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

Ms. Neha Kapoor, a 35-year-old software professional, wants to retire at 55 and expects to live until 85. Her adviser projects her retirement corpus requirement. Which of the following changes would INCREASE the corpus required at retirement, all else remaining the same?

A longer life expectancy increases the required corpus, because the funds must support withdrawals for more years. Higher post-retirement returns, lower inflation and lower expenses each reduce the corpus needed rather than raise it.

  1. AA higher expected post-retirement rate of return on the corpus
  2. BA lower expected rate of inflation after retirement
  3. CAn increase in the expected life expectancy from 85 to 92Correct
  4. DA reduction in her estimated post-retirement monthly expenses

Explanation

A longer retirement period means more years of withdrawals to fund, so the corpus needed rises. A higher return on the corpus and lower inflation both reduce the required corpus, as does lower expenses.

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