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Problem regarding the retirement date

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In order to find the amount to be saved we need to determine how much money he needs to have in his retirement fund at age 60 in order to be able to accomplish all his retirement plans. Since his spending must come from this fund (which will continue to earn interest during his retirement years), the fund value represents the present value of his withdrawals plus the present value of his inheritance amount. Hence:

Fund Value = PV of $375,000 annuity for 20 years + PV of $550,000 to be received 20 years from the retirement date.

Reference no: EM131165842

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