Question 24 15 Points Saving for retirement is important! Rather than target a random total dollar value to have at retirement, a better approach is to first figure out what you think that you will spend on an annual basis once you retire and also make an educated guess at how long you will live once you retire. Then save enough to support that stream of expected payments. Assume that you are going to work and save for 40 years and anticipate living for 30 additional years once you retire. You anticipate that you will spend

$125,000

per year every year in retirement. How much will you need to save each year during your 40 years of employment in order to have enough to support your 30 year retirement spending needs? Assume that the mutual fund where you park your money will return

6.85%

per year while you are working and while you are retired. Assume that investments and withdrawals occur at the end of each year. Your last day of work will be the day of your last investment (year 40 ) and first withdrawal will be at the end of the next year (year 41 ). Hint, you need to do this problem in two steps and you do not need to have

30**$125,000

in your account when you retire as the money will grow in between your withdrawals.