(Chapter 21) The United States Social Security System offers 62-year-olds with two options: 1. A lifetime...
(Chapter 21) The United States Social Security System offers 62-year-olds with two options:
1. A lifetime real annuity with a specific monthly payment. Monthly payments start immediately
2. A deferred lifetime real annuity with a higher specific monthly payment.
Monthly payments don’t start until the worker reaches age 67. Suppose you are a 62-year-old American worker. What factors determine how you decide between the two options?
Homework Answers
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Factors which determine between choosing 2 options are:
1. Amount of liquid savings available with me at age 62. Is enough savings available, then its better to delay.
2. The reinvestment rate between the age of 62 and 67. If it's high that what Social security offers, then its better to take money early and Invest it in the higher investment rate.
3. The current economic situation. Is there any crises going on? If yes, it's better to withdraw.
4. Family needs and obligations. If there is any like Children's education. There is an obligation to withdraw.
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(Chapter 21) The United States Social Security System offers
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