While calculating income needs in retirement using the income replacement method, the expense that will be excluded is the contribution to the provident fund, as it is a saving, not a consumption expense.

Practice question from NISM Series XB- Investment Adviser (Level 2) Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

A

Medical costs
B

Rental Expenses
Contribution to provident fund

Correct answer
D

All of the above

Why this is the answer

PF contributions are savings, not ongoing expenses, hence excluded from post-retirement income requirement calculations.

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NISM Series XB- Investment Adviser (Leve…