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Your 28 year old client wants to retire when he is 68 years old with a retirement income equivalent to $9,000 per month in today's dollars. To estimate the market expectations for average annual inflation for the next 40 years, use the difference between the 30-year US Treasury nominal rate and 30-year US Treasury real rate (rate on TIPs). Because of inflation, your client will need substantially higher retirement monthly income to maintain the same purchasing power. He plans to purchase a guaranteed lifetime annuity from an insurance company one month before he retires (479 months from now). The retirement annuity will begin in exactly 40 years (480 months). At the time the retirement annuity is purchased, the insurance company will add a 5.00 percent premium to the pure premium cost of the purchase price of the annuity. The pure premium is the actuarial cost to the insurance company of her anticipated lifetime annuity. He has savings of $95,000 today that will be invested at an annual return of 6.00%. Given a rate of return of 6.00% for the foreseeable future for both himself and for the insurance company that he plans to purchase the guaranteed life time annuity from, how much does he need to save each month (total of 479 payments) until the month before he retires? He will make the first payment next month and the last payment one month before he retires. For life expectancy after retirement at age 68, use the Your 28 year old client wants to retire when he is 68 years old with a retirement income equivalent to $9,000 per month in today's dollars. To estimate the market expectations for average annual inflation for the next 40 years, use the difference between the 30-year US Treasury nominal rate and 30-year US Treasury real rate (rate on TIPs). Because of inflation, your client will need substantially higher retirement monthly income to maintain the same purchasing power. He plans to purchase a guaranteed lifetime annuity from an insurance company one month before he retires (479 months from now). The retirement annuity will begin in exactly 40 years (480 months). At the time the retirement annuity is purchased, the insurance company will add a 5.00 percent premium to the pure premium cost of the purchase price of the annuity. The pure premium is the actuarial cost to the insurance company of her anticipated lifetime annuity. He has savings of $95,000 today that will be invested at an annual return of 6.00%. Given a rate of return of 6.00% for the foreseeable future for both himself and for the insurance company that he plans to purchase the guaranteed life time annuity from, how much does he need to save each month (total of 479 payments) until the month before he retires? He will make the first payment next month and the last payment one month before he retires. For life expectancy after retirement at age 68, use the

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