Question

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 to make one lump-sum investment today for your retirement that will result in the same retirement saving, how much would that lump sum need to be?

c. If you hope to live for 20 years in retirement, how much can you withdraw every year in retirement (starting one year after retirement) so that you will just exhaust your savings with the 20th withdrawal (assume your savings will continue to earn 12.0% in retirement)?

d. If, instead, you decide to withdraw $671,000 per year in retirement (again with the first withdrawal one year after retiring), how many years will it take until you exhaust your savings?

e. Assuming the most you can afford to save is $1,100 per year, but you want to retire with $1,000,000 in your investment account, how high of a return do you need to earn on your investments?

Answer #1

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 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 $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
$ 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 34years,
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 trying to decide how much to save for retirement. Assume
you plan to save $7,000 per year with the first investment made one
year from now. You think you can earn 7.0% per year on your
investments and you plan to retire in 26 years, immediately after
making your last $7,000 investment. a. How much will you have in
your retirement account on the day you retire? b. If, instead of
investing $7,000 per year, you wanted to...

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...

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...

Michael plans to retire in 40 years. He is now trying to decide
how much to save for his retirement. He plans to deposit equal
amount at the beginning of each month in a retirement account for
40 years, with his first saving made today. Assume the retirement
account pays him an interest rate of 6.6% p.a., compounded monthly
and Michael would like to have $2,000,000 in his retirement account
40 years later
a) How much will he have to deposit...

You
are 26 years old and decide to start saving for your retirement.
You plan to save $6,000 at the end of each year (so the first
deposit will be one year from now), and will make the last deposit
when you retire at age 65. Suppose you earn 6% per year on your
retirement savings, how much will you have saved for retirement
right at age 65? (Round to the nearest dollar.)

You are 23 years old and decide to start saving for your
retirement. You plan to save $ 6,500 at the end of each year (so
the first deposit will be one year from now), and will make the
last deposit when you retire at age 69. Suppose you earn 12% per
year on your retirement savings.
a. How much will you have saved for retirement?
b. How much will you have saved if you wait until age 40 to...

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