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When to Start Collecting Social Security: Designing a Case Study

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Conference

2012 ASEE Annual Conference & Exposition

Location

San Antonio, Texas

Publication Date

June 10, 2012

Start Date

June 10, 2012

End Date

June 13, 2012

ISSN

2153-5965

Conference Session

Methods, Cases, and Directions

Tagged Divisions

Engineering Management, Systems Engineering, Engineering Economy, and Industrial Engineering

Page Count

14

Page Numbers

25.1476.1 - 25.1476.14

Permanent URL

https://peer.asee.org/22233

Download Count

50

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Paper Authors

biography

Ted Eschenbach P.E. University of Alaska, Anchorage

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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 more than 200 publications and presentations, including 15 books. With his coauthors, he has won best paper awards at ASEE, ASEM, ASCE, and 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 master's in civil engineering from UAA in 1999.

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Neal A. Lewis University of Bridgeport

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Neal Lewis is an Associate Professor in the Department of Technology Management, School of Engineering at the University of Bridgeport (Connecticut). He has more than 25 years of industrial experience, having worked for Procter & Gamble and Bayer. Along with coauthors, he has received the 2005 Ted Eschenbach award for the best article in the Engineering Management Journal and the 2009 Grant Award for the best article in The Engineering Economist. Neal received his B.S. in Chemical Engineering from the University of Missouri, Rolla (now Missouri S&T) in 1974, M.B.A. from the University of New Haven in 2000, and Ph.D. in engineering management from UMR in 2004. Lewis has taught at the University of Bridgeport, Marshall University, UMR, and UNH.

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Yiran Zhang University of Bridgeport

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Yiran Zhang graduated from the University of Bridgeport in Dec. 2011 with a master's in technology management.

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Abstract

When to Start Collecting Social Security: an Economic Case StudyAbstractMany engineers, faculty, and the parents and grandparents of our students must answer thequestion of whether to start collecting reduced Social Security payments at age 62, wait until age66 for regular payments, or to delay until later for enhanced payments. While the U.S. SocialSecurity system is analyzed, the approach is applicable for similar problems with other definedbenefit retirement systems.The publications of the Social Security Administration focus on the dollar difference in monthlypayments and do not even touch on the question of the time value of money—which can clearlybe significant in making the correct choice. For students in the introductory engineeringeconomy course this can be framed as: “Your grandparents need advice. Obviously the interestrate and the predicted age at death are both uncertain. Choices need to be analyzed for a varietyof interest rates and expected lives. Present the results in a format that makes sense to someonewho understands the meaning of present worth and rate of return, but who may not be able tocalculate them.”This paper summarizes previous work and considers how the attractiveness of the early collectoption may be eliminated by rules on income from continuing employment and on benefits froma second pension. However, the focus is pedagogical. What data is needed, where can it befound, what economic measures are valid and easiest to understand, how can different choices becompared, and how to communicate the results?Some situations are most easily described by analyzing a scenario. This can be generalized into atable of scenarios or into an analysis of the difference between choices. The analysis andpresentation are done with a spreadsheet model, whose development and structure are described.The paper closes with an overview of deeper levels of analysis that may be suitable for moreadvanced courses. 1

Eschenbach, T., & Lewis, N. A., & Zhang, Y. (2012, June), When to Start Collecting Social Security: Designing a Case Study Paper presented at 2012 ASEE Annual Conference & Exposition, San Antonio, Texas. https://peer.asee.org/22233

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