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Presume that your retirement benefits through your first year of retirement are $60,000 per year which is just enough to meet your cost of living through the first year. But, your cost of living is expected to increase at an annual rate of 5 percent due to inflation. If there is no cost-of-living adjustment in your retirement pension, then some of your future living cost has to come from savings other than retirement pension. If your saving account earns 7 percent interest a year, how much should you set aside in order to meet this future increase in the cost of living for 25 years?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91226983

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