Archive / Investment Adviser (Level 2) / Miscellaneous Aspects of Retirement Planning

nism-series-xb-jaspreet-post-retirement-horizon-return-assumption[ INVESTMENT ADVISER (LEVEL 2) ]

In Jaspreet's retirement planning scenario, how many years does Jaspreet assume he will spend in retirement from age 60, and what expected return will his retirement corpus earn during this phase?

[ A ]15 years in retirement; 6% return

[ B ]25 years in retirement (up to age 85); 9% p.a. investment return[ CORRECT ]

[ C ]40 years in retirement; 15% return

[ D ]10 years in retirement; 5% return

Takeaway

Jaspreet's plan assumes a 25-year retirement horizon (to age 85) with the corpus earning 9% p.a. during that phase, so option B is correct.

Derivation

Practice Case 9 explicitly states that Jaspreet retires at 60 and plans to fund 25 years of retirement, running through to age 85, with his invested retirement corpus assumed to generate a 9% p.a. return against an 8% inflation assumption throughout that phase. These specific figures (25 years, 9% return) are exactly the Nper and rate inputs used in the PV(0.9259%, 25, -27,96,574.29) calculation that derives his required corpus elsewhere in this case, so this question tests whether candidates can correctly recall the underlying case assumptions independent of the downstream arithmetic.

Why the others fail

A — 15 years in retirement; 6% return

A 15-year retirement horizon with a 6% return belongs to Mr. Z's Case 1 assumptions, not Jaspreet's stated 25-year, 9%-return retirement scenario.

C — 40 years in retirement; 15% return

A 40-year span describes a full working-career horizon, not the stated 25-year post-retirement funding period Jaspreet is planning for.

D — 10 years in retirement; 5% return

A 10-year retirement horizon with a 5% return is far shorter than Jaspreet's stated 25-year plan and severely underestimates his longevity risk.