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    Personal Finance in Retirement

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    Your uncle has approached you with a personal finance decision. He tells you
    that he is currently eligible for a monthly pension benefit of $5,231
    beginning January 2017. Alternatively, he can start drawing early monthly
    benefits of $3400 in January 2007 (a 35% reduction for a 10 year early

    You tell him you are taking a finance course and can run the numbers to help
    him understand the real economics of the two alternatives. He provides the
    following additional information.

    - Life expectancy? He says 27 years starting Jan. 2007.

    - Marginal income tax rate? He says assume 28%.

    - Savings rate on the pension amounts? He says assume all the money is
    needed for living expenses.

    - Inflation? The two of you agree to assume an annual inflation rate of 4%.

    Prepare an analysis that compares your uncle's two alternatives, utilizing
    the knowledge you have gained from Chapter 9 of the text. Based on the
    analysis, what should your uncle do?

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    Solution Summary

    Response attached as Excel spreadsheet showing the calculations that will help an uncle retire in the most financially intelligent manner.