Your father, who is 40, plans to retire in 20 years, and he expects to live independently
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Question:
Your father, who is 40, plans to retire in 20 years, and he expects to live independently for 25 years. Suppose your father wants to have a real income of $40,000 in today's dollars in each year after he retires. His retirement income will start the day he retires, 20 years from today,and he will receive a total of 25 retirement payments. Inflation is expected to be constant at 3 percent per year. Your father has $200,000 in savings now, and he can earn 6 percent per year on savings now and in the future. How much must he save each year, starting today and ending a year before he retires, to meet his retirement goals?
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