EGR 403 Introduction to Retirement Planning

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EGR 403 Introduction to Retirement Planning

• Part I - Basic Approach
• Part II - Determine Total Capital to Invest
• Part III - Saving Strategy
• Part IV - Investment Strategy

Click here for streaming audio to accompany
presentation
Dr. Phillip R. Rosenkrantz IME Department, Cal
Poly Pomona
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Disclaimer

• This class project is not intended to replace the
  advice and counsel of licensed financial
  planners. It is primarily a class exercise to
  illustrate the concepts of EGR 403.

The approach used is based largely on the book
How to Retire Early and Live Well (with less
than 1,000,000) by Gillette Edmunds
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Variables to Determine How Much You Need to Live
On

• Total Expenses per year
• Total Capital to invest
• Future increases in expenses
• Estimated rate(s) of inflation
• Investment management fees
• Annual total return from investments

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Basic Retirement CFD
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Where to Start?

• How much, in todays dollars, will you need to
  retire in the manner you desire?
• When would you like to retire?
• Will you have any pension fund or part-time
  income at that time?
• What inflation rate do you want to use?
• What kind of an investment manager are you?

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Our Approach

• Figure out how much you want to have at
  retirement, then
• Work backwards to determine how much you need to
  save starting now.
• Analyze the impact of changes in your assumptions
  (sensitivity analysis)