emily earns $57,600 per year and wants to retire with 90% of her pre - retirement income. based on the 4%…

emily earns $57,600 per year and wants to retire with 90% of her pre - retirement income. based on the 4% rule, how much should emily save by the time she retires to meet this goal? $1,296,000 $51,840 $129,600 $518,400

emily earns $57,600 per year and wants to retire with 90% of her pre - retirement income. based on the 4% rule, how much should emily save by the time she retires to meet this goal? $1,296,000 $51,840 $129,600 $518,400

Answer

Explanation:

Step1: Calculate retirement - income goal

Emily's pre - retirement income is $57,600. She wants 90% of it in retirement. So the annual retirement income she wants is $57600\times0.9 = 51840$.

Step2: Apply the 4% rule

The 4% rule states that the amount of money you need in retirement ($A$) is such that 4% (or 0.04) of $A$ gives the annual withdrawal amount. Let the amount she needs to save be $x$. We know that $0.04x=51840$. Solving for $x$, we get $x=\frac{51840}{0.04}=1296000$.

Answer:

$1,296,000$