Question
You just turned 30 years old, and decided that it is time to start saving for retirement. Based on your anticipated income and expenses, you
You just turned 30 years old, and decided that it is time to start saving for retirement. Based on
your anticipated income and expenses, you expect to be able to invest $4,000 each year until you
are 50 years old, and then $5,000 each year until you retire at age 65.
You expect to earn 6.1% on your investments. What is the expected value of your retirement
account at age 65?
During retirement, you expect to spend about $160000 per year. You expect to live until you are
85 years old, and will continue to earn 6.1% on your remaining investments until you die. How
much do you need to have saved at age 65 to fund your retirement? Is your retirement completely
funded by your investments?
You just received a large inheritance. If your retirement is not completely funded by your
investments, how much of the inheritance do you need to set aside now (at age 30) to fund the
remainder of your retirement needs, if you expect to earn 6.1% on your investments?
Hint: for the time period 30-50, take N=20 and for the time period 50-65 take N=15.
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