4. Which of the following statements is false?

Suppose you plan on retiring in 50 years (it won't be unusual for people of your generation to retire well into their 70's). Although youd like to be extremely rich, you estimate that if you retired today, youd be comfortable living on $90,000 per year. You also estimate that the annual rate of inflation over that period of time will be 6%. What must be your nominal income in the year of your retirement to produce the desired standard of living?

5. Refer to the above question. Assume that a retired person today, with the same qualifications that you will have when you retire, would get $20,000 annually from Social Security, and that S.S. payments would increase at the same rate as inflation. What would be the nominal income in the year of your retirement needed to produce your desired standard of living that youd have to provide for yourself?

6. Refer to the above two questions. Suppose that you expect to live 30 years after your retirement and estimate that you could receive a net average annual rate of return on your investments of 7%. What sort of nest egg must you have in order to produce that (after Social Security) income? (Remember, youll be drawing down the income to zero while also earning interest.)

7. Refer to the above questions. If your home could presently sell for $400,000, what could you sell it for in the year of your retirement? (Assume that you lived in this house until you retired, and it will appreciate annually at one percentage point above the expected average annual rate of inflation).

8. If you sold your home when you retired (at the price computed in the above question) and used the proceeds from the sale of your home as a part of your nest egg, how much must you start saving annually to acquire the necessary principal that would allow you to retire (assume the net average annual rate of return on investment mentioned in question 4)?