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has determined he will have an annual retirement income deficit. The deficit for the first year of retirement, 10 years from now, is $90,000. He expects to be in retirement for 30 years, and believes he can earn a 7% after-tax annual return on invested dollars. Inflation is expected to average 4% annually over this same period. What is the amount of lump-sum retirement funds needed by Jason at the beginning of retirement to fund his additional retirement income needs?

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Answer:

Total needed= $2,700,000

Explanation:

Giving the following information:

The deficit for the first year of retirement, 10 years from now, is $90,000. He expects to be in retirement for 30 years and believes he can earn a 7% after-tax annual return on invested dollars. Inflation is expected to average 4% annually over this same period.

Real rate= 7 - 4= 3%

Total needed= 90,000*30= 2,700,000

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