Finance question???

Finance HW Question...?

• Hi, I had a question concerning some finance homework. I don't really need help with figuring out the answer; rather I need help correctly interpreting the last couple of sentences of the question provided below: First choice project: You are a financial planner. You have clients who are just beginning to think about planning for retirement. They are both 35 years old and have $80,000 in a company retirement plan which they can roll over into their own plan. They want to retire at 67 but are wondering what effect retiring a year or two earlier or later will have on their retirement. Their combined income is $100,000 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. The problem I'm having is interpreting the second part of the second last sentence, i.e. "...and they want to finance the same income in retirement": could you tell me what my teacher means by this part of the sentence? Moreover, based on the last sentence, is it assumed that the time span or 'n' in the retirement period equals 20, which would be when the expected second death will take place? Thanks. 10 pts to best answer, as always :).

• Answer:

  "...and they want to finance the same income in retirement" means they want the same income (from investments) after they retire as they receive from working - i.e. $100,000 per year yes, n = 20 for the 67retirement begins - 87second death occurs