You have saved $325,000 for retirement in your bank account. To further improve your retirement savings, you will open a money market account on your 50th birthday. The account earns 4.23% PYCY. You propose to place some additional money in the account starting with your 55th birthday and ending on you 64th birthday. You believe you can increase the amount saved every year by 3% to beat inflation. Starting on your 65th birthday you will withdraw $55,000. Each year you will increase your withdrawal by 4% to counter inflation. Your last payment will be on you 80th birthday.

A. How much will you need to deposit on your 55th birthday to make this plan work?

B. What does it mean (how do you know) that the plan is working. What tells you that the solution is correct?

C. You can only deposit $15000 on your 55th birthday. What interest rate will you need to earn to still make the same withdrawals?