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Visualization for problem 3 Investing on a regular basis for 3 0 years In retirement, withdrawing funds for 2 5 yrs 3 . ( a
Visualization for problem
Investing on a regular basis for years
In retirement, withdrawing funds for yrs
a You are saving for retirement, and you can afford to save $ every year, starting one year from today. If you invest for years earning an average return of per year, how much will you have saved for your retirement? Hint, this is the FV of an annuity. You may want to solve parts c and e then come back and solve b and d which are annuities due.
b How much would you have in your retirement account if you began these same annual payments immediately? Hint: This is now the FV of an annuity due.
c Now let's look at things a little differently. Suppose that once you retire, you want to be able to withdraw $ per year starting one year from your retirement for a total of years during your retirement. How much would you need to have in your account when you retire to make this work assuming an annual interest rate of Hints: This is the PV of an annuity and remember that with this type of problem, you are withdrawing a set amount every year and at the end of the years, your account has zero dollars in it
d How much would you need to have in your retirement account if you began these same annual withdrawals immediately? Hint: This is now the PV of an annuity due. Reset your calculator to "END" of period payments when you have finished the annuity due problems.
e Changing the scenario, now let's assume that you want to have $ in your retirement account at the end of years. You have now decided that you will deposit funds at the end of every month for years. The interest rate is still per year. How much do you need to deposit each month in order to reach your goal in years.?
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