A company offers you employment for the next 25 years until retirement but will not pay you a pension when you do retire, so you start investing now for your retirement. You know you can earn 6% compounded monthly on an available investment for the next 25 years until you retire. During retirement you will earn 4% compounded annually on any funds remaining in the investment, and you expect to withdraw $120,000 at the end of each year of your retirement. If you anticipate living 18 years in retirement, how much of your salary as a minimum would you have to invest at the end of each year until retirement?
The given data is executed in an excel:
Effective interest rate of deposit with 6% compounded monthly.
Yearly deposit of salary = $26,994
The excel calculation and formula used are shown below:
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