scenario:you are a staff accountant working in the planning department at wells
ID: 2626112 • Letter: S
Question
scenario:you are a staff accountant working in the planning department at wells fargo. You are 45 years old today, your birthday. You would like to retire at the end of year when you are 65 years old. You snticipate that you will need $3,000 per month beginning the day after you retire.
How would you determine how much you should save annually beginning today to receive a lump sum payout st retirement?
(Do not solve this problem. Discuss the considerations, issues, and topics surrounding the issues.)
Explanation / Answer
If he retires at 65, first of all, the life expectancy has to be known based on the condition of the individual.
The money required at retirement must be getting inflated each month, and also earning a risk free rate of return and the risk free rate of return should be higher than the inflation , otherwise additional savings would be required to meet the fund requirment apart from savings made now.
He needs to invest the collected money, fro the age of 65 till death, in a source where there is sufficient safety of capital , and also it earns him interest over and above the inflation rate.
He should consider a considerable investment plan, which helps him earn desired rate of return, so that he can receive $3000 each month post retirement,adjusted for inflation. He can also opt for the employers retirement benefit plans , if it well suits his requirement.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.