Finance 205Project 3 – Retirement Saving PlanFinance 205Project 3 – Retirement Saving PlanPurpose: To gain an understanding of what it will take you to save a set amount of money by the time you retire at age 65.1. Prepare an Excel table showing your expected income at the following ages: 25, 35, 45, and 55 (if you are older than any of these ages start with your current age, then use the remaining ages above). If you are realistic with your income expectations the exercise will be more meaningful. Start with your salary expectation at graduation and inflate that amount each year to determine your salary at each age level.2. Assume you need to save an additional $1,000,000 (in today’s dollars) to supplement your retirement at age 65. 3. Determine what dollar amount and percentage of your pay would have to be invested if you earned either 8% or 10% return on your investments. (E.g., if you started saving at age 25 how much would you need to invest each year earning 8% annually to accumulate $1,000,000 at age 65?) Repeat this same calculation assuming you delayed starting your savings until age 35, 45, and 55. Note: The goal is to accumulate $1,000,000 at age 65. Whatchanges is the number of years you have to save… 40, then 30, 20 and finally 10.4. Assume you are age 65 today and you have $1,000,000 in retirement savings. Further assume that you will live in retirement for 30 years until age 95. Also assume that your retirement savings portfolio earns 6% annually and that your average tax rate is 20%. How much can you withdraw annually from your investment savings and still have it last 30 years? Now take this annual amount and subtract federal income tax from it to establish the actual cash available to buy your retirement lifestyle. Could you live comfortably in retirement on this amount of income? Comment and show your calculations.5. Now let’s explore the affects of inflation on your savings goal! If inflation averages 3% each year during the time before you retire at age 65, how much would you need to save to achieve the equivalent of $1,000,000 today? In step 2 your goal was $1,000,000 in today’s dollars. To maintain the purchasing power of $1,000,000 today how much would you need atretirement at age 65? Repeat the table in 3 above, savings for an inflation adjusted $1,000,000. Show your calculation for the inflation adjusted savings goal.6. What conclusions would you make regarding when you should begin investing for your retirement, the affect of different investment rates of return, and the affects of inflation on retirement saving plans. Has this project has helped you understand the importance of having goals and having a plan to achieve those