GAP by suiqizheng


									Retirement Gap Forecaster

This calculator is part of Momentum's ongoing support to financial advisers.

It does not constitute advice by Momentum to your client and
may be used only on condition that you verify and endorse
its contents as your personal advice.

Every care has been taken to ensure accuracy and legal correctness,
but this is not guaranteed. The responsibility to verify the
validity hereof rests on the user.

Copyright exists in this material and it may not be copied or duplicated in any manner.
Please note that most of the calculations are based on unique features of Momentum
products. The results may be invalid if applied to products of other insurers, which
will compromise your recommendations to your client.

    I accept the conditions of use
Retirement Gap Forecaster

The Retirement Gap Forecaster provides illustrations on the present value of
all types of retirement capital
By various scenario settings, it assists in determining future contribution levels,
a realistic retirement date and income levels after retirement


Gender                 Male

Financial Adviser
Date of report         16-Oct-2011

                      Date = today
                                            Retirement Gap Forecaster
Personal detail                                                                  Assumptions
Current age                                          30                          Income and capital needs at retirement
Retirement age                                       55                          Capital needs and debt                              None
Monthly income                                       R0                          Monthly income                                       R0
Current provision                                                                Income required to age                               90
Company retirement fund                              R0                          New provision
 Current contributions                               R0                          New lump-sum                                         R0
RA+Endowment+Recurring                               R0                          Recommendation: New monthly investment
 Current contributions                               R0                          Implemented: New monthly investment
Other provisions                                     R0                          Contribution increases                              8.0%
Preservation fund                                    R0                          Fund growth of this new provision                   10.0%

                        Capital build-up to retirement                                                Utilisation of capital after retirement


                                                                                  55       60      65        70       75       80      85        90
 30         35          40        45        50
        New Provision        Preservation    Other        Recurring   Employer             Outflows           Capital: Implemented           Capital: Recommended

Capital at retirement date                                 R0                    Your life expectancy after retirement is                       22.00     years,
Present value of retirement capital                        R0                    which is equivalent to attaining the age of                    77        years.

Retirement annuity and endowment split

The purpose of this section is to determine the most tax-efficient investment vehicle.

Your maximum tax-deductible contribution to a Retirement Annuity is the greatest of the
following three amounts:
1. R1 750       or
2. R3 500 less allowable Pension Fund contributions, being :            R 3,500   minus         R0
                                                                    =   R 3,500   or
3. 15% of taxable non-retirement funding income, being :                  R0          X         15%
                                                                    =     R0
Your maximum tax-deductible contribution to a Retirement Annuity is then                         R 3,500     per year.
At the moment your contribution to all Retirement Annuities is            R0      per annum.
It follows that the maximum additional contribution allowed is          R 3,500     p.a. , or     R 292      per month.

Proposals based on the calculator results

The calculator result proposes the following investment contributions:
Single investment                                R0
Recurring monthly investment                     R0        with a        8.00%    annual increase.

Given this result and your overall tax position, it is proposed that the investments be structured as follows:
Monthly Retirement Annuity                       R0
Monthly Endowment                                R0
= Total monthly contribution of                  R 0 according to the calculator.
Single Retirement Annuity                        R0
Single Endowment                                 R0
= Total single contribution of                   R 0 according to the calculator.

Please refer to the enclosed assumptions on which all calculations are based.

            0                                                       0                            16-Oct-11
Other retirement provisions

Assets that will be liquidated at retirement (or that could be
liquidated) and then invested to generate income.

                                Current Value           Growth

Fixed property
Listed shares
Business interests
Family trust
                     TOTAL                   R0

RAs, endowments and other investments
Investments that will provide retirement income

                                    Current            Annual          Monthly
Retirement Annuities                 value             update        contribution
Contract 1

Contract 1

Unit trusts
Contract 1

Cash investments
Contract 1

                      TOTAL                   R0                                R0


These are all investments that is part of your retirement planning.
Your investments for other purposes, such as education or short term goals, are not included in these calculation.
Monthly income
Please provide detail of these sources of income

Gross retirement funding income / fund salary           (before tax)
Non-retirement funding income                           (taxable)
                     Total                         R0

Retirement Planning:
Most of us dream about our retirement and how we will have time to do the things that we do not
have time for during our working lives. However, most people will not realise their dreams, simply
because they will not be able afford to do so. In South Africa, less than 10% of people are able to
retire financially independent. The adage of 'Failing to plan is planning to fail' is most applicable to
this area of finacial planning. The sucess of a retirement plan is largely dependent on how early in
your life you start doing something about it.
This analysis will assist you in determining a suitable retirement age and setting realistic income
objectives. It aims at ensuring that you are able to maintain that standard of living throughout your

This advice process concludes with the recommendation of certain solutions as an integral part of
your retirement strategy.

Current situation

Today, at the age of 30, you intend to retire at age 55. Your current monthly taxable income is R0
and you plan to live on R0 a month after retirement to cover your general living and medical
expenses. There is R0 for general expenses that will increase by 8% a year. There is no provision
for medical expenses.

At retirement and during the years thereafter, you might need capital for various one-off or
recurring purchases. Your needs, expressed in present value terms, are as follows:
Capital needed for                Current cost      At age   Interval     Last spend

Need1                                 None

0                                     None

0                                     None

0                                     None

0                                     None

0                                     None

At retirement, or during the years thereafter, there might be some debt to settle. Your position in
respect of these general debts will be as follows:

Debt type                       Current balance        Remaining             At age

Bond: residential property            None
Bond: Other                           None
Lease                                 None
Hire Purchase                         None
Personal loan                         None
Credit card                           None
Existing and future retirement provisions
At the moment your existing retirement provisions may be summarised as follows:

Approved funds and recurring investments:
                                      Current value                             Annual increase
Employer's retirement fund                    R0               None                Salary %
Retirement annuities                      None
Endowments                                None
Unit trusts                               None
Cash                                      None

Please note that it is an important condition that you must maintain all these provisions up to your
retirement date and not use it for any purpose other than your retirement.

Assets to be liquidated at retirement:
                                      Current value

Fixed property:                           None
Listed shares:                            None
Business interests:                       None
Family trust:                             None
Other:                                    None
Other:                                    None

Preservation funds
You have no preservation funds (withdrawal benefits from previous employers).

Apart from your investment income, there are other possible income sources after retirement. Your
situation is as follows:
Post-retirement employment:                         None
Rental from fixed property:                         None
Other source:                                       None

Reduction of income needs in future:
To preserve your retirement capital, an additional strategy is to draw your stated level of income in
the beginning years of retirement, but reduce it after a number of years. For the purposes of this
analysis, you have opted not to do so.

These existing provisions are projected to provide a capital base of R0 at retirement. This may be
graphically illustrated as follows:

                                        Capital build-up to retirement

 30               35             40                45          50
                              New Provision    Preservation    Other     Recurring      Employer
At your retirement at age 55 you have a life expectancy of 22 years. This is merely a guideline and
refers to the population in general terms. Your goal is to provide retirement income and capital to
age 90.

Considering your current situation and with your personal preferences in mind, you should not
make a new recurring investment right now. You will not make a single-premium investment.

We illustrate your final retirement position below. In the graph, the blue line indicates the capital
balance that you will have, if you decide to implement our savings recommendation. The grey bars
indicate the capital balance of the savings that you implemented. The red bars indicate outflows
from capital, consisting of needs for daily living and capital expenditure.

In short, at the ages where the grey graph (the savings you implemented) shows a positive
balance, you are on target in terms of access to capital as well as for your desired standard of living
of R0 a month in present buying-power-terms.

At the ages where the grey graph shows no positive capital balance, you are below target in terms
of access to capital and your desired standard of living.

                             Utilisation of capital after retirement

55         60         65         70         75          80         85         90
                                 Capital: Implemented             Outflows
Retirement planning assumptions
As with any calculation, the outcome of this analysis relies on the accuracy of these assumptions
that we make:
Consumer Price Index (CPI) of 8% per year.
During your working life, your income is expected to increase by 9% per year.

Annual growth rates of the following investment types assumed at:

Employer retirement fund: 10%
Retirement annuities: 11%
Endowments: 11%
Unit trusts: 11%
Cash: 8%
Preservation funds: 10%
Fixed property: 0%
Listed shares: 0%
Business interests: 0%
Family trust: 0%
Other: 0%
Other: 0%
Return on capital base invested after retirement: 10%
New retirement provision made today: 10% growth a year. Any new recurring monthly investment will increase annually by

It is further assumed that all products that you agree to buy today, will continue to provide their tax benefits and other
structures as they do at the moment.

At our meeting to discuss this analysis, we will make any changes that you might want to make to
our recommendation before implementing it.

It is important to monitor the progress of every financial strategy to ensure that it comes to a
successful conclusion. We will therefore determine future revision dates that are convenient to you.

                                      0                16 October 2011                                                       0
Income and economic activity after retirement
Income needs after retirement

General needs                                R 0 increasing by     8.0%     per year (CPI is set at         8.0%   pa)
Medical aid                                       increasing by             per year
Total income requirement                     R0      (This is     #DIV/0!   of your current gross income)

Other sources of income after retirement

Post-retirement employment                          earned for              years and increasing by                per year
Rental from fixed property
Other source
                   Total                     R0

Reduction of income needs after retirement

Income requirement will be reduced by               per month               years after retirement

Capital needs and settlement of debt
Expenses and purchases
        Retirement age:
                                                                                      Last expense at    Cost of initial
              55             Current price    Required at age   Repeat interval
                                                                                            age            expense

Need1                                                                                                                 R0
                                                                                  5                 55

Settlement of debt
                               Current            Interest           Term                                   Balance
                                                                                      Settled at begin
                               balance              rate           to end of                             in year when
                                                                                      of retirement yr
                                                                   contract                                  settled

Bond: residential property                                                                                    R0
Bond: Other                                                                                                   R0
Lease                                                                                                         R0
Hire Purchase                                                                                                 R0
Personal loan                                                                                                 R0
Credit card                                                                                                   R0

Company retirement fund

Defined contribution fund

                                 Current                    Contributions
                                                 Employer                   Member

 Current value / contributions    R0                0.0%                     0.0%

                                                     OR                      OR

                                                     R0                      R0
                                                 per month              per month


Years' membership to date          0

Pension benefit is equal to       0.0%     of final salary for every          0      year's service

Annual pension increases          0.0%


Years' membership to date          0

Annual pension increases          0.0%

Preservation funds
Please supply the current fund values                          Utilisation of capital after retirement


Contract 1

          Total                           R0

It is important to preserve withdrawal benefits
from approved funds. The graph illustrates
the negative impact that any premature usage
of these benefits have on your standard of
living after retirement.

                                                  55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89
Withdrawal amount                         R0
                                                                     Income Required   Capital Balance
Fund balance                              R0

 Options available upon receipt of a withdrawal benefit

                                                      Take cash benefit: R1 800 tax-free, pay tax of approximately
                                                           -R 324     on the selected withdrawal benefit of      R0
                                                      at an average tax rate of    18.00%

                                                      Transfer full or part benefit to the retirement fund of the new
                                                      employer, no tax today, benefit at normal retirement age

                                                      Transfer full or part benefit to
                                                      Retirement Annuity, no tax
                                                      today, benefit at age 55

                               Transfer full or part benefit to a
                               Preservation Fund, no tax today,
                               benefit at any time

          Date of withdrawal
                                                                    55                       60                63

Growth of company fund                       10.0%
Growth of Retirement Annuities               11.0%
Growth of Endowments                         11.0%
Growth of Unit Trusts                        11.0%
Growth of cash investments                   8.0%
Growth of preservation fund                  10.0%
Expected salary increases                    9.0%
Consumer price index                         8.0%
Return on capital after retirement           10.0%

All these assumptions are extremely important to the outcome of this planning session.
None of these are based on any certainty and are therefore never guaranteed (except where guaranteed products are used).
All calculations are made on a pure mathematical basis, using the assumptions, and should be compared to and confirmed by an official
quotation from Momentum, which is done on a different basis.

It is of utmost importance that you check and confirm each assumption now and ensure that we discuss this issue on an ongoing basis,
as they need to be adjusted regularly.

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