GradyZebrowski, age25, just graduated fromcollege, accepted his first job with a $54 comma 000

54,000 salary, and is already looking forward to retirement in 40

40 years. He assumes a 3.1

3.1 percent inflation rate and plans to live in retirement for 20

20 years. He does not want to plan on any Social Security benefits. Assume Grady can earn a 7

7 percent rate of return on his investments prior to retirement and a 7

7 percent rate of return on his investmentspost-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 intoday's dollars?

b.Using the table LOADING...

, Grady thinks he might have an average tax rate of 13

13 percent at retirement if he is married. Adjusting fortaxes, how much does Grady really need peryear, intoday's dollars?

c.Adjusting forinflation, how much does Grady need per year in future dollars when he begins retirement in 40

40 years?

d.If he needs this amount for 20

20 years, how much does he need in total forretirement?(Hint: Use theinflation-adjusted rate ofreturn.)

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 retirementsavings?

Click on the table icon to view the FVIF table LOADING...

. Click on the table icon to view the PVIFA table LOADING...

. Click on the table icon to view the FVIFA table LOADING...

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