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CONSUMERS : Early Retirement Sparks Benefits Issue

Question: I was forced to retire at age 60 from my job as an airline pilot. I am also a “notch baby,” born in 1920. I worked for a major airline as a pilot for 38 years and always paid the maximum withholding tax. I accept the AARP’s (American Assn. of Retired Persons) statement to justify the “notch baby” differential (but still say, “why me?”), but I do not understand the differential in the size of the check for someone who pays in for 38 years to age 60 and then has a 2-year gap in collecting payments, versus a worker who joins the Social Security system at age 52, then works for 10 years without interruption and collects more per check than I do. Why the penalty for the 2-year gap?--J.B.

A: Roy Aragon, a public affairs specialist for Social Security, concedes that it’s rough on people like you who, because of the nature of their work, are forced into retirement before the age of either 62 or 65. It’s just one of those things that the framers of the program never foresaw.

Your suspicion, that someone coming along late in the game--joining Social Security at the age of 52, working 10 years and then taking retirement at 62--would be collecting benefits greater than yours doesn’t wash, however.

Whether one retires at 60 (like you) or at the normal 65, the benefits are computed exactly the same, Aragon adds. You begin with the year of birth (in your case 1920), and add 62 to this (because that’s the age at which computations begin). That gives you the year 1982. From this you subtract 1951 (an arbitrary year picked by Social Security), which gives you (in your case) 31 years of earnings for computing your benefits. The five years of lowest earnings are knocked out, leaving your 26 years of highest earnings for arriving at your monthly benefits.

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Since, I assume, you began receiving benefits at 62, three years before normal retirement, your benefits are 80% of what they would have been if you had worked to 65.

Now, what about this hypothetical person you refer to who didn’t enter Social Security until 52? (And this could be a wife who never worked before but went into the job market after her husband’s death.) Her benefits would be computed the same as outlined above.

“But,” Aragon says, “there’s going to be a long string of years with zero earnings and therefore zero benefits. And, since she’s retiring early too, not only would the basic benefits be far lower than his after 38 working years--and 26 years of highest earnings--but, like him, she’d only get 80% of the top benefits.”

It is, indeed, too bad that you lost two years through this mandatory retirement, but, for whatever (hollow, maybe) comfort you can take in it, there’s no way in the world such a person could end up with benefits comparable--much less higher--than those you receive.

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Q: I am enclosing pages from three catalogues I have received in the past few months from the same company.

I would like to point out that catalogues No. 1 and No. 3 list the same price ($8.96) for one particular item. No. 2 was a “Special Sale” catalogue received after the first one but before the third one. Note the “sale” price for that same item is not only higher ($9.96) but is represented as a "$16 value.”

If you can’t trust Lillian Vernon, whom can you trust?--J.G.P.

A: Well, for one, there’s the love and trust of a loyal dog.

A spokesperson for the Mount Vernon, N.Y.-based catalogue house, which specializes in low-cost gifts, gadgets, kitchen items, housewares and toys, knew immediately, without my describing it, the item in question: an adjustable wooden book rack.

“In this particular case,” she said, “the volume exceeded our expectations and they were in short supply. Most sale items do represent a real savings, but in this case the price had to go up.”

In other words, she added, the book rack was already in place for the “Sale” catalogue--or they would simply have yanked it out--and so the price was adjusted upward to temper the demand. And then, by the time the third catalogue was in preparation, the backlog had been ironed out and the price was reduced. And, she insists, it is a $16 value.

“We don’t like to do this sort of tinkering with prices, but sometimes it can’t be helped,” she said.

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Campbell cannot answer mail personally but will respond in this column to consumer questions of general interest. Write to Consumer VIEWS, You section, The Times, Times Mirror Square, Los Angeles 90053.


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