John, age 40, and Mary, age 39, have furnished you with the following data. They have one son Jasper who is age 10. They want to fund for Jaspers education within their means. If John or Mary dies, the survivor would like life insurance to provide an income stream to supplement the surviving spouse's income. They feel they can make 10% on all current and future investable assets. Inflation will be 4% over the long run.

What is Johns retirement savings rate?

A. 5.25%

B. 7.25%

C. 4.10%

D. 6.15%

Statement of Financial Position For the year ending December 31, 20xx
Assets			Liabilities
Checking	$ 4,000		Credit cards balance[1]	$ 3,850
Savings	8,000		Mortgage	136,150
CDs (maturing)	6,000			$140,000
	$18,000
Invested assets
IRAs	$ 50,000
Growth & Income MF	22,000
Corporate bonds	12,000
Growth stock MF	12,000
	$96,000		Net worth	$256,000
Use assets
Residence	$220,000
Automobiles	30,000
Personal property	32,000
	$282,000
TOTAL ASSETS	$396,000		TOTAL LIABILITIES AND NET WORTH	$396,000

Cash Flow Statement For the year ending December 31, 20XX
Inflows
	Salaries1	$130,000
	Dividends and interest	4,000
	Total inflows			$134,000
Fixed outflows
	Mortgage note	$ 14,000
	Insurance2	1,500
	Property taxes	3,500
	Total fixed			-19,000
Variable outflows
	Food	$10,000
	Transportation	2,000
	Clothing/personal care	9,000
	Entertainment/vacation	12,000
	Medical/dental care	3,000
	Utilities/household expenses/misc. expense Credit Card	33,000 $3,850
	Total variable			-69,000
Taxes
	Federal, state, and local	$23,000
	FICA	10,000
	Total taxes			- 33,000
	IRA contributions (John only)			- 4,000
		Net		$5,150

¹John's $65,000, Mary's $65,000 ² Homeowner's insurance $500 and auto insurance $1,000