Question

10. You are 30 years old and planning to retire at age 62. You want to plan your finances for living 35 years past age 62 and then die dead broke. You determine that you will need $3000 per month for the 35 years. At age 62, you plan to go live in the tropics on the beach and live on coconuts, rum and fishing. You need to conclude your retirement savings at age 55 because all your spare money then will go to your kids education. Ignore inflation.

The question is how much money do you need to save each month between now and 55 so that you can quit contributing and have enough money for the $3000 per month starting at age 62. The expected return on your investments over the whole period is 10% per year.

Answer #1

Solution :- Interest Rate per month = ( 1 + 0.10
)^{1/12} - 1 = 0.007974 = 0.7974%

Amount Required Per Month After Retirement = $3,000

Total Monthly Payments in 35 Years = 35 * 12 = 420

Now Present Value at retirement of Money Required after Retirement = $3,000 * PVAF ( 0.7974% , 420 )

= $3,000 * 120.9429

= $362,828.81

Now the Value of Money required after retirement at age of 55 =
$362,828.81 / ( 1 + 0.10)^{7}

= $362,828.81 * 0.51316

= $186,188.55

Now Assume the Amount we need to deposit monthly for 25 Years =

Total Deposits = 25 * 12 = 300

Rate per ,month = 0.7974%

Future Value = $186,188.55

Monthly Deposit = X

= $186,188.55 = X * FVAF ( 0.7974% , 300 )

= $186,188.55 = X * 1233.3248

X = $150.96

Therefore Monthly Deposit = $151 ( Approx )

If there is any doubt please ask in comments

Thank you please rate

1.You are offered a contract with a signing bonus. If they
offered you either $215,000 in cash or $2,000 a month for 15 years,
guaranteed, which do you take (based strictly on the math)? Your
safe rate of return is 7.5%.
2.You are 30 years old today and planning to retire at age 62.
You want to plan your finances for living 35 years past age 62 and
die dead broke. You determine you will need $3000 per month from...

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...

You are 30 years old today. You want to retire at the age of 60.
You expect to live until age 85. You would like to have a monthly
income of $13,000 per month in retirement. How much do you have to
save per month during your working years in order to achieve your
retirement goal? Assume end of period payments. Assume an annual
interest rate of 3.5% in retirement and 5% during your working
life. How much do you...

You are 45 years old and planning to retire at age 65. You
expect to live until age 85. Your retirment investment earns 9% per
year. You want to guarentee that you will withdrawl 15000 per month
during retiremnent. You expect that inflation will be 3% per year
including years in retirement. How much must you save per month
until retirment to fund your plan. HINT: Your retirment withdrawl
will increase every month at the inflation rate of 3%. The...

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....

Angela is 22 years old and would like to retire at the age of 62
with $1,000,000 in her retirement account. Assuming a 6% return,
how much does Angela need to put away on a monthly basis to ensure
her retirement goal of $1,000,000? Assume those monthly payments
are made at the end of the month. You must show your work!

You are 43 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 95 and want to withdraw a
fixed amount each year during retirement that at age 65 will have
the same purchasing power as $98,093 has today. You plan on
withdrawing the money starting the day you retire. You have not
saved any money for retirement....

You are 44 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 96 and want to withdraw a
fixed amount each year during retirement that at age 65 will have
the same purchasing power as $94,725 has today. You plan on
withdrawing the money starting the day you retire. You have not
saved any money for retirement....

You are currently 30 years old. You intend to retire at age
60, and you want to be able to receive a 20-year, $100,000
beginning-of-the-year annuity, with the first payment to be
received on your 60th birthday. You would like to save enough money
over the next 15 years to achieve your objective; that is, you want
to accumulate the necessary funds by your 45th birthday.
A. If you expect your investments to earn 12% per year over
the next...

You are 20 years old and you want to have $1,500,000
by the time you are 62 years old. You believe by putting
money in the stock market you can earn 7.8% return. How much
should you put in each year to reach this goal?
At age 65 you will receive an annuity of $1,200 a
month, and you expect to live until 85. If you are 28 years
old today, how much is that Annuity worth today? At a...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 8 minutes ago

asked 39 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 3 hours ago

asked 3 hours ago

asked 3 hours ago

asked 4 hours ago