How much will you need to have saved by your retirement date

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Reference no: EM131477040

Question: Today is your 40th birthday. You expect to retire at age 65 and actuarial tables suggest that you will live to be 100. You want to move to Hawaii when you retire. You estimate that it will cost you $200,000 to make the move (on your 65th birthday), and that your annual living expenses will be $25,000 a year after that. You expect to earn an annual return of 7% on your savings.

a. How much will you need to have saved by your retirement date?

b. You already have $50,000 in savings. How much would you need to save at the end of each of the next 25 years to be able to afford this retirement plan?

c. If you did not have any current savings and did not expect to be able to start saving money for the next 5 years (that is, your first savings payment will be made on your 45th birthday), how much would you have to set aside each year after that to be able to afford this retirement plan?

Reference no: EM131477040

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