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Social Security Systems and Retirement Plans

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1) Explain why workers who reached retirement age in the early years of the Social Security system are perceived to have received a better deal than workers about to retire and those who will retire in the future.
2) Various proposals have been made to improve the Social Security system's finances and to reform the pension system or increase the tax rates. Explain one or more of the proposals.
3) Discuss how you would improve the Social Security system and why your approach is sound. Please use outside sources to help justify your position. Given what you've learned about the future of Social Security, what savings and retirement planning decisions might you or your children make in the future? Why?

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The solution discusses the social security systems and retirement plans.

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1) Explain why workers who reached retirement age in the early years of the Social Security system are perceived to have received a better deal than workers about to retire and those who will retire in the future.

Social security is a "pay as you go" system. So those who retired first received benefits without paying into the system. Those who retire after having paid into the system their whole working lives will actually receive less than they paid, on average. For more on this see the Times article.

2) Various proposals have been made to improve the Social Security system's finances and to reform the pension system or increase the tax rates. Explain one or more of the proposals.

Social Security has run deficits since 2010 (Patton, 2013). The only solution to this is to take in more (increase taxes) or spend less. To decrease the cost of Social Security, it will be necessary to ...

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