Agnes is 40 years old. She wants to know how much she should be saving each year for retirement. Below are the specifics: • She wants to retire at 60 and expects to live until she's 90 • She currently makes $56,000 and expects that to increase each year with inflation. She thinks she will need about 65% of that to live on in retirement. . She has $39,000 in an RRSP • Her investments are earning a real rate of 7% annual return before retirement. • When she retires she will move her investments into a more conservative portfolio and earn 2% per year. • She expects that CPP will be about $14,000 per year in today's dollars. CPP amount is inflation adjusted. a. How much does she need by the time she retires (in real dollars)? (Omit the "$" sign in your response.) $990660 b. How much will she have by the time she retires if no additional saving is made (in real dollars)? (Omit the "$" sign in your response.) $150872 c. How much will she need to save at the end of each year in order to make up the shortfall (in real dollars)? (Omit the "$" sign in your response.) $ 103,386

Agnes is 40 years old. She wants to know how much she should be saving each year for retirement. Below are the specifics: • She wants to retire at 60 and expects to live until she's 90 • She currently makes $56,000 and expects that to increase each year with inflation. She thinks she will need about 65% of that to live on in retirement. . She has $39,000 in an RRSP • Her investments are earning a real rate of 7% annual return before retirement. • When she retires she will move her investments into a more conservative portfolio and earn 2% per year. • She expects that CPP will be about $14,000 per year in today's dollars. CPP amount is inflation adjusted. a. How much does she need by the time she retires (in real dollars)? (Omit the "$" sign in your response.) $990660 b. How much will she have by the time she retires if no additional saving is made (in real dollars)? (Omit the "$" sign in your response.) $150872 c. How much will she need to save at the end of each year in order to make up the shortfall (in real dollars)? (Omit the "$" sign in your response.) $ 103,386

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 10P

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Agnes is 40 years old. She wants to know how much she should be saving each year for retirement. Below are the specifics: • She wants to retire at 60 and expects to live until she's 90 • She currently makes $45,000 and expects that to increase each year with inflation. She thinks she will need about 70% of that to live on in retirement. ⚫She has $40,000 in an RRSP • Her investments are earning a real rate of 6% return before retirement. • When she retires she will move her investments into a more conservative portfolio and earn 3% per year. • She expects that CPP will be about $15,000 per year in today's dollars. CPP amount is inflation adjusted. Given this information, how much will she have saved when she is 60 (in real dollars)?
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