Assume That You Are 30 Years Old Today,and That You

question 61

Essay

Assume that you are 30 years old today,and that you are planning on retiring at age 65.Your current salary is $45,000 and you expect your salary to increase at a rate of 5% per year as long as you work.To save for your retirement,you plan on making annual contributions to a retirement account.Your first contribution will be made on your 31^st birthday and will be 8% of this year's salary.Likewise,you expect to deposit 8% of your salary each year until you reach age 65.At retirement (age 65)you will begin withdrawing equal annual payments to pay for your living expenses during retirement (on your 65th birthday).If you expect to die one day before your 101st birthday (Your last withdraw will be on your 100th birthday)and if the annual rate of return is 7%,then how much money will you have to spend in each of your golden years of retirement?

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Definitions:

Quantity of Money

The total monetary resources sum available in an economy at a particular point in time.

Productivity

Measures the efficiency of production as output per unit of input, essential for economic growth and competitiveness.

Inflation

The magnitude of growth in general service and product prices, causing a decrease in the ability to buy.

Overall Level

A general or comprehensive scope or scale, often referring to the magnitude or intensity of a phenomenon or activity.