Chapter 12

"_____" period refers to the child's check (benefits) "_____" period refers to the spouse's check (benefits)

"dependency" "blackout"

Retirement benefits : If I continue to work when I start receiving Social Security Retirement benefits before FRA, my Social Security Retirement check will be reduced by $_____ for every $_____ I earn above the set annual limit (which was around $_____ in 2011) But, in the year I reach FRA, it will be $1.00 for every $_____ above a different set limit (around $_____) This is why a lot of people wait until FRA to receive their benefits (no reduction then)

$1.00 for every $2.00 $14,000 $3.00 $37,000

Full Retirement Age is age 65 for those born before the year _____

1939

How long would blackout period last : At the time worker dies, his wife is age 30 and child is age 10

24 year blackout period (wife would receive benefits until age 36, at which time child would be 16, benefits would cease between age 36 and 60, a period of 24 years)

How many quarters must be earned to be classified as 'fully insured'?

40 quarters

You cannot apply for Disability income benefits until you are disabled for _____ consecutive months

5

Parent's benefits - when you die, if you have been claiming your parents as dependents for at least _____% on you income tax, they get a benefit

50%

Of the 7.65% of your earnings that goes to FICA, _____% goes to OASDI and _____% goes to Medicare

6.2% 1.45%

Regardless of ones FRA, one can still take early retirement at age _____

62

Medicare is health benefits for people age _____ and over and certain other circumstances

65

The primary insurance amount is actually an amount equal to your full retirement benefit at what age?

65 or 67 depending on when you were born

If you were born after the year 1939, you can't retire until age _____

67

FICA tax : _____ cents of every dollar you earn goes to FICA If you are self employed, _____% of your earnings go to FICA tax

7.65 15.3% Either way 15.3% of earnings goes to FICA (employer matches your 7.65%, or if self employed you put all 15.3% in)

If you make too much money at retirement, up to _____% of Social Security benefits can be treated as taxable income

85%

Social Security survivor benefits : 1.) Spouse benefit of $_____, or eligible child (one time payout), may be payable to kids if there is no spouse 2.) Spouse benefit at age _____ or _____ 3.) Child's benefit until age _____ (_____ if still in school) (up tp age _____ if disabled) 4.) Parent's benefit (if claimed as _____)

1.) $255 2.) 65 or 60 3.) 18, 19, 22 4.) dependent

Everybody who works pays into social security with a few exceptions including : 1.) 2.) 3.)

1.) Civil service workers who were hired before 1984 2.) Railroad workers who were covered under the Railroad Act 3.) About 25% of state and local government employees (they have a state pension)

Two classifications of Social Security coverage : 1.) 2.)

1.) Fully insured 2.) Currently insured

The following are not covered under Social Security benefits : 1.) 2.) 3.)

1.) Most federal employees hired before 1984 2.) About 25% of state and local government employees 3.) Railroad workers

Disability income benefits; Who gets these benefits : 1.) 2.) 3.)

1.) Worker 2.) Spouse 3.) Child

If your doctor says your disability is not going to last _____ months, you are not eligible for disability income benefits

12

Social Security Disability benefits are retroactive for _____ months, excluding the _____ month waiting period

12 5

Retirement benefits : If I am retired and receiving Social Security benefit, my child gets a benefit until age _____. How long will they receive benefits if they are disabled before age 22?

18 indefinitely

Child's benefit under disability : lasts until age _____, or while kid is in high school up to age _____

18, 19

Social Security started in the year _____

1935

Social security was started in the year _____, it is funded by _____ tax

1935 FICA

Retirement benefits : When I turn 65 I will get _____% of whatever my spouse is getting. If there is a dependent child (under age 16, or disabled before the age _____) spouse is eligible to receive _____% spousal benefit regardless of spouse's age, or they can receive it as early as age _____ and get a reduced amount

50% 22 50% 62

Benefits are currently based on _____

AIME

What are quarters earned per year based on? How many can you earn per year?

Based on income You can earn up to 4 per year

_____ is the age which you will be eligible to receive 100% of PIA

FRA

What does FRA stand for?

Full retirement age

_____ insured = entitles you to all coverage Social Security offers ______ insured = a limited status of eligibility

Fully Currently

What determines your classification of Social Security status

How many quarters of coverage you've earned

What does OASDI stand for?

Old Age benefits, Survivor benefits, and Disability Income

Every year you should receive something in mail from social security telling you your _____, which is the dollar amount that you are going to receive at full retirement age

Primary insurance amount

What does PIA stand for?

Primary insurance amount

_____ system provides a basic floor of protection to all working Americans against the financial problems brought on by death, disability, and aging. It does not replace a sound personal finance plan, was never intended to be entire source of retirement income

Social Security

_____ - is the period of time between when child turns 16, the spouse's benefits will stop and not begin again until after the earliest age of 60

The Black-Out Period

What is maximum taxable wage base? Approximate maximum taxable wage base = $_____

The wage limit on the 6.2% taken from your earning. $110,000 approximately There is a limit, beyond that they don't take anymore (ex. Steve Jobs has twin sister. Every year he has made 2 million dollars, every year his sister has made $150,000. They both pay the same into old age benefits because they both exceed the maximum taxable wage base limit)

If two people contribute the same amount into OASDI, would they get the same amount back?

Yes

The only time spouse can get benefit before age 60 is if they have _____

a child under the age 16

All of the following statements correctly describe the purpose of Social Security EXCEPT a.) it provides a source of income for a meaningful standard of living during retirement b.) it provides basic protection against financial problems accompanying death, disability, and retirement c.) it augments a sound personal insurance plan d.) it provides retirement and survivor benefits to a worker and his or her family

a.)

Jan, a single, working mother, dies at age 40. Dave, her only son, would receive a one-time lump sum benefit of a.) $255 b.) $500 c.) $1,000 d.) $2,555

a.)

To meet the requirement/definition of being disabled, you must have the inability to perform _____. It must result in a medically determinable mental or physical impairment that can be expected to last at least _____ months

any occupation 12

Which of the following statements regarding Social Security survivor benefits is NOT correct a.) a surviving widow, age 66, will be entitled to a life income equal to her husband's PIA b.) A health dependent child of a deceased worker will be entitled to an income benefit until age 18, or age 22, is he or she attends college c.) A surviving widower, age 47, has a 13-year old child who was also a dependent of the deceased worker. The widower is entitled to monthy income until the child becomes 16, at which time benefits will cease to the widower until he reaches at least age 60 d.) a deceased covered worker was providing one half of the support for a 62-year old parent who is confined to a nursing home. The parent is entitled to a survivor's benefit

b.)

In determining Social Security retirement benefits, which of the following statements is CORRECT a.) average monthly wages (AMW) are adjusted for inflation b.) the primary insurance amount (PIA) determines the worker's average indexed monthly earnings (AIME) c.) the PIA is a determination of the amount equal to the worker's full retirement benefit at his/her full retirement age d.) worker's retiring past age 59 1/2 can receive 100% of their PIA

c.)

Bill is self-employed. The FICA tax rate for Bill is a.) 6.2% b.) 7.65% c.) 15% d.) 15.3%

d.)

Ellen works part time to supplement her family's income. Last year, she earned $6,500 and worked at least part of every month. With how many quarters of coverage will she be credited? a.) one b.) two c.) three d.) four

d.)

Remember, the term '_____' means adjusted for inflation

indexed

What does AIME stand for?

Average Indexed Monthly Earnings

_____ is an average of our lifetime earnings that have been subjected to the FICA tax

Average Indexed Monthly Earnings (AIME)

For people eligible for benefits prior to 1979, their benefits are based on _____ (what is acronym?)

Average Monthly Wage (AMW)

Retirement benefits : Why are benefits reduced when they are received at early age (62)?

They are reduced because you will be receiving them over longer period of time

What will spouse receive if spouse died when they turn 65 years old?

They will receive what the spouse would have received

Rudy is eligible for full death, retirement and disability benefits under Social Security. His worker status is a.) completely insured b.) currently insured c.) fully insured d.) partially insured

c.)

Which of the following examples pertaining to Social Security benefits is CORRECT a.) Simon has a Social Security PIA of $700 at the time of death. His surviving spouse will receive a lump sum benefit of $2,250 b.) Lola, age 30, has a daughter, age 10. Her husband, who is covered under Social Security, died last month following surgery. Both Lola and her daughter are entitled to receive monthly survivor benefits until her daughter is age 18 c.) Mason, who is married with one son, age 16, is a fully insured retired worker receiving Social Security benefits. In addition, his spouse is eligible for benefits at age 62 and his son, normally, is eliglible for benefits until he is age 18 d.) Arlene, the 20 year old daughter of a fully insured retired worker, becomes totally and permanently disabled from a car accident. Because her disability occurred before age 16, Arlene is not eligible for her father's Social Security benefits

c.)