Question

In: Economics

You decide to replace your income of $70,000 a year in retirement for 30 years. How...

You decide to replace your income of $70,000 a year in retirement for 30 years. How much do you need in your retirement account the day you retire to make that happen, assuming a real interest rate of 3%?

Solutions

Expert Solution

Lets understand the problem. We need cashflows of $70,000 every year for 30 years. Therefore the present value of all such future cashflows discounted at real interest rate, is the amount you need in your account the day you retire.

Therefore, you need around $1,327,031 in your account the day you retire, to get $70,000 every year for the next 30 years.

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

Income Needed During Retirement $90,000 Number of Years in Retirement 30 Number of Year Before Retirement...
Income Needed During Retirement $90,000 Number of Years in Retirement 30 Number of Year Before Retirement 20 Rate of Return During Retirement 4.50% Rate of Return Before Retirement 7.50% Inflation Before and During Retirement 3% A. How much should your client save per year in order to meet their required funds for retirement? Calculate for both an annuity and annuity due.
You plan to make a deposit every year into your retirement account for 30 years. Your...
You plan to make a deposit every year into your retirement account for 30 years. Your deposit at the end of the first year will be $2000. Each year you will increase your deposit by $500. What would be the equivalent amount that you would need to deposit each year if the amount you deposited every year never changed. (i.e. instead of your first deposit being $2000 and your second being $2500, etc., your first deposit will be $X and...
You are 25 years old and decide to start saving for your retirement. You plan to...
You are 25 years old and decide to start saving for your retirement. You plan to save $3000 at the end of each year (so the first deposit will be one year from now), and will make the last deposit when you retire at age 65. Suppose you earn 10% per year on your retirement savings. How much will you have saved for retirement? How much will you have saved if you wait until age 35 to start saving (again,...
You are 25 years old and decide to start saving for your retirement. You plan to...
You are 25 years old and decide to start saving for your retirement. You plan to save $5,000 at the end of each year​ (so the first deposit will be one year from​ now), and will make the last deposit when you retire at age 65. Suppose you earn 8% per year on your retirement savings. a. How much will you have saved for​ retirement? The amount that you will have accumulated for retirement is _____ b. How much will...
1.You expect Social Security will replace 30% of your income. Your average annual career income is...
1.You expect Social Security will replace 30% of your income. Your average annual career income is $60,000. Since you plan to travel more frequently throughout your retirement years, you think you will need an 85% wage replacement rate. What percent of your income will you be responsible to replace? A.30%. B.55%. C.85%. D.−15%. 2.Abha purchases an annual renewable term life insurance policy. Each year she renews her coverage, her premiums will? A.potentially increase, decrease, or remain the same depending on...
After making payments of $688.96 for 13 years on your 30-year loan at 7.75%, you decide...
After making payments of $688.96 for 13 years on your 30-year loan at 7.75%, you decide to sell your home. What is the loan payoff?
You have just turned 25 years old and decide to start saving for your retirement. You...
You have just turned 25 years old and decide to start saving for your retirement. You plan to save $5,000 at the end of each year (so the first deposit will be one year from now), and will make the last deposit when you retire when you turn 65 (that is, 40 deposits in total. Suppose your pension fund earns 8% per year on your retirement savings. a) How much will you have saved for retirement by the time you...
2.You decide to start saving for your retirement, in 25 years time. Today you make an...
2.You decide to start saving for your retirement, in 25 years time. Today you make an initial lump sum payment of 10,000, then decide to save 500 per semester and expect an average return of 6.6%(comp.semesterly or semiannually). How much will you have in the end, assuming you pay the money in the beginning of each semester? 3.Your bank has just launched a savings scheme which pays an interest at 5.15% monthly compounded, over 10 years. If you invest 100...
You plan on retiring in 30 years and want to have $3,000,000 saved in your retirement...
You plan on retiring in 30 years and want to have $3,000,000 saved in your retirement account. You will earn an average rate of return of 6% on your investments. How much will you need to invest each month in order to get to your goal.
12. You plan to save for your retirement during the next 30 years. To do this,...
12. You plan to save for your retirement during the next 30 years. To do this, he will invest 700 dollars a month in a stock account and 300 dollars in a bond account. The performance of the stock account is expected to be 11% and the bond account pays 6%. When you retire, you will combine your money in an account with a 9% return. How much can you withdraw each month from your account if you have a...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT