Today is my 65^th birthday and I need your help making some retirement decisions. I need to decide when to start receiving my social security payments (government retirement benefits) and pension payments.

I looked online and found that a male who is 65 years old can expect to live until age 83, or 18 more years. I am currently earning 6% annually on my investments and expect to continue to do so for the remainder of my life.

Using appropriate time value of money calculations, identify which option I should take. Show your work including all assumptions and the results of your calculations.

Question 1 - Social Security Payments

My options for social security payments are to receive (i) $3,104 per month starting one month after I turn 66 or (ii) $4,222 per month starting one month after I turn 70. Both payments will continue for the remainder of my life.

Question 2 - Pension Payments

My options for pension payments are to receive (i) $905 per month starting one month after today or (ii) $1,215 per month starting one month after I turn 68. Both payments will continue for the remainder of my life.

Question 3 Earnings on Investments

Keeping all other assumptions the same, assume that I can earn 6.6% on my investments. How will this impact your recommendation regarding when I should begin social security payments? Why did this assumption change impact one payment option more than the other?

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