You are an investment advisor who has been approached by a client for help on his financial strategy. He has $250,000 in savings in the bank. He is 55 years old and expects to work for 10 more years, making $100,000 a year. (He expects to make a return of 5% on his investments for the foreseeable future. You can ignore taxes)

a. Once he retires 10 years from now, he would like to be able to withdraw $80,000 a year for the following 25 years (his actuary tells him he will live to be ninety years old.).

b. How much of his income would he need to save each year for the next 10 years to be able to afford these planned withdrawals ($80,000 a year) after the tenth year?

c. Assume that interest rates decline to 4% 10 years from now. How much, if any, would you client have to lower his annual withdrawal by, assuming that he still plans to withdraw cash each year for the next 25 years?