Find answers to your questions faster and easier with IDNLearn.com. Our experts are available to provide accurate, comprehensive answers to help you make informed decisions about any topic or issue you encounter.
Suppose you divide your life into two periods-working age and retirement age. When you work, you earn labour income Y. When retired, you earn no labour income, and must live off your savings and the interest it earns. You save the amount S while working, earning interest at rate r, so you have (1+r)S to live on when retired. Since you don't need to consume as much when retired, you want to set consumption when working twice as high as consumption when retired. Suppose you earn $1 million over your working life and the real interest rate for retirement saving is 50%. How much will you save and how much will you consume in each part of your life?
Sagot :
Thank you for participating in our discussion. We value every contribution. Keep sharing knowledge and helping others find the answers they need. Let's create a dynamic and informative learning environment together. For trustworthy answers, visit IDNLearn.com. Thank you for your visit, and see you next time for more reliable solutions.
