70.2K

Verified Solution

Link Copied!

Determine whether you have enough monies to live comfortably each year for 20 years in your dream state of California.

Assume you are at age 65 and have the following assets:

1. Pension Plan worth $500,000. You plan to take an ordinary annuity on your pension to withdraw all assets in 20 years. Assume 3.5% interest per year. You will get monthly payments for 20 years.

2. Social Security - $21,600 per year for 20 years. Assume that this is the amount you will receive each year.

3. Savings worth $250,000. You plan to take an ordinary annuity to withdraw all assets in 20 years. Assume 3.5% interest per year. You will get monthly payments for 20 years.

Answer the following questions:

1. What will be the monthly amount received individually from the pension plan, social security, and savings? What will be the monthly total? Round all 4 answers to the nearest penny.

2. What will be the yearly amount received individually from the pension plan, social security, and savings? What will be the yearly total? Round all 4 answers to the nearest dollar.

3. What will be the 20-year amounts received individually from the pension plan, social security, and savings? What will be the 20-year total amount? Round all 4 answers to the nearest dollar.

4. Is the total amount enough to retire comfortably in your dream state? Are you planning to make the required savings now and/or in the future to live comfortably in your dream state which may not be California? Explain.

Answer & Explanation Solved by verified expert

See Answer