Betty is considering taking an early retirement offered by her employer. She wou

Question

Betty is considering taking an early retirement offered by her employer. She would received $2,400
per month, indexed for inflation. However, she would no longer be able to use the company's health
facilities, and she would be required to pay her hospitalization insurance of $8,400 each year. Betty
and her husband will file a joint return and take the standard deduction. She currently receives a salary
of $40,000 a year, and her employer pays for all of her hospitalization insurance. If she retires, Betty
would not be able to use her former employer's exerise facilities because of the commuting distance.
She would like to continue to exercise, however, and will therefore join a health club at a cost of $50
per month. Also, if she retires, she will spend approximately $300 less each mont the commuting
and clothing. Betty and her husband have other sources of income and are in will remain in the 25%
marginal tax bracket. She currently pays Social Security taxes of 7.65% on her salary, but her retirement
pay would not be subject to this tax. She will earn about $11,000 a year from a part-time job if she
retires from the company. Betty would like to know whether she should accept the early retirement offer.

Explanation / Answer

yes she should

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