Question

Problem 5: Social Security. Discuss the validity of the following claims about Social Security. Determine whether each claim is True or False and present a concise explanation for your answer: 1. Social Security is inefficient because workers are capable of saving for retirement on their own 2. Social Security incentivizes workers to retire as early as possible since this allows them to receive more benefits payments. 3. Social Security is constructed so that it always redistributes wealth from low earners to high earners.

Answer 1

1. False. Because retirement means end of steady income which means they will have to depend on saving but most of the time these saving does not happen as planned.

2. False. Even though social security allows retirement as early as 62 years ,but early retirements does allow them to recieve more benefits as it will result in permanently lower benefits.

3. False. Social security does not redistribute wealth but transfers money from people who earned more during working years to those who earned less thus it is seen as a progressive program.