You just started working and want to retire in 40 years. Retirement will last for 25 years.
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Question:
You just started working and want to retire in 40 years. Retirement will last for 25 years. In the first year of retirement, you want to spend $140,000 and your annual spending in the following years has to grow by 2% to offset the inflation. You expect to earn 4% annually on your savings during retirement. How much do you need to save each year for the next 40 years, assuming you’ll earn 6% on your savings during working years? Assume your retirement account beginning balance is $0 and the ending balance after 65 years will be $100,000. The cash flows occur at the end of each year. Build cash flows for the next 65 years and solve in Excel using solver or goal seek.
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