You just celebrated your 20^th birthday, and you decide it is a good time to start investing for your retirement at age 65.

You have decided to start by determining how much you will need. You figure you will need approximately $75,000 per year during retirement until you turn 80, and then you expect to need $90,000 per year (to cover additional medical and support needs) until the end of your life. Given your family history, you expect to live until 95. You want to make your first withdrawal on the first day of your retirement and continue to withdraw your funds at the beginning of each year thereafter. During retirement, you estimate that your funds will earn 2.5% per year. Prior to retirement, you expect to earn a rate of 1% per month and plan to make deposits at the end of each month.

1. How much will you need to have saved up by the time you retire? (5 marks)
2. How much will you need to contribute, starting next month, if you want to achieve your retirement goals? (3 marks)