Assume that your Friend is now 50 years old, that he plans to retire in 10 years, and that he expects to live for 25 years after he retires (i.e. until he is 85 years old). He wants a fixed retirement income that has the same purchasing power at the time he retires as $50,000 has today (he realizes that the real value of his retirement income will decline year by year after he retires).
His retirement income will begin pm the day he retires, 10 years from today, and he will then get 24 additional annual payments.
Inflation is expected to be 3% per year from today forward. Your brother currently has a savings of $275,000 and expects to earn a return on his savings of 8% per year, annual compounding.
To the nearest dollar, how much must your brother save during each of the next 10 years (with deposits being made at the end of each year) in order to meet his retirement goal? Calculate using EXCEL functions.