Mr. Road’s basic living expense now average about $1,500 per mount, and he plans to spend $500 per month on travel and hobbies. To maintain this planned standard of living, he will have to rely on his investment portfolio. The interest from the portfolio is $16,200 per year (9% of $180,000), or $1,350 per month.
Mr. Road will also receive $750 per month is Social Security payment for the rest of his life. These payment re indexed for inflation. That is, they will be automatically increased in proportion to changes in the consumer price index.