Bob Smith’s Strategy
to
Retirement Riches
September 28th, 2013

In order to assess the adequacy of your fund, I made the following assumptions to help
me build an effective model :
 You will be the only one drawing from the pension fund when you retire
 The current fund value is assuming all interest payments have be accounted
for.
 No inflation
 Your postretirement income is inclusive of tax, and it is 60% of your income
today.
Our major assumption was that Bob’s ultimate goal was to find out at what reasonable
retirement age he would realize the highest value of his retirement fund.

CONTROLLABLE
DATA FIXED DATA UNCERTAIN DATA
Retirment age Current age Age at Death
Postretirement
Income Current Salary Age of Wifes Death
Your contribution
Bob's current
retirement fun
Rate of increase of
income
Current salary
Return on investment
up to retirement
Return on investment
after retirment
College invested
Step 1
UNCERTAIN DATA THAT INFLUENCE FUND
VALUE
Rate of increase of income 0%
Return on investment up to retirement 2.5%
Return on investment after retirement 2.5%
WORST CASE SCENARIO PARAMETERS–Holding all
controllable data constant:

BASE CASE
Post Retirement income $124,736
Age run out of money 78
 Retirement age:
Every additional year you work over 65, you increase the year you run out
of money by 1 year and 10 months
 Personal Portion:
For every additional $500 you contribute every year, you increase the year
you run out of money by 5 months
 Postretirement income:
For every 5% increase in your postretirement income, the year you run out of
money decreases by 2 years and 2 months

83.00 85.00 87.00 89.00 91.00 93.00 95.00 97.00 99.00101.00
Rate of return on Investments /year up to retirement =
Savings Rate
Bob's Annual Contribution
Rate of return on Investments /year after retirement =
Age when wife dies
Age at Which Bob Runs out of $
Parameter
Tornado Sensitivity Chart
-10 Pct +10 Pct

 Retire no earlier than 65
it will make your
fund last longer
 Contribute no less than $9500
 Your post retirement income should reflect the
bare minimum you need to survive.