Question 4 (Part A&B)

A) Earl E. Bird has decided to start receiving his Social Security monthly checks of $3000 as soon as he qualifies (from the first month after his 66^th birthday). Ivana Waite, same age as Earl, decided to wait another 4 years, so she could receive the maximum monthly payment of $4000 (from the first month after her 70^th birthday). Using the average life of 85, and a nominal rate of 6% compounded monthly, who is better off?

Group of answer choices

Equally good

Ivana

Earl

B) Earl E. Bird has decided to start receiving his Social Security monthly checks of $3000 as soon as he qualifies (from the first month after his 66^th birthday). Ivana Waite, same age as Earl, decided to wait another 4 years, so she could receive the maximum monthly payment of $4000 (from the first month after her 70^th birthday). Using the nominal rate of 6% compounded monthly, what is the break-even age that makes Earl and Ivana equally good?

Group of answer choices

70.80 year

87.56 year

79.87 year

97.83 year

Never