Calculate retirement saving...?
Assume that your father is now 40 yrs old, and he plans to retire in 20 years, and he expects to live for 25 yrs after he retires, that is , until 85. He wants a fixed retirement income that has same purchasing power at the time he retires as 75,000 (calc impact of inflation till the retirement date - ignore inflation after retirement date). His income will begin the day he retires, 20 years from today and then he would receive 24 additional payments. Inflation is expected to be 4% per year from today forward; he currently has 200,000 saved and expects to earn a return on his savings of 7% per year, annual compounding. How much must he save during each of the next 20 years (with deposits made at the end of each year) to meet his retirement goal? a) 31,105.90 b) 35,709.25 c) 54,332.88 d) 41,987.33
Public Comments
- why would he retire at 60? he can't collect Social security until at least 62 and what about medical insurance? he'd have to pay the full premium himself until age 65 and why would he need the same amount of purchasing power in retirement? He's not planning on still having a mortgage is he?
