You Are Eligible For 15% Discount This Month!
Following are several brief descriptions of how a number of different people live their lives. After you read these, you will be presented with a series of questions relating to personal and societal responsibilities for income support in old age. Person “A” graduated from college and got a good job. “A” has had steady salary progression, has saved about 12% of salary every year in a tax-protected account, paid (for the last 15 years) the maximum amount of Social Security tax (FICA), and retired at 65. “A” is getting a good company pension, and has a retirement income from all sources at about 110% of final salary.Person “B” graduated from high school and went into the armed forces, serving 5 years in a non-combat zone. On leaving the military, “B” went to work as a mechanic on heavy equipment (road graders, bulldozers, etc.). At age 62, “B” is physically worn out and retired. “B” has saved a little money, mainly in the form of a house, which is paid off. “B” also gets a small company pension and a reduced Social Security benefit. Retirement income from all sources is at about 40% of final salary.Person “C” graduated from college, got an MBA from a prestigious school, and got a job as a trader for a major investment firm. After 5 years, “C” went independent and made in the high six figures the remainder of his/her career. “C” lived very well – only the best of everything – and saved almost nothing. “C” has earned the maximum social security benefit available but no company pension. Retirement income from all sources is about 25% of final salary.Person “D” dropped out of high school and survived on marginal jobs (think repair jobs, common laborer, lawn and garden care) while following a dream of becoming a world-class surfer. Because many of the jobs were short-term and paid in cash, contributions to FICA were rarely made and “D” will get little Social Security (about 15% of final salary) and no company pension. Person “E” came from a wealthy family, got a college degree in philosophy, and worked in white-collar jobs. The family supplemented “E’s” income and “E” spent every penny earned and every penny received from the family. Unfortunately, “E’s” family had everything invested with a pyramid scheme and on their death “E” was surprised to find the estate worth nothing. “E” is now 60 and retired and looks to have very little from Social Security or an employer. “E” will retire with about 10% of final salary.Person “F” has a college degree and worked hard in a profession. “F” has a company pension which along with Social Security will replace about 50% of final salary. “F” bought a large house early on and the house appreciated greatly in value (to several times what “F” paid for it) and “F” took out second mortgages on the house for travel, cars and other spending. Everything went well until the housing market crashed and the market value of the house today is about what it was when “F” purchased it. “F” has not yet paid off the first mortgage.Person “G” has a college degree and an MBA and has had a steady income growth for an entire career, making upper management at age 45. “G” saved 15% of salary and got a pension from the company. “G” was an early casualty of the Great Recession – got laid off at age 63. “G’s” pension was vested at the time but the company went bankrupt a few months later and the pension was taken over by the government but was limited on payouts. “G” has not been able to get another job at the previous salary level. Unemployment insurance payouts ran out two years ago and “G” has worked at Home Depot and Wal-Mart since. Retirement income for “G” (including Social Security, company pension and savings) is about 40% of final salary and other work earnings bring it to about 45%, These are typical of real people reaching retirement age today. Some work hard, save, and do fine. Others work hard, save, and through no fault of their own have little retirement income. People in some jobs are able (and want) to work into their 70s. People in other jobs are physically worn out by their job and are lucky to work until they are 55. Some people don’t save, spend irresponsibly (relative to their income) and have little retirement income. In some cases the decisions they made in high school result in a life that offers little prospect of a comfortable retirement. Questions to answer: Which of the persons noted above should society/government provide extra retirement income help to? Justify your answer.Should any of the persons above have Social Security payments reduced or pay extra taxes to help pay for more retirement income of others? If so, which ones? Justify your answers.What is the responsibility of the individual in making sure they have an adequate retirement income? If they don’t live up to that responsibility what should the consequences be? Justify your answers.Should Social Security be means-tested? That is, should someone with adequate savings and a company pension even get Social Security? Remember, people have been paying into Social Security for their entire careers, and that Social Security has been considered a retirement insurance program. Justify your answers.Should employers have any obligation to assure that their employees have adequate retirement income under all circumstances? Justify your answers.Should the government have an obligation to assure that citizens have adequate retirement income under all circumstances? If yes, what would you recommend to ensure that everyone has adequate retirement income? If no, why? Justify your answers. Note: Justifications can be ethical, social, economic and/or any other rationale you believe. Answers must be thought out and considered, not just “It’s the right thing to do” or “It’s a social obligation.” For example, if you were to have a reason for having the better off subsidize the less well-off based on ethical reasons, what ethical purpose does this serve? Similarly, if it is for societal reasons, how does such a policy help society? Etc., Good luck.