Question

You want to retire on the equivalent of $50,000 per year in today's money. inflation is expected to be 3%. you will retire in 30 years. you will earn 10% annually on your investments from not till retirement and you will earn 8% during retirement (which is expected to last 20 years). how much do you need to save per month in order to fund this retirement?

Answer 1

$662.18 needs to be saved per month.

$90,000 now at 3% inflation will become 90000*1.03^30 after 30 years.

i.e.  $218,454 is required in retirement years (for 20 years)

Calculating the PV of these payments at 7% is calculated as below.

FV = 0

1/y = 7%

n=20; PMT = 218454; calculate PV = $2,314,305

Now we want to get $2,314,305 at the start of retirement by saving per year. Enter the following in the financial calculator to get the per month amount.

FV = 2314305; PV = 0; n= 12*30; 1/y = 12%/12; calculate PMT  = $662.18

So $662.18 needs to be saved per month.

Learn more about inflation here: brainly.com/question/8149429

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