The Badger wrote:One way, but necessarily the only, to look at this is as a simple present value problem. For starters, lets assume an interest rate of 8% and you will live to age 85.$430/month @ age 55: @pv(430*12,.08,30) = $58,090$950/month @ age 65: @pv(950*12,.08,20) / 1.08^10 = $50,752.Thus, given the assumptions, the better deal is $430/month @ age 55.However, if you drop the interest rate assumption to 6%; the two alternatives are essentially identical in present value.Then, rjm1 wrote:I think the answer maybe 85 to 88 years but I would plan on 90 to 95.You also have to take into account your health and family health history. The monthly amounts are based on a life annuity, so life expectancy is built in. TheBadger pretty much sums it up, that they are assuming roughly a 6% interest rate to make the two equivalent.
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