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Considering the information obtained in questions 2, should Bill wait until age 67. for his Social Secuirty benefits? If he waits until age 67, how will his monthly Social Secuirty benefit change the answers to question 2? (Hint: Calculate his portfolio value as of age 67 and then calculate how long that amount will last if it earns 5 percent annually.) 4. If the inflation rate averages 3.5 percent during 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 years and the soda costs $1 today?

Considering the information obtained in questions 2, should Bill wait until age 67. for his Social Secuirty benefits? If he waits until age 67, how will his monthly Social Secuirty benefit change the answers to question 2? (Hint: Calculate his portfolio value as of age 67 and then calculate how long that amount will last if it earns 5 percent annually.) 4. If the inflation rate averages 3.5 percent during 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 years and the soda costs $1 today?

Essentials Of Investments
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
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3. Considering the information obtained in questions 2, should Bill wait until age 67. for his Social Secuirty benefits? If he waits until age 67, how will his monthly Social Secuirty benefit change the answers to question 2? (Hint: Calculate his portfolio value as of age 67 and then calculate how long that amount will last if it earns 5 percent annually.)

4. If the inflation rate averages 3.5 percent during 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 years and the soda costs $1 today?

Mini-Case Bil Petty, 56, just retired after 31 years of teaching. He is a hus- band and father of two children who are still dependent. He re- ceived 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 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 3 percent annually. Bill has asked your advice in deciding where increase his monthly benefit amount to $1,550.
Transcribed Image Text:Mini-Case Bil Petty, 56, just retired after 31 years of teaching. He is a hus- band and father of two children who are still dependent. He re- ceived 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 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 3 percent annually. Bill has asked your advice in deciding where increase his monthly benefit amount to $1,550.
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