Robert and Joan are 45 years old and want to retire at age 67. Robert has $235,000 in his 401(k) and is currently saving $800 per month while Joan has $126,000 in her 401(k) and is saving $350 per month. Neither has an employer match. You estimate that their social security will be $39,000 for Robert and $34,000 for Joan. They feel that they will need $16,000 per month in retirement and should live to age 100, but would like a cushion of $150,000 just in case left in their savings at 100.
- What return do they need pre and post retirement to reach their goals?
- What portfolio pre and post retirement would you recommend?
- Assume 2% inflation.