Suppose your current annual income is $120, 000 and you are planning on saving for...
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Suppose your current annual income is $120, 000 and you are planning on saving for living after retirement (in 40 years). You need $80, 000 every year after your retirement to maintain your living standard. Your plan is to set aside a predetermined amount of your earnings (before your retirement) each month and the monthly contributions are growing at a rate of 3% (annualized growth rate). Assume the annual risk-free rate is 8% and you will live forever.
How much money do you need at the time of retirement to maintain your living standard?
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