Course: Financial Mathematics - Pension Calculation The following workers are Juan and Juanita. Juan Juanita Current age 29 28 Retirement age 65 60 Life expectancy 80 83 Salary (I =10% AFP**) $1,000 $1,000 Fund profitability 6.5% 6.5% Answer: 1. Calculate retirement amount for each worker 2. How much should Juanita save to have same amount as Juan? 3. Determine income (I) that both will receive at retirement under calculation made in point 2. 4. Calculate amount of retirement if Juan retires at age 67 and Juanita retires at age 65. 5. Juan, at 10th year of his working life, decides to start a business, which lasted 12 years, without contributing to his AFP**, and then decides to work again under same conditions. How will be his pension at 67? 6. Suppose now that both Juan and Juanita, by state policy, at time of their birth, $1 million was deposited in their respective AFP** accounts. Based on item 1., calculate EFFECT on retirement income for Juan and Juanita.

** AFP is Pension Fund Administrator (PFA)