Troy and Kristy Green, both age 56, have determined that they will require retirement income equal to $93,000 in today's dollars. They plan to retire in eight years and wish to assume an after-tax return on their investments, prior to retirement. They plan to readjust their assets after retirement and believe that their net return will drop to 6%. Troy's parents are both in their late-80s, and Kirsty's parents are in their 70s. The Greens assume that retirement will last for 30 years, and inflation will average 2%.
The Greens modified their thinking and would like to know how much they need to save each year to fund retirement including a few changes. For the purposes of this calculation, assume they have retirement savings of $900,000 (from the sale of a few assets), they want to retie at age 62, they will live until age 95, and they will not plan on receiving an inheritance. They also believe that they can live off $86,000 instead of $93,000 annually in today's dollars. Social Security Benefits are the same as described in question 3.
HINT: Social Security benefits are reduced by 5/9 of 1% for each month prior to full retirement age that the benefits begin.
(Show all your work, and clearly indicate your final answer.)