Question

Popular retirement books often discuss the idea of “the number,” which is the amount of money you will need at the time of retirement to support your lifestyle until the end.

What is your number?

State your planned retirement age and the number of years until retirement.

Assuming you can invest all of your retirement contributions in a low-cost index fund (such as S&P 500 from Vanguard) and the inflation adjusted return of 6.5%, what is the required annual contribution to your retirement account to reach that ‘magic’ number?

Discuss your results and the implications for your savings/investing strategy.

Answer 1

amount which would be required at retirement	5000000
retirement age	65
Year to retirement	30
Inflation adjusted return	6.50%
annual contribution to accumulate the required fund	future value/FVAF at 6.5% for 30 year period	5000000/86.3748	57887.25415
FVAF at 6.5% for 30 year period	(1+r)^n-1 / r	(1.065)^30 -1/.065	86.3748
annual contribution to accumulate the required fund			57887.25415
I would need to accumulate 5788.2542 per year to accumulate the retirement fund of 5000000 if returns are earned at a rate 6.6% annually