Question

you need to have $250,000 per year to live comfortable in retirement to allow for your passion for travel. You feel you will live to your 100th year (35 years after retirement). You believe that the rate of return on your investments will be 5% per year. How much of a retirement fund must you have in order to start paying yourself 250,000 per year on the first day of retirement and the beginning of each year thereafter until your 100th year? show work

Answer 1

Time period = 35 years

Amount required each year = $250,000

Interest rate =5%

This question is about beginning of the period calculation.

So, Using excel PV funtion to calculate total retirement fund at the beginning of retirement life =

Syntax: PV(rate,time,per year amount,,1) [We use "1" in the syntax for beginning of the period calculation]

PV(0.05, 35,250000,,1) = 42,98,226

The total retirement fund = $42,98,226