Which of the following statements concerning the Social Security system is (are) correct?

1. Workers entitled to retirement benefits can currently take early retirement benefits as early as age 59.

2. The worker who takes early retirement benefits will receive a reduced benefit because he or she will receive more monthly benefit payments, as payments commence earlier than if the worker had waited and retired at full retirement age.

a. 1 only.

b. 2 only.

c. Both 1 and 2.

d. Neither 1 nor 2.

Elin wants to retire in 20 years when she turns 60. Elin wants to have enough money to replace 120% of her current income less what she expects to receive from Social Security. She expects to receive $20,000 per year from Social Security in todays dollars. Elin is conservative and wants to assume a 6% annual investment rate of return and assumes that inflation will be 3% per year. Based on her family history, Elin expects that she will live to be 95 years old. If Elin currently earns $100,000 per year and expects her raises to equal the inflation rate, approximately how much does she need at retirement to fulfill her retirement goals?

Stephanie wanted to save for her daughters education. Tuition costs $10,000 per year in todays dollars. Her daughter was born today and will go to school starting at age 18. She will go to school for 4 years. Stephanie can earn 12% on her investments and tuition inflation is 6%. How much must Stephanie save at the beginning of each year if she wants to make her last savings payment at the beginning of her daughters first year of college?