Your employee Mrs. Brown, a 63 year-old widow, wants to semi-retire to smell the flowers and listen to the birds. She has support of her manager to reduce her hours from full time to fewer hours. She wants to reduce her hours as much as possible. She is currently earning $60,000 per year as full time worker. Under Social Security (SS) early retirement her monthly benefit would normally be $1,000. She wants to gross about $2,500 per month ( $100) from the total of SS and her job with reduced hours. So she needs to know how much can she earn (gross) from her job with reduce hours (pay) as much as possible yet still come close to her $2,500/month target? Remember, her objective is to receive about $2,500 per month. So what should be her new monthly earnings from her job with your organization? Social Security has rules regarding individuals who want to early-retire with SS and work. There is an earnings limit each year: for 2019 it is $17,640 per year. Any earnings over $17,640 will result in a reduction of SS benefits by $1 for every $2 earned over the earnings limit. One of your professional staff has tried to do some initial calculations ($40,000 from her job) to meet Mrs. Browns needs but they dont come out to what she wants/needs: Initial Staff Calculation: Under the SS excess earnings rules of 2019, $1 is deducted from SS for every $2 she earns over the excess earnings annual limit ($17,640 in 2019). So if she earns $40,000/year starting in January 2020, her excess earnings would be $22,360 in 2020 and her SS would be reduced by $11,180. So her income in 2020 would be: Social Security Benefit: $1,000/month = $12,000/yr Excess Earnings Reduction = $11,180/Yr. Reduced SS Benefit: $820 Under reduced hours: $40,000 Total of Reduced SS and reduced hours: $40,820 = $3,401.66/month The projected $3,401.66 is much more than what Mrs. Brown wants/needsso she needs less pay/hours.

To Students: A. Assume the SS earnings limit will stay the same for next year. Come up with another Reduced Hours estimate that will better meet Mrs. Browns need. B. Identify up to five concerns you would like to share with Mrs. Brown about her plan.