Question
Your uncle is 35 years old today and is considering his retirement needs. He expects to retire at age 65, and his actuarial tables suggest
Your uncle is 35 years old today and is considering his retirement needs. He expects to retire at age 65, and his actuarial tables suggest that he will live to be 90 years old. He wants to move to Hawaii when he retires. He estimates that it will cost him 300,000 to make the move (on his 65th birthday) and that his living expenses will be 30,000 a year (starting at the end of year 66 and continuing through the end of year 90) after that. Assume that the discount rate is 5%.
1-He already has 5000 in savings. If he can invest money at 5% a year; how much will he have when he retires?
2-In addition to his savings in part b, if he plans to deposit an equal amount of money in his savings account at the end of each year starting when he is 36, how much would he need to save each year for the next 30 years to be able to afford his retirement plan?
3-If he did not have any current savings and does not expect to be able to start saving money for the next five years, how much would you have to set aside each year that to be able to afford this retirement plan? Assume that his first deposit will be when he is 41 years old and also make deposit at age 65.
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