Decision to make regarding social security

Assignment Help Financial Management

Reference no: EM131531163

You are advising a friend who has a decision to make regarding Social Security. He is about to turn 62 years old, and is eligible for early Social Security benefits. His early benefits would amount to $ 667 each month. However, he knows that if he waits until he is 65, his monthly benefits would be $ 875 per month. According to the actuarial tables, he is expected to live until his 82nd birthday. He cannot decide if he should take early benefits or wait until he is 65. If his opportunity cost on the Social Security benefits is 8 percent, how would you advise him on this decision? Please ignore taxes and assume your friend is interested only in the expected value of his Social Security payments.

Reference no: EM131531163

Questions Cloud

Discuss data interface to a modern microprocessor : If you had to design a 32-bit address and data interface to a modern microprocessor, how would you go about it? What functions would you include.

A brief introduction describing the chronically ill group : A brief introduction describing the chronically ill group you selected and provide rationale for selecting this illness and the participants.

How much money can he afford to borrow : The bank will lend her money to buy a car at 6% APR compounded monthly (0.5% per month). How much money can he afford to borrow?

What is a mutual holding company : Why have mergers and acquisitions among insurers increased over time? What is the meant by demutualization? What is a mutual holding company?

Decision to make regarding social security : You are advising friend who has decision to make regarding Social Security. assume your friend is interested only in expected value of Social Security payments

Identify four parameter and how they cause timing problems : Identify these four parameters, and explain how they cause timing problems. Delays in interface logic (e.g., address decoder) can be neglected.

Why are expenditure-switching policies : Why are expenditure-switching policies more effective in restoring external balance, and expenditure-changing policies better for restoring internal balance?

What will share of stock sell for today : Storico Co. just paid a dividend of $5.00 per share. If the required return on Storico stock is 10 percent, what will a share of stock sell for today?

Amount of the bank reserve requirement : Consider a bank with loans of $500, equity of $100, deposits of $500, investments of $400, and short-term debt of $200.

User Account

All Pages