Suppose Ken is enrolled in a defined contribution plan in which the employer contributes 10% of his salary each year. Ken is earning $60,000 this year and his tax rate is 30%. Assume that the before tax rate of return is 8%.

What is the additional amount of funds that Ken will have when he reaches retirement in 10 years as a result of this year's contribution?

Continuation of Question above

Suppose that Ken's employer is stopping its contributions to the defined contribution plan. Ken's only opportunity to save for retirement is in a non-registered plan. How much would Ken need to receive in additional salary (which he would then save) to achieve his objective?

Would Ken be just as happy if his employer increased his salary by 10% instead?