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Question regarding retirement savings

Assumptions:

1. Your required rate of return until retirement is 8%

2. Your retirement payout will be a fixed payment, and will be adjusted for a much more conservative return of 5%. This will be your return on the payout until you die.

Process:

Using the time value of money, you will need to calculate how much you will need to save up in a lump sum so you can retire at ages 62 and also at age 70, in order to receive annual payments for the rest of your expected life. Once you have calculated your answers, please outline how you plan to implement it. Please use the following information in your problem:

1. Target retirement age(s): 62 and 70 (please complete analysis for both)

2. Current age: 25

3. Total amount of money needed to live off for retirement: $37,500 ($3,125 a month)

4. Anticipated death age: 80

- Retirement at age 62: 18 years of retirement

- Retirement at age 70: 10 years of retirement

5. Do not factor in social security or spouses retirement.

6. $10,000 in retirement account right now at age 25.

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