Question
You have recently graduated and just started your first job. Your financial advisor has recommended saving for retirement to ensure you have enough to live
You have recently graduated and just started your first job. Your financial advisor has recommended saving for retirement to ensure you have enough to live large and to leverage the time value of money. Data for your situation follows: Starting salary = $60,000 (at end of first year) Annual raises = 5% p.a. Current age = 25 Career = 40 years ROR in career = 10% p.a. Retirement = 30 years Amount needed in first year of retirement = 80% of last years salary Inflation in retirement = 3% p.a. ROR in retirement = 5% p.a. In the Retirement 1 tab, calculate the values going out to 40 years and graph the ending balances. In the Retirement 2 tab, determine the amount you need to have in your account the day you retire (PV) and conduct a sensitivity analysis to determine if you will have enough for retirement based on the various savings rates and RORs. Round monies to the nearest dollar and use the 1000 separator (,). Provide your observations about the results of the sensitivity analysis.
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