Question

you plan to retire 35 years from today. You want to invest the same amount each...

you plan to retire 35 years from today. You want to invest the same amount each year starting one year from now so you can withdraw $50000 each year during your retirement. You expect to live independently for 25 years following your retirement. You also need a lump sum of 350000 in 60 years to pay for permanent nursing care until you die. You earn 10% per year. You intend to make your first withdrawal one year after retiring. How much do you need to invest each year?

Homework Answers

Answer #1

Needed FV (lumpsum in 60 years) = $ 350,000

So , PV of the lumpsum in 35 years time as on retirement date = PV ( 350,000 @ 10% for 25 years) = 350,000/(1+10%)^25 = $ 32,303.60

Withdrawals in retirement (PMT) = 50,000

Years of retirement (nper) = 25 years

rate = 10%

PV of withdrawals 35 years from now (PV) = = $ 453,852

So Total PV 35 years from now (FV) =( PV of withdrawals 35 years from now (PV) + PV of the lumpsum in 35 years time as on retirement date) = $ 486,155.60

Rate = 10%

Number of years (nper) = 35 years

Investment per year for 35 years time (PMT) = = $ 1,793.77

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You are trying to decide how much to save for retirement. Assume you plan to save...
You are trying to decide how much to save for retirement. Assume you plan to save $ 5,500 per year with the first investment made one year from now. You think you can earn 12.0​% per year on your investments and you plan to retire in 38 ​years, immediately after making your last 5,500 investment. a. How much will you have in your retirement account on the day you​ retire? b.​ If, instead of investing $5,500 per​ year, you wanted...
You are trying to decide how much to save for retirement. Assume you plan to save...
You are trying to decide how much to save for retirement. Assume you plan to save $5,000 per year with the first investment made one year from now. You think you can earn 10% per year on your investments and you plan to retire in 43 years, immediately after making your last $5,000 investment. Please show how to solve on Excel. a. How much will you have in your retirement account on the day you retire? b. If, instead of...
You want to retire in 40 years and plan to invest $1,800 per month until you...
You want to retire in 40 years and plan to invest $1,800 per month until you retire. If you would like to be able to withdraw $600,000 per year for 25 years during retirement, what annual rate will you have to earn until retiring if you expect to earn 5% after you retire? A.)9.01% B.)7.50% C.)13.96% D.)10.13% E.)11.64%
You are trying to decide how much to save for retirement. Assume you plan to save...
You are trying to decide how much to save for retirement. Assume you plan to save $6,000 per year with the first investment made one year from now. You think you can earn 11.0​% per year on your investments and you plan to retire in 28 ​years, immediately after making your last $6,000 investment. a. How much will you have in your retirement account on the day you​ retire? b.​ If, instead of investing $6,000 per​ year, you wanted to...
You are trying to decide how much to save for retirement. Assume you plan to save...
You are trying to decide how much to save for retirement. Assume you plan to save $4,000 per year with the first investment made one year from now. You think you can earn 8.0​% per year on your investments and you plan to retire in 34 ​years, immediately after making your last $4,000 investment. a. How much will you have in your retirement account on the day you​ retire? b. ​ If, instead of investing $4,000 per​ year, you wanted...
You are trying to decide how much to save for retirement. Assume you plan to save...
You are trying to decide how much to save for retirement. Assume you plan to save $ 5000 per year with the first investment made one year from now. You think you can earn 11.5​% per year on your investments and you plan to retire in 34​years, immediately after making your last $ 5000 investment. a. How much will you have in your retirement account on the day you​ retire? b.​ If, instead of investing $5,000 per​ year, you wanted...
You are 35 years old today and want to plan for retirement at age 65. You...
You are 35 years old today and want to plan for retirement at age 65. You want to set aside an equal amount every year from now to retirement. You expect to live to age 85 and want to withdraw a fixed amount each year during retirement that at age 65 will have the same purchasing power as $83,697 has today. You plan on withdrawing the money starting the day you retire. You have not saved any money for retirement....
2) You are trying to decide how much to save for retirement. Assume you plan to...
2) You are trying to decide how much to save for retirement. Assume you plan to save $7,500 per year with the first investment made one year from now. You think you can earn 9.0​% per year on your investments and you plan to retire in 39 ​years, immediately after making your last $7,500 investment. a. How much will you have in your retirement account on the day you​ retire? b.​ If, instead of investing $7,500 per​ year, you wanted...
You are trying to decide how much to save for retirement. Assume you plan to save...
You are trying to decide how much to save for retirement. Assume you plan to save $ 5 comma 000$5,000 per year with the first investment made one year from now. You think you can earn 7.07.0​% per year on your investments and you plan to retire in   2727 ​years, immediately after making your last $ 5 comma 000$5,000 investment. a. How much will you have in your retirement account on the day you​ retire? b.​ If, instead of investing...
Suppose you are 30 years old and want to retire at the age of age 70...
Suppose you are 30 years old and want to retire at the age of age 70 and expect to live another 20 years. On the day you retire, you want to have $1,000,000 in your retirement savings account. i. If you invest monthly starting one month from today and your investment earns 6.0 percent per year, How much money do you need to invest every month until you retire? ii. Now you’re retired with $1,000,000 and you have 20 more...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT