Benefit Basis Social Security benefits are based on up to 35 years of earnings.

Question

Benefit Basis
Social Security benefits are based on up to 35
years of earnings. The example represents a
rough calculation based on a current salary of
$100,000
Important Disclosures
Benefits estimates based on data from ssa.gov,
shown in today's dollars, using SSA's Quick
Calculator as of 6/4/2014, for someone born
January 2, 1953, and making $100,000.
Retirement date is on his birthday and the
accumulated annual benefits for each age
reflect a full 12 months of benefits. No cost of
living adjustment is included. Time value of
money is not considered in the example.
Assignment
(1) Consider the impact of COLA and the time
value of money in an economic analysis and
determine what age Bob should retire.
Justify your selection.
(2) Describe how Social Security operates.
Determine if any possible ethical concerns
exist with the Social Security process.
Justify your answer

Benefit Basis
Social Security benefits are based on up to 35
years of earnings. The example represents a
rough calculation based on a current salary of
$100,000
Important Disclosures
Benefits estimates based on data from ssa.gov,
shown in today's dollars, using SSA's Quick
Calculator as of 6/4/2014, for someone born
January 2, 1953, and making $100,000.
Retirement date is on his birthday and the
accumulated annual benefits for each age
reflect a full 12 months of benefits. No cost of
living adjustment is included. Time value of
money is not considered in the example.
Assignment
(1) Consider the impact of COLA and the time
value of money in an economic analysis and
determine what age Bob should retire.
Justify your selection.
(2) Describe how Social Security operates.
Determine if any possible ethical concerns
exist with the Social Security process.
Justify your answer

WHEN SHOULD YOU COLLECT? It depends on how much income you think you will need, whether you will continue working, and your health and life expectancy. Take Bob, for example. He turns 62 next year and currently makes $100,000. Lets look at how three hypothetical retirement scenarios would impact his monthly benefits. Early retirement at age 62 Full retirement at age 66 Delayed retirement at age 70 Bob has had some health issues that have required him to retire earlier than anticipated. He chooses to collect benefits early to help make ends meet. Bob is in good health and decides to continue working until age 66, when he will be eligible for full retirement benefits. Bob is in good health and has adequate savings to cover his Pryday expenses after he stops working. so he chooses to delay his benefits. MONTHLY BENEFIT $1,621 MONTHLY BENEFIT $2,235 MONTHLY BENEFIT : $3,038 70 20-30% The amount a persons benefits could be reduced if he chooses to collect at age 62 instead of full retirement age. 8% Annual increase in benefits for each year after full retirement age (until age 70) that a person delays collecting benefits. HOW RETIREMENT BENEFITS STACK UP Here's how Bob's annual retirement benefits would accrue over time for each of the three scenarios above. I Early retirement (62) Full retirement (66 ) Delayed retirement (70) 2 $500,000 Early retirement means less money over time. 8 $300,000 $100,000 62 63 6465 66 67 68 69 70 71 72 73 74 75 767 78 79 808 8283 845

Explanation / Answer

Bob must choose to retire at the age of 70, provided his health and his physical fitness allow him to work until he attains that age. There are a lot of benefits that Bob will get if he chooses to retire at the age of 70

Till such time Bob will be working and he will be getting paid normally during that time. His montly salary is huge during the period of 8 years. Even if he gets paid at a shorter duration after his retirement, he could compensate it with the large amount of monthly salary that he is being paid

There are not ethical issues with the employee working for an extended period of time in the organization.

The only problem with the early retirement is less money over a long period of time.

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