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a-1. With a 3.0% inflation rate (Spreadsheet 21.2), by how much would your retirement annuity grow if you increase the saving
ment Years Income Growth Rate of Inflation 07 .03 Income Deflator 50,000 1.00 53,500 1.03 70,128 137,952 1.56 271,372 2.09 53
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Answer #1

As per the given spreadsheet, increasing the savings rate by 1.7% would increase the annuity as shown below:

1 Retirement years income growth rate of inflation savings rate ROR TROR 25 0.07 0.03 0.167 0.06 0.0291 Age Income Deflator S

So the annuity would increase by: $5,627.41

Here we are assuming that inflation in base case was also 3% (as it is not mentioned otherwise). So as per this assumption the benefit is not greater in the face of inflation.

If however, in the base case, there was no inflation or the inflation rate was lower than 3% than the result may change accordingly.

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