One person has estimated that with 500,000 dolars per year, he will be able to live worthily when he gets older and the first thing he did was to look for some unconventional alternative to deposit his savings, since he well knew that the bank was not the best option. He found a savings fund that guaranteed him in "real terms" an annual interest of 4% for the next 80 years, as long as he defined the savings dates and the withdrawal dates of his money from him.

He decided that he would save from year 23 (expired annuity), until year 65 (retirement age) and he wanted the fund to last him until he was 100 years old.

1. How much does this person should save in the year 65 to enjoy a pension of $ 500,000 dolars per year?

2. How much will he have to save annually to achieve this goal?

Answer rating: 100% (QA)

Annuity Calculations for Retirement Savings We can solve this problem by considering the two phases of this scenario Phase 1 Saving for Retirement Yea... View the full answer