Question: Liz is retiring from the US Postal Service and will turn 70 next year.After 39 years of service, her monthly pension is $7,500.She does not…

by | Jun 19, 2022 | accounting | 0 comments


Question:

The professor responded with the following to my answer below:


1. Monthly Pension = $7500


Savings                 =$700000


Life Expectancy = 17.5 years=210 months


Long Term Bond Rate = 3% Rate/12 months = 3/12= .25 monthly rate


Annuit Payment = =PMT(0.25%,210,-700000)=$4,288.62


IRA Mandatory 4% each year IRA growth of 6% per year


700000*4%=28,0000


Liz should choose the annuity at this age.

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