Chapter 1The Retirement Crisis in Brief

A Tale of Two Widows

Jane and June Smith are sisters, Jane turning 58 years old in 2017, while June turns 60 in that same year. They are married to two brothers, Jim and John Smith, who turn 61 and 63, respectively, in 2017. Jim and John work for the same company.

Each Smith family has the following financial profile:

  1. $200K in investible assets, comprising $30K cash, $100K in traditional retirement accounts, and $70K in a taxable brokerage account with a tax basis of $50K. All the assets but the cash are in index funds that are expected to provide a 7% pretax return before expected inflation of 2%, whereas the cash is expected to return 2% pretax before inflation.
  2. The husband works as a contractor, ...

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