You Are Planning to Save for Retirement Over the Next

question 10

Multiple Choice

You are planning to save for retirement over the next 15 years.To do this,you will invest $1,100 a month in a stock account and $500 a month in a bond account.The return on the stock account is expected to be 7 percent,and the bond account will pay 4 percent.When you retire,you will combine your money into an account with a 5 percent return.How much can you withdraw each month during retirement assuming a 20-year withdrawal period?

• A)$2,636.19
• B)$2,904.11
• C)$3,008.21
• D)$3,113.04
• E)$3,406.97

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Definitions:

Universal Life Insurance

A type of insurance policy that is flexible and allows one to raise or reduce premiums and the amount of coverage on one’s life.

Term Life Insurance

A type of insurance policy covering the insured for a fixed period of time (e.g., 10 or 20 years). Premiums are usually lower for a greater amount of coverage than with other types of life insurance.

Whole Life Insurance

A type of insurance policy with which, for a set annual premium, one receives life insurance coverage and, at the same time, invests one’s money.

Premiums

A designated amount of money paid at regular intervals by an individual or entity for a policy or service, especially in the context of insurance.