Tony is currently 45 years old and wants to retire in 10 years time an plans to
Question:
Tony is currently 45 years old and wants to retire in 10 years time an plans to withdraw $40 000 per years (in today’s term) from his retirement savings. This amount will increase with inflation with the rate of 3% per year.
You have generated the following projection at the end of 10 years using a financial planning software on the assumption that Tony will continue doing things the same way he is currently doing them.
Direct shares - $35,000
Term deposit - 5,000
Savings account - 230,000
Cheque account - 3,000
Townhouse - 420,000
Beach side unit - 390,000
Superannuation - 380,000
Liabilities - 60,000
Determine the future planning gap in Tony's case by calculating the lump sum he requires upon retirement and comparing it with what he is projected to have. You need to show your complete workings.
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford