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Josh and Millicent are back! Remember, we outlined their situation in Lesson 2. You'll be happy to hear that Josh got a promotion and is now in charge of titanium skull plates. Millicent has indulged her lifelong passion for singing opera. Unfortunately, she began belting out arias from "The Magic Flute" around one of Josh's customers, a baseball umpire who'd been beaned by a line drive, and due to intense vibrations in his titanium skull plate brought on by Millicent's warbling, the ump is now seeing double. He now declares that many long fly balls are simultaneously fair and foul. Millicent feels terrible.

But enough about their personal lives.

We entered most of their data into the calculator back in Lesson 2 (you can double check those entries here). Reenter that data in the calculator now.

In refining their plan, Josh and Millicent, too, have completed their Net Worth  and Cash Flow Statements. The latter shows their income and expenses for today, and estimates the same numbers for the first year of retirement (Josh's age 55), for the year in which Josh will reach age 64 (and also the year Millicent may first draw a Social Security benefit), and for the year Josh will reach age 69. (Note: The development of the statements is discussed in the lesson itself.) As a consequence, Josh and Millicent now have expense data for the early, middle, and final retirement years.

In developing their data, Josh and Millicent decided to include Social Security income in their plan. Accordingly, they obtained a projection of that income from the Social Security Administration (SSA) based on their individual work histories. Both intend to take their benefit at the earliest possible date they can, age 62. The SSA estimates Josh's benefit at that age will be $950 per month, while Millicent's will be $825 per month.

Assume you are Josh and your spouse is Millicent. Based on the above information and that in Lesson 2:

1. Go to the Retirement Calculator.
   
   
2. In the "Monthly Expenses When Retired" area, enter "$5,032 for 9 years," "$4,307 for 5 years," and "$5,307 for the remainder of retirement."
   
   
3. Under Social Security, check the first item and enter "$950 for You and $825 for Your Spouse per Month."
   
   
4. Scroll to the bottom of the page and click "Results."
   
   
   1. Under the assumptions entered, at what age will your income be insufficient?
      
      
   2. At that age, your Social Security and pensions will cover what percentage of your expenses?
      
      
   3. How many more years must you work to ensure the income will last?
   
   
   
5. Click on the "Inputs" tab to return to the data entry part of the calculator.
   
   
6. Josh has an S&P 500 Index fund available in his 401(k). Based on long-term historical averages, he knows he can increase his 401(k) plan returns by assuming a slightly higher risk through an increased allocation of his current account balance and his future contributions to the S&P 500 fund. Josh also knows that since 1926 the long-term average return for stocks has been slightly better than 11% annually. Therefore, he decides he will reallocate his 401(k) investments. By doing so, he believes he will be able to increase the average rate of return in his 401(k) plan to 10% today, and 9% in retirement. Based on Josh's decision, scroll down to the area where you may enter "Return" data for your 401(k). In the "Return Now" block enter 10%, and in the "Return at Retirement" block enter 9%.
   
   
7. Scroll to the bottom of the input screen, click on "Results," and answer the following:
   
   
   1. Under the assumptions entered, at what age will your income be insufficient?
      
      
   2. How many more years must you work to ensure the income will last?
      
      
   3. How much, if anything, will be available to heirs at your assumed death?