Rebeccah Is 65 and Planing to Retire Next Month

Multiple Choice

Rebeccah is 65 and planing to retire next month. She can select a pension of $1745 monthly guaranteed for the rest of her life, but not indexed for inflation, or take a lump sum of $312 000. Assume she can invest the lump sum at five percent annually and draw the same income as the pension. How long does she need to live in order for the monthly pension to be the better choice?

A) 89
B) 90
C) 92
D) 93