Information about retirement account

Reference no: EM1330031

Today is Archie's 50th birthday and his retirement account totals $237,000. He plans to retire in 12 years and is confident that his nest egg will earn 8% annually between now and that time. When he retires, Archie wants to purchase a 20-year annuity from the Gold Star Insurance Company. The annuity carries an interest rate of 6% per year. Archie thinks he will need payments of $80,000 per year to sustain his life style. He is concerned that his current nest egg will not be sufficient to purchase an annuity that will pay $80,000 per year and he wonders if he must save additional money over the next 12 years to achieve his goal and he has come to you for help.

a. Does Archie have a shortfall?

b. If he has a shortfall, how much is it?

c. If he has a shortfall how much additional money must Archie save each year for the next 12 years at 8% interest in order to have enough money to purchase an annuity that will produce payments of $80,000 per year for 20 years?

Reference no: EM1330031

Questions Cloud

Explain e-business website comparison : Explain E-Business Website Comparison and what has each company doe to distinguish itself from its competitors

Human performance technology practitioners : Human Performance Technology Practitioners - Why should HPT Practitioners care about the organization's strategic direction?

Explain how do high inflation rates affect : Explain how do high inflation rates affect the exchange rate of a country in the short and the long run.

Use of it in logistics as advanced : Is the use of IT in logistics as advanced as the use of IT in other areas of business?

Information about retirement account : Today is Archie's 50th birthday and his retirement account totals $237,000. If he has the shortfall how much additional money should Archie save each year for next 12 years at 8% interest in order to have enough money to purchase an annuity that w..

Show the analysis phase of a project : Explain What are some of the biggest challenges to an HPT professional in the Analysis phase of a project

The disadvantages of intermodal logistics parks : What are some of the disadvantages of intermodal logistics parks?

Elucidate why not the change in the price of military goods : Elucidate why not the change in the price of military goods will be reflected in how the United States measures inflation.

Explain ebusiness- solution set : Explain EBusiness- Solution set and identify any ethical, legal, regulatory and social issues that might negatively impact people and organizations and or society

User Account

All Pages