uncle is 65 years old and wants to begin taking retirement income payments at age...
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uncle is 65 years old and wants to begin taking retirement income payments at age 66. His financial advisor has told him that his savings are sufficient to provide annual payments of $75,000 starting at age 66 and then growing geometrically by 3% each year in each of the following 19 years, for a total of 20 payments (to uncles age 85).
a. What is the value of your uncles savings today that the financial advisor is using to arrive at this conclusion?
b. If your uncle believes that inflation will only be 1.5% per year instead of 3% per year, and he wishes to take inflation-adjusted payments for 30 years instead of 20 years, what should the amount of the initial payment at age 66 be instead of $75,000?
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