You wish to have $10,000 per year as a retirement supplement for 20 years (from age 65-85). You are now 40 years old. How much must you save each year for the next 25 years if you assume your savings will earn 12% annually?
A)$560.17
B)$1,499.99
C)$5,403.87
D)None of the above

Question

Quizplus · Accepted Answer

To find the annual savings required, first calculate the present value of the retirement withdrawals using the formula for the present value of an annuity. Then, calculate the future value of this present value at age 65. Finally, determine the annual savings needed using the future value of an annuity formula. The correct calculation leads to approximately $560.17.

You Wish to Have $10,000 Per Year as a Retirement