You have just turned 35, and you intend to start saving for your retirement. Once you retire in 30 years (when you turn 65), you would like to have an income of $100,000 per year for the next 20 years. Calculate how much you would have to save between now and age 65 in order to finance your retirement income. Make the following assumptions:

All savings draw compound interest of 10% per year.

You make the first payment today and the last payment on the day you turn 64 (30 payments).

You make the first withdrawal when you turn 65 and the last withdrawal when you turn 84 (20 payments).

A B. F G H 1 J K L M N O DE SAVING FOR RETIREMENT 1 Year Age Total, Payment at Withdrawal at beginning of beginning of beginning of year year Total end of year year 2 Interest rate 3 Number of payments 4 Number of withdrawals 5 Size of annual withdrawal 6 7 Size of payment 8 9 Present value of payments 10 Present value of withdrawals 11 12 Difference (this should be zero) 13 14 15 Check 16 Future value at age 65 of payments 17 Present value at age 65 of withdrawals 18 19 20 Use Solver to do this easily-- you can also do 21 this analytically 22 23 24 This problem has a one-step analytic 25 solution: see next spreadsheet 26 27 28 29