In a certain retirement program, benefits are based on retiring at age 62, but if retirement is delayed, the monthly payment is increased by 2/3 of 1 percent for each month worked after age 62 until age 65. If Mr. Johnson would receive a monthly payment of $310 by starting benefits on his 65th birthday, what would the monthly payment be if he started on his 62nd birthday?

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$286.00

$250.00

Correct

$235.60

$206.67

$186.00

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Explanation

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Official Explanation

Official

The calculation is based on simple interest, rather than compound interest, as the increase is consistently applied to the original amount, not to the accumulating balance.

Let the monthly payment at age 62 be

x

.

The increase per month is

\frac{2}{3}\%

x

, which is

\frac{2}{3} \times \frac{1}{100} \times x = \frac{2}{300}x

.

From age 62 to 65, there are 36 months.…

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What this question tests

What it tests

Your ability to apply GMAT math concepts to solve a multi-step problem quickly and accurately. At the 705-805 level, accuracy and speed both matter.

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Overcomplicating the setup — most GMAT problems reward a direct, organized approach over brute calculation.