Reference no: EM133204800

The largest social insurance program in the United States is the Social Security program. Millions of Americans currently count on the program for monthly benefits. If you are working, you are probably having funds withheld from your paycheck, matched by your employer, and contributed to the program.

As you learned in this chapter, there are some long-range financial issues with the program. That's unfortunate, as many people currently depend on the program. Will Social Security be there when you retire? It's a serious question. The American Academy of Actuaries has an on-line "game" that illustrates some of the possible ways in which the Social Security program's ability to pay benefits can be extended into the future. Access the American Academy of Actuaries web site at:

In the right-hand margin, a number of features are listed. Click on the link for "The Social Security Game." Once you click on this link, you'll learn about some Social Security myths and some options available for extending the solvency of the program. Use the link to answer the following questions.

Questions

1. A number of myths about Social Security are discussed.
   1. Is Social Security "broke"?
   2. Will the program last into the future?
   3. Is Social Security a "Ponzi scheme"?
   4. Are the Social Security trust funds real or fictitious?
2. One way of extending the solvency into the future is to reduce the expected future outlays from the program-benefit reductions. What four options are listed that will reduce the program's future benefit payments? How would each option reduce expenditures?
3. Another way of extending the solvency of the program into the future is to increase the revenues. What four options are listed that will increase revenues for the program? How would each option increase revenues?
4. Of course the decreasing expenditures and raising revenues options can be used together. Which option or combination of options do you think is best to improve the financial prospects of the program? Why do you think your plan is best?