Mr Poirot has come to ask you for advice on his retirement planning. He is 45 years old, and has EUR 100,000 in his savings account. He also expects to receive an additional EUR 80,000, after taxes, in ten years, when he sells his house. He plans to work for 20 years more, and expects to save EUR 10,000 a year for the next 10 years, and EUR 15,000 a year for the following 10 years. a)Assuming that he earns 5% on both his current and future savings, how much should he expect to have in savings, when he retires in 20 years? b)If Mr. Poirot plans to withdraw the money in equal annual installments over the 15 years following his retirement, how much can each withdrawal be? (Assume that the interest rate continues to be 5% after the twentieth year.) c)How would your answer to question (a) change if interest rates are expected to rise to 6% after ten years
Mr Poirot has come to ask you for advice on his retirement planning. He is 45 years old, and has EUR 100,000 in his savings account. He also expects to receive an additional EUR 80,000, after taxes, in ten years, when he sells his house. He plans to work for 20 years more, and expects to save EUR 10,000 a year for the next 10 years, and EUR 15,000 a year for the following 10 years.
a)Assuming that he earns 5% on both his current and future savings, how much should he expect to have in savings, when he retires in 20 years?
b)If Mr. Poirot plans to withdraw the money in equal annual installments over the 15 years following his retirement, how much can each withdrawal be? (Assume that the interest rate continues to be 5% after the twentieth year.)
c)How would your answer to question (a) change if interest rates are expected to rise to 6% after ten years
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