$2.$ One of the major concerns for middle$-$aged folks is when to retire and start receiving social security payments. The Social Security Administration $($SSA$)$ gives you the following guidelines:

a$.$ Retire at age $62.$ SSA payments are reduced by $25$ percent, and you can only earn less than $$14,000/$year before further reduction of your payments.

b$.$ Retire at $66($full retirement age$).$ You can also continue to work and earn as much as you want with no penalties. Typical yearly SSA payments for engineers are $$20,000$ to $$30,000/$year$.$

c$.$ Retire at $70,$ and SSA payments will increase by $25$ percent.

The decision is obviously dependent on the life expectancy of the person and the expected future interest $($inflation$)$ rate. Each participant should use a different inflation rate $($i$\%)$ or consumer purchasing index or $($CPI$)$ to advise whether to retire at $62,66,$ or $70$ based on the person$$s life expectancy. Indicate the age where there is a breakeven between any two of the three choices. You can choose $0$ percent, low or hyper$-$inflation i$\%$ rates, or half$-$percent increments not in the tables, depending on your outlook for the economy into the future. Hint: treat the SSA problems posed here as independent items from your income. SSA is an annuity where the decision when to take it rests on the merits of the three options above, nothing to do with your salary.

Required discussion post $2$ centers on three scenarios for social security administration $($SSA$)$ retirement benefits. These benefits increase yearly by the amount of inflation $($i$\%)$:

Retire at $66$ and receive full SSA retirement benefits.

Retire at $62,$ and receive $25\%$ reduced SSA retirement benefits with limits on how much you can earn

Retire at $70$ and receive $25\%$ increased SSA retirement benefits

Note that the average retirement benefits for an engineering manager working $40$ years is around $$30,000/$year and current interest rate increase per year is less than $1\%.$ However, the decision is immaterial to the benefit amount, so you can actually use $$1$ as your basis in making the decision.

The goal of Post $2$ is to determine which scenario is better, assuming that each potential retiree has two constraints to think about:

How long are they expected to live $($average age for Males is $78$ and females is $82)$ depending on their current health before retiring?

What is the expected rate of inflation?

I attached an Excel sheet based starting scenario to help in post $2.$ It assumes no inflation rate for ages $62$ and $70,$ but shows how to perform analysis for age $66,$ and show three crossover points $($for $0\%$ interest they are $62/66$ at $78$ years of age, $62/70$ at $81$ years and $66/70$ at $82$ years. Use it as guide to change the analysis for ages $62$ and $70).$ You can update it either for PV or FV$,$ not both

To add inflation rate $($i$\%)$ to the decision, you can convert each year benefit by using either Present Value $($PV$)$ or Future Value $($FV$)$ to each year of the benefit on a yearly basis then add the years to make the crossover comparison in a third Excel column, using either the ROI tables or the formula

FV $=$ PV $*(1+$i$)$n$.$ The higher the inflation rate the larger $($older$)$ crossover age is$,$ since $$ in the future are worth less in today$$s dollars. I find it easier to use FV$,$ which shows expanding up curves. PV shows leveling off curves.

In the given Excel example, Please note that Present$/$Future Values for ages $62($column D$)$ and $70($Column M$)$ are not calculated using the inflation rate like the Present$/$Future Value is for age $66($Column H$).$

If you use PV$,$ then you have to make sure to bring the first and subsequent years for ages $66$ and $70$ to PV$.$ If you use FV$,$ then you do not have to bring all years to PV and just plug in the FV formula to each year then add up the benefits $($Please have the same n for all three scenarios, starting with n $=0$ for age $62,$ and n $=4$ for age $66$ and n$=8$ for $70$ yeas$).$ The crossovers will be the same for using either PV or FV as described.

If you are really ambitious, then you can use P$/$A or F$/$A from the ROI table. This way you can eliminate the third addition column for each year and compare the three scenarios directly

I am using $80$ as average life expectency $3\mathrm{.}5\%$ interest rate and $$22,500$ as the starting salary.