Bob is a 37 year old and is an account manager with a large telecom company. He's been dragging his feet with his retirement plan, opting instead for expensive trips to vegas and aspen. He has decided its time to get serious about saving for his retirement. He plans to retire at age 67 and travel the world. Because of this plan he figures he needs approx. 70,000/year in retirement. His grandfather lived until he was 86 and his dad is in perfect health at age 70, therefore bob figures he should plan to be around until he's 90. So far, he has 11,000 saved for retirement and because of his aggressive investment philosophy, is planning for a return on all his investments before retirement of 8%. Following retirement he will invest more conservatively and will plan for a 5% return on investments. His company’s retirement plan is defined contribution, so he doesn’t plan on getting a pension. He is not counting on social security to be around, so he isn’t including that in his plan. Thus, his entire retirement will be funded on his own savings.
How much will bob have saved at the end of his work life if he doesn’t add to his current savings? How much will money will bob need during retirement based on his calculations?
How much will bob need to save EACH YEAR to be ready for retirement at age 67?