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receive such generous increases into the future. In addition to his salary, Bob typically earns $10,000 to20,000 per year from consulting, executive education, and other activities. In addition to the 10 percentregular contribution theschool makes to Bob’s retirement savings, Bob also con-tributes a substantial amount. He is currentlysetting aside $7,500 per year (before taxes). The maximum tax-deferred amount he can contribute iscurrently $10,000; this limit rises with inflation. If he were to increase his savings toward retirementabove the limit, he would have to invest after-tax dollars. All of Bob’s retirement savings are investedwith TIAA–CREF (Teachers Insurance and Annuity Association-College Retirement Equities Fund; homepage: www. tiaa-cref.org), which provides various retirement, investment, and insurance services touniversity professors and researchers. Bob has contributed to Social Security for many years as requiredby law, but in light of the problems with the Social Security trust fund he is uncertain as to the level ofbenefits that he will actually receive upon retirement. (The Social Security Administration’s website is.)Bob’s TIAA-CREF holdings currently amount to $137,000. These are invested in the TIAA long-termbond fund (20 percent) and the Global Equity Fund (80 per-cent). The Global Equity Fund is investedroughly 40 percent in U.S. equities and 60 percent in non-U.S. equities. New contributions are alsoallocated in these same proportions. In addition to his retirement assets, Bob’s net worth consists of his