Timur and Maurguerite recently met with the benefits administrator at Timur's employer to establish a retirement...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Timur and Maurguerite recently met with the benefits administrator at Timur's employer to establish a retirement date and to discuss payout options for his pension. Timur just turned 67, while Maurguerite, a self-employed artist, will be 62 in 6 months. The benefits administrator was helpful in outlining potential sources of income that they can expect in retirement. Annual estimates are as follows: Social Security $9,000 Defined Benefit $12,000 (single life annuity) Maurguerite's Work $5,000 Defined Contribution $10,000 (single life annuity) Other $4,000 The defined contribution payout was calculated based on a 401(k) balance of $250,000 earning approximately 8 percent. The benefits administrator indicated that a 100 percent joint and survivor annuity would decrease yearly benefits by about $2,000 in the defined-benefit plan and $1,500 in the defined-contribution plan. Timur's company does not offer an annuity for life option. • What are the advantages associated with taking the pension payouts in the forum of an annuity? What are the disadvantages? • Based on the information provided, which type of annuity would you recommend that Timur and Marguerite choose given the difference in their ages and earnings? • What recommendation would you make to Timur and Marguerite to help them monitor expenses and safeguard their retirement lifestyle? Timur and Maurguerite recently met with the benefits administrator at Timur's employer to establish a retirement date and to discuss payout options for his pension. Timur just turned 67, while Maurguerite, a self-employed artist, will be 62 in 6 months. The benefits administrator was helpful in outlining potential sources of income that they can expect in retirement. Annual estimates are as follows: Social Security $9,000 Defined Benefit $12,000 (single life annuity) Maurguerite's Work $5,000 Defined Contribution $10,000 (single life annuity) Other $4,000 The defined contribution payout was calculated based on a 401(k) balance of $250,000 earning approximately 8 percent. The benefits administrator indicated that a 100 percent joint and survivor annuity would decrease yearly benefits by about $2,000 in the defined-benefit plan and $1,500 in the defined-contribution plan. Timur's company does not offer an annuity for life option. • What are the advantages associated with taking the pension payouts in the forum of an annuity? What are the disadvantages? • Based on the information provided, which type of annuity would you recommend that Timur and Marguerite choose given the difference in their ages and earnings? • What recommendation would you make to Timur and Marguerite to help them monitor expenses and safeguard their retirement lifestyle?
Expert Answer:
Answer rating: 100% (QA)
Answer 1 The advantages of taking pension payouts in the form of an annuity include the following Pa... View the full answer
Related Book For
Concepts in Federal Taxation
ISBN: 9780324379556
19th Edition
Authors: Kevin E. Murphy, Mark Higgins, Tonya K. Flesher
Posted Date:
Students also viewed these finance questions
-
Timur and Marguerite recently met with the benefits administrator at Timurs employer to establish his retirement date and to discuss payout options for his pension. Timur just turned 67, while...
-
The CEO of your company recently met with the external auditors to discuss the scope of the years audit. The auditors suggested that they conduct an integrated audit. The CEO has asked you, the...
-
This question has several parts that must be completed sequentially. If you skip a part of the question, you will not receive any points for the skipped part, and you will not be able to come back to...
-
On April 1 of the current taxable year, Mr. Lasing Gho died leaving Php 25, 000, 000 of net distributable estate. He also left behind Tessie, his legitimate wife; Rhealyn, his legally adopted...
-
A 150-mm-diameter tool steel ( = 60 W-s/mm3) work roll for a metal rolling operation is being ground using a 250-mm-diameter, 75-mm-wide Type 1 grinding wheel. The work roll rotates at 10 rpm....
-
The Am1004-T61 magnesium tube is bonded to the A-36 steel rod. If the allowable shear stresses for the magnesium and steel are (Ï allow ) mg = 45 MPa and (Ï allow ) st = 75 MPa,...
-
The Foreign Corrupt Practices act can levy fines of more than five hundred million against companies our size that do not eliminate corruption in their operations abroad. Can you understand why the...
-
Terry Industries produces two electronic decoders, P and Q. Decoder P is more sophisticated and requires more programming and testing than does Decoder Q. Because of these product differences, the...
-
1. Satisfaction A recent Gallup Poll asked a random 206 sample of 1025 adults, "In general, are you satisfied or dissatisfied with the way things are going in the United States at this time?" In all,...
-
What is a futures contract?
-
Moletji Ltd is public company owned by two prominent business women and the local community trust around the Capricorn District Municipality. The company was founded in the year 2018 and the...
-
You have just purchased a municipal bond with a \($10\),000 par value for \($9\),500. You purchased it immediately after the previous owner received a semiannual interest payment. The bond rate is...
-
What is the effective annual interest rate for 10 percent compounded (a) semiannually, (b) every 4 months, (c) quarterly, (d) every other month, (e) monthly?
-
A total of \($50\),000 is borrowed and repaid with 60 monthly payments, with the first payment occurring 1 month after receipt of the \($50\),000. The stated interest rate is 6 percent compounded...
-
How long, to the nearest year, does it take an investment at 6 percent compounded annually to (nearly, more or less) a. double itself? b. triple itself? c. quadruple itself?
-
How much money must be deposited now in order to withdraw $10,000 in 4 years if interest is 5 percent compounded quarterly?
-
Please solidify your plans for the project by completing this worksheet and submitting it in - person by the end of Week 6 Formative Assessment. This worksheet must be reviewed and approved by your...
-
Walker, Inc., is an all-equity firm. The cost of the company's equity is currently 11.4 percent and the risk-free.rate is 3.3 percent. The company is currently considering a project that will cost...
-
On July 4 of the current year, Lawrence invests $240,000 in a mineral property. He estimates that he will recover 800,000 units of the mineral from the deposit. During the current year, Lawrence...
-
Casandra and Gene are married and have a daughter who is a junior at State University. Their adjusted gross income for the year is $78,000, and they are in the 25% marginal tax bracket. They paid...
-
Upon returning from lunch, you find the following message on your voice mail: This is Jarrett Ogilvie. I'm not one of your clients, but I need some advice. I received a statement in the mail from the...
-
The things that might lead a person to quit might not be the same things that lead a person to stay with an organization. For example, another job offer or the tendency to always be looking for new...
-
Divide the team into three groups. Each group will choose value, brand, or retention equity. Or, if team sizes are smaller, each team will select an equity component. For each equity component,...
-
Generate survey or interview items that would capture value-, brand-, or retention-equity levels in workers. If possible, ask a sample of your friends and neighbors to take a survey based on your...
Study smarter with the SolutionInn App