Scenario: You are a Staff Accountant working in the planning department at Wells
ID: 1175833 • 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 anticipate that you will need $3,000 per month beginning the day after you retire.
Post: How could you determine how much you should save annually beginning today to receive a lump sum payout at retirement?
(Do not solve this problem. Discuss the considerations, issues, and topics surrounding the issues.)
Explanation / Answer
Answer ) While planning for retirement the first thing is to determine the life expectancy of the individual.Suppose the individual is expected to live at least 20 years more after the retirement i.e. till 85 years.Here the per month requirement is $3000.It will be required for 20 years after retirement.From here the total amount of money required after retirement can be estimated.In case the time value of money must be considered while planning the savng for the retirement.The time value of money is very important to consider.It is because a dollar on hand today is worth more than a dollar promised in the future. The dollar on hand today can be used to invest and earn interest or capital gains. A dollar promised in the future is actually worth less than a dollar today because of inflation.So here the staff accountant is 45 years old and he has 20 years to save for his retirement.He can plan better if he cosnider the time value of money.
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