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Caitlin is helping her parents plan for retirement. Her mother and father plan to retire in 30 years at age 65 and have accumulated $125,000
Caitlin is helping her parents plan for retirement. Her mother and father plan to retire in 30 years at age 65 and have accumulated $125,000 of savings as of today. The couple can earn an interest rate of 3% (EAR) on their investment account, while saving for retirement, but plan to move funds into a safer mix of assets that will yield 2.5% (EAR), when they reach retirement. The couple wishes would save enough to maintain withdrawals of $45,000 per year for 25 years after they retire. How much would the couple need to have accumulated in savings when they reach retirement to finance the withdrawal plan
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