Simon just turned 66 and is trying to decide whether to take his Social Security benefits today or to wait until he is 70. The risk-free rate of interest is 2%, and Simon anticipates that this rate will not change in the foreseeable future. If Simon decides to take his benefits at age 66 (his current age), he will get 12*$2,216 = $26,592 per year. If he waits 4 years, he will get $3,067 per month. 1) Simon estimates that he will die on his 85th birthday. Should he wait until 70 or take the Social Security now? Note: In doing this problem, assume that benefits are paid at the end of the year in which they are taken. Also assume that Simon will die exactly on his birthday. Your Retirement Benefit Estimate The amount you receive when you first start your benefits sets the base amount you will get for the rest of your life. You can get lower monthly payments for a longer period of time or higher monthly payments over a shorter period of Jime. Assuming you continue earning about the same amount, if you • wait to start your benefits at your full retirement age (66 Years and 00 Month(s) for you), your monthly benefit will be about..$2,216.00. • delay starting your benefits until age 70, your monthly benefit will be about.$3,067.00.
Simon just turned 66 and is trying to decide whether to take his Social Security benefits today or to wait until he is 70. The risk-free rate of interest is 2%, and Simon anticipates that this rate will not change in the foreseeable future. If Simon decides to take his benefits at age 66 (his current age), he will get 12*$2,216 = $26,592 per year. If he waits 4 years, he will get $3,067 per month. 1) Simon estimates that he will die on his 85th birthday. Should he wait until 70 or take the Social Security now? Note: In doing this problem, assume that benefits are paid at the end of the year in which they are taken. Also assume that Simon will die exactly on his birthday. Your Retirement Benefit Estimate The amount you receive when you first start your benefits sets the base amount you will get for the rest of your life. You can get lower monthly payments for a longer period of time or higher monthly payments over a shorter period of Jime. Assuming you continue earning about the same amount, if you • wait to start your benefits at your full retirement age (66 Years and 00 Month(s) for you), your monthly benefit will be about..$2,216.00. • delay starting your benefits until age 70, your monthly benefit will be about.$3,067.00.
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter14: Planning For Retirement
Section: Chapter Questions
Problem 2FPE
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Transcribed Image Text:Simon just turned 66 and is trying to decide whether to take his Social Security benefits today or to wait
until he is 70. The risk-free rate of interest is 2%, and Simon anticipates that this rate will not change in the
foreseeable future. If Simon decides to take his benefits at age 66 (his current age), he will get 12*$2,216
= $26,592 per year. If he waits 4 years, he will get $3,067 per month.
1) Simon estimates that he will die on his 85th birthday. Should he wait until 70 or take the Social
Security now?
Note: In doing this problem, assume that benefits are paid at the end of the year in which they are taken.
Also assume that Simon will die exactly on his birthday.
Your Retirement Benefit Estimate
The amount you receive when you first start your benefits sets the base amount you will get for the rest of your life.
You can get lower monthly payments for a longer period of time or higher monthly payments over a shorter period of
Jime.
Assuming you continue earning about the same amount, if you
• wait to start your benefits at your full retirement age (66 Years and 00 Month(s) for you), your monthly benefit will
be about..$2,216.00.
• delay starting your benefits until age 70, your monthly benefit will be about.$3,067.00.
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