Question

28

Drawing on Andrew Eschtruth’s lectures, which of the following is true about prospects for Americans’ retirement

Select one:

a. In 2020, Social Security benefit costs will exceed Social Security’s tax revenues and Trust Fund income; that will be the end of Social Security.

b. In 2020, Social Security benefit costs will exceed Social Security’s tax revenues and Trust Fund income; that will statutorily require an increase in the Social Security tax.

c. Over the past generation, Americans have shifted sharply from Defined Benefit Plans to Defined Contribution Plans.  

d. Over the past generation, Americans have shifted sharply from Defined Contribution Plans to Defined Benefit Plans.

Answer 1

Option c) is correct..Over the years, American have shifted sharply from Defined benefits program to Defined contribution plans.

Defined Benefit Pension Scheme: It contains a formula for determining retirement benefits so that the actual benefits to be received are defined ahead of time.

Defined Contribution scheme: It specifies what contribution the employer will make to a retirement or savings fund set up for the employee.It does not define the eventual benefit amounts contributed to the fund and the retirement fund's investment earnings.

Companies choose defined contribution plans because they are less expensive and complex to manage than traditional pension plans.And it has placed the burden of saving and investing for retirement on employees. 64% is the number of private sector employees who have access to a defined-contribution plan, according to Bureau of Labour Statistics.In today's time Social Security benefits aren't enough to live on in retirement