Question

Mr Sam is 35 years old today, and is considering his retirement needs. He is expected to retire at age 65 (in 30 years) and plans to live to age 99. He wants to buy a house costing $300,000 on his 65th birthday and his living expenses will be $30,000 a year after that (starting at the end of year 65 and continuing through the end of year 99, i.e., for 35 years). Assume an annual interest rate of 8%, annual compounding a. How much will he need to have saved by your retirement date to be able to afford this course of action? b. Suppose he already has $50,000 in savings today and can invest money at 8% a year, how much would he need to save at the end of each year for the next 30 years to be able to afford this retirement plan?

          Mr Sam is 35 years old today, and is considering his retirement needs. He is expected to retire at age 65 (in 30 years) and plans to live to age 99. He wants to buy a house costing $300,000 on his 65th birthday and his living expenses will be $30,000 a year after that (starting at the end of year 65 and continuing through the end of year 99, i.e., for 35 years). Assume an annual interest rate of 8%, annual compounding
a. How much will he need to have saved by your retirement date to be able to afford this course of action?
b. Suppose he already has $50,000 in savings today and can invest money at 8% a year, how much would he need to save at the end of each year for the next 30 years to be able to afford this retirement plan?

Added by Priesha T.

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