Chap 1

Question 1

what 3 factors affect the plan when planning for retirement?

Answer 1

• Period of accumulation
• amount of saving required
• rate of return

Question 2

what are the 6 steps to retirement process?

Answer 2

1) Gather current financial info
2) Prepare statement to reflect current financial position (statement of financial position, statement of cash flow)
3) Qualify short and long term goals
4) Prepare short term budget
5) calculate required retirement savings
6) monitor results and make change as needed

Question 3

What are the categories of information gathered

Answer 3

1) Employment information
2) assets and liability
3) expenses

Question 4

Calculation of 2009 cash balance

Answer 4

2008 cash balance + net change in cash

Question 5

3 Steps in determining retirement savings

Answer 5

1) Calculate PV of annual retirement income. Distinguishing between before and after tax annuity. Estimations in the short term budget are after tax and must be transferred to before tax
2) Calculate PV at retirement of CPP, OSA and pension benefit
3) Calculate the shortfall

Question 6

4 controllable factors to retirement planning

Answer 6

1) Date of retirement
2) Planned retirement life style
3) level of savings
4) Investment and asset allocation

Question 7

4 uncontrollable factor of affecting retirement planning

Answer 7

1) life expectancy
2) Inflation
3) rate of return
4) Income tax