You plan to retire at age 65. You anticipate needing $5,000 per month ($60,000 per year) after you retire. You expect to live for 20 years after you retire. You will work for 40 years, from age 25 to 65. Your average salary per working year will be $100,000. You estimate that you can earn an average of 8% per year on your investments. This considers inflation by using a “real” interest rate (nominal rate of 11% less an expected inflation rate of 3%). Assume that all cash flows occur at the end of the year and ignore income taxes. Before doing any calculations, estimate what fraction of your annual income you will need to save to have $60,000 per year for each year of your retirement life. After you make your estimate, compute what percentage of your annual salary during your 40 working years you must invest to be able to withdraw $60,000 per year for the 20 years after you retire. What if you wait until you are 30 to start saving? 35? 40? Was your initial guess too high or too low?