How much must he save during each of the next years

Reference no: EM132150203

Question - Assume that your father is now 40 years old, that he plans to retire in 20 years, and that he expects to live for 25 years after he retires, that is until he is 85. He wants a fixed retirement income that has the same purchasing power at the time he retires as GHC 75,000 has today (he realizes that the real value of his retirement income will decline year by year after he retires). His retirement income will begin the day he retires, 20 years from today, and he will then get 24 additional annual payments. Inflation is expected to be 4 percent per year from today forward; he currently has GHC 200,000 saved up; and he expects to earn a return on his savings of 7 percent per year, annual compounding. To the nearest cedis, how much must he save during each of the next 20 years (with deposits being made at the end of each year) to meet his retirement goal?

Reference no: EM132150203

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