Nick is expected to receive full social security retirement benefit of $1325 per month when he turns 67. He has an option to delay his retirement till age 70 and get increased benefits. Should Nick take full benefit at 67 or delay benefit at age 69 if his life expectancy is 85 years and can earn 7% return on investments? Assume no other income and taxes during retirement.

ANSWERS:

A. At 69 since present value at 67 for taking delayed retirement is $177,235

B. At 67 since present value at 67 for taking retirement at 67 is $162,477

C. At 67 since present value at 67 for taking retirement at 67 is $154,804

D. At 69 since present value at 67 for taking delayed retirement is $154,805