Tara, age 44, plans to retire at age 67. Her life expectancy, accounting for family medical history, is age 97. Tara is single and currently earns $56,000 per year as a university librarian. At her normal retirement age she expects to receive $28,700 in Social Security benefits (today's dollars). She will also receive a small defined benefit pension in the amount of $13,500 from a local municipality. She has come to you to determine whether she is on track to meet her retirement goals. Use the following assumptions and information to answer the questions that follow:

• She would like to use a 90% income replacement ratio, based on current earnings.

• She is currently contributing $2,400 per year into a 403(b) plan [no employer match].

• Inflation is assumed to be 3.50%.

• She can earn a 6.50% after-tax rate of return on assets before retirement.

• She can earn a 4.50% after-tax rate of return on assets after retirement.

a. How much does Tara need, on her first day of retirement, to fund a capital depletion model of retirement?

b. Given her current level of savings, is Tara on target to reach her retirement goal?

c. If she has a shortfall, how much more must she save per year to reach her goal?

d. If she would like to obtain a capital preservation goal for retirement, how much will she need to have saved on her first day of retirement?

e. Given a capital preservation goal, is she saving enough on a yearly basis currently?

f. How much, in total, must she save yearly to reach a capital preservation model of retirement?