American Academy of Actuaries Discussion Social Security Problem

DISCUSSION TOPICPlay the Social Security Game (Links to an external site.)Links to an external site. to solve the Social Security problem. Detail your choices, noting the why’s of your choices and also discuss the effects on the stability of employment, inflation, and GDP as a result.Respond to the following 2 discussion post (at least 1 paragraph each; cite all work), this is just a response to classmates(Discussion 1)A) Raise Payroll Tax RateRaise to 7.0% (57% solved) If we look at the numbers based on a $40,000 salary at 6.2%, we are paying about $2,480 in Social Security taxes each year, by gradually increasing it to 7.0% we are looking at $2,800 in taxes which is about $26.67 a month, with a very little noticeable difference in take home wages. With the majority of the funds that provide for the Social Security program coming from payroll taxes, increasing it by 0.8% could help fill the potential void by close to 0.2%. The longer lifespan and the readily available funds at retirement will increase the individuals net wealth, which will increase their buying potential, which in turn, increases the aggregate demand and thusly the GDP. It can be looked at as a long run game: pay more now for a greater return in the future. (Center on Budget and Policy Priorities, 2017)B) Subject Higher Wages to Social Security Payroll TaxNo maximum on earnings subject to tax, increase in benefits. In 2019, the earnings cap was $132,900, meaning that any wages made over $132,000 were not taxed for Social Security. Much like an increase in payroll tax, by increasing the cap, so that those who earn more pay the same percentage of their income into Social Security as the middle class and working families, we could close the potential void by close to 25%. Some economists have looked at raising the gap to $250,000. Doing so could extend the Social Security program by another 50 years and add an additional $65 per month into the amount received per person, increase the cost of living allowance and increase the benefit payouts to low-income seniors (Phipps, 2016).(Discussion 2)Hi class,While playing the social security game my first option was to gradually increase full retirement age. After full retirement age reaches age 67 for those born in 1960, increase the full retirement age 2 months for every year until full retirement age reaches age 68. Doing so would solve 16% of Social Security problems. My second choice was to increase the payroll taxes rate by 7.4% which solves 85% of the problems. For me, make sense to put more money towards Social Security and add time to individuals to access those funds. Also, If individuals receive their full retirement a little later, this could ensure more stability at their jobs helping at the same time individuals to obtain full benefits when they retire. With a tax increase, goods and services prices will also increase. If companies began to have profits the GDP may increase.

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