Because Harry is financially challenged in
college, he works 10 hours a week at $10 an hour, earning $100. But he has $5.30 (5.3%)
deducted from his check for Social Security's Old
Age and Survivor Insurance (OASI). George,
his freshman roommate, does not work during his college years.
By the
time he graduates from college, the OASI taxes may add up to about
$530!
And on top of that, there is the Social Security taxes he will have
paid on his summer
earnings.
Harry could sure use those
bucks, but he
takes
some consolation from the thought that the OASI tax will help finance
his retirement.
George and Harry compare notes when they
meet
at their 50th reunion. It turns
out that they had equally successful careers; indeed they had identical
earning
histories after college. Question #1: Approximately how much more OASI retirement benefits will Harry receive each year when he retires as a result of the Social Security taxes he paid while working during his college years?
| a: 0 |
b:
$5.30 |
c:
$53 |
d: $530 |
e:
$1,000 |