Doug Klock, 56, just retired after 31 years of teaching. He is a husband and father of three children, two whom are still dependent. He received a 141,000 lump-sum retirement bonus and will receive $3,000 per month from his retirement annuity. He has saved $151,000 in a 403(b) retirement plan and another $90,000 in other accounts. His 403(b) plan is invested in mutual finds, but most of his other investments are in bank accounts earning 2 or 3 percent annually. Doug has asked your advice in deciding where to invest his lup-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 in college and a nonworking spouse. Because Rachel and Rhonda are still in college, his current mothly expenses total $5,900. He does not intend to begin receiving Social Security until age 67 and his monthly benefit will amount to $1,500. He has grown accustomed to some risk but wants most his money in FDIC-insured accounts. (Ignore income taxes in your calculations.)

a. Assuming Doug has another account set aside for emergencies, how much can he withdraw on a monthly basis to supplement his retirement annuity if his investments retun 4 percent annually and he epects to live 25 more years?

b. How long will his supplemental retirement income last if his current monthly expenses remain at $5,900 per month?

If they are reduced to $4,600 per month how long will his supplemental income last?

c. If he withdraws $2,900 per month, how much will he have in 11 years when he turns 67?

If he begins to receive Social Security payments of $1,500 at 67, how many years can he continue to withdraw $1,400 per month from his investments?

d. If the inflation rate averages 4 percent during Doug's retirement, how old will he be when prices have doubled from the current level?

How much will a soda cost Doug when Doug dies, if he lives the full 25 years and soda currently costs $1 today?