Asee peer logo

Extending the Case Study on When to Collect Social Security: Economic Decision Making for Couples

Download Paper |

Conference

2013 ASEE Annual Conference & Exposition

Location

Atlanta, Georgia

Publication Date

June 23, 2013

Start Date

June 23, 2013

End Date

June 26, 2013

ISSN

2153-5965

Conference Session

Engineering Economy Division Technical Session

Tagged Division

Engineering Economy

Page Count

13

Page Numbers

23.584.1 - 23.584.13

Permanent URL

https://peer.asee.org/19598

Download Count

32

Request a correction

Paper Authors

biography

Neal Lewis University of Bridgeport

visit author page

Dr. Neal Lewis received his Ph.D. in engineering management in 2004 and B.S. in chemical engineering in 1974 from the University of Missouri – Rolla (now the Missouri University of Science and Technology), and his MBA in 2000 from the University of New Haven. He is an associate professor in the School of Engineering at the University of Bridgeport. He has over 25 years of industrial experience, having worked at Procter & Gamble and Bayer. Prior to UB, he has taught at UMR, UNH, and Marshall University.

visit author page

biography

Ted Eschenbach University of Alaska Anchorage

visit author page

Dr. Ted Eschenbach, P.E. is the principal of TGE Consulting, an emeritus professor of engineering management at the University of Alaska Anchorage, and the founding editor emeritus of the Engineering Management Journal. He is the author or coauthor of nearly 250 publications and presentations, including 15 books. With his coauthors he has won best paper awards at ASEE, ASEM, ASCE, & IIE conferences, and the 2009 Grant award for the best article in The Engineering Economist. He earned his B.S. from Purdue in 1971, his doctorate in industrial engineering from Stanford University in 1975, and his masters in civil engineering from UAA in 1999.

visit author page

Download Paper |

Abstract

Extending the Case Study on When to Collect Social Security: Economic Decision Making for CouplesAbstractThe decision of when to start collecting social security benefits is a complex one. Many peoplemust answer the question of whether to start collecting reduced benefits at age 62 or wait untilage 66 (or later) for regular payments. Most of the available literature, including the publicationsof the Social Security Administration, focuses on the dollar difference in monthly payments andcompletely disregards the time value of money. Our 2012 ASEE presentation analyzed how thechoices faced by a single individual could be analyzed as a case study in engineering economycourses. This paper focuses on how to extend that work to the much more complex situationfaced by couples. As in the previous paper, our focus is pedagogical. What tools should studentsuse? What mistakes are they likely to make? What results can we provide to assist faculty inguiding and evaluating student work?The couples case study is more complex for two reasons. First, there are many more possiblesituations with two ages, two employment situations, and two different levels of earned benefits.Second, when couples face the question of when to start collecting benefits—they have manymore options than single people. For example, anyone may elect to start collecting early at age62. However, if one’s spouse is already age 66, they may elect (starting at age 62) to collect up tohalf of their spouse’s benefit. Or they may start collecting their own benefit, and switch tocollecting spousal benefits if that is in their best interest. Also, if one spouse dies, the survivormay collect death benefits. The best strategy for defining both people’s benefit plans depends oneach other’s, and opens many options. Of course, other considerations such as health and incomesources become a part of the decision.Much of the literature ignores the need for couples’ strategies. A better way to approach thequestion is to use decision analysis tools, such as decision trees, that incorporate the time valueof money. These tools are taught in engineering economy courses, and the social security forcouples issue can be used as a case study to apply these tools. The focus here is pedagogical.What information is needed, and how can it be put together to identify optimum choices? Thedifference in couples ages, the difference in past income, and current and future work status allcombine to create many different possible scenarios and many different optimal solutions. 1

Lewis, N., & Eschenbach, T. (2013, June), Extending the Case Study on When to Collect Social Security: Economic Decision Making for Couples Paper presented at 2013 ASEE Annual Conference & Exposition, Atlanta, Georgia. https://peer.asee.org/19598

ASEE holds the copyright on this document. It may be read by the public free of charge. Authors may archive their work on personal websites or in institutional repositories with the following citation: © 2013 American Society for Engineering Education. Other scholars may excerpt or quote from these materials with the same citation. When excerpting or quoting from Conference Proceedings, authors should, in addition to noting the ASEE copyright, list all the original authors and their institutions and name the host city of the conference. - Last updated April 1, 2015