Annuities

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Question
Abgail
Asked at 2012-07-29 12:36:58
On Marion's 35th birthday, her insurance company told her she is expected to live until age 85. She wants to retire at age 60. Many of her expenses will be eliminated by then, so she estimates she will only need 15,000 per year to live comfortably.
Marion has a family history of disease, so she plans to have home health care starting at age 70 which will cost 45,000 per year.
She doesn't want to outlive her income, so she allows another 3 years of life beyond the actuary's estimate.
She wants 40,000 to be left to cover her final expenses, including cremation.
Long term interest rates suggest that her opportunity cost of cash approximates the 20-year treasury bond rate of 8% per annum.
She has not started saving yet, but wants to start right away.
How much money does she need to have when she retires to achieve her goals?
How much money does she need to save each year from now until the time she retires in order to
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