Joe Smith has decided to start to save for retirement. He is $25$ years old and he expects to

retire in $40$ years $($when he is $65$ years old$).$ He has calculated that if he were to retire today

his annual$**$ living expenses would be $$65,000.($please consider$/$explain if we have to

account for this as his ANNUAL living expenses by multiplying $65,000$ by the # retirement years

for his starting retirement fund amount, or if this $65,000$ is his actual starting balance for his

retirement fund$).$

He expects inflation to average $4\mathrm{.}0\%$ a year and that he will start withdrawing the money

immediately the day he retires $($on an annual basis and adjusted for inflation each year after

the initial withdrawal$).$

He expects to live until he is $90(90$ years old $-65$ years old $=25$ years in retirement$)$ and his

financial planner has offered him a product that will produce a $10\%$ annual return for pre and

post retirement. He has decided to start contributing to his account today and he will make

equal payments for the next $39$ years $($starting today and on an annual basis$).$

How much money does he need to put away each year to reach his goal? HINT: Use a real

rate of return for your annuity in retirement.