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Richard is a successful executive at a large company with headquarters in Houston, Texas.He celebrated his58th birthdayin the current year.Richard has worked with the company

Richard is a successful executive at a large company with headquarters in Houston, Texas.He celebrated his58th birthdayin the current year.Richard has worked with the company for more than 20 years.As a result, he has significant savings accumulated as well as a company pension.He is considering retiring from employment early at age 60.Even if he retires early, he can continue the company paid health insurance as a retiree until he qualifies for Medicare at age 65.He wouldlike to evaluate his options for taking Social Security retirement benefits at age 62, at FRA, or at age 70.Based on his earning history, his Social Security statement shows that he will receive $3,750 per month at FRA.Inflation is expected to be 2.0% and his life expectancy is 90.He has asked you to do an analysis of differences in his monthly cash flow from Social Security at each age.

1.What is Richard's full retirement age (FRA)? (8 points)

2.What is the reduced monthly SS retirement benefit if Richard draws at age 62?Show your calculation.Use formula from the book.(8 points)

3.What is the increased monthly SS retirement benefit if Richard draws at age 70?Show your calculation.Use formula from the book.(8 points)

4.Show the calculation for the analysis of thepresent value for taking benefits at age 62.Use time value of money calculation.(12 points)

5.Show the calculation for the analysis of thepresent value for taking benefits at age FRA.Use time value of money calculation. (12 points)

6.Also discount the PV found at FRA back to age 62 for an apples to apples comparison. Use time value of money calculation. (4 points)

7.Show the calculation for the analysis of thepresent value for taking benefits at age 70.Use Time value of money calculation. (12 points)

8.Also discount the PV found at age 70 back to age 62 for an apples to apples comparison.Use time value of money calculation. (4 points)

9.If you were Richard's financial advisor, would you recommend taking benefits at age 62, FRA, or 70?Give the reasoning for your recommendation.Your answer should be at least 2 paragraphs in complete sentences.(12 points)

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