inflation / IPS return, only, because

Viceroy

In 2009 exam, is the inflation added onto the return only because they are 59 and retiring in a year?

If they were 60 and "just retired", would you exclude inflation or would it be the same calc?

Analti_Calte

so in other words, since you are deducting living expenses right away, your "first year" living expenses are essentially your "second year"?

skycfa

there was a trick there. They said the first payment to be deducted immediately. That reduced the assets. I missed that. 4200000 becomes 4000000

So you're left with next year , which is 2.5% more i.e. 205,000

Watch the words carefully, they are just out to fool you , really straight and simple



Edited 1 time(s). Last edit at Thursday, June 2, 2011 at 12:20AM by janakisri.

mar350

Then you adjust for inflation, give them the return they are asking for.

NO EXCUSES

pennyless

assume item set says they want inflation adjusted returns

zwjy

Depends, I've seen problems where some income/expenses are inflation indexed and some aren't. I break everything out into a table so the grader can clearly see what I'm doing.

NO EXCUSES

thommo77

and if they were 58, would you multiply by (1+inf)^2

Analyze_This

Depends on what year calculation they're asking for. If they wanted the return at retirement and they retire at 60, inflation isn't needed.

NO EXCUSES