(a) Your uncle has emergency fund already set aside, so he can use his RM400, 000 of savings for retirement. How much can he withdraw on a monthly basis to supplement his retirement annuity if his investments return 5% annually and he expects to live 30 more years?
(b) Ignoring his pension security benefit, is the amount determined in question (a) sufficient to meet his current monthly expenses (keep in mind he will receive a pension of $2,800 per month)? If not, how long will his retirement last if his current expenses remain the same? What if his expenses are reduced to RM4,500 per month?
(c) Considering the information obtained in (b), should your uncle wait until 67 for his pension benefits? If he waits until age 67, how will his pension benefit change the answer to (b)?
(d) If the inflation rate averages 3.5 percent during your uncle’s retirement, how old will he be when prices have doubled from current levels? How much will a soda cost when your uncle dies, if he lives the full 30 years and the soda costs $1 today?