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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Miscellaneous Aspects of Retirement Planning

Caselet: A client aged 35 wants to retire at 60 and has no pension from an employer. Which of the following is the most appropriate step for the adviser to take first in estimating the retirement corpus?

The adviser should first estimate post-retirement expenses in today's terms and inflate them to the retirement date. This gives the funding target from which the corpus and savings rate are derived, before any products, annuity providers or nominations are considered.

  1. AEstimate post-retirement annual expenses in today's terms and then inflate them to the retirement dateCorrect
  2. BSelect the mutual fund schemes to invest in
  3. CChoose an annuity provider
  4. DDecide the nominee for the retirement account

Explanation

Corpus estimation starts with the expense needs: estimate current-value expenses for retirement, inflate them to retirement, and then compute the required corpus. Product selection, annuity choice and nomination come after the target is known.

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