Jane Doe is 25 years old and starting next year wants to
save and invest in order to ensure an annual income of $100kin each of the 20 years after she retires, till she is 85. She willretire at 65.
She expects to earn 10% interest till retirement and 5%interest in the years after retirement.
How much must she save each year from now till retirementstarting next year?
This part is easy; PVA with pmt=100k, t=20, r=5% --> ~$1,246,200
The second part: As it turned out, Jane spent the next 5 years on the beach inBarcelona. She is 30 now and has $4,000 in the bank. Howmuch does she need to save each year, starting next year?All other data unchanged.
What should be my thought process behind this? I know the future value when she's 65 should be $1,246,200, interest should be 10%, and there's 35 more years.