12. Verify that the traditional tax shelter with a progressive tax (Spreadsheet 21.7) actsas a hedge. Compare the effect of a decline of 2% in the ROR to an increase of 2%in ROR.

SPREADSHEET 21.7 The benchmark (IRA) tax shelter with a progressive tax code A B C D E F G H Retirement Years Income Growth Rate of Inflation Exemption Now | Tax rates in Savings Rate ROR TROR 25 0.07 0.03 10000 Table 21.1 0.15 0.06 0.0291 Spreadsheets are 3 Age Income Deflator Exemption Taxes Savings Cumulative Savings rConsumption 4 30 50,000 1.00 10,000 5, 140 9, 160 9,160 35,700 available in Connect 5 31 53,500 1.03 10,300 5,553 9,880 19,590 36,958 35 70, 128 1.16 11,593 7,480 13,654 77,112 42,262 19 45 137,952 1.56 15,580 14,749 33,880 434,916 57,333 29 55 271,372 2.09 20,938 32,920 72,885 1,455,451 79,076 39 65 533,829 2.81 28, 139 66, 100 172,359 4, 125,524 104,970 40 Total 632,759 879,430 2,036,474 Real Annuity 83,380 41 RETIREMENT 42 Age Nom Withdraw Deflator Exemption Taxes Funds Left Consumption 43 66 241,658 2.90 28,983 49,311 4, 131,398 66,366 47 70 271,988 3.26 32,620 55,500 4,079,381 66,366 52 75 315,309 3.78 37,816 64,340 3,788,036 66,366 57 80 365,529 4.38 43,839 74,588 3, 131,989 66,366 62 85 423,749 5.08 50,821 86,467 1,945,496 66,366 67 90 491,241 5.89 58,916 100,239 0 66,366 68 Total 8,810,670 Total 1,797,848