Question
You are planning to save for retirement over the next 30 years. To save for retirement, you will invest $1,000 a month in a stock
You are planning to save for retirement over the next 30 years. To save for retirement, you will invest $1,000 a month in a stock account in real dollars and $525 a month in a bond account in real dollars. The effective annual return of the stock account is expected to be 11 percent, and the bond account will earn 7percent. When you retire, you will combine your money into an account with a 9 percent effective return. The inflation rate over this period is expected to be 4 percent. How much can you withdraw each month from your account in real terms assuming a 25-year withdrawal period?
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