CRPC MAXIMIZING THE CLIENT EXPERIENCE DURING THE RETIREMENT
PLANNING
During retirement, John wants to receive $50,000 at the end of each year for the rest of his
life. To calculate the amount that he will need to save, you need to solve for -
(ANSWER)Ordinary annuity-set calculator at end.
You do need to set the calculator in END mode and solve for ordinary annuity. If this were
asking you to solve for an annuity due (where payments occur at the beginning of the
period), you would set calculator for BEG.
You do need to set the calculator in END mode and solve for ordinary annuity. If this were #$
asking you to solve for an annuity due (where payments occur at the beginning of the %
period), you would set calculator for BEG. - (ANSWER)To solve this problem, you would ^
need to solve for annuity due, and set the calculator at begin. &*
()_
John wants to have $1 million in his retirement fund when he retires in 25 years. Assuming +
that he earns 11% and inflation is at 3%, how much does John need to save on a level basis
at the end of each year? - (ANSWER)$8,740
Set calculator to END mode, one payment per year, and C/ALL
Mary wants to have a retirement income of $60,000 protected against 3% inflation. She
assumes that she will earn 9%, and wants to have the income for 30 years. How much
capital will be required to provide Mary this much income at the first of each year? (Set your
calculator for four decimal places.) - (ANSWER)$890,589
Set calculator to BEG mode, one payment per year, and C/ALL
Because the problem indicates that Mary wants her income to be protected against
inflation, you will use the inflation-adjusted rate of 5.8252% [((1.09 1.03) - 1) 100 = 5.8252].
Keystrokes:
60000, PMT
5.8252, I/YR
30, N
PV Solution: -$890,589
LO 1-4
Margaret needs an annual retirement income of $48,000 protected against 2% inflation.
You are to assume that she will earn 8%, and wants to have the income for 25 years. How
much capital will be required to provide Margaret this much income at the first of each
year? - (ANSWER)$657,022
, CRPC MAXIMIZING THE CLIENT EXPERIENCE DURING THE RETIREMENT
PLANNING
This problem uses the same steps as the previous problem (Problem #14). You solve for an
annuity due using the inflation-adjusted rate of 5.8824%.
When gathering data during the retirement planning process, financial goals should be
quantified in dollar amounts and which of the following? - (ANSWER)Established time
frames.
When assisting the client in establishing realistic goals, the planner should help define #$
financial goals so that they are quantified in dollar amounts and have established time %
frames instead of remaining general in nature. Goals may be organized based on type, ^
ownership, and priority but those are not ways of quantifying them and making them more &*
specific. ()_
+
You would like to examine the Smiths' net worth as of Dec. 31, 20X1. You will prepare -
(ANSWER)A statement of financial position.
A statement of financial position shows a client's net worth, which is defined as assets
minus liabilities, as of a specific date. A cash flow statement shows a client's net cash flow
(or deficit) over a period of time (usually one year). Income replacement percentage is
another name for "replacement ratio" and is used as a rough guide in determining the
amount of income needed in retirement relative to pre-retirement income.
long-term liabilities. - (ANSWER)Long-term liabilities are those that are payable over a
period greater than one year. Mortgage notes and auto loans are examples that fall into this
category.
Barb wants a retirement income of $5,000 at the beginning of each month for 25 years. If
she is able to earn a return of 7% on invested assets, she needs $700,000 to fund her
income. However, this does not include any inflation adjustment. By incorporating a 3.5%
inflation factor, what is Barb's approximate funding requirement increase, stated at the
time of retirement, if she wants to maintain the same purchasing power of her $5,000
monthly payment? - (ANSWER)$300,000
Instead of around $700,000, Barb will need slightly more than $1 million to maintain an
inflation-adjusted budget with equal purchasing power (using an inflation-adjusted rate of
3.3816 compounded monthly); so the increase is approximately $300,000.
Set calculator to BEG mode, 12 payments per year, and C/ALL
PLANNING
During retirement, John wants to receive $50,000 at the end of each year for the rest of his
life. To calculate the amount that he will need to save, you need to solve for -
(ANSWER)Ordinary annuity-set calculator at end.
You do need to set the calculator in END mode and solve for ordinary annuity. If this were
asking you to solve for an annuity due (where payments occur at the beginning of the
period), you would set calculator for BEG.
You do need to set the calculator in END mode and solve for ordinary annuity. If this were #$
asking you to solve for an annuity due (where payments occur at the beginning of the %
period), you would set calculator for BEG. - (ANSWER)To solve this problem, you would ^
need to solve for annuity due, and set the calculator at begin. &*
()_
John wants to have $1 million in his retirement fund when he retires in 25 years. Assuming +
that he earns 11% and inflation is at 3%, how much does John need to save on a level basis
at the end of each year? - (ANSWER)$8,740
Set calculator to END mode, one payment per year, and C/ALL
Mary wants to have a retirement income of $60,000 protected against 3% inflation. She
assumes that she will earn 9%, and wants to have the income for 30 years. How much
capital will be required to provide Mary this much income at the first of each year? (Set your
calculator for four decimal places.) - (ANSWER)$890,589
Set calculator to BEG mode, one payment per year, and C/ALL
Because the problem indicates that Mary wants her income to be protected against
inflation, you will use the inflation-adjusted rate of 5.8252% [((1.09 1.03) - 1) 100 = 5.8252].
Keystrokes:
60000, PMT
5.8252, I/YR
30, N
PV Solution: -$890,589
LO 1-4
Margaret needs an annual retirement income of $48,000 protected against 2% inflation.
You are to assume that she will earn 8%, and wants to have the income for 25 years. How
much capital will be required to provide Margaret this much income at the first of each
year? - (ANSWER)$657,022
, CRPC MAXIMIZING THE CLIENT EXPERIENCE DURING THE RETIREMENT
PLANNING
This problem uses the same steps as the previous problem (Problem #14). You solve for an
annuity due using the inflation-adjusted rate of 5.8824%.
When gathering data during the retirement planning process, financial goals should be
quantified in dollar amounts and which of the following? - (ANSWER)Established time
frames.
When assisting the client in establishing realistic goals, the planner should help define #$
financial goals so that they are quantified in dollar amounts and have established time %
frames instead of remaining general in nature. Goals may be organized based on type, ^
ownership, and priority but those are not ways of quantifying them and making them more &*
specific. ()_
+
You would like to examine the Smiths' net worth as of Dec. 31, 20X1. You will prepare -
(ANSWER)A statement of financial position.
A statement of financial position shows a client's net worth, which is defined as assets
minus liabilities, as of a specific date. A cash flow statement shows a client's net cash flow
(or deficit) over a period of time (usually one year). Income replacement percentage is
another name for "replacement ratio" and is used as a rough guide in determining the
amount of income needed in retirement relative to pre-retirement income.
long-term liabilities. - (ANSWER)Long-term liabilities are those that are payable over a
period greater than one year. Mortgage notes and auto loans are examples that fall into this
category.
Barb wants a retirement income of $5,000 at the beginning of each month for 25 years. If
she is able to earn a return of 7% on invested assets, she needs $700,000 to fund her
income. However, this does not include any inflation adjustment. By incorporating a 3.5%
inflation factor, what is Barb's approximate funding requirement increase, stated at the
time of retirement, if she wants to maintain the same purchasing power of her $5,000
monthly payment? - (ANSWER)$300,000
Instead of around $700,000, Barb will need slightly more than $1 million to maintain an
inflation-adjusted budget with equal purchasing power (using an inflation-adjusted rate of
3.3816 compounded monthly); so the increase is approximately $300,000.
Set calculator to BEG mode, 12 payments per year, and C/ALL
