The Center for
Mathematics and Quantitative Education at Dartmouth

Money Matters
The Financial Literacy Initiative at Dartmouth College

Your Parents Will Move in With You!
How much do they need to retire?

This module does not actually answer that question, although it leads the students through a set of calculations that mimic those done by financial advisors in search of an answer for their clients. Two problems are addressed. What is the likely annual income that will be necessary for a couple in 25 years given their current income? Second, how much must be present in investments at retirement in order to produce this level of income? Because the answers to both questions depending on knowing rates of return, this module also addresses the margin of error in these calculations. Finally, the spreadsheets offered include randomized increases in cost of living and randomized returns of the market, allowing students to see the effects of uncertainty on their projections.

We suggest that instructors open the instructor notes for this module, save them as a PDF file, and print them for reference.

This module also includes assessment tools (pre and post test) and a case study for deeper investigation of this topic. These resources are available by contacting Audrey Brown .

Clyde Martin, Texas Tech University, Eric Gaze, Bowdoin College, Dorothy Wallace, Dartmouth College, Kim Rheinlander, Dartmouth College, Caren Diefenderfer, Hollins University