Accounts or retirement corpus fund question.

Accounts or retirement corpus fund question.

72°
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Deal Subedar
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Neha would retire 30 years from today and she would need INR 6,00,000 per year after her retirement, with the first retirement funds withdrawn one year from the day she retires. Assume a return of 7% per annum on her retirement funds and if her planning is for 25 years after retirement, Calculate
A. How much lumpsum she should deposit in her account today so that she has enough funds for retirement.
b. How much she should deposit each year so that she has enough funds for retirement.

Thanks.

Someone studying send me this question..and i don’t have a good answer.

12 Comments  |  
9 Dimers
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Deal Subedar
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I calculated using excel and answers are (A) 982837 (B) 74022 per year
Are these answers correct?

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Deal Subedar
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..Bro i dont know the answers….

I would like to help him…can u plz send me how to do this question plz..

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Deal Subedar
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You can find many retirement calculators online which can be used to validate the answers.

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Deal Subedar
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Let the amount required at the start of Neha’s retirement P. At first we have to  find out the value of P.

Inorder to calculate the value of P, we can consider this P as a credit to be paid by yearly installment and the first 6L withdrawn at the beginning of 1st year as down payment and upcoming 6L withdrawals as equated installment amount. Then by using installment formula/concept we can find P value.

A) A value at 7% CI, in 30 years should become P. According to that we can find value of A

B) Again you have to find yearly installment for 30 years to achieve P amount. (If service period and retirement period is same then finding value of B is lot easier i.e
600000*(100/107)^n n-service or retirement time period)

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Deal Subedar
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micke wrote:

I calculated using excel and answers are (A) 982837 (B) 74022 per year
Are these answers correct?

Correct.

My answers
A = Rs.982836
B = Rs.74021 when savings deposited at beginning of each year
B = Rs.79203 when savings deposited at ending of each year

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Deal Cadet
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balu44 wrote:

Correct.

My answers
A = Rs.982836
B = Rs.74021 when savings deposited at beginning of each year
B = Rs.79203 when savings deposited at ending of each year

Did you consider inflation?

The above figures would become invalid as inflation is very important factor.

Currently it is around 18% per year including food habits, housing, hospitalization,travel, technology change etc.

According to my calculation, one need at least 50L. If there are 4 people in the family, they need 2C. It can be in any form like property, cash, shares, MFs etc.

OP, 6L/year after 30 years means, it is equivalent to around 20k/per year as on today. Can any person live with that 20k per year today?

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Deal Subedar
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ramadesidime wrote:

Did you consider inflation?

The above figures would become invalid as inflation is very important factor.

Currently it is around 18% per year including food habits, housing, hospitalization,travel, technology change etc.

According to my calculation, one need at least 50L. If there are 4 people in the family, they need 2C. It can be in any form like property, cash, shares, MFs etc.

OP, 6L/year after 30 years means, it is equivalent to around 20k/per year as on today. Can any person live with that 20k per year today?

…M like a rookie in accounts..

….I do understand inflation but in the end I would be much obliged if you can give me the correct answer…

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Deal Subedar
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Neha should change her job currently and go for higher ctc jump..
Problem solved

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Deal Subedar
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_One_Miller_ wrote:

@Time_pass

OP has asked genuine question. I didn’t know that she is so much educated ☹️

CC: Dr. @saucap aka Dr. Neha 🧐🧐

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Deal Cadet
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still_guessing wrote:

…M like a rookie in accounts..

….I do understand inflation but in the end I would be much obliged if you can give me the correct answer…

ok, you just need answer for an hypothetical query without considering the inflation.

A= Rs 8,60,000
B= Rs 70,000 per year (depositing in the end of year)

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