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In: Finance

The Time Value of Money is an important component of retirement planning. Read the following three...


The Time Value of Money is an important component of retirement planning. Read the following three WSJ articles and answer the questions below related to retirement.



1. Why are people retiring later in life now than they were previously? Is this because they don't want to "sit around all day" or because they have not accumulated a large enough nest egg? What is your answer to the retirement crisis?

Solutions

Expert Solution

Answer: Time value of money- This concept is related to value of money, this concept says that value of money in your hands, decreases as the time passes, purchasing power of money decreases if you go to purchase something while if you invest the money, value of money increases as the time passes.

Retirement is the stage where people get retired from work and they do not get regular salaries or wages, after retirement, they are dependent on the accumulated savings, investment, property rent etc. People do not want to retire early because they have not nested enough eggs in their baskets. They are not having enough money that can be spent after retirement, they still want to earn for survival, they want to earn for the medical bills that increases as the people grow older. Working people may lose many benefits if they go for early retirement, they will not get monthly income, they will only get pension that is lower than their salaries. They will also not get employer contribution if they retire early. People generally retire between the age of 60 to 65, after the retirement also there is a long way to go. They can live 20 or 30 more years after the retirement so for securing the future and uncertainty, people work even after the retirement or they will not get retired soon. They do not want to be a liability on their children. They want to earn more and more money until their health is good enough to work.


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