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Determine the average number of years

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Reference no: EM133074799

The actual returns of the S&P since 1928 are in the attached file.

The Assignment

Your team works at a financial advisory firm and is asked to work with a client, Ms Christie, who has retired and has 400K in liquid assets.  

To maintain a semblance of her prior lifestyle she needs to draw down 50K per year to complement social security and other pension payments.

a) Based on actual data (use the random function to select different starting years), determine the average number of years she can continue to draw down 50K before she runs out of money.

b) Second, since your client understands distribution (she took this course) and comes from a family of septagenarians, she wants to know how much she can draw down if she expects to live to 78. She is 65 now.

c) finally, any other advice you would like to offer

Year

S&P 500 (includes dividends)

3-month T.Bill

Return on 10-year T. Bond

1928

43.81%

3.08%

0.84%

1929

-8.30%

3.16%

4.20%

1930

-25.12%

4.55%

4.54%

1931

-43.84%

2.31%

-2.56%

1932

-8.64%

1.07%

8.79%

1933

49.98%

0.96%

1.86%

1934

-1.19%

0.32%

7.96%

1935

46.74%

0.18%

4.47%

1936

31.94%

0.17%

5.02%

1937

-35.34%

0.30%

1.38%

1938

29.28%

0.08%

4.21%

1939

-1.10%

0.04%

4.41%

1940

-10.67%

0.03%

5.40%

1941

-12.77%

0.08%

-2.02%

1942

19.17%

0.34%

2.29%

1943

25.06%

0.38%

2.49%

1944

19.03%

0.38%

2.58%

1945

35.82%

0.38%

3.80%

1946

-8.43%

0.38%

3.13%

1947

5.20%

0.57%

0.92%

1948

5.70%

1.02%

1.95%

1949

18.30%

1.10%

4.66%

1950

30.81%

1.17%

0.43%

1951

23.68%

1.48%

-0.30%

1952

18.15%

1.67%

2.27%

1953

-1.21%

1.89%

4.14%

1954

52.56%

0.96%

3.29%

1955

32.60%

1.66%

-1.34%

1956

7.44%

2.56%

-2.26%

1957

-10.46%

3.23%

6.80%

1958

43.72%

1.78%

-2.10%

1959

12.06%

3.26%

-2.65%

1960

0.34%

3.05%

11.64%

1961

26.64%

2.27%

2.06%

1962

-8.81%

2.78%

5.69%

1963

22.61%

3.11%

1.68%

1964

16.42%

3.51%

3.73%

1965

12.40%

3.90%

0.72%

1966

-9.97%

4.84%

2.91%

1967

23.80%

4.33%

-1.58%

1968

10.81%

5.26%

3.27%

1969

-8.24%

6.56%

-5.01%

1970

3.56%

6.69%

16.75%

1971

14.22%

4.54%

9.79%

1972

18.76%

3.95%

2.82%

1973

-14.31%

6.73%

3.66%

1974

-25.90%

7.78%

1.99%

1975

37.00%

5.99%

3.61%

1976

23.83%

4.97%

15.98%

1977

-6.98%

5.13%

1.29%

1978

6.51%

6.93%

-0.78%

1979

18.52%

9.94%

0.67%

1980

31.74%

11.22%

-2.99%

1981

-4.70%

14.30%

8.20%

1982

20.42%

11.01%

32.81%

1983

22.34%

8.45%

3.20%

1984

6.15%

9.61%

13.73%

1985

31.24%

7.49%

25.71%

1986

18.49%

6.04%

24.28%

1987

5.81%

5.72%

-4.96%

1988

16.54%

6.45%

8.22%

1989

31.48%

8.11%

17.69%

1990

-3.06%

7.55%

6.24%

1991

30.23%

5.61%

15.00%

1992

7.49%

3.41%

9.36%

1993

9.97%

2.98%

14.21%

1994

1.33%

3.99%

-8.04%

1995

37.20%

5.52%

23.48%

1996

22.68%

5.02%

1.43%

1997

33.10%

5.05%

9.94%

1998

28.34%

4.73%

14.92%

1999

20.89%

4.51%

-8.25%

2000

-9.03%

5.76%

16.66%

2001

-11.85%

3.67%

5.57%

2002

-21.97%

1.66%

15.12%

2003

28.36%

1.03%

0.38%

2004

10.74%

1.23%

4.49%

2005

4.83%

3.01%

2.87%

2006

15.61%

4.68%

1.96%

2007

5.48%

4.64%

10.21%

2008

-36.55%

1.59%

20.10%

2009

25.94%

0.14%

-11.12%

2010

14.82%

0.13%

8.46%

2011

2.10%

0.03%

16.04%

2012

15.89%

0.05%

2.97%

2013

32.15%

0.07%

-9.10%

2014

13.52%

0.05%

10.75%

2015

1.38%

0.21%

1.28%

2016

11.77%

0.51%

0.69%

2017

21.64%

1.39%

2.80%

2018

-4.23%

2.37%

-0.02%

2019

31.22%

1.55%

9.64%

2020

18.01%

0.09%

11.33%

Reference no: EM133074799

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