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It uses formulas similar to the PV (present value) and FV (future value) formulas in Excel. Example. Let's make a rough estimation that inflation will be 2% per year  I would go to the Society of Actuaries longevity calculator, input your details, The basic principle is we are going to find the present value of this stream of payments. and earns the discount rate, will be sufficient to meet all future payments.

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