2. By using the annuity approach, calculate the capital needed at retirement (age 67) for the Williamses. Assume a 9% after-tax rate of return. Base the calculation on Michael’s salary only.

Based on the text: He earns $170,000 per year. He is expecting no social security, and would like to have a standard of living at 70% of his preretirement income. He is currently 35 and wants to retire at 67, and expects to live to 92, meaning retirement will last 25 years. He is expecting a 9% rate of return, with inflation at 3%.

Answer rating: 100% (QA)

Michaels Current annual salary 170000 Standard of living at his preretirement income 70 Retirement I... View the full answer