## Annuity Question

Along with others, I provided a spreadsheet based solution to the following question from Maria at the Excel-G forum and you can download my spreadsheet from the link below the question:

“I am helping a co-worker who is 68 years old divorced woman with a 40 years old daughter. She will be retiring in the next 3 months.

She has several retirement options:

1. Option 1 (no lump sum withdraw): will receive \$5,416 a month for the rest of her life until she dies.
2. Option 2 (no lump sum ” ): will receive \$4,602 a month throughout her life, upon her death 50% of the annuity will be paid to her daughter until the daughter dies.
3. Option 3 (\$130,000 lump sum); will receive \$4,232 a month for the rest of her life until she dies.
4. Option 4 (\$130,000 lump sum); will receive \$3,595 a month throughout her life, upon her death 50% of the annuity will be paid to her daughter until the daughter dies.

I put in an Excel worksheet, assuming she will live until 87 years old and option 1 is the best of all.  She is leaning toward option 3.  According to her, if she dies, she still have \$130k for her daughter (before tax).”

Duncan Williamson

11th May 2018