Colin is 40 years old and wants to retire in 27 years. His family has a history of living well into their 90s. Therefore, he estimates that he will live to age 95. He currently has a salary of $150,000 and expects that he will need about 85% of that amount annually at the beginning of each year if he were retired. He can earn 8.5% from his portfolio and expects inflation to continue at 3%. Some years ago, he worked for the government and expects to receive an annuity from his pension plan that will pay him $20,000 in todays dollars per year beginning at age 67. The annuity includes a cost of living adjustment equal to inflation. Colin currently has $200,000 invested for his retirement. His Social Security benefit in todays dollars is $30,000 per year at his normal age retirement of age 67.

how much total investment capital would Colin need to support his retirement lifestyle and leave a financial legacy if he wanted to have the same amount of investment capital remaining at his death with an equal purchasing power as he will have at retirement (round to the nearest $100,000)?

a. $2.6 million

b. $2.7 million

c. $2.9 million

d. $3.2 million