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Last week, we discussed the impact that inflation has on our purchasing power over time. Assuming you were helping your aunt to plan for her

Last week, we discussed the impact that inflation has on our purchasing power over time. Assuming you were helping your aunt to plan for her retirement in 10 years, if she had retired today it is estimated that she would need an annual income of $48,000 to adequately meet her needs. If the inflation rate is expected to be 2.5% annually over this time, what would it cost her to live comfortably in her first year of retirement? Assume further, that your aunt will live for 30 years during retirement. She would like to know how much she would need to have saved by the time she retires to ensure that she does not outlive her money if she earned a real rate of return (return less inflation) of 3%

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