We want to retire in 40 years, and we shall need $65,000 income per annum during

Question

We want to retire in 40 years, and we shall need $65,000 income per annum during our retirement which will last 35 years. We can save $60,000 annually during the first 9 years. We estimate that from year 6 till 10 we shall return to school for a graduate degree, which will cost $30,000 yearly in actual cash flow and opportunity cost expenses. Afterward, during years 27 to 40, our father will need nursing home care for twenty years. He has to give his house and $70,000 annually to the nursing home. Furthermore, we shall buy a yacht costing $150,000 in year 40. Additionally, we

Explanation / Answer

This is just a lot of addition and subtraction. Multiply $650,000 by 10% to get the $65,000 a year needed for retirement. If the money can earn 10% interest. Multiply$60,000 times 9 so you know what you have saved thru year 9. The next 5 years only get you $30,000 a year since you have to pay for the degree. That means $30,000 times 5. Keep going like that until you have added and subtracted (the savings minus the spending).

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