Question points$]$

You are $25$ years old and have decided to start saving for your retirement. You plan to save

$$8,000$ at the end of each year $($so the first deposit will be one year from now$)$ and will make the

last deposit when you retire at age $65.$

Suppose you earn $8\%$ per year on your retirement savings.

a$)$ How much will you have saved for retirement? $($Hint: draw the timeline of cash flows to

help structure your answer$)$

b$)$ How much will you have saved if you wait until age $35$ to start saving $($again$,$ with your

first deposit at the end of the year$)?$

Now, instead imagine that you earn $$80,000$ in income at age $25.$ You plan to save $10\%$ of your

income each year, starting one year from now and expect your income to grow by $4\%$ each year

$($including this year$).$

c$)$ Now how much will you have saved for retirement at age $65?$ Assume the return on

retirement saving is still $8\%.$