Wong, currently 35, plans to retire at the age of 65.
His current salary is $750,000 per annum that is expected to increase by 3% yearly.
Upon retirement, he expects to maintain the same standard of living by spending 50% of his last drawn salary to maintain a comfortable lifestyle.
Moreover, he also plans to liquidate all his share investments for an expected value of $3,000,000 at the age of 65. The money from the sale of his share investments will be used to meet his retirement living expenses.
He estimates that the return he expects to generate before retirement is 8% per annum. He also projects an interest rate of 5% per annum during his retirement.
If his life expectancy is 85 years, please advise:
a how much does he need to accumulate by the age of 65 in order to achieve his retirement goals?
b how much does he need to save each year if he plans to set up a systematic savings plan now in which he saves a fixed sum of money annually at the end of each year until he retires?© BrainMass Inc. brainmass.com March 21, 2019, 6:19 pm ad1c9bdddf
The solution explains how to calculate the amount needed for retirement and the annual savings to reach that amount