. His wage replacement ratio has been determined to be 72%. He expects inflation will average 3.5%/year over his lifetime. He expects to earn 8% on his investments and he plans to retire at age 67. You have helped him determine his estimated social security retirement benefit at his full retirement age of 67 to be $18,000 per year (in today's dollars). Due to longevity in his family, he wants you to help him determine his capital needs for retirement
Hanford MacDwaddy is 47 years old today and makes $78,000 per year. His wage replacement ratio has been determined to be 72%. He expects inflation will average 3.5%/year over his lifetime. He expects to earn 8% on his investments and he plans to retire at age 67. You have helped him determine his estimated social security retirement benefit at his full retirement age of 67 to be $18,000 per year (in today's dollars). Due to longevity in his family, he wants you to help him determine his capital needs for retirement assuming he lives to age 97.
Questions:
1. Calculate Hanford's capital needed at retirement at age 67 using the Pure
2. Calculate the monthly savings Hanford must make at the end of each month to accumulate the capital needed as identified in Question 1. You will have 3 separate solutions here as well.
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