Alex and Selena\'s Future Alex and Selena are 25 and love to dream about what th

Question

Alex and Selena's Future Alex and Selena are 25 and love to dream about what they will do when they are retired. They want to own a summer home in Florida, travel to Europe, and spend time visiting family around the U.S. To support this dream, they need ent income of $100,000 per year throughout their ment. At their current retirement contribution level, they a retirem retire will have $2 million saved by age 65. l Will they have enough money to support their dream by the time they are 65? Support your answerwith realistic figures What should they do to obtain that money so they can live out their dreams? 2 3 Is their retirement dream realistic? Why or why not?

Explanation / Answer

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They are standing in need of $3 million 600 thousand to supply $100,000 per year for the next 35 years from their age of 35

But they will have just $2 million saved by the age of 65 and this 2 million will support only till their age of 84 or till the year 2076

1. They can support their dream for the first 20 years of retirement - from the age of 65 to 84 only - not till the age of 100

2. They must look for sources of income to raise the additional $1,600,000

3. The retirement dream is not realistic as it supports only for the first 20 years of the retirement - not for the entire life span till the age of 100

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Year Age Income needed per year Cumulative amount needed 2017 Present Age 25 2057 Retirement Age of 65 100,000 100,000 2058 66 100,000 200,000 2059 67 100,000 300,000 2060 68 100,000 400,000 2061 69 100,000 500,000 2062 70 100,000 600,000 2063 71 100,000 700,000 2064 72 100,000 800,000 2065 73 100,000 900,000 2066 74 100,000 1,000,000 2067 75 100,000 1,100,000 2068 76 100,000 1,200,000 2069 77 100,000 1,300,000 2070 78 100,000 1,400,000 2071 79 100,000 1,500,000 2072 80 100,000 1,600,000 2073 81 100,000 1,700,000 2074 82 100,000 1,800,000 2075 83 100,000 1,900,000 2076 84 100,000 2,000,000 2077 85 100,000 2,100,000 2078 86 100,000 2,200,000 2079 87 100,000 2,300,000 2080 88 100,000 2,400,000 2081 89 100,000 2,500,000 2082 90 100,000 2,600,000 2083 91 100,000 2,700,000 2084 92 100,000 2,800,000 2085 93 100,000 2,900,000 2086 94 100,000 3,000,000 2087 95 100,000 3,100,000 2088 96 100,000 3,200,000 2089 97 100,000 3,300,000 2090 98 100,000 3,400,000 2091 99 100,000 3,500,000 2092 100 100,000 3,600,000

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