To establish lump sum shortfall from the amount of payouts when performing retirement needs calculations,which of the following rates do we use?
A)Investment rate
B)Inflation rate
C)Real rate
D)Both a and b
E)Both b and c

Question

Quizplus · Accepted Answer

To calculate the lump sum shortfall, we use the real rate, which takes into account inflation and investment returns. Therefore, option C (real rate) is the best choice. The investment rate (option A) and inflation rate (option B) are important factors to consider when performing retirement needs calculations, but they are not used to establish the lump sum shortfall.

To Establish Lump Sum Shortfall from the Amount of Payouts