Question

Your current income is​ $50,000 per​ year, and you would like to maintain your current standard of living​ (i.e., your purchasing​ power) when you retire. If you expect to retire in 30 years and expect inflation to average​ 3% over the next 30​ years, what amount of annual income will you need to live at the same comfort level in 30​ years?

Answer 1

it will need income for 121,363.12

Step-by-step explanation:

We will adjust the 50,000 principal by inflation at 3% per year during 30 years:

`Principal \: (1+ r)^(time) = Amount`

Principal 50,000.00

time 30.00

rate 0.03000

`50000 \: (1+ 0.03)^(30) = Amount`

Amount 121,363.12

An income for 121,363.12 per year in 30 years will have the same purchasing power as 50,000 dollars today.