Your Father,who Is 60,plans to Retire in 2 Years,and He

question 39

Multiple Choice

Your father,who is 60,plans to retire in 2 years,and he expects to live independently for 3 years.He wants a retirement income which has,in the first year,the same purchasing power as $40,000 has today.However,his retirement income will be of a fixed amount,so his real income will decline over time.His retirement income will start the day he retires,2 years from today,and he will receive a total of 3 retirement payments.Inflation is expected to be constant at 5 percent.Your father has $100,000 in savings now,and he can earn 8 percent on savings now and in the future.How much must he save each year,starting today,to meet his retirement goals?

• A) $1,863
• B) $2,034
• C) $2,716
• D) $5,350
• E) $6,102

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Definitions:

Workers Without Jobs

Individuals who are actively seeking employment but are unable to find work.

Structural Unemployment

Unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one.

U-5 Measure

The U-5 Measure is a broader definition of unemployment than the standard, including not only those actively seeking work but also discouraged workers and others marginally attached to the labor force.

Marginally Attached Workers

Individuals who are not in the labor force but want and are available to work, and have looked for a job sometime in the past 12 months but not in the four weeks preceding the survey.