Anuradha Dixit just turned 55. Anuradha is planning to retire in 10 years, and she currently has
Question:
Anuradha Dixit just turned 55. Anuradha is planning to retire in 10 years, and she currently has $500,000 in her pension fund. Based on the longevity pattern of her family, she assumes that she will live 20 years past her retirement rate; during each of these years she desires to withdraw $100,000 from her pension fund.
If the interest rate is 5% annually, how much will Anuradha have to save annually for the next 10 years? Assume that the first deposit to her pension fund will be today, followed by 9 more annual deposits, and the annual withdrawals from age 65 will occur at the beginning of each year.
Use the following spreadsheet (the numbers are not correct) and Goal Seek to find an answer to the above question AND the following 3 questions (listed after the spreadsheet).
1. How much is the annual withdrawn (deposit) at age 57?
2. How much is the account balance at the beginning of age 84?
3. How much is the account balance at the end of age 84?
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta