Finance major has a starting salary of $100,000 with a twenty year working horizon after which he retires. Assume his salary grows each year at the rate of inflation, 3.2%. Also assume he receives his salary at the beginning of the year. After consuming a certain percentage of salary, the rest of the money is invested at 8% nominal and 4.8% real return. If he aims to save at least 15% of his pre-tax income each year for retirement, how much money will he have at the end of 20 years? Show end of the year cash for each year for 20 years.
How much % of salary does he have to save each year to have half a million dollars at the time of retirement?