To calculate the total amount the software developer will need for retirement, we can follow these steps:
1. Calculate the amount the developer wants to live off annually:
80% of the current annual gross wage = 0.8 x 93400 = 74720
2. Calculate the amount the developer needs to have saved for retirement:
We can use the 4% rule, which suggests that the developer can safely withdraw 4% of their retirement savings in the first year of retirement and adjust the withdrawal amount for inflation in subsequent years.
So,
Amount needed = Annual living expenses / Withdrawal rate
Amount needed = 74720 / 0.04 = 1868000
Therefore, the software developer will need a total retirement savings of $1,868,000 to be able to live off 80% of their current annual gross wage.