time horizon

when someone is approaching retirement (1 year or less) but not retired, should we consider the one year remaining of employment a separate time horizon (i.e pre-retirement)? i would think yes, but I’ve come across that situation in CFA 2006 q1 and a schweser exam where they ignore it. in the CFA 2006 essay q1 (soccer player) he retires in one year. they say time horizon #1 is retirement until he finshes child support. not: 1.pre-ret 1 year and then 2. retirement why is this?

i thought with the soccer example that you were supposed to create the IPS as though a year had passed.

you were… that’s why we don’t start until Rodolfo turned 35…

I dont think you’ll get any points off (i coudl be wrong) but its talking about her retirment which begins in 1 year and she doesnt get all the fudns until a year from now so the SAA doesnt really beging until 1 year…catch my drift??

yes, the soccer one was done as if the year had passed. and to answer the first q under normal circumstances though it would be a two stage time hoizon. 1 year until retirement, then retirment to death.

Sorry, i was thinking of Yeos hat was 2005.

thanks…that makes sense. it said calculate the return requirement beginning in yr 1 of retirement so I guess that means assume the IPS begins at retirement. the other one I was referring to in case anyone wants to comment is schweser book 1 3am q1. single woman (52) lost her high paying job because her company was acquired. she has a few mil in the bank and has offers from other companies so employment wont be a problem. she decides to travel and stay unemployed for the next 6 months rather than working. i said time horizon 1 = 6 month unemployment 2. = pre-retirement employment. schweser said time horizon 1 = employment, 2. retirement, ignoring the 6 month unemployment period.