Computing the value of dcpp

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Problem:

1. Walter is a member of his defined contribution pension plan. He has pensionable earnings of $94185 per year. Walter contributes 5% of his pensionable earnings to the DCPP each year and his employer matches his contributons. The current value in his DCPP is $407547 and he earns a nominal rate of return of 6%. He plans on working and contributing to the DCPP for the next 10 years. The current rate of inflation is 2%. What will the value of his DCPP at the time he retires in 10 years?

2. Carolyn and Jim are planning on retiring next year when they turn 65. They estimate that they will need $67596 per year when they retire to cover their expenses, travel and taxes. They will need this income each year until they die at age 95. They are currently earning a rate of return of 5% on their investments and the rate of inflation is 2%. What amount of money will they need when they retire next year to fund their retirement?

Reference no: EM133207241

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