Download - Retirement Options
Preview
• Current retirement plans
• Options for Retirement Plans
• Code
• Conclusion
Age % BR % Pop.
% BR to Population
18-24 0.05 0.13 0.06725-29 0.15 0.09 0.12430-34 0.15 0.10 0.13335-39 0.15 0.11 0.15240-44 0.16 0.11 0.17245-49 0.10 0.10 0.09550-54 0.09 0.09 0.07455-59 0.08 0.07 0.04760+ 0.07 0.22 0.136
25%
Current Retirement Structure
1.
2.3
.
1. Decide retirement income2. Step 1 depicts value to amortize at 653. Start investing! No breaks, no options.
No Guarantees!
Retirement OptionsOption #1 • Forward Contract w/
guarenteed Floor• Next best option =
bond market for 2.5%
Option #2• Assume yearly
“sale”of retirement savings, much like Cargill
• Thus yearly forward contracts, until V65 with an “average window” of a year
• Option to shout yearly
Option #1
SPo = 23.35 SP1 = 23.35Bond = 38.26Expect = 51.16
• K = expected value – growth attributed in bond market• Floor! Guaranteed $51.16/share or greater.• Cost of underlying short put is purchased as premium• Assumed market for 40 year market for Vanguard 500 Index
40yrs
Option #2: Increased Control
• Cargill, except instead of a guarentee for commodity pricing, guarentee for stock sale
• Q = # of stocks needed for retirement quota• Commodity = volatile stock market index shares
• Price a 40 year forward contract (based on V0 retirement) to be sold at time 0
• Average window of the entire year • Delivery in 39 years• Continue each year until 64 with 1 less year delivery each year
Conclusion
• 2009 hurt: “those with more than $200,000 in account balances had an average loss of more than 25 percent.” (ebri.org)
• More options are needed in retirement plans• As social security deflates further and news articles
continue to criticize the importance of retirement, individuals will look for new options.