Question: Thomas currently earns $ 7 8 , 0 0 0 per year and wants to replace 8 0 % of his annual income at the

Thomas currently earns $78,000 per year and wants to replace 80% of his annual income at the beginning of each year during retirement. He expects to receive $17,000 in today's dollar terms from Social Security at the the beginning of each year during retirement. Thomas is currently 32, wants to retire at 67 and expects to live till 88. Assume that Thomas can earn 9.5% return on his investments and inflation to be 3.5%. Thomas expects his salary to increase with inflation every year. Calculate the amount he should save at the end of every year to accumulate the capital needed at 67? Assume Thomas presently has $50,000 in current retirement savings.

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