Use the following information regarding your retirement planning: You plan to work (and save) for 35 years,...

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Finance

Use the following information regarding your retirementplanning:
You plan to work (and save) for 35 years, then retire (andspend money from your retirement account) for 25 years. After these60 years, you expect that your retirement saving account will have$50,000 left to give to your family.
You plan to save $4,000 in year 1, and you will increase thisamount by 3% a year
You want your retirement spending to increase by 2% peryear
You expect to earn a rate of return of 8% during your workingyears and 4.50% during retirement
To solve this problem, find the amount that you spend your firstyear of retirement.

Answer & Explanation Solved by verified expert

3.7 Ratings (490 Votes)

Saving 4000 in the first year and increasing the savings at 3is in the form of a Growing Annuity The time period is here for 35years for savingsFuture Value of Growing Annuity formula is Future Value of Savings after 35 See Answer

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