John is 60 years old. He plans to retire in two years. He now has $400,000 in a savings account that yields 2.9% interest compounded continuously. He has calculated that his final working year's salary will be $88,000. He has been told by his financial advisor that he should have 60-70% of his final year's annual income available for use each year when he retires.
a. What is the range of income that his financial advisor thinks he must have per year once he retires?
b. Use the continuous compounding formula to determine how much he will have in his account at the ages of 61 and 62.
c. Assume that John is planning on using 65% of his current salary in each of his first 5 years of retirement. What should that annual amount be?
d. John has decided that he will need $20,000 each year from his savings account to help him reach his desired annual income during retirement. Will John be able to make withdrawals of $20,000 from his savings account for 20 years? Explain your reasoning.