Today is your 40th birthday. Your expect to retire at age 65, and your actuarial tables suggest that you will live to be 100. You want to move to Maheshkhali when you retire. You estimate that it will cost you $200,000 to make the move (on your 65th birthday). Starting on your 65th birthday and ending on your 99th birthday, your annual living expenses will be $25,000 a year. You expect to earn an annual return of 7% on your savings.
a) How much will you need to have saved by your retirement date?
b) You already have $50,000 in savings. How much would you need to save today and at 41,... 64 to be able to afford this retirement plan?