Dear Financial Adviser, My spouse and I are each 62 and hope to retire in three years. After retirement we will receive $9,100 per month after taxes from our employers' pension plans and $3,100 per month after taxes from Social Security. Unfortunately our monthly living expenses are $16,600. Our social obligations preclude further economies. We have $820,000 invested in a high-grade, tax-free municipal-bond mutual fund. The return on the fund is 5.0% per year. We plan to make annual withdrawals from the mutual fund to cover the difference between our pension and Social Security income and our living expenses. Sincerely, Luxury Challenged Marblehead, MA You can assume that the withdrawals (one per year) will sit in a checking account (no interest) until spent. The couple will use the account to cover the monthly shortfalls. How many years before Luxury Challenged runs out of money? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Number of years

Dear Financial Adviser, My spouse and I are each 62 and hope to retire in three years. After retirement we will receive $9,100 per month after taxes from our employers' pension plans and $3,100 per month after taxes from Social Security. Unfortunately our monthly living expenses are $16,600. Our social obligations preclude further economies. We have $820,000 invested in a high-grade, tax-free municipal-bond mutual fund. The return on the fund is 5.0% per year. We plan to make annual withdrawals from the mutual fund to cover the difference between our pension and Social Security income and our living expenses. Sincerely, Luxury Challenged Marblehead, MA You can assume that the withdrawals (one per year) will sit in a checking account (no interest) until spent. The couple will use the account to cover the monthly shortfalls. How many years before Luxury Challenged runs out of money? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Number of years

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

Dear Financial Adviser, My spouse and I are each 62 and hope to retire in three years. After retirement we will receive $7,600 per month after taxes from our employers' pension plans and $1,600 per month after taxes from Social Security. Unfortunately our monthly living expenses are $15,100. Our social obligations preclude further economies. We have $1,010,000 invested in a high-grade, tax-free municipal-bond mutual fund. The return on the fund is 4.0% per year. We plan to make annual withdrawals from the mutual fund to cover the difference between our pension and Social Security income and our living expenses. Sincerely, Luxury Challenged Marblehead, MA You can assume that the withdrawals (one per year) will sit in a checking account (no interest) until spent. The couple will use the account to cover the monthly shortfalls. How many years before Luxury Challenged runs out of money? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Number of years
Dear Financial Adviser, My spouse and I are each 62 and hope to retire in 3 years. After retirement we will receive $5,000 per month after taxes from our employers’ pension plans and $1,000 per month after taxes from Social Security. Unfortunately our monthly living expenses are $15,000. Our social obligations preclude further economies. We have $1,200,000 invested in a high-grade, municipal-bond mutual fund. However, the fund's annual after-tax return has dropped to 3.5%. We plan to make annual withdrawals from the mutual fund to cover the difference between our pension and Social Security income and our living expenses. How long will our money last? Sincerely, Luxury Challenged Marblehead, MA You can assume that the withdrawals (one per year) will sit in a checking account (no interest) until spent. The couple will use the account to cover the monthly shortfalls. How many years before Luxury Challenged runs out of money? (Do not round intermediate calculations. Round your answer to 2…
Bob and Rose are both 62 years old and plan to retire in 3 years. They will receive $5,000 per month after taxes from pension plans and $1,000 per month after taxes from Social Security after retirement. Regrettably, their living expenses are $15,000 per month. Further economies are ruled out due to their social obligations. They have invested $1,200,000 in a high-quality corporate bond mutual fund. However, the fund's annual after-tax return has dropped to 3.5%. Thus, they intend to withdraw money from the fund on an annual basis to cover the gap between their pension and social security income and their living expenses. How long will the money last?Bob and Rose are both 62 years old and plan to retire in 3 years. They will receive $5,000 per month after taxes from pension plans and $1,000 per month after taxes from Social Security after retirement. Regrettably, their living expenses are $15,000 per month. Further economies are ruled out due to their social obligations. They have…
Magdalena, age 35, has $72,000 accumulated in savings. She projects she will save $23,000 a year until her retirement at age 67. Her current cost of living is $100,000. In retirement, she will receive $31,704 per year in Social Security and $20,000 in pension, both in today’s dollars and both expected to rise by the rate of inflation. Her retirement cost of living is expected to decline by $6,000, in current dollars in the first year of retirement and thereafter grow at the projected inflation rate of 3%. Her projected annual investment return is 6%. a. Calculate her accumulated savings at retirement. b. Calculate her annual income, expenditures, and annual withdrawal for the first year of retirement. c. Develop a withdrawal rate. d. Does she meet the withdrawal rate method of deciding whether she will have sufficient funds to retire? If not, what do you recommend and why?
"As of today, Americans live on average 20 more years after retiring, which calls for well-designed retirement plans. There are different ways to save for retirement, such as retirement plans offered by the employer, savings and investments, and Social Security among other. " (Norrestad, 2021) Lifetime Savings Accounts, known as LSAS, would allow people to invest after-tax money without being taxed on any gains. If an engineer invests $10,000 now and $10,000 each year for the next 15 years, how much will be in the account immediately after the last deposit if the account grows by 8% per year? All the alternatives resented below were calculated using compound interest factor tables including all decimal places. O $271,521 O $303,243 $427,533 $359,497
You’ve landed your first job after graduation. Although retirement may seem like a long way off, you wisely enroll in your company’s retirement programs. In addition to maximizing your company’s 401K match you also plan to contribute $7000 per year to a self-directed fund for 35 years. Starting one year after you make your final contribution to this fund, how much could you withdraw each year from this account forever without impacting the fund’s balance? Assume the fund earns 6% per year.
Mr. Peter Phang, aged 35, is planning to retire at age 55. He understands from his advisor that he currently has a retirement funding shortfall of $800,000 at age 55 when he retires. His financial planner has recommended that he invest his savings in equities to help him meet the retirement funding shortfall. Assuming that the inflation-adjusted rate of return on equities is 5.5%, what is the regular savings which Peter will need to set aside yearly till his retirement?
Bob and Rose are both 62 years old and plan to retire in 3 years. They will receive $5,000 per month after taxes from pension plans and $1,000 per month after taxes from Social Security after retirement. Unfortunately, their living expenses are $15,000 per month. Further economies are ruled out due to their social obligations. They have invested $1,200,000 in a high-quality corporate bond mutual fund. However, the fund's annual after-tax return has dropped to 3.5%. Thus, they intend to withdraw money from the fund on an annual basis to cover the gap between their pension and social security income and their living expenses. How long until the money runs out?
Your friend is celebrating her 30th birthday today and wants to start saving for her anticipated retirement at age 65. She wants to be able to withdraw $100,000 from her savings account on each birthday for 25 years following her retirement, with the first withdrawal on her 66th birthday. Your friend intends to invest her money in the local credit union, which offers 8 percent interest per year. She wants to make equal annual payments on each birthday into the account established at the credit union for her retirement fund.b.) Suppose your friend has just inherited a large sum of money. Rather than making equal annual payments, she has decided to make one lump-sum payment on her 30th birthday to cover her retirement needs. What amount does she have to deposit?
Your friend is celebrating her 30th birthday today and wants to start saving for her anticipated retirement at age 65. She wants to be able to withdraw $100,000 from her savings account on each birthday for 25 years following her retirement, with the first withdrawal on her 66th birthday. Your friend intends to invest her money in the local credit union, which offers 8 percent interest per year. She wants to make equal annual payments on each birthday into the account established at the credit union for her retirement fund. a.) If she starts making these deposits on her 30th birthday and continues to make depositsuntil she is 65 (the last deposit will be on her 65th birthday), what amount must shedeposit annually to be able to make the desired withdrawals at retirement?
An individual is currently 30 years old, wants to work until the age of 65 and plans on dying at the age of 85. How much will the individual need to have saved by the time he or she is 65 if he or she plans on spending $40,000 per year while retired? You can assume the individual can earn an interest rate of 5.0% and the $40,000 is in addition to any Social Security that may be received
Suppose your friend is celebrating her 35th birthday today and wants to start saving for her anticipated retirement at age 65. She wants to be able to withdraw $80,000 from her savings account on each birthday for 15 years following her retirement; the first withdrawal will be on her 66th birthday. Your friend intends to invest her money in the local credit union, which offers 9 percent interest per year. She wants to make equal annual payments on each birthday into the account established at the credit union for her retirement fund. If she starts making these deposits on her 36th birthday and continues to make deposits until she is 65 (the last deposit will be on her 65th birthday), what amount must she deposit annually to be able to make the desired withdrawals at retirement? b) Suppose your friend has just inherited a large sum of money. Rather than making equal annual payments, she has decided to make one lump-sum payment on her 35th birthday to cover her retirement needs.…

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS