Assume that you are 21 years old. You would like to retire at age 65. You would like to have an income throughout retirement that is equivalent to $65,000 in todays dollars during retirement. You believe that you should plan to live until age 99. You believe that inflation will average 3% during your savings years. You believe that you can earn an average return on your investments of 8% during your savings years. You believe that you will earn an average return of 5% on your investments during your retirement years. Questions: 1. What lump sum in needed at age 65 to retire? 2. How much will you need to save annually to accumulate that amount of money?
Use N, I, PV,PMT,FV to show how