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##### How much will she short fall amount to at the beginning of the retirement period?

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leanor needs \$40,000 a year to live on in retirement net of the income she will receive. She will be retiring in 22 years and is funding for a 25-year retirement. The inflation rate is expected to be 3.5 percent a year and the after-tax return on her investments 6 percent.;a) How much will she short fall amount to at the beginning of the retirement period?;b) What lump sum will she need at the beginning of the retirement period?;c) What is the required yearly savings?;Q2;Frank, age 28, wants to calculate his resources in real (inflation-adjusted) terms. Calculate the amount of resources made available by age 65 retirement if \$18,000 a year is saved. Assume that outflows from ages 65 to 90 are at the rate of \$27,000 a year. The projected inflation rate is 4 percent, and the anticipated investment return is 6 percent.;a) How much in new savings will Frank have available at age 65 before subsequent withdrawals?;b) How much will he have left at age 90?;c) What is the present value of that sum at age 65?;d) How much will he have to save per year to exactly meet his need?

Paper#28197 | Written in 18-Jul-2015

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