Math 1000 Common Assessment

Lets plan for retirement! YES, even if youre 18 years old or 60 years old! We will

assume you can get an 8% APR compounded monthly account for both saving for

retirement and payout during retirement.

1) At what age do you plan to retire? 65

2) At what age do you plan to have your career job and start saving for retirement

(if youre working and want to start saving now enter your age now)? 32

3) Calculate the number of years youll have to save for retirement. 33

4) NOW, how much money per month would you like to have to live on during your

retirement years? Keep in mind inflation and cost of living adjustments. $5,000

5) Use the information above along with the attached actuary table to determine, on

average, how many years you will spend in retirement (not live). Be sure to

include a justification on how you determined this value.

6) Using the information above calculate the lump sum of how much youll need at

the beginning of retirement in order to achieve your goal.

7) Now calculate how much youll need to contribute monthly during your working

years in order to achieve your retirement goal.

8) What if you live longer than the actuary table predicts? Suppose we dont want to

drain our retirement fund to $0. What if we just live off the interest each month

and dont touch the principal? Again, assuming an 8% APR, how much a month

could we have in retirement with the same lump sum from question 6 using just the

interest in the account?

9) Lets suppose you still want the same monthly amount during retirement you

answered in question 4 and that you still can earn 8% APR, but you want to live

off the interest only, as in question #8. How much money would you need to

contribute monthly during your working years to attain this retirement goal?

Reflection:

1) Compare and contrast the retirement options. Which one is preferrable? Why?

2) What assumptions must we make in order to find the solution(s)?

Life Expectancy Actuarial Table

Period Life Table, 2019 Period Life Table, 2019

Life Expectancy (Years left to live) Life Expectancy (Years left to live)

)Age Now) Male Female

16 60.9 65.86

17 59.93 64.87

18 58.97 63.89

19 58.02 62.91

20 57.07 61.93

21 56.13 60.96

22 55.2 59.99

23 54.27 59.02

24 53.35 58.05

25 52.43 57.08

26 51.51 56.11

27 50.58 55.14

28 49.67 54.18

29 48.75 53.22

30 47.83 52.26

31 46.92 51.3

32 46 50.34

33 45.09 49.39

34 44.18 48.44

35 43.27 47.49

36 42.36 46.54

37 41.46 45.59

38 40.55 44.65

39 39.65 43.71

40 38.75 42.76

41 37.84 41.83

42 36.95 40.89

43 36.05 39.95

44 35.16 39.02

45 34.26 38.09

46 33.38 37.17

47 32.5 36.24

48 31.62 35.33

49 30.75 34.42

50 29.88 33.51

51 29.03 32.61

52 28.18 31.71

53 27.34 30.82

54 26.51 29.94

55 25.7 29.06

56 24.89 28.2

57 24.1 27.34

58 23.31 26.48

59 22.54 25.64

60 21.77 24.8

61 21.02 23.96

62 20.28 23.14

63 19.54 22.32

64 18.81 21.51

65 18.09 20.7

66 17.38 19.9

67 16.67 19.1

68 15.97 18.31

69 15.28 17.53

70 14.6 16.76

71 13.92 16

72 13.25 15.26

73 12.59 14.52

74 11.95 13.81

75 11.32 13.1

76 10.71 12.41

77 10.12 11.74

78 9.54 11.09

79 8.98 10.45

80 8.43 9.83