Feel free to work on these case TVM questions. You may use Excel or your calculator. Remember our annuity due rules when making estimate (this is really an application of the TVM rules we have been learning).

Tammy Mekeels needs some help thinking about her future retirement income needs. Here are the facts:

Tammy is 52 years old and single

She currently earns $86,000 per year

Social Security benefits, in today's dollars, are $19,000 (assuming an age 67 retirement)

She believes she can live on approximately 80% of her current income when retired

She can earn 8% on investments, after taxes, before retirement

She believes she can earn 5%, after taxes, when retired

You think that inflation will average 3.5% before and after retirement

She is saving $4,500 per year into a "retirement portfolio."

She has $300,700 currently saved and earmarked for retirement

She plans to retire at age 67

Her life expectancy is age 94

Question 1: How much income does Tammy need to replace in retirement (in today's dollars)?

Question 2: If she retires at age 67, how much income will she need at that time?

Question 3: How much will her annual savings be worth at retirement?

Question 4: How much will her current savings be worth at retirement?

Question 5: Is she on track to meet her retirement goal?

Question 6: How much additional must she save yearly in order to reach her goal?