1. You believe you will need $150,000 annually to live comfortably while retired. You plan on retiring when you are 65 and will begin withdrawing funds from your retirement account on your 66th birthday. If you expect to need 25 years of retirement income how much money will you need in at retirement (when you are 65) to meet this goal assuming the fair interest rate is 7%?

2. You realize that in the analysis above you forgot to include the impact of inflation. Recalculate the answer to # 21 assuming inflation is 3% per year (the real rate is 3.89%) and the $150,000 annually is stated in real dollars instead of nominal dollars.

3. Given your new answer above in real dollars, calculate the amount you must invest annually in real dollars to meet your retirement goal. Again assume 7% is the fair nominal rate and inflation is 3% per year (the real rate is 3.89%).

4. The annual payments you calculated in the previous problem are in real dollars. Since your first annual investment will be made next year, what is the nominal amount you need to invest next year to account for inflation?

5. Based on the assumptions in the problems above, how much will you need in your retirement account in nominal dollars when you retire at age 65?