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Aiming for a constant retirement income

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Question #1: Joe has recently found a job paying him $48,000 per year, paid at the beginning of each month. His salary grows by 3% per year. He plans to work for 30 years and enjoy a retirement period of 30 years after that. Assume that the valuation rate is 2.4% per year.

Part A: He decides to start saving for his retirement. If he starts by saving $2000 from his first salary and increase the saving by 2% per year, how much can he withdraw from his savings at the end of each month during retirement? Assume that he is aiming for a constant retirement income.

Part B: What would happen if the salary payment and saving occur annually instead of monthly? Why? Only discuss it intuitively.

Reference no: EM133116545

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