You are 60 years old. Currently, you have $ 10,000 invested in an IRA and have just received a lump- sum distribution of $ 50,000 from a pension plan, which you roll over into an IRA. You continue to make $ 2,000 annual payments to the regular IRA and expect to earn 9 percent on these funds until you start withdrawing the money at age 70 ( i. e., after ten years). The IRA rollover will earn 9 percent for the same duration.

a) How much will you have when you start to make withdrawals at age 70?

b) If your funds continue to earn 9 percent annually and you withdraw $ 17,000 annually, how long will it take to exhaust your funds?

c) If your funds continue to earn 9 percent annually and your life expectancy is 18 years, what is the maximum you may withdraw each year?

8. Bob places $ 1,000 a year in his IRA for ten years and then invests $ 2,000 a year for the next ten years. Mary places $ 2,000 a year in her IRA for ten years and then invests $ 1,000 a year for the next ten years. They both have invested $ 30,000. If they earn 8 ­percent annually, how much more will Mary have earned than Bob at the end of 20 years?

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