You are required to specify a fixed percentage of your salarythat you want to co

Question

You are required to specify a fixed percentage of your salarythat you want to contribute. Assume that your starting salary is$75,000 per year and it will grow 2 % per year untill youretire.
Assuming that: Every dollar in the plan earns $7 peryear                      You start your retirement when you are 30 and you will live tillyour a 100 year old. What is the percentage of your income do you need tocontribure to the plan every year to fund the retirementincome? I believe you need to use the formula for the growingannuity: PV = C × 1/(r-g) × (1 - (1+g/1+r)) with r =0.07 ang g = 0.02 and C = 75000 and N = 35 I however have no idea how to calculate the percentage of theincome. You are required to specify a fixed percentage of your salarythat you want to contribute. Assume that your starting salary is$75,000 per year and it will grow 2 % per year untill youretire.
Assuming that: Every dollar in the plan earns $7 peryear                      You start your retirement when you are 30 and you will live tillyour a 100 year old. What is the percentage of your income do you need tocontribure to the plan every year to fund the retirementincome? I believe you need to use the formula for the growingannuity: PV = C × 1/(r-g) × (1 - (1+g/1+r)) with r =0.07 ang g = 0.02 and C = 75000 and N = 35 I however have no idea how to calculate the percentage of theincome.

Explanation / Answer

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Assuming that: Every dollar in the plan earns $7 per year                      You start your retirement when you are 30 and you will live tillyour a 100 year old. Assuming that: Every dollar in the plan earns $7 per year                      You start your retirement when you are 30 and you will live tillyour a 100 year old.

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