The issue before you: You would like to retire in 25 years. You estimate you will need $140,000 annually at retirement (in today's dollars) You are not sure what that amount would be in 25 years. Some believe CPI, Consumer Price Index ( products and services prices) will increase by 3% year over year for the next 25 years, some believe they'll more likely increase by 2.5% and some say it's closer to 2%. Your firm offers a 401K with a dozen or more diversified portfolio options. At what rate on average would you expect your portfolio to grow annually (8%, 9% or 10%)? Justify your assumption. You expect to live for 28 years after retiring. What happens if you under estimated your life span? Another assumption you have to make; at what average annual rate would you expect your portfolio to grow after retirement (2%, 4%, 5%, 7%)? Explain your reasoning. 1. Which inflation rate do you believe is more relevant (EXPLAIN) and given that inflation rate, calculate the value of $140,000 in 25 years? 2. Given the annual income you would need at retirement and the portfolio growth assumption after retirement you made, calculated how much money you will need the first day of retirement? Justify the growth assumption. 3. How much should you save every month, given your above assumptions for the next 25 years, assuming you are starting with 0$ in your savings account? Justify your growth rate assumption. 4. What if you live longer than your estimated 28 years? How do you ensure you don't run out of money? Hint: change your future value assumption when calculating the dollars needed at the beginning of retirement