Bodie2e_Chapter05 Household Saving and Investment Decisions 英文版PPT金融学(第二版) 教学课件

fund HumanCap Capital
Real $
300000
200000
100000
0
35
45
55
65
75
-100000
Age 12
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The Inter-temporal Budget Constraint
• That the investment will return 10%/year
• That you plan to remain retired for 20-years, and will require income that is indexed to inflation
• The tax rate on all taxable income streams is 30%, both now and after retirement
• Contributors pay a tax during their working years, and in return qualify for a lifetime annuity in their old age
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How Much Should I Save and Consume?
• Consider two approaches:
– Target replacement rate of pre-retirement income
– Maintain the same level of consumption spending
5000
0
35
40
45
50
55
60
65
70
75
80
-5000
Ag e 11
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Human Capital and Wealth
700000
600000 500000 400000
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Labor Income and Consumption
35000
30000
25000
Real $
20000 15000 10000
lab_inc consump
– The analysis becomes progressively more complex as we make the assumptions more realistic.
• What if you don’t know your date of death., returns are risky, et cetera?
• Your real labor income is $30,000/year
until age 65
• Interest rates exceed inflation by 3%/ year
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Human Capital and Permanent Income
• Human capital
– The present value of one’s future labor income
• Permanent income
– The constant level of (real) consumption spending that has a present value equal to one’s human capital
Target replacement rate Conclusion
• You will have noticed that your preretirement consumption is $30,000 $5,646 = 24,354; but the real retirement income is only $22,500
– It is usual for marginal tax rates to be lower after retirement, but this is not the key benefit
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tT 11C tit 1 B iTW 0tR 11 Ytit
i = real interest rate R = number of years to retirement T = number of years of remaining life W0 = initial wealth B = bequest
• The next method equates consumption
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Maintain the same level of consumption spending
n = 30, i = 3, FV = 0, PMT = 3,000, CPT PV, n = 45 CPT PMT gives $23,982
• The savings are then $30,000 - $23,982 = $6,018
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Target replacement rate of pre-retirement income
• First compute the retireme来自百度文库t income. Many experts recommend a rate of 75% of the pre-retirement income.
save each year
n=15, i = 3, PV=0, FV= -268,604 -> PMT=5,646
• To obtain a real $22,500 you need to save $5,646 per year
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life cycle
5.1 A Life-Cycle Model of Saving
• Assume that you are currently 35 years old, expect to retire in 30 years at 65, and then live for 15 more years until 80
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Omar’s Life-Cycle Savings Plan
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– Assume that your level of real consumption is C
– The present value of consumption over the next 45 years must equal the present value of earnings over the next 30 years
IRA Benefits
– The major benefits are more subtle. Assume:
• You can reserve $2,000 of pre-taxed income for investment, starting next year, for the next 40-years. This will grow at the rate of inflation of 3%
Social Security as Investment Substitute
– If social security pays a return equal to 3% in the last example, then just reduce the savings by the social security tax
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5.3 Deferring Taxes Through Voluntary Retirement Plans
– Many countries encourage voluntary savings for retirement through provisions of the tax code.
– In the US employees are permitted to set up Individual Retirement Accounts (IRA) that defer payment of taxes until retirement
– The rules are a little complex, but an IRA may be used by an investor to save money for retirement. Payments into the plan are tax-deductible, but the flows from the plan after retirement are taxed
Chapter 5: Household Saving and Investment Decisions
Objective
Financial decisions in an
uncertain world; Human
capital, permanent income
1
decisions over
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5.2 Taking Account of Social Security
• In many countries the government obliges citizens to participate in a mandatory retirement income system called social security
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Target replacement rate of pre-retirement income (Cont.)
• Next compute the retirement income • Next compute how much you need to
– $30,000*0.75 = $22,500/year – using your calculator compute the present
value of the retirement funds as an regular annuity
n=15, i = 3, FV=0, PMT=-22,500 -> PV=268,604