Question
Bob Katz currently has $18,000 in his Roth IRA which is expected to continue earning 8% indefinitely. Bob plans to continue depositing $5000 annually into
Bob Katz currently has $18,000 in his Roth IRA which is expected to continue earning 8% indefinitely. Bob plans to continue depositing $5000 annually into this account. Upon Bobs retirement in 30 years, he would like to be able to withdraw $150,000 annually--adjusting for 3% inflation--forever. After his Finance class, Bob realizes the importance of not running out of retirement funds. Assuming all funds at retirement will earn 7% and any additional deposits Bob has to make will earn 10% in the stock market, how much will Bob need to deposit annually in addition to his IRA contributions?
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