3. Another one of your colleagues would like to reform Social Security, but you want to make sure the reform is in the best interest of your constituents. To determine this, you must compute some basic Social Security statistics for those that you serve. (20 pts) a. Calculate your representative constituent's Average Indexed Monthly Earnings if they have the following earnings throughout their career (40 total years). Years 1-5 Years 6-12 Years 13-19 Years 20-26 Years 27-33 Years 34-40 $20,000 $40,000 $45,000 860,000 $70,000 $90,000 b. Calculate the representative constituent's monthly Social Security annuity payment once they retire with full benefits at age 70. (Receipt amounts: 90 cents/$ for first $816, 32 cents/S for $817-4917, and 15 cents/$ for $4918+.) c. What is the representative constituent's replacement rate? Why is this value important?d. The last step in determining if you want to support your colleague's Social Security reform proposal is to determine the Social Security Wealth of your representative constituent. Calculate this value given the following probabilities of receiving benefits (the first year receiving payments is age 70): ages 70-73 = 90%, ages 74-75 = 50%, age 76+ = 0%) and a 7% discount rate. (Hint: remember, they put in 12.4% each month.) e. Based on these statistics, do you agree to reform Social Security? Why or why not? 2