How much do you need to save each month

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Reference no: EM132178376

Question -

Part 1) You are age 20 and have decided to take the bull by the horns and start planning for your retirement in 40 years (age 60). You would like to have $1,000,000 in today's dollars saved to live from when you are 60. The expected inflation rate for the next 40 years is 2.5%. You think by investing in good growth mutual funds you can get a yearly return of 10% over the next 40 years. How much do you need to save each month, starting today, to meet your goal?

Part 2) Once you hit 60 you will retire and start pulling from the above investment monthly for the next 30 years (or until you are 90) you plan on having your nest egg invested earning 7% over that period of time. You want the funds to last for the entire 30 years. How much can you pull from your nest egg each month for living expenses for the next 30 years?

Reference no: EM132178376

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