You decide you would like to retire at age 65, and expect to live until you are

Question:

You decide you would like to retire at age 65, and expect to live until you are 85

(assume there is no chance you will die younger or live longer). You fi gure that you can live nicely on $50,000 per year.

a. Describe the calculation you need to make to determine how much you must save to purchase an annuity paying $50,000 per year for the rest of your life.

Assume the interest rate is 7 percent.

b. How would your calculation change if you expected infl ation to average 2 percent for the rest of your life?

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Money Banking And Financial Markets

ISBN: 9780073375908

3rd Edition

Authors: Stephen Cecchetti, Kermit Schoenholtz

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Question Posted: Jul 25, 2024 08:00 AM

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You decide you would like to retire at age 65, and expect to live until you are

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Money Banking And Financial Markets

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