Example 10.5A used the average inflation rate of Canada for the past 97 years as an indicator of future inflation. Some critics argue that using outdated inflation rates is not a good representation of the future. Recall that you are 20 years old in 2012 and the comfortable retirement income is $40,000. The historical inflation rate over the past 40 years for Canada has averaged 4.5% from 1971 to 2011.

a. Recalculate your required retirement income at age 65.

b. What will be the purchasing power of a 2012 dollar in 45 years?