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Mini-Case Barry Neill. 60, has just retired from his job at the city council Where he has worked for 38 years. He has a family that is depen- dent on him. He has received a lump sum retirement bonus of 80,000 in addition to 1.700 per month as his pension. Besides this lump sum bonus, he also has 60,000 in an ISA account and owns mutual fund units worth 80,000 as of now. The ISA account pays 4 percent per annum. Barry has estimated that he will need around 3.700 per month to maintain his family and lifestyle. He will be eligible for state pension of 300 a month once he turns 65. However, if he defers withdrawing his state pension until he is 70, he will get 560 a month Advise Barry on what he should do with his receipts from pension funds and savings. Questions 220,000 for retirement. If his savings pay him 5 percent per annum and he expects to live for another 35 years, how much 1. Barry bors access to some money for emergencies from his wife's family. He can thus use his overall receipts from his savings can be withdraw on a monthly basis? 2. Ignoring his state pension, is the amount determined in Question 1 sufficient for meeting Barry's monthly expenses in addi What if he reduces his expenditure to 3,2002 tion to his pension of 1.700? If not , how long will his retirement savings last if his current expenditure remains the same? 3. Considering the information obtained in Question 2, should Barry wait till he is 65 to obtain his state pension? If he waits until the age of 70. how will this state pension change the answer to Question 27 4. If the inflation rate averages 3 percent during his retirement, how old will he be when the prices have doubled from current levels? How much will a newspaper cost when he is 95 years old, in 35 years' time, if it costs 1.25 today? 3 Mini-Case Barry Neill. 60, has just retired from his job at the city council Where he has worked for 38 years. He has a family that is depen- dent on him. He has received a lump sum retirement bonus of 80,000 in addition to 1.700 per month as his pension. Besides this lump sum bonus, he also has 60,000 in an ISA account and owns mutual fund units worth 80,000 as of now. The ISA account pays 4 percent per annum. Barry has estimated that he will need around 3.700 per month to maintain his family and lifestyle. He will be eligible for state pension of 300 a month once he turns 65. However, if he defers withdrawing his state pension until he is 70, he will get 560 a month Advise Barry on what he should do with his receipts from pension funds and savings. Questions 220,000 for retirement. If his savings pay him 5 percent per annum and he expects to live for another 35 years, how much 1. Barry bors access to some money for emergencies from his wife's family. He can thus use his overall receipts from his savings can be withdraw on a monthly basis? 2. Ignoring his state pension, is the amount determined in Question 1 sufficient for meeting Barry's monthly expenses in addi What if he reduces his expenditure to 3,2002 tion to his pension of 1.700? If not , how long will his retirement savings last if his current expenditure remains the same? 3. Considering the information obtained in Question 2, should Barry wait till he is 65 to obtain his state pension? If he waits until the age of 70. how will this state pension change the answer to Question 27 4. If the inflation rate averages 3 percent during his retirement, how old will he be when the prices have doubled from current levels? How much will a newspaper cost when he is 95 years old, in 35 years' time, if it costs 1.25 today? 3