Retirement Example - Given Length of Working Life in years Length of Retired Life in years W the Annual Withdrawal during Retired Life r the Annual

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Given: Length of Working Life in years 30 Length of Retired Life in years 50 W, the Annual Withdrawal during Retired Life $500,000 r, the Annual Return on Savings 9% Assumption: Savings form a flat annuity Question: What is S, the annual savings during working life? Computations AF(9%, 50 years) 10.96 $5,480,841.45 AF(9%, 30 years) 10.27 10.27 *S 136.31 *S Solve for S in 136.30S = %5489841.45 S= $40,209.38 PV 30 (Withdrawals) = $500K*AF(9%,50) PV 0 (Savings) = S*AF(9%,30) PV 30 (Savings) = S*AF(9%,30)*(1.09)^30
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t [1] [2] [3] at t = [7] at t -1 [4]=r*[3] [5] = S 0 6/30/2009 $- $- $- 1 6/30/2010 $- $- $40,209.38 2 6/30/2011 $40,209.38 $3,618.84 $40,209.38 3 6/30/2012 $84,037.60 $7,563.38 $40,209.38 4 6/30/2013 $131,810.36 $11,862.93 $40,209.38 5 6/30/2014 $183,882.68 $16,549.44 $40,209.38 6 6/30/2015 $240,641.50 $21,657.73 $40,209.38 7 6/30/2016 $302,508.61 $27,225.77 $40,209.38 8 6/30/2017 $369,943.76 $33,294.94 $40,209.38 9 6/30/2018 $443,448.08 $39,910.33 $40,209.38 10 6/30/2019 $523,567.79 $47,121.10 $40,209.38 11 6/30/2020 $610,898.27 $54,980.84 $40,209.38 12 6/30/2021 $706,088.49 $63,547.96 $40,209.38 13 6/30/2022 $809,845.83 $72,886.12 $40,209.38 14 6/30/2023 $922,941.34 $83,064.72 $40,209.38 15 6/30/2024 $1,046,215.43 $94,159.39 $40,209.38 16 6/30/2025 $1,180,584.20 $106,252.58 $40,209.38 17 6/30/2026 $1,327,046.16 $119,434.15 $40,209.38 18 6/30/2027 $1,486,689.69 $133,802.07 $40,209.38 19 6/30/2028 $1,660,701.14 $149,463.10 $40,209.38 20 6/30/2029 $1,850,373.63 $166,533.63 $40,209.38
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This note was uploaded on 04/30/2010 for the course L&S 101 taught by Professor Chow during the Spring '10 term at University of California, Berkeley.

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Retirement Example - Given Length of Working Life in years Length of Retired Life in years W the Annual Withdrawal during Retired Life r the Annual

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