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Financial Management and Retirement Planning

1. Carry out the transactions indicated in the "action" columns for each account, and create a table (using the exhibit format as a guide) for the surviving accounts.

2. If the Trudeaus retire at age 60, how much wealth will they have built up, given the strategy outlined in exhibit 4? What if they retire at age 67 1/2? For simplicity. all returns listed are already adjusted for taxes (they are aftertax returns).

3. The Trudeaus estimate that they could live on $10,000 per month after retiring, taking into account the fact that may occur. They have already adjusted their estimated need according to that inflation expectation. Assuming this dollar amount will not change, and that the Trudeaus will live until age 85, is their savings adequate to retire at age 60? At age 67 1/2?

4. According to good financial planning principles, how would you recommend making up for the difference between what they have and what they desire as an annuity after retirement? How much extra do they need to save in that account per month?

5. Should they consider retiring at age 60 or not? Justify your answer

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Solution Preview

Question 1
Please refer to the attached Excel file, specifically worksheet Q1
I copied the 6 exhibits, and then I created another exhibit for the surviving accounts after executing Ron's suggested action for each account.

I have linked the exhibits such that if you change any values in Exhibits 1 to 6, the values in Exhibit 7 changes automatically. Please review the figures for Exhibits 1-6. The copy is a bit blurry on some parts, and I might have copied the numbers incorrectly.

Question 2
I copied Exhibit 7 to Worksheet Q2
I then computed the total interest/income earned by each of the investment accounts for the period before ...

Solution Summary

The expert examines financial management and retirement planning.