nd is celebrating her birthday and wants to start saving for her anticipated retirement. She has the following years to retirement and retirement spending goals. Years until retirement: 30 Amount to withdraw each year: $120,000 Years to withdraw in retirement: 25 Interest rate: 7.5% Because your friend is planning ahead, the first withdrawal will not take place until one year after she retires. She wants to make equal annual deposits into her account for her retirement fund. Assume that the inflation rate is 3%. Consequently, when your friend retires she will want to withdraw $120,000 each year in today’s dollars. If she starts making deposit amounts in one year and makes equal deposit amounts each year and makes her last deposit on the day she retires, what amou
A friend is celebrating her birthday and wants to start saving for her anticipated retirement. She has the following years to retirement and retirement spending goals.
|
Years until retirement: |
30 |
|
Amount to withdraw each year: |
$120,000 |
|
Years to withdraw in retirement: |
25 |
|
Interest rate: |
7.5% |
Because your friend is planning ahead, the first withdrawal will not take place until one year after she retires. She wants to make equal annual deposits into her account for her retirement fund.
Assume that the inflation rate is 3%. Consequently, when your friend retires she will want to withdraw $120,000 each year in today’s dollars.
- If she starts making deposit amounts in one year and makes equal deposit amounts each year and makes her last deposit on the day she retires, what amount must she deposit annually to be able to make the desired withdrawals at retirement?
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If she starts making deposit amounts in one year and her deposits increase at the inflation rate of 3% each year until she makes her last deposit on the day she retires, what amount must she initially deposit to be able to make the desired withdrawals at retirement?
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