You are currently 22 years old and just starting your first "grown up" job after college, earning $44,000 per year.  Since you took this class, you know how important it is to save for retirement and want to get started right away, but you need to figure out how much to save each month.  You have compiled the following information: 

• You expect that your income will increase 3.5% per year until you retire at age 69.
• You estimate that your expenses in the first year of retirement will be 70% of your final salary and they will increase at 3% per year.
• You expect to live to age 100.
• You do not currently have any savings and you will not be eligible for a defined benefit pension in retirement, but you expect to receive a Social Security benefit equal to 25% of your final salary.
• Your investments earn 6% and your tax rate is 25% (both now and in retirement)

Assuming your final salary is $221,640.50, what will your pre-tax income requirement be at retirement?

 

Answer rating: 100% (QA)

To calculate your pretax income requirement at retirement we need to consider the following factors ... View the full answer