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Funding Retirement

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1. What is the person's current income? 30,000 per year

2. What is the percent of current income that the person will need during his retirement? 50%

3. How many years does the person have until retirement? 15 years

4. What is the average annual interest rate for the investment? 6%

5. How many years do you believe the person will live in retirement? 25 years

For simplicity, assume the investment plan you are proposing is the person's only source of retirement income and that all the money must be available at the time the person reaches retirement age.
Use items 1-5 to calculate the future value of the money that is needed. Then use the manual compounding method to find the present value of the money that would need to the investment today to meet the person's retirement needs.

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Solution Summary

An example of how a person might invest to self-fund his or her own retirement is presented.

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Income per year $30,000
Will need per year 50% of income $15,000
Number of years ...

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