Question
You want to withdraw $8,500 per month in real terms for 25 years when you retire. You plan to retire in 35 years, and expect
You want to withdraw $8,500 per month in real terms for 25 years when you retire. You plan to retire in 35 years, and expect to earn an 11 percent nominal effective annual return before you retire. You will make monthly deposits to fund your retirement account. Immediately after you make your last deposit, you plan to withdraw $35,000 in real terms to take an around the world trip. You also wish to leave your grandchildren $750,000 in real terms at the end of the 25 years of withdrawals. You will earn a 7 percent effective annual nominal return after you retire. The inflation rate over the entire period is expected to be an effect annual rate of 3.4 percent. What is the real amount of your monthly deposit? How much will your account be worth in nominal terms immediately after your last deposit
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