With these facts in mind, draw three budget constraints in the same diagram: i. The constraint that applies to beneficiaries who choose not to receive benefits ii. The constraint that applies to those who receive benefits between 62 and the NRA iii. The constraint that applies to beneficiaries, older than the NRA, receiving benefits

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Chapter1: Making Economics Decisions
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Please determine all equations for the three budget constraints, assuming that the individual's total quantity of benefits is such that they are completely reduced to $0 at the point where they have earned $48,600

▪ Individuals who receive retirement benefits from the Social Security Administration are
subject to something known as the "retirement earnings test." In 2020, this test
reduced benefits by one dollar for every two dollars earned between $18,240 and
$48,600. The test applies to beneficiaries between ages 62 and the "Normal Retirement
Age," currently 67. Although these reduced benefits are eventually restored to
beneficiaries in an actuarially fair manner at a later date, research shows that most
people perceive the retirement earnings test to be a pure tax on labor earnings.
▪ With these facts in mind, draw three budget constraints in the same diagram:
i. The constraint that applies to beneficiaries who choose not to receive benefits
ii. The constraint that applies to those who receive benefits between 62 and the NRA
iii. The constraint that applies to beneficiaries, older than the NRA, receiving benefits
Transcribed Image Text:▪ Individuals who receive retirement benefits from the Social Security Administration are subject to something known as the "retirement earnings test." In 2020, this test reduced benefits by one dollar for every two dollars earned between $18,240 and $48,600. The test applies to beneficiaries between ages 62 and the "Normal Retirement Age," currently 67. Although these reduced benefits are eventually restored to beneficiaries in an actuarially fair manner at a later date, research shows that most people perceive the retirement earnings test to be a pure tax on labor earnings. ▪ With these facts in mind, draw three budget constraints in the same diagram: i. The constraint that applies to beneficiaries who choose not to receive benefits ii. The constraint that applies to those who receive benefits between 62 and the NRA iii. The constraint that applies to beneficiaries, older than the NRA, receiving benefits
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