• A person retiring today at age 65 needs retirement savings of $2,200,000 so they can maintain an annual income of $100,000. Assume that the average person lives another 25 years (i.e., to age 90).

a. What is the assumed rate of return on the retirement savings? (8 Points)

b. Suppose a retiree wants to live on twice the annual income assumed in part A., what is the new rate of return on the retirement savings? (8 Points)

c. If inflation averages 3% for the next 30 years, how much total retirement savings will you need in 2050? (4 Points)

d. If you are currently 25 and start saving for retirement in 30 years, how much do you need to save each year to have the amount calculated in part C., assuming you can earn 11% on your savings. (5 Points)