How much money will she need to withdraw

Assignment Help Finance Basics

Reference no: EM13300402

Retirement Planning Info:
An individual is currently 30 years old and she is planning her financial needs upon retirement. She will retire at age 65 (exactly 35 years from now) and she plans on funding 20 years of retirement with her investments. Ignore any social security payments and ignore any taxes. She made $81,000 last year and she estimates she will need 75% of her current income in today's dollars to live on when she retires. She believes that inflation will average 2 percent per year during her working years. (For simplicity we will ignore inflation during her retirement years). She will retire at age 65 and will begin drawing down her retirement annuity at age 65. She plans on making a total of 20 annual withdrawals after she retires. After she retires she believes she will be able to earn 6 percent per year. If she puts her money in a blended stock and bond portfolio now, she figures she can earn 9.5 percent per year until she retires.

Income during retirement
1) How much money will she need to withdraw each year starting at age 65 to have the same purchasing power as today?

Amount Needed at Retirement
2) How much money must she have at age 65 in order to make her planned withdrawals?

3) How much should she save per year starting right now in order to have the retirement annuity she desires?

Reference no: EM13300402

Questions Cloud

Determine perpetual equivalent annual worth at interest rate : The cash flow associated with landscaping and maintaining a certain monument in Washington, D.C., is $100,000 now and $50,000 every 5 years forever. Determine its perpetual equivalent annual worth (in years 1 through infinity)

Explain lactic acid to form a buffer solution : How many grams of sodium lactate ( or ) should be added to 1.00 of 0.140 lactic acid ( or ) to form a buffer solution with = 4.10? Assume that no volume change occurs when the sodium lactate is added.

Evaluate the cost incurred by talbot partners compared : Talbot Parners is planning to process improvement initiative aimed at reducing scheduling conflicts. What would be the savings if rescheduling could be reduced by 50 percent? Assume that the only variable cost in travel services is the wages paid ..

Determine the components of the reactions at a and g : Two 9-in.-diameter pipes (pipe 1 and pipe 2) are supported every 7.5 ft by a small frame like that shown. Knowing that the combined weight of each pipe and its content is 30 lb/ft and assuming frictionless surfaces

How much money will she need to withdraw : How much money will she need to withdraw each year starting at age 65 to have the same purchasing power as today?

Find apparent settling velocity for the phosphorus in lake : The only losses of total phosphorus for the lake are settling and fluching throught the lake's outlet. Assume the outflow rate is 212 km^2/year and the sediment area is 10,500 km^2.

What is the horizonn value at 2012 : Current and projected free cash flows for Radell global operations are shown below. growth is expected to be constant after 2012, and the weighted average cost of capital is 11% what is the horizonn (continuing) value at 2012?

How is a ziggurat similar to and different from a pyramid : How is a ziggurat similar to and different from a pyramid? Address in detail how the two differ structurally, culturally, and functionally use specific factual details.

State the possible number of electrons on particular orbital : What does the angular momentum quantum number determine? Check all that apply. A.) the overall size of an orbital B.) the energy of the electron on the outer shell C.) the possible number of electrons on particular orbital D.) the energy of an orb..

User Account

All Pages