Question

Joe Dokes retired today with $1,000,000 in his retirement nest egg.   If he followed a cash flow matching immunization strategy using zero coupon treasuries (STRIPS, CATS, or the like), for how many years could he take out $100,000 given the following yields on zero coupons, an approximation of their levels on 8/16/19?   What would you advise Mr. Dokes to do in order to prolong the life of his nest egg?

Year
1	1.70%
2	1.48%
3	1.48%
4	1.48%
5	1.42%
6	1.43%
7	1.44%
8	1.45%
9	1.46%
10	1.55%
11	1.57%
12	1.60%
13	1.62%
14	1.65%
15	1.67%
16	1.70%
17	1.72%
18	1.75%
19	1.77%
20	1.80%
21	1.82%
22	1.85%
23	1.87%
24	1.90%
25	1.92%
26	1.95%
27	1.97%
28	2.00%
29	2.02%
30	2.03%

Answer 1

We need to prepare Yield and withdrawal table

Year	Yields %	Nest egg Value Opening	Yields	Withdraw	Nest egg Value Closing
	(A)	(B)	(A*B)	(C)	(B+(A*B)-C)
0					1000000
1	1.70%	1000000	17000	100000	917000
2	1.48%	917000	13572	100000	830572
3	1.48%	830572	12292	100000	742864
4	1.48%	742864	10994	100000	653858
5	1.42%	653858	9285	100000	563143
6	1.43%	563143	8053	100000	471196
7	1.44%	471196	6785	100000	377981
8	1.45%	377981	5481	100000	283462
9	1.46%	283462	4139	100000	187601
10	1.55%	187601	2908	100000	90508
11	1.57%	90508	1421	91929	0
12	1.60%	0	0	0	0
13	1.62%	0	0	0	0
14	1.65%	0	0	0	0
15	1.67%	0	0	0	0
16	1.70%	0	0	0	0
17	1.72%	0	0	0	0
18	1.75%	0	0	0	0
19	1.77%	0	0	0	0
20	1.80%	0	0	0	0
21	1.82%	0	0	0	0
22	1.85%	0	0	0	0
23	1.87%	0	0	0	0
24	1.90%	0	0	0	0
25	1.92%	0	0	0	0
26	1.95%	0	0	0	0
27	1.97%	0	0	0	0
28	2.00%	0	0	0	0
29	2.02%	0	0	0	0
30	2.03%	0	0	0	0

According to above calculation if he takes 100000 per year it will last for 11 Years

To prolong the life of his next egg he need to reduce his yearly takes and need to find other plans with higher yields.