DOCSLIB.ORG

CE 02 INFRE International Foundation for Retirement Education

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
CE 02 INFRE International Foundation for Retirement Education CE 02 INFRE International Foundation for Retirement Education Retirement Plan Design INFRE CONTINUING EDUCATION Retirement Plan Design 2009 International Foundation for Retirement Education P.O. Box 1860 Lubbock, TX 79408-1860 847.756.7350 fax 806.742.6102 www.infre.org CE02 2009 International Foundation for Retirement Education RETIREMENT PLAN DESIGN Introduction etirement professionals should know everything about pensions, contribution payouts, integration with other retirement plans, health care and estate planning right? We all are retirement professionals but we all may work for R different types of plans or associations. We all are knowledgeable about our specific plan, but our participants do not live in a vacuum. True retirement professionals realize the need for the participant to utilize all of their benefits when planning for retirement. They will have their own pension and they may have a spouse who will also have a pension. They may each have Social Security benefits on top of that, not to mention their 401(k), 403(b), 457 plans and even IRAs. Retirement professionals realize that a participant won’t always know which plan you are discussing or which one you work with. Retirement professionals and Congress realize that portability is an increasingly interesting subject to many young professionals. Retirement professionals realize that they do not know it all; especially in an industry that is trying to make the company pension plan more universal to associates. Retirement professionals realize that the plan structure within your organization may evolve and you will be a player in the changing environment. Retirement issues have become increasingly important in American life. Baby boomers are reaching retirement age in larger numbers than any generation that has come before. Because of this, media attention has made retirement education a sought after benefit. Many baby boomers realize they are reaching retirement age and haven’t saved much for the lifestyle they are planning on living. This so-called “crisis” in Americans’ retirement savings has spawned a Presidential Summit and a Commission to study the situation. National debates have been held to discuss Social Security and its solvency, as well as its ability to protect those currently enjoying benefits and those who would like to enjoy its benefits in the future. Retirement plan models have been developed to better enable retirement plan sponsors to select the best program or combination of programs for its plan members. As with many issues, history plays a large role in shaping our view. The next section will look at the history of retirement plans and bring us up-to-date so we can examine the models available today. CE02 2009 International Foundation for Retirement Education 1 RETIREMENT PLAN DESIGN History Retirement plans are a twentieth century development in the United States. Their development directly coincides with the Industrial Revolution. Before the industrial revolution people were cared for in old age by their family, church and community. There was no need for pension subsidies because old age transfers were voluntary and the majority of intergenerational transfers were agricultural in nature. The industrial revolution brought about change. People moved from villages and farms into the cities, leaving behind their support systems. This move of the early 1800’s was a move to industrial jobs. People moved for the attractive wages but soon found that with greater wages and year round income security came greater risks than they had found in agriculture. They found they were without any support system in the city and therefore began to see the need for pensions and insurance. Individuals who lived long enough were eventually forced to public charities, often with the loss of civil rights that we enjoy today. But the fact was, old age was not a problem of importance to lawmakers. First of all, most people did not live that long, as life expectancy was only 41 years of age! Second, leaders saw these plans as socialist in nature (a term we have heard with the advocacy of national healthcare over the past decade). Finally, the issue was just politically and economically inefficient. The Industrial Revolution had reached its peak years earlier overseas. For instance, the political clout of labor in Europe resulted in the public support of insurance and retirement. In places like England, private insurance “schemes” were becoming common to all classes of people. The movement evolved from private “schemes” to public pension plans, initially aimed at assisting widows and the disabled. In 1871, Chancellor Bismarck of the German Reich considered the working class a danger to the State. If left unchecked, the working class would create social unrest. Bismarck was the father of the modern pension plan. Instead of clamping down on the labor movement, Bismarck took a different approach, which included arranging social insurance to subdue the unrest. Bismarck’s scheme was the first defined benefit pension plan. The plan was mandatory and required that premium contributions be made by workers. Transfers were made to those who were sick, old, or needy. By 1890, health and pension laws spread across Germany and other parts of Europe. People were usually eligible at 70 years of age, if their working capacity was reduced to one third of normal capacity. The age 70 came from the biblical reference to “3 score and 10”. Some of these plans were the first to combine pension and disability. These plans were financially feasible since the chance of people living to age 70 collect was highly unlikely since the life expectancy was age 41! Payments were based on the time worked and wages earned and pensions were not indexed for inflation. Although some changes were made, these existed in this form until WWII. CE02 2009 International Foundation for Retirement Education 2 RETIREMENT PLAN DESIGN The United States lagged Europe in industrializing by some 25 years. Including in this lag was any debate on social insurance and pensions. American Express in 1875 and the Baltimore & Ohio Railroad Company in 1880 offered the first American plans. Proctor and Gamble offered the first profit sharing plan in 1887. By the early 1900’s there were 400 U.S. pension plans being offered. Most were for employees of railroad, banking and utility companies. Even then, manufacturing had no pension concerns. Metropolitan Life and the Equitable Life Assurance society offered the first group annuity contracts in 1921 and 1924 respectively. But during the Roaring Twenties Americans had little concern for the future, so there was little interest in pension plans. The Great Depression brought the Roaring Twenties to a halt. People had no savings and no employment so many sank into poverty. America had lagged behind Europe mostly due to the individualistic culture we had. Americans tended to be migrant and until the great depression there was no need for savings. The first government enacted plan was Social Security in 1935. As was done in Europe, the normal retirement age was set at a prohibitive level, although life expectancy had jumped to age 60 by now. It was immediately reworked from a system based on actuarial assumptions (defined benefit plan) to a “pay as you go” system. Private pensions became widely accepted in the mid-1930 and early 1940’s. During the 1920’s there were only 200 such plans. By 1930, 15% of the entire population was covered by a plan. In 1934, Congress established a pension system for railroad workers. Finally, in 1949 there was a major US steel industry labor dispute. The dispute centered on the belief that American business had a moral obligation to provide for the elderly. As a result of labor disputes, consultants made a case for the increased productivity possible with pension plans. Congress then developed tax incentives for businesses with retirement plans. The social pressure was great under the “New Deal” politics. CE02 2009 International Foundation for Retirement Education 3 RETIREMENT PLAN DESIGN Current Statistics 86% of all state & local government employees participate in some type of pension plan. Approximately 51% of private employees participate in some plan. 67% of employees of medium and large private establishments participate in a plan. 37% of employees of smaller private establishments participate in a plan (with less than 100 employees). 61% of non-government workers have access to a plan.1 There are other factors worth noting: Employees who earn less money are often excluded. Employees with part-time jobs are often excluded. Participation is lower among women. With all this history we can now study the types of plan you may be confronted with, either as an employee or counselor to others. 1 Bureau of Labor Statistics, “Employee Benefits in the United States,” 2008. CE02 2009 International Foundation for Retirement Education 4 RETIREMENT PLAN DESIGN Retirement Plan Types DEFINED BENEFIT PLANS ERISA and the IRS define this type of plan as “any plan that is NOT an individual account plan.” Defined benefit (DB) plans are subject to regulation by the Pension Benefit Guaranty Corporation (PBGC). DB Plan Facts: Provides benefits after retirement from a trust of separately maintained funds, by the purchase of insurance, or from general assets. Amount of benefit is either specifically stated or can be calculated in accordance with a set formula based on factors such as age, length of service, and earnings, but not profits. Annual contributions needed to produce a specific benefit are calculated actuarially. The amount of annual benefit that may be paid to a participant is $195,000 (2009, indexed for inflation). Promises a specific benefit based on a calculated formula at retirement. Flat dollar benefit formula Flat benefit formula Flat percentage of earnings formula Percentage of earnings per year of service formula CE02 2009 International Foundation for Retirement Education 5 RETIREMENT PLAN DESIGN Types of Defined Benefit Formulas Flat dollar benefit formula: A retirement benefit that calls for a specific pension amount without regard to income or service.
Load more

Recommended publications
  • Policy Issues in Work and Retirement. INSTITUTION Upjohn (W.E.) Inst
    DOCUMENT RESUME ED 232 024 CE 036 489 AUTHOR Parnes, Herbert S., Ed. TITLE Policy Issues in Work and Retirement. INSTITUTION Upjohn (W.E.) Inst. for Employment Research, Kalamazoo, Mich. REPORT NO ISBN-0-88099-010-4 PUB DATE 83 NOTE 285p.; Papers presented at the Conference on Policy Issues in Work and Retirement (New Brunswick, NJ, October 1982). AVAILABLE FROMW.E. Upjohn Institute for Employment Research, 300 South Westnedge Avenue, Kalamazoo, MI 49007 ($20-95, hardcover--ISBN 0-88099-011-2; $13.95, paper; quantity discounts available). PUB TYPE Collected Works - Conference Proceedings (021) -- Information Analyses (070) Viewpoints (120) EDRS PRICE MF01 Plus Postage. PC Not Available from EDRS. DESCRIPTORS *Age Discrimination; Aging (Individuals); Employment Opportunities; *Employment Practices; Financial Support; Health Needs; Health Services; Older Adults; *Personnel Policy; *Public Policy; Retirement; *Retirement Benefits IDENTIFIERS *Social Security ABSTRACT This collection consists of papers presented at a 1982 conference on policy issues in work and retirement. Presented first is an introductory overview of the problems of retirement and aging by Herbert S. Parnes. The following conference reports are included in the volume: "Life without Work: Does It Make Sense?" by Eli Ginzberg; "Aging, Health, and Work," by Leon F. Koyl; "Health and Retirement; Retirement and Health," by Carl Eisdorfer and Donna Cohen; "Keeping Older Workers on the Job: Methods and Inducements," by Daniel E. Knowles; "Maximizing Post-Retirement Labor Market Opportunities," by Anna Marie Buchmann; "Age Discrimination in Employment," by Stephen R. McConnell; "Financing Options for Social Security," by Alicia H. Munnell; and "Private Pensions, Inflation, and Employment," by James H.
    [Show full text]
  • Retirement Income and the Problem of Integrating Private Pensions and Social Security Patricia E
    University of Florida Levin College of Law UF Law Scholarship Repository UF Law Faculty Publications Faculty Scholarship 4-1997 The volutE ion of Entitlement: Retirement Income and the Problem of Integrating Private Pensions and Social Security Patricia E. Dilley University of Florida Levin College of Law, [email protected] Follow this and additional works at: http://scholarship.law.ufl.edu/facultypub Part of the Retirement Security Commons Recommended Citation Patricia E. Dilley, The Evolution of Entitlement: Retirement Income and the Problem of Integrating Private Pensions and Social Security, 30 Loy. L.A. L. Rev. 1063 (1997), available at http://scholarship.law.ufl.edu/facultypub/656 This Article is brought to you for free and open access by the Faculty Scholarship at UF Law Scholarship Repository. It has been accepted for inclusion in UF Law Faculty Publications by an authorized administrator of UF Law Scholarship Repository. For more information, please contact [email protected]. THE EVOLUTION OF ENTITLEMENT: RETIREMENT INCOME AND THE PROBLEM OF INTEGRATING PRIVATE PENSIONS AND SOCIAL SECURITY PatriciaE. Dilley* TABLE OF CONTENTS I. Introduction ............................................................................ 1066 A. Conflict of Integration and Entitlement Principles... 1068 B. Integration as a Microcosm .......................................... 1070 II. Retirement Entitlements: From Practice to Theory ......... 1074 A. Entitlement as the Precondition of Retirement ........ 1076 B. Entitlement for the Worthy ......................................... 1078 C. Mass Retirement and Earned Entitlement ................ 1080 D. Metaphor and Reality of Contributory Entitlem ents ................................................................... 1081 E. Retirement Entitlements and Redistribution ............ 1082 III. The Roots of Entitlement: Evolution of Entitlement and Retirement in America .................................................. 1085 A. Old Age and Poverty Before the Retirement Era .... 1086 1.
    [Show full text]
  • In Political Economy the Revolution of 1935: the Secret History of Social Security
    Essays In Political Economy FROM THE LUDWIG VON MISES INSTITUTE The Revolution of 1935: The Secret History of Social Security By Gregory Bresiger1 Social Security was not just about the provision of publicly funded old-age pensions in the name of social insurance. It was designed as a tool of macroeconomic policy, a social arm of central planning passed in age of boundless faith in the power of the state. As such, the program was steeped in economic fallacy and became an integral part of the discredited Keynesian plan to turn stones into bread. Far from achieving its stated aims, it helped prolong the Great Depression and has contributed mightily to the decline of American liberty. 1 Gregory Bresiger is assistant manger editor of Traders Magazine and a business and financial writer/editor in Kew Gardens, New York. [email protected] Brad Edmonds helped with editing. © 2002 Mises.org Essays in Political Economy 2 _______________________________________________________________ Section I: peaks and valleys of deflation and 4 Introduction inflation.” Social Security was representative of A second American revolution national planning schemes, some of occurred almost 70 years ago. On which had been tested during World August 14, 1935, after very little War I and regained popularity with public or congressional debate, intellectuals after the crash of 1929. President Franklin Delano Roosevelt Many intellectuals believed the signed the Social Security Act into government could wage war on law on. Many of his allies were poverty and, by using the techniques disappointed because they wanted of wartime planning so popular with more than the act provided; FDR progressives during World War I, assured them much more was manage the business cycle.5 coming.2 He said, on signing the bill into law, that Social Security Social Security was a Keynesian “represents a cornerstone in a device meant to ensure that buying structure which is being built but is 3 power would remain strong in times by no means complete.” In the midst of high unemployment.
    [Show full text]
  • DOCUMENT RESUME ED 262 315 CG 018 550 Fifty Years Of
    DOCUMENT RESUME ED 262 315 CG 018 550 TITLE Fifty Years of Social Security: Past Achievements and Future Challenges. An Information Paper Prepared for Use by the Special Committee on Aging. United States Senate, Ninety-Ninth Congress, First Session. INSTITUTION Congress of the U.S., Washington, D.C. Senate Special Committee on Aging. REPORT NO Senate-Prt-99-70 PUB DATE 13 Aug 85 NOTE 96p.; These essays were commissioned by Carnegie-Mellon University for a special coherence and committee meeting held there on August 13, 1985. PUB TYPE Collected Works General (020) -- Legal /Legislative /Regulatory Materials (090)-- Viewpoints (120) EDRS PRICE MF01/PC04 Plus Postage. DESCRIPTORS *Disabilities; *Females; History; *Labor Economics; Older Adults; *Policy Formation; Position Papers; *Public Policy IDENTIFIERS *Social Security ABSTRACT This document contains six essays examining the history and impact of the social securityprogram on America's economic and social development. "Social Security: The Cornerstone of American Social Welfare Policy," by Malcolm H. Morrison,presents brief background information on the system and discussesthe basic principles of social security. The second section ofthe paper describes the changing profile of the aging population which will require modifications in the social securitysystem. "Social Security: A Source of Support for All Ages," by W. AndrewAchenbaum, reviews the development of social security and offersa three-stage strategy for renewing the system: job training for older workers, assurance of universal coverage, and recognition of the changed status of women. "Emerging Issues in Disability Policy," by EdwardD. Berkowtiz, discusses the stages of development and policyproblems in the disability insurance program along with recommendationsto address those problems.
    [Show full text]
  • Retirement Income and the Problem of Integrating Private Pensions and Social Security
    Loyola of Los Angeles Law Review Volume 30 Number 3 Article 14 4-1-1997 The Evolution of Entitlement: Retirement Income and the Problem of Integrating Private Pensions and Social Security Patricia E. Dilley Follow this and additional works at: https://digitalcommons.lmu.edu/llr Part of the Law Commons Recommended Citation Patricia E. Dilley, The Evolution of Entitlement: Retirement Income and the Problem of Integrating Private Pensions and Social Security, 30 Loy. L.A. L. Rev. 1063 (1997). Available at: https://digitalcommons.lmu.edu/llr/vol30/iss3/14 This Article is brought to you for free and open access by the Law Reviews at Digital Commons @ Loyola Marymount University and Loyola Law School. It has been accepted for inclusion in Loyola of Los Angeles Law Review by an authorized administrator of Digital Commons@Loyola Marymount University and Loyola Law School. For more information, please contact [email protected]. THE EVOLUTION OF ENTITLEMENT: RETIREMENT INCOME AND THE PROBLEM OF INTEGRATING PRIVATE PENSIONS AND SOCIAL SECURITY PatriciaE. Dilley* TABLE OF CONTENTS I. Introduction ............................................................................ 1066 A. Conflict of Integration and Entitlement Principles... 1068 B. Integration as a Microcosm .......................................... 1070 II. Retirement Entitlements: From Practice to Theory ......... 1074 A. Entitlement as the Precondition of Retirement ........ 1076 B. Entitlement for the Worthy ......................................... 1078 C. Mass Retirement and Earned Entitlement ................ 1080 D. Metaphor and Reality of Contributory Entitlem ents ................................................................... 1081 E. Retirement Entitlements and Redistribution ............ 1082 III. The Roots of Entitlement: Evolution of Entitlement and Retirement in America .................................................. 1085 A. Old Age and Poverty Before the Retirement Era .... 1086 1. Old Age and Poverty in the Old World ............
    [Show full text]
  • Social Security Journal History of Retirement Church and State Roles In
    Social Security Journal History of retirement Church and state roles in Australian welfare provision Love or work – wage or pension Flexible retirement Social Security Notes – new policies and programs Book reviews Social Security Statistics Project Notes – new research listings Details about new books and reports Selective bibliography on social security issues SOCIAL SECURITY JOURNAL JUNE 1996 ã Commonwealth of Australia 1996 ISBN 0 644 36051 8 This work is copyright. It may be reproduced in whole or in part for study or training purposes subject to the inclusion of an acknowledgment of the source and no commercial usage or sale. Reproduction for purposes other than those indicated above require the written permission of the Australian Government Publishing Service, GPO Box 84, Canberra, ACT, 2601. The opinions expressed by contributors in the Social Security Journal do not necessarily represent the views of the Department of Social Security or the Minister for Social Security and, of course, cannot be taken in any way as expressions of government policy. The Social Security journal is published twice yearly and contributions are most welcome. Intending contributors are asked to contact the Managing Editor for an authors' guide on preferred length and style requirements. Intending authors should note that the guidelines were revised significantly in late 1994 and that not all styles and formats that were used in previous issues are appropriate guides to the new standard. As this publication has a widespread readership, it would be appreciated if articles submitted are written in plain, non-technical language. Information from authors about forthcoming books and reports on income support and related research is also welcome.
    [Show full text]
  • Savings of Americans in A
    UNIVERSITY OF CALIFORNIA RIVERSIDE The Needs of a Lifetime: The Search for Security, 1865-1914 A Dissertation submitted in partial satisfaction of the requirements for the degree of Doctor of Philosophy in History by Tony King Yang December 2009 Dissertation Committee: Dr. Roger L. Ransom, Chairperson Dr. Richard C. Sutch Dr. Molly McGarry Copyright by Tony King Yang 2009 The Dissertation of Tony King Yang is approved: _____________________________________ _____________________________________ _____________________________________ Committee Chairperson University of California, Riverside ACKNOWLEDGEMENTS We have for once learnt to see the great events of world history from below, from the perspective of the outcast, the suspects, the maltreated, the power-less, the oppressed, the reviled – in short, from the perspective of those who suffer- Dietrich Bonheoffer to Hans von Dohnanyi and friend, Christmas, 1942. Letters and Papers from Prison. Thanks to all my wonderful professors and mentors at the University of California, Riverside. In particular I’d like to thank Professor Ransom for his considerable time and effort in revising this manuscript and for the numerous years of support. I’d also like to give special thanks to Professor Richard Sutch for introducing me to the topic of life cycle savings and the history of savings. I have also been very grateful for having been able to work with both of these distinguished professors who not only are great scholars but great friends and outstanding teachers. Lastly, I would like to thank Professor McGarry for having stepped in on many occasions to answer questions and was always ready with a book recommendation. I’d also like to thank my fellow graduate students for making my four years in the program a fun and enjoyable time.
    [Show full text]
  • 1C Hapter a Short History of Retirement
    CHAPTER1 A Short History of Retirement “When I want to understand what is happening today, I try to decide what will happen tomorrow; I look back; a page of history is worth a volume of logic.” —Oliver Wendell Holmes The U.S. standard-gauge railroad track is four feet, eight and one- half inches wide. Why such an odd measure? Because that was the width in England and the United States when railroads were built by British expatriates. Where did the English get that measure? The first rail lines were built by the same people who built the tramways that pre- ceded railroads, and they built the trams with the same jigs and tools used for building wagons. The wagons were built to what is now the standard-gauge railroad track so their wheels would fit the ruts of England’s ancient long-distance roads. The ruts had been made by the war chariots brought to England by the occupying imperial Roman army. And the chariots were four feet, eight andCOPYRIGHTED one-half inches wide to accommodate MATERIAL the rear ends of two horses. You’re not alone if you struggle with change. Retirement as we know it today is a relic from a time and a world that have long since passed. In the context of our modern age, con- ventional ideas about retirement are not just inappropriate—they are counterproductive. The concept of retirement was a shortsighted 1 c01.indd 1 1/6/2014 7:07:19 AM 2 The New Retirementality political machination and social manipulation that is no longer rel- evant and is hopelessly out of touch with our times.
    [Show full text]
  • The Attack on Retirement Patricia E
    University of Florida Levin College of Law UF Law Scholarship Repository Faculty Publications Faculty Scholarship 1-1-2004 Hope We Die Before We Get Old: The Attack on Retirement Patricia E. Dilley University of Florida Levin College of Law, [email protected] Follow this and additional works at: http://scholarship.law.ufl.edu/facultypub Part of the Elder Law Commons, and the Retirement Security Commons Recommended Citation Patricia E. Dilley, Hope We Die Before We Get Old: The Attack on Retirement, 12 Elder L.J. 245 (2000), available at http://scholarship.law.ufl.edu/facultypub/175 This Article is brought to you for free and open access by the Faculty Scholarship at UF Law Scholarship Repository. It has been accepted for inclusion in Faculty Publications by an authorized administrator of UF Law Scholarship Repository. For more information, please contact [email protected]. HOPE WE DIE BEFORE WE GET OLD: THE ATTACK ON RETIREMENT PatriciaE. Dilley The American institution of retirement has sustained numerous attacks over the last twenty years, to the extent that it may cease to exist by the time most of today's workers reach their midsixties. Professor Patricia Dilley describes how all of the components of the "three-legged stool" that represents private pensions, personal savings, and Social Security, have declined so significantly in recent years that the combination may not be able to provide support for the elderly in the future, particularlythose retired seniors who are in the lower and middle classes. Changes in employment policies, the markets for retirement savings investment, and the public policy surrounding the Social Security debate threaten the mainstays of golden years income upon which Americans have come to rely.
    [Show full text]
  • From the Impoverished to the Entitled: the Experience and Meaning of Old Age in America Since the 1950S
    From the Impoverished to the Entitled: The Experience and Meaning of Old Age in America since the 1950s By Copyright 2012 Jason G. Roe Submitted to the graduate degree program in the Department of History and the Graduate Faculty of the University of Kansas in partial fulfillment of the requirements for the degree of Doctor of Philosophy. ________________________________ Chairperson Dr. Jeffrey Moran ________________________________ Dr. Sheyda Jahanbani ________________________________ Dr. Christopher Crenner ________________________________ Dr. Jacob Dorman ________________________________ Dr. Shawn Alexander Date Defended: 02 April 2012 The Dissertation Committee for Jason G. Roe certifies that this is the approved version of the following dissertation: From the Impoverished to the Entitled: The Experience and Meaning of Old Age in America since the 1950s ________________________________ Chairperson Dr. Jeffrey Moran Date approved: 02 April 2012 ii Abstract With more than seventy million individuals, the baby boom generation is rapidly approaching traditional retirement age and threatening to strain America's public and private resources. Within the context of Social Security and Medicare, the subject of later life has become one of the most pressing issues of our time. But these potential fiscal problems are not just the result of natural aging; rather, they were caused by historic developments that encouraged most individuals to retire in their mid-sixties, regardless of their personal financial status, physical health, or career ambitions. This project argues that these assumptions about retirement emerged from political and social developments that emerged in the 1950s and 1960s. Prior to those decades, a majority of Americans over the age of sixty-five continued to work as long as they were physically able and could find employment.
    [Show full text]
  • The Genesis and Evolution of Social Security
    This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: The Defining Moment: The Great Depression and the American Economy in the Twentieth Century Volume Author/Editor: Michael D. Bordo, Claudia Goldin and Eugene N. White, editors Volume Publisher: University of Chicago Press Volume ISBN: 0-226-06589-8 Volume URL: http://www.nber.org/books/bord98-1 Publication Date: January 1998 Chapter Title: The Genesis and Evolution of Social Security Chapter Author: Jeffrey A. Miron, David N. Weil Chapter URL: http://www.nber.org/chapters/c6897 Chapter pages in book: (p. 297 - 322) 9 The Genesis and Evolution of Social Security Jeffrey A. Miron and David N. Weil Social security is the largest transfer program in the United States. In 1994, total tax collections under old-age and survivors insurance (OASI, the largest part of social security, and the part on which we focus in this paper) were $293 billion, or 4.2 percent of GDP. Benefit payments were $279 billion. Thirty- seven million people received benefits, and 139 million workers paid taxes on their wages or self-employment income. OASI accounted for 40 percent of the income of the aged in 1992, paying benefits to more than 90 percent of those aged 65 and over and providing more than half of total income to 63 percent of beneficiary units (U.S. Department of Health and Human Services [HHS] 1994b, 1995). In this paper we examine the genesis and evolution of social security in the United States, with special attention to the role of the Great Depression.
    [Show full text]
  • Get Free Chapter
    Table of Contents Preface ............................................................................................. i Not Your Father’s Retirement ......................................................... 1 Workers Are Worried. ................................................................. 6 Life Insurance Retirement Plans ............................................... 15 Taxes Are on Sale ........................................................................... 19 Social Security ........................................................................... 25 Traditional IRAs ....................................................................... 25 401(k)s ....................................................................................... 25 What is Tax-Free Retirement Income? .................................... 25 Roth IRAs .................................................................................. 26 Life Insurance ........................................................................... 26 Build Your Future Today with Secure Retirement Strategies .. 26 Saving for Retirement ............................................................... 29 Three Buckets ............................................................................... 33 Bucket No. 1: The Taxable Bucket ............................................ 34 Social Security ........................................................................... 35 Traditional IRAs and 401(k) ..................................................... 36 Bucket No. 2: The
    [Show full text]