Question
You just started working and want to retire in 40 years. Retirement will last for 25 years. In the first year of retirement, you want
You just started working and want to retire in 40 years. Retirement will last for 25 years. In the first year of retirement, you want to spend $140,000 and your annual spending in the following years has to grow by 2% to offset the inflation. You expect to earn 4% annually on your savings during retirement. How much do you need to save each year for the next 40 years, assuming you’ll earn 6% on your savings during working years? Assume your retirement account beginning balance is $0 and the ending balance after 65 years will be $100,000. The cash flows occur at the end of each year. Build cash flows for the next 65 years and solve in Excel using solver or goal seek.
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Get StartedRecommended Textbook for
Fundamentals of Corporate Finance
Authors: Berk, DeMarzo, Harford
2nd edition
132148234, 978-0132148238
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