# Retirement planning: Capital depletion model

Please help arrive at the capital depletion model for a couple.

If a married couple is each 43.

Husband makes 75000

Wife makes 50000

Required Rate of REturn is 8%

Inflation rate is 3%

If they retire at 62 what is the total needed assuming 80% wage replacement ratio to age 96? My calculations are below. Are they correct?

PV - 100,000 (80% of 125,000)

N-19

i - 3

FV 175,350

Find Lump sum that they need to have to get to age 96 (beg mode)

PMT - 175,350

N 34 (96-62)

i [(1.08/1.03)-1]x100

PVAD 3,390,948

How much do they need to save? Below is portfolio

STock Portfolio = 200,000

401K = 250,000 (adding 7,500 annually)

IRA = 28,000

PV = 478,000

i = 8

n = 19

FV 2,062,905

Needed 3,390,948

FV of Lump 2,062,905

Difference is 1,328,043

What is additional that needs to be saved?

FV = 1,328,043

n=228 (19x12)

i.0067 (8% / 12)

PMT 5,780

Are these numbers correct?

What do we do to figure Social Security changing how much is needed to save....Head of House - 29,996; Spouse - 22,468, beginning at age 62, 65, 67?

At age 62 they will have reduced benefits of 75.8% of SS

At age 65 they will have 94.4%

At age 67 they will have 100%.

https://brainmass.com/economics/the-time-value-of-money/retirement-planning-capital-depletion-model-600862

#### Solution Summary

The solution provides a capital depletion model for retirement planning for a married couple.