Sara is 30 years old and makes $40,000/year. She has $10,000 in a traditional IRA, which is growing at 5%. She plans not to touch it until she retires at age 70. She believes she will make $3,000/ month from Social Security.

a. With cost of living and merit salary increases, she estimates that she will be making $200,000 annually prior to retiring. How much should she budget for living expenses on a monthly basis after retirement?

b. How much will her IRA be worth by age 70?

c. Assuming she needs $2,000,000 for retirement and her IRA grows at 5%, how much will she need to put in your company 401(k) plan over the next 40 years in order to reach her retirement income goals?