Your Sister Turned 35 Today,and She Is Planning to Save

question 16

Multiple Choice

Your sister turned 35 today,and she is planning to save $5,000 per year for retirement,with the first deposit to be made 1 year from today.She will invest in a mutual fund that will provide a return of 8% per year.She plans to retire 30 years from today,when she turns 65,and she expects to live for 25 years after retirement,to age 90.Under these assumptions,how much can she spend in each year after she retires? Her first withdrawal will be made at the end of her first retirement year.

• A)$47,888
• B)$50,408
• C)$53,061
• D)$55,714

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Definitions:

Medicare

In the United States, Medicare is a public health coverage scheme designed for individuals over the age of 65, along with a select group of younger people who have certain disabilities.

Tax Table

A chart that displays the amount of tax owed based on income received, helping individuals or entities calculate their taxes.

Wage Bracket Withholding Table

A chart provided by tax authorities to help employers determine the amount of tax to withhold from an employee's paycheck.

Warranty Liabilities

Obligations that a company holds to repair or replace a product within a specified period due to defects or failures.