Grady Zebrowski, age 25, just graduated from college, accepted his first job with a $53,000 salary, and is already looking forward to retirement in 40 years. He assumes a 3.4 percent inflation rate and plans to live in retirement for 20 years. He does not want to plan on any Social Security benefits. Assume Grady can earn a 9 percent rate of return on his investments prior to retirement and a 6 percent rate of return on his investments post-retirement to answer the following questions using your financial calculator. a. Grady wants to replace 90 percent of his current net income. What is his annual need in today's dollars? b. Using the table , Grady thinks he might have an average tax rate of 13 percent at retirement if he is married. Adjusting for taxes, how much does Grady really need per year, in today's dollars? c. Adjusting for inflation, how much does Grady need per year in future dollars when he begins retirement in 40 years? d. If he needs this amount for 20 years, how much does he need in total for retirement? e. How much does Grady need to save per month to reach his retirement goal assuming he does not receive any employer match on his retirement savings? I Retirement Income $20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 150,000 Average Tax Rate Couples Filing Jointly Individuals 79% 100% 10 14 12 17 14 20 17 22 19 23 21 24 22 25 23 26 28 30 | 1 Compound Sum of $1 (FVIF) n= 20 n = 40 2.00% 1.4859 2.2080 2.10% 1.5154 2.2963 2.20% 1.5453 2.3880 2.30% 1.5758 2.4833 2.40% 1.6069 2.5822 2.50% / 1.6386 2.6851 2.60% 1.6709 2.7919 2.70% 1.7038 2.9028 2.80% 1.7372 3.0180 2 90% 1.7714 3.1377 3.00% 1.8061 3.2620 3.10% 1.8415 3.3911 3.20% 1.8776 3.5252 | 3.30% 3.40% 350% 3.60% 3.70% 3.80% 3.90% 4.00% 4.10% 4.20% | 19143 | 36645 | 1957 | 3.8091 19898 3.9593 2.0286 | 4.1152 | 2.0681 42771 | 2.1084 4.4452 | 2.1494 | | 4.6198 | 2.1911 | | 22336 | 4.9892 1 2270 | 51845 Present Value of an Annuity (PVIFA) n= 20 n = 40 1.00% 18.0456 32.8347 1.10% 17.8651 32.2195 1.20% 17.6873 31.6205 1.30% 17.5120 31.0372 1.40% 17.3391 30.4692 1.50% 17.1686 29.9158 1.60% 17.0006 29.3768 1.70% 16.8349 28.8517 1.80% 16.6715 28.3401 1.90% 16.5103 27.8414 2.00% 16.3514 27.3555 2.10% 16.1947 26.8818 2.20% 16.0402 26.4200 230% 2.40% 2.50% 2.60% 2.70% 2.80% 2.90% 3.00% | 3.10% 3.20% 330% | 3.40% | 3.50% 360% 3.70% 158878 | 25.9698 5374 25.5309 153892 25.1028 | 15.4429 24.6853 152986 | 24.2780 15.1563 23.8807 15.0160 23.4930 14.8775 23.1148 14.7409 22.7456 14.6061 22.3853 14.4731 22.0336 14.3419 21.6903 142124 | 21.3551 140347 21 0277 39586 | 20.7080 | 380% 38342 | 20.3958 3.90% 37115 | 20.0908 4.00% | 135903 | 197928 4.10% | 134708 | 19.50 16 | 4.20% | 133528 | 192171 4.30% | 13.2363 | 18.9390 | 4.40% | 13.1214 | | 18.6673 4.50% | 13.0079 | 184016 4.60% | 12.8960 | 18.1418 4.70% | 12.7854 | 178879 4.80% | 12.6763 | 17.6395 | 4.90% 125686 | 173967 | 5.00% 12.4622 | 17.1591 Monthly Installment Loan Tables ($1,000 loan ith interest payments compounded monthly) n = 240 n = 480 462.0409 1991.4907 520.9267 2624.8134 589.0204 3491.0078 667.8869 4 681.3203 759.3688 6324.0796 865.6380 8600.1272 12 989.2554 11764.7725