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Doug​ Klock, 56 just retired after 31 years of teaching. He is a husband and father...

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Finance

Doug​ Klock, 56 just retired after 31 years of teaching. He is ahusband and father of three​ children, two of whom are stilldependent. He received a $140,000​lump-sum retirement bonus andwill receive 2,700 per month from his retirement annuity. He hassaved $151,000 in a​ 403(b) retirement plan and another​$93,000 inother accounts. His​ 403(b) plan is invested in mutual​ funds, butmost of his other investments are in bank accounts earning 2 or 3percent annually. Doug has asked your advice in deciding where toinvest his​ lump-sum bonus and other accounts now that he hasretired. He also wants to know how much he can withdraw per​ month,considering he has two children in college and a nonworking spouse.His current monthly expenses total $6,000. He does not intend tobegin receiving Social Security until age 67​,and his monthlybenefit will amount to ​$1,500.He has grown accustomed to some riskbut wants most of his money in​ FDIC-insured accounts.

a. Assuming Doug has another account set aside for​ emergencies,how much can he withdraw on a monthly basis to supplement hisretirement annuity if his investments return is 4 percent annuallyand he expects to live 25 more​ years?

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Total amount available at retirementLump sum retirement    See Answer
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