Posted: April 23rd, 2016

A pension fund has accumulated $1 million in a retirement plan for James B. Smith, who retires this month at age 65. If Mr. Smith has a life expectancy of 75 years, what is the minimum size of the annual annuity check the pension plan will be able to send him each year

A pension fund has accumulated accumulated $1 million million in a retirement plan for James B. Smith, who retires this month at age 65. If Mr. Smith has a life expectancy of 75 years, what is the minimum size of the annual annuity check the pension plan will be able to send him each year (assuming that the value of the pension fund s investments remains stable)? Should he insist on receiving that size payment each year? Why or why not? What other kinds of information would be helpful in analyzing Mr. Smith . s financial situation at retirement?