You are trying to decide how much to save for retirement. Assume you plan to save

$4,000

per year with the first investment made one year from now. You think you can earn

5.5%

per year on your investments and you plan to retire in

41

years, immediately after making your last

$4,000

investment.

a. How much will you have in your retirement account on the day you retire?

b. If, instead of investing

$4,000

per year, you wanted to make one lump-sum investment today for your retirement that will result in the same retirement saving, how much would that lump sum need to be?

c. If you hope to live for

26

years in retirement, how much can you withdraw every year in retirement (starting one year after retirement) so that you will just exhaust your savings with the

26th

withdrawal (assume your savings will continue to earn

5.5%

in retirement)?

d. If, instead, you decide to withdraw

$116,000

per year in retirement (again with the first withdrawal one year after retiring), how many years will it take until you exhaust your savings? (Use trial-and-error, a financial calculator: solve for "N", or Excel: function NPER)