
Economics Economics Forum  Financial Mathematics, Econometrics, Operations Research, Mathematical Finance, Computational Finance 
 LinkBack  Thread Tools  Display Modes 
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: 13,641 Thanks: 954  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: 13,641 Thanks: 954  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. 

Tags 
finance or retirement, finance or retirment, plan or tvm, problem 
Search tags for this page 
Click on a term to search for related topics.

Thread Tools  
Display Modes  

Similar Threads  
Thread  Thread Starter  Forum  Replies  Last Post 
problem with mathematical finance  FreeeZy00  Applied Math  8  May 14th, 2018 01:04 PM 
word problem: amount in retirement account  musgt01  Applied Math  2  February 15th, 2015 02:25 PM 
Finance Problem  Marcipanas  Economics  9  February 3rd, 2014 09:07 PM 
Need some help in retirement planning Mathematics please  NelisVerhoef  Economics  1  October 1st, 2010 07:35 AM 
Finance problem  mr.confused  Algebra  3  September 28th, 2008 10:53 PM 