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\"I plan to retire in 45 years. At his time I will be 70 years old. I expect to

ID: 2692556 • Letter: #

Question

"I plan to retire in 45 years. At his time I will be 70 years old. I expect to live until I am 90. I believe I will need $120,000 per year to live once I retire. How much wealth will I need when I reach the age of 70? Assume a risk free rate of 3% for my retirement years.How much will I have to save beginning today if interest is paid at the end of each year and is compounded annually? Assume an investment rate of 9% from age 45 to retirement." ANSWER ONLY QUESTION BELOW! Based on information above, What are the implications of your answer to question one if I live to 100? (a) I will have excess savings (b) i will be able to spend more than $120,000 per year (c) No way of knowing given information (d) i will either run out of money unless i reduce my yearly expenditures.

Explanation / Answer

(d) i will either run out of money unless i reduce my yearly expenditures. Reason - You would have made savings such that you can spend 120000 for 20 years after retirement. If you live to 100, you will run out of money