Hugo is now 50 and plans to retire by the age 60. He is single, owns an apartment with current market value around HKD 4.5 million, with a mortgage to be paid down in 10 years.

Currently, he has an income of $30,000 per month but does not have much savings (after all expenses including mortgage) but expects to have HKD 1 million in his MFP account when he retires. He figures that he needs $12,000 per month ($144,000 per year) in todays term to live a comfortable live then.

1. Assuming that the MPF account can generate a real rate of return of 2.4% per year (after adjusting for inflation), how much he can receive per month the first year he retires if he draws money out from his MPF account such that the account balance is 0 by the time he turns 82.

(Hint: First determine the monthly income required at aged 60.)

2. What is the shortfall per month during his first year of retirement?
3. What alternatives Hugo has in order to generate enough to cover the shortfall, if possible. Try to work out the math briefly for your suggestions. If not, what advices will you give Steve?
4. State the assumptions you use and implied in the case. Criticize the assumptions used.
5. Suggest how the government can help in this case.

Please list the full steps, thanks.