Case Background: A young couple, both 25 years old, are planning to retire in 40 years...

Case Background:

A young couple, both 25 years old, are planning to retire in 40 years at the age of 65. After they retire,

they expect to live for an additional 20 years, until age 85. They plan to begin saving for retirement today

and based on information from their financial planner, they think they will earn 8% on their investment

compounded annually. They think they will earn 5% on their retirement savings after they retire.

Using the answer from question 1, if this couple is now age 65 and in good health and plans to travel and enjoy life. Since they are in good health chances of living until age 85 are quite good. If thy live until age 85 and are able to earn 5% on their retirement savings, what is the maximum amount they can withdraw each year, assuming they plan to spend all of their savings?

Answer from question #1= $1,295,283

Answer_______________________ (10 points)

Expert Solution

SOLVED USING BOTH THE METHODS. ANSWER ROUNDED TO 2 DECIMALS.

jeff jeffy answered 1 year ago

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