Prepare your retirement plan as followed:
(A) Age- 25 years old,
plan to retire at the age = 60
Expected to live until 80,
Saving period = 35 years
Life after working = 20 years
(B) annual expenses:-
for first 10 years - $10000
for next 10 years - $20000
(C) Average annual inflation rate:-
= 3%
(D) Rate of return = 10%
(E) Current Saving = 0
Future values of annual expense with inflation rate chosen :-
Future Value (FV)= Present Value (PV) (1+r/100)n
where;
FV= Future value of your goal
PV= Present value or current cost of your goal
r= annual rate of inflation
n= time left to reach your goals (in years)
= $10000 (1+ 3/100)10
= $114,638.79
= $20000 (1+ 3/100)10
=$229,277.59
Prepare your retirement plan as followed: A) Time periods: Estimate how long you have to save...
You are trying to decide how much to save for retirement. Assume you plan to save $4,000 per year with the first investment made one year from now. You think you can earn 7.0% per year on your investments and you plan to retire in 45 years, immediately after making your last $4,000 investment. a. How much will you have in your retirement account on the day you retire? b. If, instead of investing $4,000 per year, you wanted to...
You are trying to decide how much to save for retirement. Assume you plan to save $5,000 per year with the first investment made one year from now. You think you can earn 5.0% per year on your investments and you plan to retire in 27 years, immediately after making your last S5,000 investment. a. How much will you have in your retirement account on the day you retire? b. If, instead of investing S5,000 per year, you wanted to...
You are trying to decide how much to save for retirement. Assume you plan to save $5,500 per year with the first investment made one year from now. You think you can earn 11.5% per year on your investments and you plan to retire in 34 years, immediately after making your last $5.500 investment. a. How much will you have in your retirement account on the day you retire? b. If, instead of investing $5,500 per year, you wanted to...
Retirement Plan Now that you have a house, it’s time for you to plan for retirement. Your plan is to take a certain amount from your salary at the end of each year and invest it in a 401(K) mutual fund. Then when you get sick of your job and want to retire, you will have a fund that you can withdraw from each year to live on. Let’s assume you want to retire at age 60 and your life...
Homework Question for Time value of money You plan to retire in 30 years and plan on saving $15,000 annually, starting next year, for the next 30 years. You expect to need $120,000 about 18 years from now for college tuition for your recently born daughter which must be paid out of these savings. You expect to live 35 years during retirement (the first retirement payment will be 31 years from today). a. If you assume an interest rate of...
1) Ishan and Hazel plan to retire at age 60 with a retirement income of $48,000 a year from their savings. Rather than pay themselves the whole amount at the beginning of each year, they have decided that payment at the beginning of each quarter of $12,000 gives them the right balance of flexibility and maximized interest earnings. They feel they can safely earn an interest rate of 8%, compounded quarterly, on their money and they are budgeting based on...
You are trying to get your retirement savings in order. You plan to retire in 27 years. For retirement, you calculate that you will need $75,000 per year in today’s dollars, and that you will start taking annual withdrawals from the account 27 years from today. To be safe, you assume you will need to make 40 withdrawals (i.e., live 40 years in retirement), and you assume inflation will be 2% per year forever.You plan on contributing a fixed percentage...
QUESTION 5 You would like to plan for your retirement. You have gathered or assumed the following information: You just turned 30 years of age, and currently have zero savings. You plan to work until you turn 50 years old, at which time you would like to retire. During retirement, assume that you will have no sources of income other than what you can earn on the money that you have saved up for retirement. For the...
You would like to start saving for retirement and you have 40 years until the planned retirement date. Each year, during your retirement years (assume 30 years), you would like to spend an amount equivalent to the purchasing power of $50,000 today. You estimate that the expected rate of return on some recommended investment portfolio is 8%AER and you plan to select that portfolio during the working (savings) years. Assume 4%AER yield on your investments during retirement years. The annual...
If your retirement account shows $800,000 on the day of retirement and you plan to live to be 90 (you are 33 now), how much can you withdraw each month if your annual investment rate of return is 7% with a annual inflation rate of 2.5%. Show all steps, formulas, and calculations