Your 50-year old father wants to do some retirement planning. His goal is to retire at...
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Your 50-year old father wants to do some retirement planning. His goal is to retire at age 65, to replace 80% of his pre-retirement pay, to increase his income by 4% per year after retirement; and to have $600,000 left at age 90 to leave as an inheritance. If his current salary is $80,000 per year (expected to increase each year by 4%), what percentage of his income must he save on an annual basis to achieve his goal? Assume a 9.00% annual rate of return before retirement, a 7.50% annual rate of return after retirement, annual compounding, annual deposits, annual withdrawals, and a current account balance of $400,000; also ignore the effect of taxes. Your 50-year old father wants to do some retirement planning. His goal is to retire at age 65, to replace 80% of his pre-retirement pay, to increase his income by 4% per year after retirement; and to have $600,000 left at age 90 to leave as an inheritance. If his current salary is $80,000 per year (expected to increase each year by 4%), what percentage of his income must he save on an annual basis to achieve his goal? Assume a 9.00% annual rate of return before retirement, a 7.50% annual rate of return after retirement, annual compounding, annual deposits, annual withdrawals, and a current account balance of $400,000; also ignore the effect of taxes.
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To determine the percentage of income your father must save on an annual basis to achieve his retirement goal we can break down the calculations into ... View the full answer
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