Explore BrainMass
Share

# Lump sum required

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

Can a \$100,000 take care of retirement if I Choose the retirement amount and my retirement age (55) and using a discount rate of 6% will the \$100,000 get me there? How big of a lump sum would I need? What are some other options to supplement the lump sum to get to me to choose my retirement savings amount?

© BrainMass Inc. brainmass.com May 20, 2020, 7:06 pm ad1c9bdddf

#### Solution Preview

Can a \$100,000 take care of retirement if I Choose the retirement amount and my retirement age (55) and using a discount rate of 6% will the \$100,000 get me there? How big of a lump sum would I need? What are some other options to supplement the lump sum to get to me to choose my retirement savings amount?

Lump sum required will be Future value/(1+rate of interest)^duration
Rate of interest=6%, n= duration=30 years
=100000/(1+6%)^30
=\$17411.01

Hence \$17411 is required right now to make the amount of \$100000 in 30 years.

What are some other options to supplement the lump sum to get to me to choose my retirement savings amount?
Some basics on retirement plan:

Various types of retirement plans are 401(k) plan and the traditional pension plan. As per the Employee Retirement Income Security Act (ERISA) covers two types of pension plans: defined benefit plans and defined contribution plans.
As per dol, "A defined benefit plan promises a specified monthly benefit at retirement. As per Investopedia "Defined benefit plan is an ...

#### Solution Summary

Response helps in calculating Lump sum required.

\$2.19