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Calculate the shortfall in retirement account

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Jose, age 25, currently saves $7000 per year in his retirement account which is expected to earn 5% return. Jose is planning to retire at 62 and needs to fund his retirement upto age, 85. He has estimated that the annual amount needed during retirement would be $47,000 in today's dollar terms. The inflation rate is expected to be 1.5%. Calculate the shortfall (if any) in his retirement account at the beginning of retirement.

The correct answer is 612,854. Please help me how to do steps by steps to get that answer.

Reference no: EM132411014

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