You plan to retire in 30 years. Beginning in 31 years from now you wish to...

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Finance

You plan to retire in 30 years. Beginning in 31 years from nowyou wish to have an annual retirement
income of $80,000 / year as measured in today’s dollars. Theinflation rate is assumed to be 2.5%. Each
year in retirement you wish to have your retirement income growby 3% per year. You plan on living for
35 years in retirement. Starting in one year from now you aregoing to make annual deposits into a
savings account. Your savings payments are expected to grow by5% per year. You will make 30
payments into your retirement account. The discount rate is 9%.How much must your first savings
amount be in order to achieve your retirement goal

Answer & Explanation Solved by verified expert

3.9 Ratings (780 Votes)

Given Inflation rate i 25 Amount required per yearcommencing in 31 years80000Therefore first See Answer

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You plan to retire in 30 years. Beginning in 31 years from nowyou wish to have an annual retirementincome of $80,000 / year as measured in today’s dollars. Theinflation rate is assumed to be 2.5%. Eachyear in retirement you wish to have your retirement income growby 3% per year. You plan on living for35 years in retirement. Starting in one year from now you aregoing to make annual deposits into asavings account. Your savings payments are expected to grow by5% per year. You will make 30payments into your retirement account. The discount rate is 9%.How much must your first savingsamount be in order to achieve your retirement goal