00:01
We need to evaluate that how much parker needs to save each year to meet his retirement goals.
00:06
So firstly, we'll calculate parker's retirement income needs.
00:27
So we can say see that parker currently has a salary of $1 ,20 ,000 and he estimates that he will need about 65 % of that amount annually in retirement.
01:31
So retirement income needs is evaluated as 65 % is multiplied by $1 ,20 ,000.
01:50
So the value here will be $78 ,000 per year.
01:58
Now we have to calculate the length of parker's retirement.
02:06
So parker wants to retire in 15 years and expects to live until age of 95, which means retirement will last 95 wherein we subtract 50, we get for 45 years.
03:03
After that, we'll determine parker's required retirement savings, which we will use the present value of annuity formula, which is pv is equal to pv stands for present value of retirement, which is equal to c, c stands for annual retirement income needs multiplied bracket again bracket one wherein we subtract again bracket one wherein we add r, r stands for annual interest rate during retirement bracket close to the power minus n minus n, sorry, the value of n stands for number of years in retirement, which is then bracket closed divided by r.
03:49
So pv is equal to $78 ,000, which is multiplied by one where we subtract bracket one wherein we add 0 .07 bracket close to the power minus 45 again brackets closed divided by 0 .07.
04:14
So the value then is obtained as $15 ,33 ,860 .60...