440 Engineering Economic Presont Worth Analys CASE STUDY COMPARING SOCIAL SECURITY BENEFITS spousal benefits and start his own. Inti-uume his efits will have increased by 24%, or- magy Whem Sheryl gradusted from Northesterm Uaiventyinud be switched with Brad taking is bemetits and Shry 2017 and went to work for BAB Syeems, she did not peyspousal beneits until age 70 mech nention to the monthly payroll deducticn tr iocial securicy, It was a "necessary evil" that may be helpfal in re tirement ycars. However, this was so far in the future that she fully expectod this govermment retirement benefit systes to be hroke and gone by the time she could reap any beoetits from her years of contributions. All these options led them to define foor alernutive plans A: Each takes early benetits at age 62 with a30% medac B: Each takes full henefits at full redireent age of 67 C: Each delays benefits until age 70wix34%mnme tion to $1400 per monch. and reonives $2000 per month o $2480 per onth This year, Sheryl and Brad, another engineer at BAR, got married. Recently, they both received notices from the So- cial Security Administration of their potential retirement smounts, were they to retire and start social security bene- fits at preset ages. Since both of them hope to retire a few years early, they decided to pay closer atention to the pro- dicted amount of retirement benefits and to do some analy sis on the ambers Di One penson takes full benelits of $2000 per month a age 67, and the other person reocives spousal benefits ($1000 per month at age 67) and swiches lo delayed They realize, of course, that the nunbers will chge over time, based on their respective salaries and number of years of contributice to the social security system by them and by They found that their projected benefits are substantially the sne, which makes sense since their salaries are very close to each other Although the numbers were slightly different inCase Study Exercises their two mailings, the simular messages can be summanad follows: heir employers t Brad and Sery Brad and Sheryl are the same age. Brad deterined that most of their investments make this as the interest rate, the analysis for the four ahernatives is possible. Sheryl and Brad plan to answer the ollowing ques ions, but don't have time this week, Can you please hep an average of 5% you wi T you stop working and stant receiving benefits At age 62, your payment would be about $1400 per mont them (Do the analysis for one person at At your full retirement age (67 years), your payment would be he cou ple, and stop at the age of 85) How much in total (without the time vale of nyo- sidered) will each plan A through D pay through age 857 $2000 per month At age 70, your payment would be about $2480 per month These numbers represent a reduction of 30%tor ear- tirement (age 62) and un increase of 24% for delayed retire. what is the future worth age 857 2. 6% per ofeach plan at 3. Pictthe future worth values fararpma sprcadsheet gruph. Ecocomically, what is the best combination of plans o Brad and SheryL assuming dhey both live to be 85 years ment (age 70) This couple also learned that it is possible Sor a spouse to lake spousal benefits at the time that one of them is at full retirement age. In other words, if Sheryl starts her $2000 ben- efit at age 67, Brad can receive a benefit equal to 50% of hers. Then, when Brad reaches 70 years of agn, he can discontinue 5, Develop at least one additional question Sheryl and Brad may have. Answer the question you think 440 Engineering Economic Presont Worth Analys CASE STUDY COMPARING SOCIAL SECURITY BENEFITS spousal benefits and start his own. Inti-uume his efits will have increased by 24%, or- magy Whem Sheryl gradusted from Northesterm Uaiventyinud be switched with Brad taking is bemetits and Shry 2017 and went to work for BAB Syeems, she did not peyspousal beneits until age 70 mech nention to the monthly payroll deducticn tr iocial securicy, It was a "necessary evil" that may be helpfal in re tirement ycars. However, this was so far in the future that she fully expectod this govermment retirement benefit systes to be hroke and gone by the time she could reap any beoetits from her years of contributions. All these options led them to define foor alernutive plans A: Each takes early benetits at age 62 with a30% medac B: Each takes full henefits at full redireent age of 67 C: Each delays benefits until age 70wix34%mnme tion to $1400 per monch. and reonives $2000 per month o $2480 per onth This year, Sheryl and Brad, another engineer at BAR, got married. Recently, they both received notices from the So- cial Security Administration of their potential retirement smounts, were they to retire and start social security bene- fits at preset ages. Since both of them hope to retire a few years early, they decided to pay closer atention to the pro- dicted amount of retirement benefits and to do some analy sis on the ambers Di One penson takes full benelits of $2000 per month a age 67, and the other person reocives spousal benefits ($1000 per month at age 67) and swiches lo delayed They realize, of course, that the nunbers will chge over time, based on their respective salaries and number of years of contributice to the social security system by them and by They found that their projected benefits are substantially the sne, which makes sense since their salaries are very close to each other Although the numbers were slightly different inCase Study Exercises their two mailings, the simular messages can be summanad follows: heir employers t Brad and Sery Brad and Sheryl are the same age. Brad deterined that most of their investments make this as the interest rate, the analysis for the four ahernatives is possible. Sheryl and Brad plan to answer the ollowing ques ions, but don't have time this week, Can you please hep an average of 5% you wi T you stop working and stant receiving benefits At age 62, your payment would be about $1400 per mont them (Do the analysis for one person at At your full retirement age (67 years), your payment would be he cou ple, and stop at the age of 85) How much in total (without the time vale of nyo- sidered) will each plan A through D pay through age 857 $2000 per month At age 70, your payment would be about $2480 per month These numbers represent a reduction of 30%tor ear- tirement (age 62) and un increase of 24% for delayed retire. what is the future worth age 857 2. 6% per ofeach plan at 3. Pictthe future worth values fararpma sprcadsheet gruph. Ecocomically, what is the best combination of plans o Brad and SheryL assuming dhey both live to be 85 years ment (age 70) This couple also learned that it is possible Sor a spouse to lake spousal benefits at the time that one of them is at full retirement age. In other words, if Sheryl starts her $2000 ben- efit at age 67, Brad can receive a benefit equal to 50% of hers. Then, when Brad reaches 70 years of agn, he can discontinue 5, Develop at least one additional question Sheryl and Brad may have. Answer the question you think