You are currently 24. Based on your calculations, you will need $120,000 of income each year once you retire. You plan on retiring at age 65, and want to have enough money in your account so that you can draw payments out for 25 years (with the first payment taking place immediately upon your 65th birthday). Assume that all your funds earn an 11% annual return. You will begin making payments into your retirement account immediately and will make 41 payments into the account. How much must you invest each year in order to make your retirement goal?
Now, assume that all other facts stay the same, but that your start with a balance of $10,000 in your account. Now what should your annual payments be?