By ROBERT POWELL

The Judeo-Christian world has its 10 commandments. Newton has his three laws of motion. And now retirement has its seven equations.

Actually, the world of retirement has had these equations for a while, in some cases for hundreds of years. But Moshe Milevsky, a York University professor, has put all these equations into one readable and, truth be told, highly accessible book, "The 7 Most Important Equations for Your Retirement."

In his book, Milevsky reveals not just the equations, but he also provides portraits of the people and ideas that are behind all our retirement planning. Here's a look at the equations that both students of retirement and would-be students need to know if they want to build a bulletproof retirement plan.

If you want to know how long your nest egg might last, consider equation No. 1, which was developed by Italian mathematician Leonardo Fibonacci some 800 years ago, back in the early part of the 13th century.

Fibonacci, who is best known for introducing and popularizing the Hindu-Arabic number system in the Western world (we dare you to use Roman numerals to perform long division) and a number sequence that bears his name, also gets credit for this one: the present value analysis.

That right, credit Fibonacci--who Milevsky calls the first financial engineer or quant--when you want the answer to this question: How long will your nest egg last in retirement if you were to stop contributing today and instead withdraw a fixed amount each year while earning a fixed interest rate each year for the rest of your life?

So, for instance, if you have $250,000 set aside for retirement earning 4% per year and you plan to withdraw $12,000 per year, your money would last 45 years. If, however, you decide to withdraw $24,000 per year, your money would last just 13 years.

Today, there are sophisticated ways of figuring out how long your nest egg will last, but this equation, wrote Milevsky, "provides a quick and sobering assessment of whether you can maintain your standard of living, or when the money will run out if you can't."

And oh by the way, Milevsky thinks Fibonacci likely retired wealthy and didn't outlive his assets. The city of Pisa gave Fibonacci an annual pension of 20 Pisan pounds for life for service to the city.

See the article here:
7 Equations for a Secure Retirement