You plan to retire after 30 years. After that, you need $200,000 per year for 10...

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You plan to retire after 30 years. After that, you need $200,000per year for 10 years (first withdrawal at t=31). At the end ofthese 10 years, you will enter a reitrement home where you willstay for the rest of your life. As soon as you enter the retirementhome, you will need to make a single payment of $1,000,000. Youwant to start saving for your retirement in an account that paysyou 9% p.a. Therefore, beginning from the end of the first year(t=1), you will make equal yearly deposits into this account for 30years. You expect to receive $500,000 at t=30 from a cash valueinsurance policy that you own. This money will be deposited in yourretirement account. What should your yearly deposits into theaccount be?

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STEP 1 amount required at age 30Amount needed for 10 years See Answer

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You plan to retire after 30 years. After that, you need $200,000per year for 10 years (first withdrawal at t=31). At the end ofthese 10 years, you will enter a reitrement home where you willstay for the rest of your life. As soon as you enter the retirementhome, you will need to make a single payment of $1,000,000. Youwant to start saving for your retirement in an account that paysyou 9% p.a. Therefore, beginning from the end of the first year(t=1), you will make equal yearly deposits into this account for 30years. You expect to receive $500,000 at t=30 from a cash valueinsurance policy that you own. This money will be deposited in yourretirement account. What should your yearly deposits into theaccount be?