Rochelle has been reading about the FIRE movement and wants to retire as soon as possible. She
Question:
Rochelle has been reading about the FIRE movement and wants to retire as soon as possible. She is an engineer and makes $100,000 per year but can live off of $25,000 after paying her federal income tax (average of 20.35%) as well as paying her payroll tax. Rochelle is conservative and wants to assume a 7.5% annual investment rate of return and assumes that inflation will be 3% per year. Based on her family history, Rochelle expects that she will live to be 98 years old. She currently has $34,500 saved. At what age could Rochelle retire assuming she saves as much as possible after covering her needs and taxes and assuming she can live off of $25,000 in today’s dollars?
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Investment Analysis and Portfolio Management
ISBN: 978-0538482387
10th Edition
Authors: Frank K. Reilly, Keith C. Brown