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Allison, age 45, is beginning to panic about inflation in retirement. She is currently saving $15,000...

Allison, age 45, is beginning to panic about inflation in retirement. She is currently saving $15,000 real a year and will retire 20 years from now. Inflation is 2.5% and her fund are earnings a return of 6%. What is her real rate of return (adjusted for inflation)?

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Expert Solution

her real rate of return (adjusted for inflation) is

=((1+nominal rate of return)/(1+inflation rate))-1

=((1+6%)/(1+2.5%))-1

=3.41%

is answer

jeff jeffy answered 2 years ago
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