You believe you will need to have saved $500,000 by the time you retire in 46 years in order to live comfortably. You also believe that you will inherit $10,000 in 10 years. If the interest rate is 6% per year, how much must you save each year to meet your retirement goal?
You have to accumulate $500,000 in 46 years for a comfortable life.
You will inherit $10,000 in 10 years. Deposit that $10,000 at the rate of 6% for next 36 years. It will become $81,472.52 (Formula=(10000*(1+6%)^36))
Now, the actual money you have to accumulate is $500,000-$81,472.52=$418,527.48
To accumulate $418,527.48 in 46 years, you have do yearly deposits. This can be calculated by using PMT function in EXCEL
You have to invest $1,847.74 every year.
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