Eleanor needs $40,000 a year to live on in retirement net of the income she will receive.
Question:
Eleanor needs $40,000 a year to live on in retirement net of the income she will receive. She will be retiring in 22 years and is funding for a 25-year retirement. The inflation rate is expected to be 3.5 percent a year and the after-tax return on her investments 6 percent.
a. How much will the shortfall amount to at the beginning of the retirement period?
b. What lump sum will she need at the beginning of the retirement period?
c. What is the required yearly savings?
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