Question

You plan to retire 30 years from now. You will save $5,000 per year for the next 15 years, and then $7,000 for the 15 years after that. You can earn 9% on your savings. How much will you have 30 years from now? Round your answer tothe nearest whole number,for example 1441.

Answer 1

1)	The FV of the annuity of $5000 for 15 years at t15 = 5000*(1.09^15-1)/0.09 =	$   1,46,805
	FV of the above amount at t30 = 146805*1.09^15 =	$   5,34,735
	FV of the annuity (t16 to t30) at t30 = 7000*(1.09^15-1)/0.09 =	$   2,05,526
	Amount accumulated in the savings account 30 years from now =	$   7,40,261
2)	The FV of the annual savings = 4000*(1.1^30-1)/0.10 =	$   6,57,976
	The above amount will be the PV of the annual withdrawals for the next 40 years.
	So, the annual withdrawals that can be made = 657976*0.10*1.1^40/(1.10^40-1) =	$       67,284