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Today is your 40th birthday. Your expect to retire at age 65, and your actuarial tables suggest that you will live to be 100. You want to move to Maheshkhali when you retire. You estimate that it will cost you $200,000 to make the move (on your 65th birthday). Starting on your 65th birthday and ending on your 99th birthday, your annual living expenses will be $25,000 a year. You expect to earn an annual return of 7% on your savings.

a) How much will you need to have saved by your retirement date?
b) You already have $50,000 in savings. How much would you need to save today and at 41,... 64 to be able to afford this retirement plan?

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Tod Thiel
Tod ThielLv2
28 Sep 2019
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Happy Birthday! You turned 25 today. You intend to retire at age 65 and want to be able to receive a 25-year, $80,000 beginning of the year annuity with the first payment to be received on your 65th birthday. You would like to save enough money over the next 40 years to achieve your objective; that is, you want to accumulate the necessary funds by your 65th birthday. You expect your investments to earn on average 8% per year until age 65, and 5% thereafter. What equal, annual amount must you save at the end of each month for the next 40 years until you are age 65 to achieve your objective? Assume you currently have saved $15,000 toward this goal.

To live comfortably in retirement, you decide you will need to save $2 million by the time you are 65 (you are 30 years old today). You will start a new retirement savings account today and contribute the same amount of money on every birthday up to and including your 65th birthday. Using TVM principles, how much you must set aside each year to make sure that you hit your goal target goal if the interest rate is 5%? What flaws might exist in your calculations, and what variables could lead to different outcomes? What actions could you take ensure you reach your target goal?

If your friend is celebrating her 35th birthday today and wants to start saving for her anticipated retirement at age 65. She wants to be able to withdraw $105,000 from her savings account on each birthday for 20 years following her retirement; the first withdrawal will be on her 66th birthday. Your friend intends to invest her money in the local credit union, which offers 7% interest per year. She wants to make equal annual payments on each birthday into the account established at the credit union for her retirement fund.

(Questiona) If she starts marking these deposits on her 36th birthday and continues to make deposits until she is 65 (i.e. the last deposit will be on her 65th birthday), what amount must she deposit annually to be able to make the desired withdrawals as retirement?


(Questionb) Suppose your friend has decided to make one lump sum payment on her 35th birthday to cover her retirement needs. What amount does she have to deposit? (6 marks)


(Question C) Suppose your friend

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