Skip to content

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

Ms. Nair, aged 45, wants to retire at 60 and expects to live till 85. Which of the following changes would most directly INCREASE the corpus required at retirement, all else equal?

A longer expected life expectancy increases the required corpus because the savings must fund expenses for more years. Higher post-retirement returns, lower inflation and lower expenses all reduce the corpus needed, so they are not the answer.

  1. AA higher assumed post-retirement rate of return
  2. BA lower assumed inflation rate during retirement
  3. CA longer expected life expectancy (retirement period)Correct
  4. DA reduction in her post-retirement lifestyle expenses

Explanation

A longer retirement period means expenses must be funded for more years, raising the required corpus. A higher return on corpus, lower inflation and lower expenses each reduce the corpus needed. Hence only the longer life expectancy raises it.

Did you get it right without looking?

One question tells you little. A timed set on Retirement Planning Basics shows your real accuracy, how long you take and where you lose marks.

Practise Retirement Planning BasicsFree diagnostic mock

More Retirement Planning Basics questions