Niles and Daphne are near retirement. They have a joint life expectancy of 25 years in retirement. Daphne anticipates their annual income in retirement will need to increase each year at the rate of inflation, which they assume is 4%. Based on the assumption that their first year retirement need, beginning on the first day of retirement, for annual income will be $85,000, of which they have $37,500 available from other sources, and an annual after-tax rate of return of 6.5%. 

Calculate the total amount that needs to be in place when Niles and Daphne begin their retirement.

Explain how you came to your answer.

 

Question:

Robbie and Robin, both age 45, are married and filed a joint return for 2021. Robin earned a salary of $100,000 in 2021 and is covered by her employer's 401(k) plan. Robbie and Robin earned interest of $40,000 in 2021 from a joint savings account. Robbie is not employed, and the couple had no other income. On April 15, 2022, Robin contributed $6,000 to an IRA for herself and $6,000 to an IRA for Robbie. The maximum allowable IRA deduction on the 2021 joint return is:

Explain how you came to your answer.

Answer rating: 100% (QA)

To calculate the total amount that needs to be in place when Niles and Daphne begin their retirement we can use the concept of present value of an ann... View the full answer