Agnes is 40 years old. She wants to know how much she should be saving each year for retirement. Below are the specifics: • She wants to retire at 60 and expects to live until she's 90 • She currently makes $56,000 and expects that to increase each year with inflation. She thinks she will need about 65% of that to live on in retirement. . She has $39,000 in an RRSP • Her investments are earning a real rate of 7% annual return before retirement. • When she retires she will move her investments into a more conservative portfolio and earn 2% per year. • She expects that CPP will be about $14,000 per year in today's dollars. CPP amount is inflation adjusted. a. How much does she need by the time she retires (in real dollars)? (Omit the "$" sign in your response.) $990660 b. How much will she have by the time she retires if no additional saving is made (in real dollars)? (Omit the "$" sign in your response.) $150872 c. How much will she need to save at the end of each year in order to make up the shortfall (in real dollars)? (Omit the "$" sign in your response.) $ 103,386
Agnes is 40 years old. She wants to know how much she should be saving each year for retirement. Below are the specifics: • She wants to retire at 60 and expects to live until she's 90 • She currently makes $56,000 and expects that to increase each year with inflation. She thinks she will need about 65% of that to live on in retirement. . She has $39,000 in an RRSP • Her investments are earning a real rate of 7% annual return before retirement. • When she retires she will move her investments into a more conservative portfolio and earn 2% per year. • She expects that CPP will be about $14,000 per year in today's dollars. CPP amount is inflation adjusted. a. How much does she need by the time she retires (in real dollars)? (Omit the "$" sign in your response.) $990660 b. How much will she have by the time she retires if no additional saving is made (in real dollars)? (Omit the "$" sign in your response.) $150872 c. How much will she need to save at the end of each year in order to make up the shortfall (in real dollars)? (Omit the "$" sign in your response.) $ 103,386
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Agnes is 40 years old. She wants to know how much she should be saving each year for retirement. Below are the specifics:
• She wants to retire at 60 and expects to live until she's 90
She currently makes $56,000 and expects that to increase each year with inflation. She thinks she will need about 65% of that to
live on in retirement.
She has $39,000 in an RRSP
●
Her investments are earning a real rate of 7% annual return before retirement.
• When she retires she will move her investments into a more conservative portfolio and earn 2% per year.
●
She expects that CPP will be about $14,000 per year in today's dollars. CPP amount is inflation adjusted.
●
a. How much does she need by the time she retires (in real dollars)? (Omit the "$" sign in your response.)
$990660x
b. How much will she have by the time she retires if no additional saving is made (in real dollars)? (Omit the "$" sign in your
response.)
$150872
c. How much will she need to save at the end of each year in order to make up the shortfall (in real dollars)? (Omit the "$" sign in your
response.)
$ 103,386 x
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