Five years have passed, and Alonso, age 45, signs a 10-year employment contract, which includes a...

 

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Five years have passed, and Alonso, age 45, signs a 10-year employment contract, which includes a one-time signing bonus, with a corporate-owned professional soccer club. His annual base salary with this club is higher than his previous salary and is indexed to inflation. Because the club has had financial difficulties in the past, the owner agrees to guarantee Alonso's salary over the life of the contract. Alonso intends to keep his living expenses unchanged and increase his annual savings. Alonso still plans to retire at the end of the 10-year contract. Given his improved financial position, he now plans to depend on cash flow from his investment portfolio to meet retirement expenses rather than purchase the 25-year annuity. Five years have passed, and Alonso, age 45, signs a 10-year employment contract, which includes a one-time signing bonus, with a corporate-owned professional soccer club. His annual base salary with this club is higher than his previous salary and is indexed to inflation. Because the club has had financial difficulties in the past, the owner agrees to guarantee Alonso's salary over the life of the contract. Alonso intends to keep his living expenses unchanged and increase his annual savings. Alonso still plans to retire at the end of the 10-year contract. Given his improved financial position, he now plans to depend on cash flow from his investment portfolio to meet retirement expenses rather than purchase the 25-year annuity.

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