1. The US Social Security system provides workers with the option of retiring at age 62 and having a lower social security benefit or waiting until age 66 (or later depending on your birth year) and receiving their full benefits. For simplicity assume that social security benefits are received annually (instead of monthly) at the end of each year. Assume that benefits grow at the rate of 2.2% per year. People who retired at age 62, receive $25,200 this year. People who retired at age 66, receive $33,600 this year. You are advising a friend who expects to live until age 83. If he gets benefits next year, he will receive benefits for 22 years. If he waits four years to retire, he will receive benefits for 18 years. Assume that the benefits grow annually at 2.2% per year and that the appropriate discount rate is 5.0%. a. What is the present value of the benefits he would receive if he begins receiving his benefits next year? b. What is the present value of the benefits he would receive if he begins receiving his benefits four years later? c. Policymakers are concerned about the long-term viability of Social Security and are considering dramatic changes to the program. This year Social Security system currently raises $920 billion per year in income and pays $800 billion per year in benefits. However, with the pending retirement of the Baby Boom generation, benefits levels are expected to increase at the rate of 3.7% per year (2.2% inflation plus 1.5% annual increase in the number of beneficiaries) whereas income (FICA taxes) is expected to grow only 2.2% per year (inflation) as the workforce is not forecast to grow. Continue to assume that the appropriate discount rate is 5%. Using a 75-year forecast time period (as used by policymakers), estimate the solvency of the Social Security system. In other words, what is the value of its expected payments relative to its expected tax revenues at the end of 2022 Answer on the excel spreadsheet