Jerry Scott has just accepted a position with a state agency that has a retirement pension plan
Question:
Jerry Scott has just accepted a position with a state agency that has a retirement pension plan calling for joint contributions by the employee and the employer. Scott is now 10 years from retirement age of 65 and expects to contribute $4,000 per year to the plan, which would make him eligible for payments of $10,000 per year for the remainder of his life, starting in 10 years. Because this retirement plan is optional, Scott is considering the alternative of investing annually an amount equal to his $4,000 per year contribution. If Scott assumes that his investments would earn 8% annually, and that his life expectancy is 80 years, should he invest in his own plan or should he make contributions to his employer’s fund?
Step by Step Answer:
Essentials Of Health Care Finance
ISBN: 9781284094633
8th Edition
Authors: William O. Cleverley, James O. Cleverley