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Mr. Homer, who turned 36 years old today, is getting serious about retirement planning. He has $135,000 already set aside in his retirement account and plans to add an equal amount in real terms at the end of each of the next 33 years so that he can retire at age 69. His goal is to build a retirement account that will enable him to make 25 annual withdraws with a purchasing power of $100,000 (at today’s prices) on his 70th through 94th birthdays. His retirement account is expected to earn 5.50% per year and the expected inflation rate is 2.50% per year. How much does Mr. Homer need to set aside in real terms at the end of each of the next 33 years to meet his retirement goal?

Round your answer to the nearest whole dollar. 

Financial Management, Finance

  • Category:- Financial Management
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