Question
Your sister turned 30 today, and she is planning to save $3,000 per year for retirement, with the first deposit to be made one year
Your sister turned 30 today, and she is planning to save $3,000 per year for retirement, with the first deposit to be made one year from today. She will invest in a mutual fund, which she expects to provide a return of 8% per year. She plans to retire 35 years from today, when she turns 65, and she expects to live for 25 years after retirement, to age 90. Under these assumptions, how much can she spend in each month after she retires? Her first withdrawal will be made at the end of her first month of retirement.
(Hint calculate the FV of the deposits first then figure out draw down payments)
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