Jasmin and John would like to retire today with a retirement income of $60,000 per year for 30 years. They assume that their retirement assets will earn 6% after taxes during their retirement years, and that inflation will be an average of 3%.

Required:

Determine the amount of capital required to fund the Jasmins goal today by the following methods:

1. The capital liquidation method.
2. The capital liquidation with inflation factor.
3. The capital conservation with inflation approach.
4. Discuss TWO (2) weaknesses each of the capital liquidation method and the capital conservation method.

Discuss TWO (2) effects of rate of return on retirement planning.