What constant amount would need to save each year

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Reference no: EM132692176

You are saving for your retirement. Today (t=0), you are 30 years old. you plan to work and save for retirement for the next 35 years (t=1 thought t=35), retiring at age 65. The nominal interest rate is (and always will be) 5%.. Need detailed explanation about below questions with excel sheet formula.

Problem a. Suppose at retirement (t=35), you have $2 million in the bank. What constant amount could you spend each year during retirement if your retirement lasts for 25 years (t=36 through t=60)?

Problem b. Suppose that today (t=0), you have no retirement savings. What constant amount would you need to save each year during your working life (t=1 through t=35) to have $2 million in your account when you retire (t=35)?

Problem c. Suppose that today (t=0), you have no retirement savings. Next year (t=1), you plan to save $20, 000. In each subsequent year (t=2 through t=35), you plan to save 6% more than you saved in the previous year. How much will you save at t-6? Note, I am asking what contribution to your savings account you will make at t=6 and not how much savings you will have at t=6

Problem d. Suppose you follow the savings plan described in part (c). How much will you have in the bank immediately after making your last deposit (t=35)?

Reference no: EM132692176

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