I am a graduated Finance major but I am stuck financing my own retirement.
Between the ages of 25 and 68, in which I would deposit 25% of my income each year. The income starts at $80,000 with an annual growth rate of 5% and assuming an interest rate of 2%. (I think that’s fair) I will be assuming for simplicity that I will receive my first salary ($80,000) when I turn 25, and my last salary when I turn 68. As soon as I receive a salary, I will save 25% of it.
I would like to know (1) how much I will have in my retirement account when I turn 68, immediately after the last deposit, and (2) what single deposit made on my 25th birthday would give the same account balance when I turn 68. I am trying to apply the idea of present value.
But this raises issues, as if I try to use the equation for the present value of a growing annuity with a 5% growth rate and 2% discount rate, r-g will yield a negative number. Also, I could not find online how to do this on my HP 10bII+ financial calculator and I don’t want to manually enter 44 payments.
Thank you if you read that.