A 25-year old engineer wants to save $15,000 per year until retiring at 65. Her plan is that after 5 years she will spend the savings on buying a house and later savings will be for retirement. As her income increases she wants to spend more on herself and her family, which is why she chose a fixed dollar amount to save. Her investing mix will become more conservative over the years so she expects her investment returns to average 5.5% over inflation. How much will she have saved for the house? How much will she have saved at retirement?

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Retirement Income

Retirement income is the income received by the retiring person after retirement. Income can either be paid every month or paid annually. The retiree would get a guaranteed income until their death. Retirement income payment differs from person to person based on their investment type and payment method. Some are paid on a lump-sum basis and some are paid in a regular series with fixed payment or variable cash flow. Retirement income can be created from retirement savings, investment, salary, bonus, and wages from employment. Every working individual should plan their retirement income according to their income goals for the future. The plan should be made by identifying suitable income sources, estimating future expenses, applying a savings plan, and managing risk and assets. The most common age for retirement is between 60-65 years.