Suppose your current monthly net salary is 1000 euros, presumably it should increase every year by 6.0%
Question:
Suppose your current monthly net salary is 1000 euros, presumably it should increase every year by 6.0% until your retirement (you are planning to retire exactly in 25 years from now, your planned retirement period is 20 years): first salary increase should take place in one year from now. You decide to start making monthly payments into an investment fund (you plan to allocate 15.0% of your net salary) which is expected to earn 6.0% a year as well. During your retirement you would like to receive a monthly payment in certain amount (to be paid out at the beginning of a month from the investment fund). You plan to invest the amount of money you accumulate by the beginning of the retirement into securities with lower risk which means that during your retirement the residual amount of money will increase at annual rate of 2.0%. You plan to bequeath 150000 euros by the end of your retirement to your descendants.
How much money can you receive on monthly basis so that your descendants can get 150000 euros in 45 years from now (assuming that all your expectations and plans will hold)?
Personal Finance Turning Money into Wealth
ISBN: 978-0134730363
8th edition
Authors: Arthur J. Keown