Retirement Example 7-9-09

# 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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