Refer to the comparison line graph which shows how the net worth of Claire Kozar

Question

Refer to the comparison line graph which shows how the net worth of Claire Kozar's retirement savings will change under certain assumptions as she gets older and as she withdraws living expenses from savings. Suppose Claire has dollar 4,00,000 at age 60, retires at 60, reaches age 74, in good health, and that the average annual return has proved to be 8 percentage. About how much longer can she expect her money to last? She can expect her money to last for about years. What options might she consider in order to extend that time? She can cut down on her expenses or opt for a retirement savings scheme with a higher percentage of returns. She can opt for a retirement savings scheme with a lower percentage of retunes. She can start spending her money lavishly

Explanation / Answer

a) As we see from the plot for 8% returns she runs out of money at around 79 years age

So money will last for about 19 years

b)

A. Lower expenses and higher returns both guarantee she will extend that time.

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