6. Stan Stanley works at a stapler company and is considering retirement. He cur

Question

6. Stan Stanley works at a stapler company and is considering retirement. He currently earns $200,000 per year as a high-level executive. He currently pays payroll and income taxes and save 10% of his salary to his retirement account. His mortgage will be paid off prior to retirement and his monthly payment (principal and interest only) will save him approximately $15,000 per year. What is Stan’s wage replacement ratio?

Question 6 options:

a.)

b)

c)

d)

7.) Which of the following items will likely increase during retirement?

Question 7 options:

a)

b)

c)

d)

8.) Which of the following statements is correct?

1. Social security is heavily relied upon by current and soon to be retired individuals.


2. The risk of a premature death during one’s WLE can be protected by life and disability insurance.

Question 8 options:

a)

b)

c)

d)

9.) Which are not considered important assumptions for long term retirement calculations?

1. Estimate of one’s work life expectancy.
2. Mortality rates and adjustments for health factors.
3. Spending needs during an individual’s retirement period.

Question 9 options:

a)

b)

c)

d)

10) Which of the following statements is/are correct?

1. Sensitivity analysis consists of rotating each variable assumption toward the undesirable side of the risk to determine the impact of a small change in that variable on not achieving the overall plan.

2. Monte Carlo allows for a range of alternative assumptions, such as changes in investment rates of return, the variability of inflation, adjustments to life expectancy, and many other market-condition scenarios.

3. If assumptions entered are accurate then monte carlo analysis can predict the future for clients.

Question 10 options:

a)

b)

c)

d)

a.)

83%

b)

93%

c)

80%

d)

75%

Explanation / Answer

6) here option is a because as per formula we can say:

Wage replacement ratio : retirement income/pre retirement income*100

Here retirement income be

Annual income be 200000

- 10% savings. 20000

-yealy payment for mortgage. 15000

Total . 165000

So here wage replacement ratio: 165000/200000*100

82.5% or 83%

7)during retirement increased mortgage expenses so option be c.

8) here option 2 is correct statement so option is a.

9)here option is a. Because mortality rate and adjust of health factors and spending need for various employees for individual retirement not considered important assumption for long term retirement process.

10)option c is opt because they are interlinked statements which help to get the over all analysis about the particular problem solution based.

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