You are an investment advisor who has been approached by a client for help on his financial strategy. He has $800,000 in savings in the bank. He is 40 years old and expects to work for 20 more years, making $200,000 a year. (He expects to make a return of 6% on his investments for the foreseeable future. You can ignore taxes).

a. Once he retires 20 years from now, he would like to be able to withdraw $150,000 a year for the following 30 years (his actuary tells him he will live to be ninety years old.). How much would he need in the bank 20 years from now to be able to complete this?

b. How much of his income would he need to save each year for the next 20 years to be able to afford these planned withdrawals ($150,000 a year) during his retirement years?