New Retirement Plans

OPTIONS TO LIVING HAPPILY EVER AFTERBY, DAVID OWEN

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

R

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.