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Suppose you are 40 years old and plan on retiring in 25 years, and then living...

Suppose you are 40 years old and plan on retiring in 25 years, and then living for another 15 years after retirement.  Your current income is $70,000 per year.  If you pay $3,000 in Social Security taxes each year, how much do you need to save per year in order to have enough to replace 75% of your preretirement income at retirement when combined with Social Security

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Expert Solution

Particulars Working Amount
Your current annual income            70,000
Expected income after retirement = 70000*75%            52,500
Total money required after retirement = 52500*15 years          787,500
Amount saved by investing social security = 3000*25 years            75,000
Total savings required over span of 25 years = 787500-75000          712,500
Each year savings to be done = 712500/25 years            28,500

Note: Time value of money needs to be adjusted. In case it is considered, Interest income will be added in savings made each year and accordingly savings amount will change.

ekkarill92 answered 1 year ago
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