Q3. Your client needs $100,000 each year ($ today), 18 years from now for a retirement period of 20 years after. The rate of inflation is 4% compounded annually. He will receive $36,000 in social security each year during retirement. Ignore the rate of inflation beyond year 18 and ignore inflation for social security. How much the client needs approximately every year, adjusted for social security, during retirement. Ignore taxes in this part. Hint: Social security will reduce the amount you need for living expenses during retirement.

a. $166,581

b. $202,581

c. Less than $165,000

d. More than $203,000

e. None of the above. My answer is .

Q4. Refer to Question 3. Suppose the client needs $200,000 net each year during retirement after tax. Ignore social security. How much the client needs before tax? The income tax rate is 20%. The answer is:

a. $240,000

b. $250,000

c. Less than $240,000

d. More than $250,000

e. None of the above. My answer is ..