Reference no: EM132487538

Point 1: Tom just turned 45 years old. He wants to retire when he becomes 65. To support himself after he retires, he decides to save part of his salary each year for the next ten years (assume that he gets his salary once a year and his first salary when he turns 46 years old). His first salary is going to be $100,000, and it is expected to grow at a yearly rate of 3%. He decides to save 20% of his salary every year. The account where the saving will be invested has an APR = 6% compounded annually. He plans to withdraw half of what he will have in the account ten years from today (leaving the rest of the money in the 6% account), and he will use the money to buy a property. He believes that at the time he retires the value of the property will double and he will sell the property. Tom forecasts that he will live until he is 80 years old, and he wants $30,000 per year after he retires (his first withdrawal is going to be when he turns 66 years old).

Question 1: Will he have enough money when he retires to meet his post retirement financial needs?