How to solve using financial calculator Assume that I plan to retire in 20 years, and...
How to solve using financial calculator
Assume that I plan to retire in 20 years, and that I expect to live for another 25 years after I retire. I want a fixed retirement income of $75,000 cash money per year. My retirement income will begin exactly 12 months (1 year) after I retire; after that payment, I want to receive 24 additional annual payments at the end of each year. I currently have $100,000 saved; I expect to earn a return on my savings of 6% per year, with annual compounding. (11 points) (A) How much must I save during each of the next 20 years (with deposits being made at the end of each year) to meet my retirement goal? (B) How much will I have saved when I retire?
Homework Answers
First compute the amount required at retirement
Using financial calculator
Input: I/Y = 6, N=25, PMT=-75000
Solve for PV as 958751.71
Using financial calculator
Input: I/Y = 6, N=20, FV = 958751.71, PV=-100000
Solve for PMT as -17344.78
a: Amount to save during each of the next 20 years= $17344.78
b: Total amount on retirement = 958751.71
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How to solve using financial calculator
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