Question

Richard is a successful executive at a large company with headquarters in Houston, Texas. He celebrated his 58th birthday in the current year. Richard has worked with the company for more than 20 years. As a result, he has significant savings accumulated as well as a company pension. He is considering retiring from employment early at age 60. Even if he retires early, he can continue the company paid health insurance as a retiree until he qualifies for Medicare at age 65. He would like to evaluate his options for taking Social Security retirement benefits at age 62, at FRA, or at age 70. Based on his earning history, his Social Security statement show`s that he will receive $2,946 per month at FRA. Inflation is expected to be 2.0% and his life expectancy is 95. He has asked you to do an analysis of differences in his monthly cash flow from Social Security at each age.

A: Show the calculation for the analysis of the present value for taking benefits at age 62.

B: Show the calculation for the analysis of the present value for taking benefits at age FRA.

Answer 1

ANSWER:

1. Richard is working in the company, she is the very talented employee, the company provides the head quarters in houston the richard .
2. he is more experiance employee in working the company more than 20 years, in recently, the celebrated the 58 years birthday in the present year.
3. The company to provide pension or savings them.

The richard to provide facilaties & benifits for the age 62 years :

  

AGE	BENIFITS	FRA	CASH FLOW	LIFE EXPENTANCY	PAYMENTS	INFLATION RATE
62	70%	$2850	$2850*70/100 = 1995	95 YEARS	374	0.035
67	100%	$2840	$2870*100/100 = $2580	95 YEARS	325	-2538
70	124%	$2850	$2850*124/100 = $3534	95 YEARS	250	-3234

AT inflation rate is 2.0 , its provides the benifits of the social security at the age of the richard 70 years