You have just turned 22 years old, received your bachelor's degree, and accepted your first job. Now you must decide how much money to put intoyour retirement plan. The plan works as follows: Every dollar in the plan earns 7.2% per year. You cannot make withdrawals until you retire on your65th birthday. After that, you can make withdrawals as you see fit. You decide that you will plan to live to 100 and work until you turn 65. You estimatethat to live comfortably in retirement, you will need $95,000 per year, starting at the end of the first year of retirement and ending on your 100thbirthday. You will contribute the same amount to the plan at the end of every year that you work. How much do you need to contribute each year tofund your retirement?Your annual contribution should be $(Round to the nearest cent.)

Retirement savings can be calculated using PV function PV (rate, nper, pmt, [Fv], [type]) Rate The…

Answered: You have just turned 22 years old,…

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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Similar questions

On your 35th birthday, you open a retirement account that pays 6% interest each year. You want to have two million dollars when you retire at age 65. How much do you need to deposit each month to reach your goal?
Please help me. I dont understand the steps.
Assume you are now 21 years old and will start working as soon as you graduate from college. You plan to start saving for your retirement on your 25th birthday and retire on your 65th birthday. After retirement, you expect to live at least until you are 85. You wish to be able to withdraw $38,000 (in today's dollars) every year from the time of your retirement until you are 85 years old (i.e., for 20 years). The average inflation rate is likely to be 5 percent. Problem 6.42(a) X Your answer is incorrect. Calculate the lump sum you need to have accumulated at age 65 to be able to draw the desired income. Assume that the annual return on your investments is likely to be 10 percent. (Round answer to 2 decimal places, e.g. 15.25. Round intermediate value to 3 decimal places, e.g. 359400.312. Do not round factor values.) Lump sum amount accumulated at age 65 $ 10463.384
Suppose, again, that you want to retire at age 65 and to cover 25 years of regular, annual, $60,000 expenses, beginning on your 66th birthday, given 7% rates of return on your savings. a) What would be the present value of this amount on your 24th birthday? B) If you wanted to put an equal amount into your retirement account each year, beginning on your 25th birthday, and ending with the final payment on your 65th birthday, how much would you need to set aside each year?
You want to be able to withdraw $35,000 from your account each year for 20 years after you retire. You expect to retire in 15 years. If your account earns 10% interest, how much will you need to deposit each year until retirement to achieve your retirement goals?
You are preparing for your retirement and have decided to begin saving early. Based on your research, you've determined that you will require $3,000 per month to cover your living expenses during retirement. a. How much money do you need when you retire if you place all of it in a compound interest account that earns 7% compounded monthly, and is living off the interest only? (What is the required retirement savings amount that can generate your monthly living expenses as interest income?)
Shelly Franks is planning for her retirement, so she is setting up a payout annuity with her bank. She is now 35 years old, and she will retire when she is 65. She wants to receive annual payouts for twenty years, and she wants those payouts to receive an annual COLA of 4%. a. She wants her first payout to have the same purchasing power as does $15,000 today. How big should that payout be if she assumes inflation of 4% per year? b. How much money must she deposit when she is 65 if her money earns 8.3% interest per year? c. How large a monthly payment must she make if she saves for her payout annuity with an ordinary annuity? (The two annuities pay the same interest rate.) d. How large a monthly payment would she make if she waits until she is 40 before starting her ordinary annuity?
You are graduating from college at the end of this semester and after reading the The Business of Life box in this chapter, you have decided to invest $4300 at the end of each year into a Roth IRA for the next 41 years. If you earn 8 percent compounded annually on your investment, how much will you have when you retire in 41 years? How much will you have if you wait 10 years before beginning to save and only make payments into your retirement account?
Vijaya
Your goal is to retire in 20 years. You plan to start on this path by saving $200 a month. If you earn 6% annually (using monthly compounding), how much will you have saved in 20 years? Right before you started saving, you were notified by your auto insurance company that you will receive a discount of $20 a month on your auto premium because of your impeccable driving record. If you chose to put those savings towards your retirement goal each month, how much would your retirement account be worth if you save $220 a month for 20 years with an annual return of 6% (compounded monthly)? Please discuss your thoughts on the impact of saving an additional $20 a month over 20 years.
You want to be able to withdraw $20,000 from your account each year for 30 years after you retire. You expect to retire in 25 years. If your account earns 8% interest, how much will you need to deposit each year until retirement to achieve your retirement goals?
John, a 25-year-old teacher, wants to start saving for his retirement. John wants a comfortableretirement, so he needs to have one million dollars in his saving account, which pays 2.4% annualinterest rate, when he reaches 67 years of age.a. How much should John deposit into his saving account monthly now? Round your answer to thenearest cent.b. If John wants the one million dollars in his saving account to last him 20 years into hisretirement, how much could he withdraw from the saving account monthly? You can assume thesaving account will pay the same 2.4% annual interest rate. Round your answer to the nearestcent.c. If John increases his monthly deposit in part (a) by $200, how much will be in his saving accountif he wants to retire at 60 years of age? Round your answer to the nearest cent.

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