A worker plans to retire in 30 years.He hopes to receive $65,000 per year in retirement income.If inflation is forecast at 2.5% per year,what annual income should he plan to receive in the first year of retirement in order to maintain the purchasing power on $65,000?

Question

Quizplus · Accepted Answer

To maintain the purchasing power of $65,000 in 30 years with 2.5% annual inflation, the future value is calculated using the formula: Future Value = Present Value * (1 + inflation rate)^number of years. This results in $65,000 * (1 + 0.025)^30 = $136,342.

A Worker Plans to Retire in 30 Years