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December 7th, 2016, 07:39 PM  #1 
Newbie Joined: Nov 2016 From: Chicago Posts: 5 Thanks: 0  Finance/Retirement plan/TVM problem
You have clients who are just beginning to think about planning for retirement. They are both 35 years old and have 85,00 in a company retirement plan which they can roll over into their own plan. They want to retire at 67 but are wondering what effect retiring a year or two earlier or later will have on their retirement. Their combined income is 120,000 per year, and they want to finance the same income in retirement. When they retire, they can purchase a twolife annuity with an expected second death at age 87. Prepare a plan with some alternative rates of return and retirement dates and explain what annual contributions they must make. Last edited by skipjack; September 3rd, 2018 at 12:40 AM. 
December 7th, 2016, 08:46 PM  #2  
Math Team Joined: Oct 2011 From: Ottawa Ontario, Canada Posts: 13,984 Thanks: 995  Quote:
Why don't you show us what YOU've done so far... Can you handle this: Initial investment: 85,000 Term: 6735 = 32 years Annual rate: 5% Required total investment after 32 years: 1,500,000 What annual contribution must be made to achieve above? Last edited by skipjack; September 3rd, 2018 at 12:41 AM.  
December 7th, 2016, 09:09 PM  #3 
Newbie Joined: Nov 2016 From: Chicago Posts: 5 Thanks: 0 
I plugged those numbers into a financial calculator pv = 85,000, n = 32, i = 5, fv = 1,500,000 pmt = 14541.79 Could you explain how you got interest to be 5% and total investment after 32 years to be 1,500,000? What does the 2 life annuity with an expected second death at 87 mean? Last edited by skipjack; September 3rd, 2018 at 12:43 AM. 
December 7th, 2016, 09:21 PM  #4  
Math Team Joined: Oct 2011 From: Ottawa Ontario, Canada Posts: 13,984 Thanks: 995  Quote:
you could calculate such an example WITHOUT a financial calculator. Are you saying you were given that problem and your teacher gave no explanations? Last edited by skipjack; September 3rd, 2018 at 12:45 AM.  
September 2nd, 2018, 08:51 PM  #5 
Newbie Joined: Sep 2018 From: Australia Posts: 1 Thanks: 0 
I think this problem could definitely be done multiple ways.
Last edited by skipjack; September 3rd, 2018 at 12:48 AM. 

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