Peter and Blair recently reviewed their future retirement income and expense pro

Question

Peter and Blair recently reviewed their future retirement income and expense projections. They hope to retire in 34 years and anticipate they will need funding for an additional 24 years. They determined that they would have a retirement income of $57,000 in today?s dollars, but they would actually need $81,224 in retirement income to meet all of their objectives. Calculate the total amount that Peter and Blair must save if they wish to completely fund their income shortfall, assuming a 4 percent inflation rate and a return of 6 percent. Click on the table icon to view the FVIF table Click on the table icon to view the PVIFA table?). The total amount that Peter and Blair must save if they wish to completely fund their income shortfall, assuming a 4 percent inflation rate and a return of 6 percent is $.

Explanation / Answer

Calculation of Annual Saving for required future fund:

Future Fund required

$81,224

Return

6%

Inflation rate

4%

Discounting rate = 6%+4%

10%

FVIA (10%, 24 years )

88.49733

Annual Savings = 81224 / 88.49733=

$917.81

Calculation of Annual Saving for required future fund:

Future Fund required

$81,224

Return

6%

Inflation rate

4%

Discounting rate = 6%+4%

10%

FVIA (10%, 24 years )

88.49733

Annual Savings = 81224 / 88.49733=

$917.81

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.