Your client is now 50 years old and plans to work for 10

more years and he retires. After that, he expects to live

for 25 more years until the age of 85. He would like to

have a fixed retirement income that has the same

purchasing power at the time of retirement as $40,000

has today (he accepts that the real value of his

retirement income will decline year by year after

retirement). His retirement income will begin the day he

retires, 10 years from today; he will then get 24

additional annual payments. The following additional

information is provided:

- Inflation is expected to be 5% a year from today

forward;

- Your client currently already has $100,000 in

savings and expects to earn 8% a year on this with

annual compounding.

To the nearest dollar, how much would you advise your

client to save during each of the next 10 years (with

deposits made at the end of each year) to meet his

retirement goal?