### Estimated monthly retirement benefits

##### Reference no: EM13885990

Charles is a senior engineer who has worked for 18 years since he graduated from college. Yesterday in the mail, he received a report from the U.S. Social Security Administration. In short, it stated that if he continues to earn at the same rate, social security will provide him with the following estimated monthly retirement benefits:

Normal retirement at age 66; full benefit of \$1500 per month starting at age 66.

Early retirement at age 62; benefit reduced by 25% starting at age 62.

Extended retirement at age 70; benefit increased by 30% starting at age 70.

Charles never thought much about social security; he usually thought of it as a monthly deduction from his paycheck that helped pay for his parents’ retirement benefits from social security. But this time he decided an analysis should be performed. Charles decided to neglect the effect of the following over time: income taxes, cost-of-living increases, and inflation. Also, he assumed the retirement benefits are all received at the end of each year; that is, no compounding effect occurs during the year. Using an expected rate of return on investments of 8% per year and an anticipated death just after his 85th birthday, calculate the following for Charles:

1. Calculate the total future worth of each benefit scenario through the age of 85.

2. Plot the annual accumulated future worth for each benefit scenario through the age of 85.

The report also mentioned that if Charles dies this year, his spouse is eligible at full retirement age for a benefit of \$1600 per month for the remainder of her life. If Charles and his wife are both 40 years old today, determine the following about his wife’s survivor benefits, if she starts at age 66 and lives through her 85th birthday:

3. Present worth now.

4. Future worth for his wife after her 85th birthday.

#### Calculate your price elasticity of demand of widgets

Suppose the price of widgets falls from \$7 to \$5 and consumption of widgets rises from 15 widgets a month to 25 widgets. Calculate your price elasticity of demand of widgets.

#### Discuss the elements that make up australia current account

Discuss the elements that make up Australia's Current Account. Outline the cyclical and structural factors that have caused Current Account Deficits in the last decade.

#### Unemployment and inflation work in opposite directions

Why is it that unemployment and inflation work in opposite directions--when one is high the other is low and vice versa? This concept is depicted by the Phillips Curve. Why ar

#### Different combinations of policies

"The rapidly growing East Asian economics used very different combinations of policies, from hands-off to highly interventionist. Thus there is no single East Asian model o

#### No changes in px will have any income or substitution effect

. Abstracting out this income effect would leave the quantity of X unchanged. On the other hand, beyond the switch point, only Y is consumed and no changes in Px will have

#### What is the economic meaning of the different slopes

In economy A, the LM curve is very steep, but not vertical (call this the “Friedman” economy) while in economy B, the LM curve is very flat (call this the “Keynesian” economy)

#### Compared to the yd curve of the standard model

Suppose that we have a standard real intertemporal model with investment with two twists. First, the effect of the real interest rate r on current consumption C is assumed to

#### What are the factors that affect consumer spending

What causes movement along AD curve? What causes a shift in the AD curve? What are the factors that affect consumer spending ( C)? What are the factors that affect changes in