Richard is a successful executive at a large company with headquarters in Houston, Texas. He celebrated his 58th birthday in 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 would like 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 $3,000 per month at FRA. Inflation is expected to be 1.0% and his life expectancy is 94. 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. (8 points) 3. What is the increased monthly SS retirement benefit if Richard draws at age 70? Show your calculation. (8 points) 4. Show the calculation for the analysis of the present value for taking benefits at age 62. (12 points) 5. Show the calculation for the analysis of the present value for taking benefits at age FRA. (12 points) 6. Also discount the PV found at FRA back to age 62 for an apples to apples comparison. (4 points) 7. Show the calculation for the analysis of the present value for taking benefits at age 70. (12 points) 8. Also discount the PV found at age 70 back to age 62 for an apples to apples comparison. (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) Richard is a successful executive at a large company with headquarters in Houston, Texas. He celebrated his 58th birthday in 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 would like 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 $3,000 per month at FRA. Inflation is expected to be 1.0% and his life expectancy is 94. 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. (8 points) 3. What is the increased monthly SS retirement benefit if Richard draws at age 70? Show your calculation. (8 points) 4. Show the calculation for the analysis of the present value for taking benefits at age 62. (12 points) 5. Show the calculation for the analysis of the present value for taking benefits at age FRA. (12 points) 6. Also discount the PV found at FRA back to age 62 for an apples to apples comparison. (4 points) 7. Show the calculation for the analysis of the present value for taking benefits at age 70. (12 points) 8. Also discount the PV found at age 70 back to age 62 for an apples to apples comparison. (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)
