Themba Sithole has consulted with you regarding his retirement. He is 45 years old and he would like to retire at the age of 65 years. After a consultation with Mr Sithole the following was decided:

Required:

• -He would like to receive income after retirement until the age of 90 years.
• -His income after retirement must increase annually by a rate of 6% per annum (the
• assumed rate of inflation).
• -After retirement, Mr Sithole would like to receive an income of R650 000 per annum
• in today's terms.
• -He will receive an interest rate of 15% (compounded annually) after retirement for
• the capital invested at retirement.
• -He currently contributes R25 000 per annum to his pension fund and he has no further retirement provisions. These contributions increase at a rate of 7% per annum and he earns a 12% return on his investment.
• -The value of his pension fund is currently R800 000.

Advise Themba Sithole on his retirement situation.