John and Mary Smith have been your friends for many years and they have called to set-up an appointment to discuss their financial plans for retirement. During the first appointment you learn that both John & Mary plan on retiring in one year. Currently, John owns a mid-size electronics firm which he has operated for many years. Mary is a university professor. Below is additional information you developed during the first appointment with John & Mary. Item Description John MaryItem Descriptions John Mary Age in One Year At Retirement 56 55 Current Annual Salary $100,000 $60,000 Current Value of Residence $250,000 (Joint) Mortgage on Residence $0 $0 Children None None Health Ins. Continuing In Retirement (Spouse) Yes Cost of Health Ins. In Retirement $0 $0 Estimaed Retirement Income (Annual) None $20,000 Social Security Benefits (At Age 66) $24,000 None Est. Personal Exp. After Retired (Annual) $30,000 $30,000 Current Vehicles Value $25,000 $20,000 Amt. Owed on Vehicles $0 $0 Additional Information John plans to sell the electronics company to another individual who has already expressed interest. The agreed selling price for equipment, building, inventory, goodwill and customer list will be $2,000,000 in cash. There is no remaining basis in any fixed assets and the value of inventory is $150,000. All capital gain amounts will be taxed at long-term income tax rate of 15%. Both John & Mary have strongly indicated during the first appointment that they are conservative investors and want a minimum risk of any losses. You are a partner in a regional investment brokerage firm together with several other partners. Each partner is considered an expert in one area. The areas within your firm of expertise are:Risk Analysis Mutual Funds & Stocks Bonds Options & Futures Foreign Investments Income TaxProject RequirementsYou and your fellow investment partners are to present a proposal that specifically meets the retirement investment objectives of John & Mary listed below. Your proposal should be from 3 5 pages double spaces, Times Roman 12 pt. In addition, your team should include a cover page listing each member of your team and a separate list of any references used in preparing the proposal. The proposal must follow APA rules in structure and presentation. John & Marys Retirement Investment ObjectivesProvide $90,000 of withdrawals from the investment account each year. Minimize income tax. Include at least three types of investments. Provide for active management of the portfolio with an annual fee of 1% – 1 ½% of value in the investment portfolio. Provide an annual growth after all withdrawals and fees of 4% – 5%.
Financial retirement plans
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