Using a hypothetical situation, make calculations to assist in retirement planning (e.g., determine stream of savings necessary for certain standard of retirement).
Make the following assumption about a person:
Age is 40, retirement in 25 years.
Salary is 100,000; growth rate per year is 4%.
Interest rate is 10% (savings grow at 10%).
A constant living standard is desired.
Inflation (CPI rate) is 3%.
Estimated years of retirement is 20.
To maintain standard of living during retirement, one requires 80% of non-retirement expenditure.
With your team: Calculate the stream of expenses possible with the assumed income (Hint: the PV of salary MUST EQUAL the PV of all expenses).
Develop and submit a spreadsheet with clearly labeled material that is formatted to be printable on 1 page (clearly indicate the stream of salary, expenses during working life and expenses during retirement).