Question
In: Finance
A couple will retire in 50 years; they plan to spend (in today's dollars) about $30,000...
A couple will retire in 50 years; they plan to spend (in today's dollars) about $30,000 a year in retirement, which should last about 25 years. They believe that they can earn 8% interest on retirement savings. The inflation rate over the next 75 years is expected to average 5%.
a. What is the real annual savings the couple must set aside? Assume they will discontinue saving when they retire. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
b. How much do they need to save in nominal terms in the first year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
c. How much do they need to save in nominal terms in the last year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
d. What will be their nominal expenditures in the first year of retirement? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
e. What will be their nominal expenditures in the last year of retirement? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Solutions
jeff jeffy answered 1 year agoRelated Solutions
A couple will retire in 40 years; they plan to spend about $37,000 a year in...
A couple will retire
in 40 years; they plan to spend about $37,000 a year in retirement,
which should last about 20 years. They believe that they can earn
7% interest on retirement savings.
a. If
they make annual payments into a savings plan, how much will they
need to save each year? Assume the first payment comes in 1 year.
(Do not round intermediate calculations. Round your answer
to 2 decimal places.)
b.
How would the answer to part...
A couple will retire in 40 years; they plan to spend about $35,000 a year in...
A couple will retire in 40 years; they plan to spend about
$35,000 a year in retirement, which should last about 20 years.
They believe that they can earn 9% interest on retirement
savings.
a. If they make annual payments into a savings
plan, how much will they need to save each year? Assume the first
payment comes in 1 year. (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
Annual Savings =
b. How would the...
A couple will retire in 40 years; they plan to withdraw $39,000 a year in retirement,...
A couple will retire in 40 years; they plan to withdraw $39,000
a year in retirement, and they
will make 20 withdraw. They believe that they can earn 8%
interest on the retirement
savings.
- If they make annual deposit into their retirement savings, how
much will they need to save
each year? Assume the first deposit comes at the end of the
first year, and the first withdraw
comes at the end of year 41.
3. You plan to retire in 40 years. Upon retirement, you plan to spend US$40,000.00 per...
3. You plan to retire in 40 years. Upon retirement, you plan
to spend US$40,000.00 per year
for 30 years.
a. At a discount rate of 7.00% per year, how much do you need
to have saved up in 40
years if you are to meet up with your retirement
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b. Using the answer to part (a) and a compound rate of 8.00%,
how much would you
have to save yearly for the next 40 years if you are...
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You plan to retire in exactly 15 years and are worried about
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Requirement 1:
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1. You are now 50 years old and plan to retire at age 65. You currently...
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Anne has 30,000 dollars that she can spend on health care (c1) and a composite good...
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and a composite good of every- thing else (c2). The price of a unit
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A man plans to retire in 25 years and spend 35 years in retirement. He currently...
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Case Background: A young couple, both 25 years old, are planning to retire in 40 years...
Case Background:
A young couple, both 25 years old, are planning to retire in 40
years at the age of 65. After they retire,
they expect to live for an additional 20 years, until age 85.
They plan to begin saving for retirement today
and based on information from their financial planner, they
think they will earn 8% on their investment
compounded annually. They think they will earn 5% on their
retirement savings after they retire.
Using the answer from...
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