1. Suppose your current employer offers a retirement plan that provides a benefit of $5,000 a month...
Question:
1. Suppose your current employer offers a retirement plan that provides a benefit of $5,000 a month from age 67 until death. According to your calculations, $5,000 a month will not be sufficient to support the lifestyle you plan on leading. You have determined that you need an additional $2,000 monthly to supplement the employee retirement benefit.
Assuming you will live until the age of 90, calculate the present value at age 67 of the $2,000 per month supplemental retirement benefit, assuming a conservative rate of return of 3%.
2. Relative to your current age, the present value at age 67 found in question #1 becomes the future value you need to obtain given your current age now, How much money do you need to deposit starting today in order to get the present value calculated above at age 67? Suppose you are currently 25 years old and assume a 4% growth rate.
Income Tax Fundamentals 2019
ISBN: 9781337703062
37th Edition
Authors: Gerald E. Whittenburg, Steven Gill