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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...
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.