You have 38 years left until retirement and want to retire with $4. 2 million. Y

Question

You have 38 years left until retirement and want to retire with $4. 2 million. Your salary is paid annually, and you will receive 564, 000 at the end of the current year. Your salary will increase at 2. 4 percent per year, and you can earn a 14. 1 percent return on the money you invest. If you save a constant percentage of your salary, what percentage of your salary must you save each year? (Do not round intermediate calculations and round your final answer to 2 decimal places, (e. g. , 32. 16))

Explanation / Answer

FV ga = P*((1+r)^n-(1+g)^n)/(r-g) P=first payment r=rate of return g=growth of salary 4,200,000=x*(1.141^38-1.024^38)/(.141-.024) x=3324.74

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