Let's break down the problem step by step. --- ## **Step 1: Understand the Question** You want to have enough money saved to withdraw **$80,000 per year** in retirement, and you expect to earn **4% interest** on your retirement funds without touching the principal. The question is: **How much do you need in your retirement account to achieve this?** --- ## **Step 2: Set Up the Math** If you want to withdraw $80,000 per year and only use the interest (not the principal), the amount you need in your account (let's call it \( X \)) must satisfy: \[ .04X = 80,000 \] Where: - \( .04 \) is the 4% interest rate - \( X \) is the amount you need saved --- ## **Step 3: Solve for \( X \)** \[ X = \frac{80,000}{.04} \] \[ X = 2,000,000 \] --- ## **Step 4: Check the Answer Choices** Let's look at the options given in the image: - $1,750,000 - $2,000,000 - $1,000,000 - $800,000 --- ## **Step 5: Select the Correct Answer** The correct answer is **$2,000,000**. --- ### **Summary Table** | Step | Calculation | Result | |-----------------|------------------------------------|---------------| | Withdraw per yr | $80,000 | | | Interest rate | 4% | | | Formula | $80,000 ÷ .04 | $2,000,000 | --- **Final Answer:** **$2,000,000** is the amount you need in your retirement account to withdraw $80,000 per year at 4% interest without touching the principal.