Question

First deposit will be made one year from today, and the last deposit will be made on the day she retires. Her first withdrawal will not take place until one year after she retires and she plans to spend her entire nest egg. Calculate the amount she will need to have saved on the day she retires.

Your friend is celebrating her birthday and wants to start saving for retirement. She has provided you with the following information:Years until retirement: 40Amount to withdraw each year in retirement: $150,000Years to withdraw in retirement: 25Interest rate while saving: 9%The interest rate in retirement: 4%Saved today: $50,000

Answer 1

The amount to be deposited each year till retirement = $2,287.31.

Amount needed on the retirement date = $2,343,311.99.

Step-by-step explanation:

Amount needed on the retirement date in order to support the withdrawals post retirement is $2,343,311.99.

calculated using the PV function of Excel as follows: See the first attached file

The amount to be deposited each year till retirement is $2,287.31.

calculated using PMT function of Excel as follows: See attache file 2