Answered step by step
Verified Expert Solution
Question
1 Approved Answer
When Sam retires at age 67, he wishes to withdraw all his superannuation as a lump sum and use that to invest in an
When Sam retires at age 67, he wishes to withdraw all his superannuation as a lump sum and use that to invest in an annuity that pays him $70,000 each year for 20 years. This $70,000 income comprises of part principal draw down on the lump sum he invested and part Interest he earns from the return on his lump sum. Sam can earn a 2% p.a. return on his lump sum investment. By the final year, he will have drawn down his initial investment to 0. Based on these terms, calculate the lump sum amount of superannuation Tom needs to have at 67, in order to achieve his target payment of $70,000 each year for 20 years. Answer: Sam now wishes to know whether he can reach the lump sum of superannuation required. He is currently 30 years old and having just moved to Australia, has $0 in superannuation. He earns $75,000 each year which he expects to increase by at least the annual inflation rate of 2% p.a. He has to contribute the mandatory 9,5% of his annual salary Into a superannuation fund which is forecasted to earn 6% p.a, in the long run, Upon reaching retirement age, calculate the amount oft superannuation accumulated and identify whether it is sufficient or not to meet his retirement plans. Answeor:
Step by Step Solution
★★★★★
3.45 Rating (148 Votes )
There are 3 Steps involved in it
Step: 1
1 Lumpsum Amount of Superannuation sam Needs Annual Amount Presen...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started