Problempeter griffin planes to retire in 20 years 1st, Ask an Expert

Accounting

Problem:

Peter Griffin planes to retire in 20 years (1st withdrawal in year 21). He is told by Glenn Quagmire that he will need about $135,000 per year to fund his retirement. Peter wants to be able to maintain that level of purchasing power forever (Assume inflation = 3% per year). Peter plans to increase his savings by 4% per year and expects to earn 7% per year on his investments.

Requirement:

Question 1: What is Peter's retirement number? That is, how much does Peter need to have saved by the end of year 20?

Question 2: How much does Peter have to save the first year to fund his retirement goal?

Note: Show all workings.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91172724

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