A young couple, both 25 years old, are planning to retire in 40 years at the age
Question:
A young couple, both 25 years old, are planning to retire in 40 years at the age of 65. After they retire,
they expect to live for an additional 20 years, until age 85. They plan to begin saving for retirement today
and based on information from their financial planner, they think they will earn 8% on their investment
compounded annually. They think they will earn 5% on their retirement savings after they retire.
If they begin at age 25 to save $5,000 per year for the next 40 years. Assume they will be selling
their business in 5 years for $100,000, which will be deposit into their retirement account and
leave there until age 65. How much will this couple have saved in their retirement account at age
65?
Personal Finance Turning Money into Wealth
ISBN: 978-0134730363
8th edition
Authors: Arthur J. Keown