Question

The impact of social security on the individual’s simultaneous decision about retirement and savings

Answer 1

INTRODUCTION TO SOCIAL SECURITY-

Social security is any goverment finanical help to their people with low or no income. They are also focused towards promoting the welfare for society by provinding assistance in food, shelter, health and other basic needs for the well-being of an individual.

IMPACT OF SOCIAL SECURITY ON INDIVIDUAL'S DECISION ABOUT RETIREMENT AND SAVINGS-

Today the retirement behaviour has grown rapidly during the last twenty years. People in today's world invest in their present, at the same time secure their future by investing in various plans and investment schemes, and also increase their amount of savings. This decision of retirement and savings is affected by the social security they are going for through the structure of the benefits schedule, earing tax and its actual unfair delayed retirement credit associated with postponong retirement beyond the normal retirement age. The individual's saving during the most productive years and dissaving during retirement can help an individual maintain a smooth pattern over the lifetime. This relationship between social security and retirement is however quite complicated, the existense of social security taxes, by the effect of social security on retirement decisions, by the role of intergenerational transfer payments and by the interaction of social secturity with human capital investment decisions. This examination of these issues reveals that an increase in social security benefits can cause either an increase or a decrease in personal savings.

Social security also affects the decisions to work. The social secuirty reults in retirement of people at an earlier age. To take the advantage , individual should accumulate additional assest during their working years to provide more retiremnet income.

Therefore, social security has an impact on the individuals's decision about retirement and savings.