Mr. Road has reached his 70th birthday and is ready to retire. Mr. Road owns his home with a mortgage that has already been paid off. He does not want to move and wants to leave the house and any remaining assets to his daughter. He has accumulated investments of $180,000 yielding 9% interest, savings of $12,000 with a 5% interest rate and receives $750 A MONTH in social security payments. ONLY the social security payments are indexed for inflation!

What advice do you have for Mr. Road?

Can he safely spend all the interest from his investment portfolio?

How much could he withdraw at year-end from that portfolio if he wants to keep its REAL value intact?

Supposed Mr. Road will live for 20 more years and is willing to use up ALL of his investment portfolio over that period, he also wants his monthly spending to INCREASE along with inflation over that period.

How much can he affort to spend per month assuming that his investment portfolio continues to yield a 9% rate of return and that the inflation rate will be 4%?