How much must proctor save per year during the 20 years

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Reference no: EM131338885

Bobbi Proctor does not want to "gamble" on Social Security taking care of her in her old age. Hence she wants to begin to plan now for retirement. She has enlisted the services of Hackney Financial Planning to assist her in meeting her goals.

Proctor has determined that she would like to have a retirement annuity of $200,000 per year, with the first payment to be received 36 years from now at the end of her first year of retirement. She plans a long, enjoyable retirement of about 25 years. Proctor wishes to save $5,000 at the end of each of the next 15 years, and an unknown, equal end-of-period amount for the remaining 20 years before she begins her retirement.

Hackney has advised Proctor that she can safely assume that all savings will earn 12 percent per annum until she retires, but only 8 percent thereafter. How much must Proctor save per year during the 20 years preceding retirement?

Reference no: EM131338885

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