You have clients who are just beginning to think about planning for retirement. They are both 35 years old and have 85,00 in a company retirement plan which they can roll over into their own plan. They want to retire at 67 but re wondering what effect retiring a year or two earlier or later will have on their retirement. Their combined income is 120,000 per year, and they want to finance the same income in retirement. When they retire they can purchase a two-life annuity with an expected second death at age 87.
Prepare a plan with some alternative rates of return and retirement dates and explain what annual contributions they must make.