You are making plans for your retirement. You have just turned 30 and want to retire on your 65 th birthday.

  You are making plans for your retirement. You have just turned 30 and want to retire on your 65th birthday. Once retired, you plan to move to a tax-free Caribbean state, where you believe you can live comfortably on $10,000 per month. Your first payment of $10,000 will occur when you retire at age 65, and you will receive your last instalment from your retirement fund one month before your 85th birthday. On your 85th birthday, you intend to move back to Canada and freeload off your kids until you die. 

Your current salary is $60,000 per year, or $5,000 per month. Your personal tax rate is approximately 25%. You estimate that you can earn an average return of 10% APR compounded annually on any money you invest over the next 60 years. You will make your first deposit one month from now and your last deposit on your 65th birthday. To ensure that you are able to achieve your retirement objective, what percentage of your after-tax monthly income must you save?    

I have figured this out :

Amount needed 2390000

After Tax Income 45000

Per Month 3750

PV 0

FV 2390000

Interest 10%

I am confused about the 10% investment for the next 60 years and the compounding interest.

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