Question
On January 1, Bowie, just reached age 42, has come to you for help in planning his retirement. He works for a bank, where he
On January 1, Bowie, just reached age 42, has come to you for help in planning his retirement. He works for a bank, where he earned $80,000 annually at the end of last year. It is assumed that his salary will grow by 3% per year and it is paid at the end of each year. Bowie would like to retire when he reaches 62 (20 years from today). He has consistently earned 6% of his investments annually. Assuming he is expected to live 20 years after retirement and he has an expected wage replacement ratio of 80%.
(d). Whats the present value of the retirement needs as of today? (show your work ).
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