You are planning to save for retirement over the next 26 years. To save for reti

Question

You are planning to save for retirement over the next 26 years. To save for retirement, you will invest $680 a month in a stock account in real dollars and $320 a month in a bond account in real dollars. The effective annual return of the stock account is expected to be 13 percent, and the bond account will earn 6 percent. When you retire, you will combine your money into an account with an 10 percent effective return. The inflation rate over this period is expected to be 5 percent. Assuming a 28-year withdrawal period you can withdraw $____________each month from your account in real terms. The nominal dollar amount of your last withdrawal is $____________.

Explanation / Answer

$12,800 $9,650

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