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You are trying to decide how much to save for retirement. Assume you plan to save $ 4 0 0 0 per year with the
You are trying to decide how much to save for retirement. Assume you plan to
save $ per year with the first investment made one year from now. You think
you can earn per year on your investments and you plan to retire in years,
immediately after making you last $ investment.
a How much will you have in your retirement account on the day you retire?
b If instead of investing $ per year, you wanted to make one lumpsum
investment today for your retirement that will result in the same etirement saving,
how much would that lump sum need to be
c If you hope to live for years in retirement, how much can you withdraw every
year in retirement starting one year after retirement so that you will just exhaust
your savings with the th withdrawal assume your savings will continue to earn
in retirement
d If instead, you decide to withdraw $ per year in retirement again with
the first withdrawal one year after retiring how many years will it take until you
exhaust your savings? Use trialanderror, a financial calculator: solve for or
Excel: function NPER
e Assuming the most you can afford to save is $ per year, but you want to
retire with $ million in your investment account, how high of a return do you
need to earn on your investments? Use trialanderror, a financial calculator: solve
for the interest rate, or Excel: function RATE
Inputs:
Annual Savings
Investment Return
Retirement in
Retirement Horizon
a Account Value
h Todays Lump Sum
c Retirement Annual
Withdrawal
d Years of retirement
e Rate required
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