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You are 28 years old and currently making $200,000 per year. Your salary grows at 3% a year. You dont plan on saving for retirement
You are 28 years old and currently making $200,000 per year. Your salary grows at 3% a year. You don’t plan on saving for retirement until you are age 40. Starting at age 40, you set aside 10% of your salary each year for retirement. After accounting for financial management fees, you only earn 4% on your retirement savings.
- How much do you have in retirement savings at age 65?
- Suppose you start saving at age 35 and choose a passive investing strategy that bumps your return to 6%. How much will you have in retirement at age 65? Assume you still save 10% of your salary.
- Assume you take equal annual distributions from age 66 to 90, how much larger is your annual distribution in (b) versus (a)? Assume a discount rate of 6%
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a Starting at age 40 Firstcalculate the salary at age 40 Salary at age 40 200000 1 00312 282810 Nowcalculate the annual retirement savings contribution Annual retirement savings contribution 01 282810 ...Get Instant Access to Expert-Tailored Solutions
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