Mini CaseBill Petty, 56, just retired after 31 years of teaching. He is a husband and father of two childrenwho are still dependent. He received a $150,000 lump-sum retirement bonus and will receive$2,800 per month from his retirement annuity. He has saved $150,000 in a 403(b)-retirement planand another $100,000 in other accounts. His 403(b) plan is invested in mutual funds, but most ofhis other investments are in bank accounts earning 2 or 3 percent annually. Bill has asked youradvice in deciding where to invest his lump-sum bonus and other accounts now that he has retired.He also wants to know how muchand a nonworking spouse. Because he has children, his current monthly expenses total $5,800. Heis not eligible for Social Security until age 62, when he will draw approximately $1,200 per month;however, he would rather defer drawing on Social Security until age 67 to increase his monthlybenefit amount to $1,550.Questionscan withdraw per month, considering he has two children1. If the inflation rate averages 3.5 percent during Bill's retirement, how old will he be whenprices have doubled from current levels? How much will a soda cost when Bill dies if he livesthe full 30 years and the soda costs $1 today?

Prices increase each year by the rate of inflation and may grow to double from existing levels over…

who are still dependent. He received a $150,000 lump-sum retirement bonus and will receive $2,800 per month from his retirement annuity. He has saved $150,000 in a 403(b)-retirement plan and another $100,000 in other accounts. His 403(b) plan is invested in mutual funds, but most of his other investments are in bank accounts earning 2 or 3 percent annually. Bill has asked your advice in deciding where to invest his lump-sum bonus and other accounts now that he has retired. He also wants to know how much he can withdraw per month, considering he has two children and a nonworking spouse. Because he has children, his current monthly expenses total $5,800. He is not eligible for Social Security until age 62, when he will draw approximately S1,200 per month; however, he would rather defer drawing on Social Security until age 67 to increase his monthly benefit amount to $1,550. Questions 1. If the inflation rate averages 3.5 percent đuring Bill's retirement, how old will he be when prices have doubled from current levels? How much will a soda cost when Bill dies if he lives the full 30 vears and the soda costs $1 today?

who are still dependent. He received a $150,000 lump-sum retirement bonus and will receive $2,800 per month from his retirement annuity. He has saved $150,000 in a 403(b)-retirement plan and another $100,000 in other accounts. His 403(b) plan is invested in mutual funds, but most of his other investments are in bank accounts earning 2 or 3 percent annually. Bill has asked your advice in deciding where to invest his lump-sum bonus and other accounts now that he has retired. He also wants to know how much he can withdraw per month, considering he has two children and a nonworking spouse. Because he has children, his current monthly expenses total $5,800. He is not eligible for Social Security until age 62, when he will draw approximately S1,200 per month; however, he would rather defer drawing on Social Security until age 67 to increase his monthly benefit amount to $1,550. Questions 1. If the inflation rate averages 3.5 percent đuring Bill's retirement, how old will he be when prices have doubled from current levels? How much will a soda cost when Bill dies if he lives the full 30 vears and the soda costs $1 today?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter14: Planning For Retirement

Section: Chapter Questions

Problem 2FPE

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Bill Petty, 56, just retired after 31 years of teaching. He is a husband and father of two children who are still dependent. He received a $150,000 lump-sum retirement bonus and will receive $2,800 per month from his retirement annuity. He has saved $150,000 in a 403(b)-retirement plan and another $100,000 in other accounts. His 403(b) plan is invested in mutual funds, but most of his other investments are in bank accounts earning 2 or 3 percent annually. Bill has asked your advice in deciding where to invest his lump-sum bonus and other accounts now that he has retired. He also wants to know how much he can withdraw per month, considering he has two children and a nonworking spouse. Because he has children, his current monthly expenses total $5,800. He is not eligible for Social Security until age 62, when he will draw approximately $1,200 per month; however, he would rather defer drawing on Social Security until age 67 to increase his monthly benefit amount to $1,550. Questions Bill…
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