You find an extra $500 a month to put away that you believe is easily sustainable for the next 3 years. You plan to increase that monthly amount by $250 during each 3-year period as you believe your salary will increase close to proportionately and you can get better control of your expenses (i.e., $750 monthly for years 4-6, $1000 7-9, etc.). You plan to follow Buffet's lead and allocate your funds 90% to S&P500 index and 10% to treasuries. You expect an average 11% return. You plan to retire in 30 years at which time you will reallocate your funds to lower your equity exposure to 50/50 split between the index and treasuries. You expect to earn a 6% return thereafter while in retirement. You plan to live 25 years in retirement. How much will you have when you retire? How much can you withdraw each year while in retirement leaving no bequest? What if you worked for 5 more years?

Answer rating: 100% (QA)

To calculate how much you will have when you retire we can use the future value formula FV PV x 1 rn Where FV is the future value PV is the present value r is the interest rate n is the number of peri... View the full answer