Social Security (Life)

Taxation of Social Security Benefits

- Current threshold levels are $25,000 for single filers and $32,000 for joint filers. Any income over these levels may subject up to 85 percent of the Social Security benefits to tax.

How Social Security Is Funded

- Social Security benefits are funded through payroll taxes. Workers and their employers (as well as the self-employed) pay a portion of the workers' wages into the Social Security program. - These are "FICA" taxes, 15.3%, spit between worker and employee

Social Security Retirement Benefits

- The amount of monthly retirement benefits a fully insured worker is entitled to is based on his or her PIA and the age at which he or she elects to receive the benefit. - for those born after 1954 and reaches its current maximum of age 67 for those born in 1960 or later.

Currently Insured Status

- Workers who are currently insured are eligible for survivor death benefits. - a worker must have 6 credits in the 13-quarter period before he or she Dies; Most recently becomes entitled to disability benefits; or Becomes entitled to old-age insurance benefits.

Social Security Disability Benefits: childs benefit

- child under age 18 (19 if still in high school) is eligible to receive survivor benefits equal to 75 percent of the deceased worker's PIA, continuing until the child's age 18 (19 if still in high school). At age 18 (or 19), these benefits cease - disabled kid: benefits will always continue

Social Security Disability Benefits; Spousal benefit

- early as age 60 - spouse suffers from a disability, survivor benefits are available as early as age 50. The benefits are equal to a percentage of the deceased worker's PIA and can range from 71 percent at age 60 to 100 percent if the surviving spouse is his or her full retirement age or older. - If the surviving spouse has a child younger than age 16 (or older, if the child is disabled), the spouse will receive 75 percent of the deceased worker's PIA. When the youngest child reaches age 16, these spousal benefits end until the spouse turns age 60.

Fully Insured Status

- entitles a worker to full OASDI benefits under Social Security - must have At least one quarter of coverage for each year since 1950 or since reaching age 21 and the year before dying or reaching age 62; or 40 quarters of coverage. -n work a minimum of ten years

Taxable Wage Base

- there is a cap on the maximum amount of benefits a worker may receive - Any earnings over the taxable wage base are not subject to OASDI taxes - Medicare portion of the tax is applied to all of a worker's earnings, no matter what the amount.

To qualify for Social Security disability benefits, a worker must satisfy a waiting period of how many months?

5

A worker can receive full retirement benefits if he or she retires at the full retirement age. However, a worker can also choose to collect permanently reduced Social Security benefits as early as what age?

62

Social Security Benefit Eligibility

As they pay OASDI taxes, workers earn quarters of coverage, or QCs (also called Social Security credits). Social Security benefit eligibility is based on the number of credits a worker has earned.

Social Security Retirement Benefits: spouse benefit

At the spouse's FRA, the benefit equals 50 percent of the worker's PIA. The spouse can choose early (reduced) benefits as early as age 62,

What will happen if a person starts receiving Social Security retirement benefits before reaching his or her full retirement age and continues to work and earn money that exceeds specified earnings limits?

Benefits will be reduced each year until the worker attains full retirement age.

Social Security Retirement Benefits: childs benefit

Children of a retired (or disabled) worker are eligible to receive a monthly benefit. This benefit can be up to 50 percent of the worker's PIA.

Retirement Benefit Earnings Test

For every $2 earned over the limit, Social Security benefits are reduced by $1. This limit, called the retirement benefit earnings test, continues until the worker attains FRA. - person is allowed to earn a wage without any reduction in his or her benefit.

Steve decides to retire this year at age 69. What will happen when he applies for Social Security retirement benefits?

His benefits will be slightly higher than if he had retired at normal retirement age

Fred, age 65, never married and has been working for more than 40 years. He provided more than 80 percent of his elderly mother's financial support. He died a year after he began caring for her. Which of the following statements is correct?

His mother is eligible to receive monthly benefits equal to 82.5 percent of Fred's primary insurance amount (PIA).

Social Security Disability Benefits: Parents benefit

If they are age 62 or older, parents of a deceased worker are eligible to receive monthly survivor benefits if the deceased worker had been responsible for at least one-half of their financial support. When two parents are eligible, each receives 75 percent of the worker's PIA; if only one parent is eligible, he or she receives 82.5 percent of the worker's PIA.

For Social Security purposes, Brian is considered currently insured while Samantha is fully insured.

Samantha is eligible for more Social Security benefits than Brian.

All of the following statements about the funding of Social Security benefits are correct

Self-employed workers pay a lower FICA tax than employees.

Social Security Retirement Benefits: Maximum family benefit

Social Security limits the amount of Social Security benefits any one family can receive based on the earnings of a single worker. The total varies, but generally the maximum amount a family may receive on behalf of a worker is 150 to 180 percent of the worker's full retirement benefit

Which of the following federal benefit programs is available to eligible U.S. citizens regardless of their Social Security insured status?

Survivor benefits

Under Social Security, a fully insured worker dies and leaves behind a husband, age 50, and a son, age 10. Based on this scenario, which of the following is correct?

The son will receive survivor benefits until he reaches age 18.

What happens if the amount of retirement benefits that a family receives based on the earnings of a single worker exceeds the maximum family retirement benefit?

The total benefits payable to a spouse and children are reduced proportionately.

What is the name for the period of years during which no Social Security benefit is payable to the surviving spouse of a deceased, fully insured worker until the survivor qualifies for his or her own benefits?

The worker must satisfy a 12-month waiting period.

If a worker chooses to retire early under Social Security, what will happen to his or her benefits?

The worker will receive lower benefits than those choosing normal or deferred retirement.

Social Security Disability Benefits

Upon the death of a covered worker, Social Security provides for a lump-sum payment of $255, payable only to a spouse or dependent children, which is intended to help with the costs of a funeral.

Social Security benefits are most directly based on which one of the following?

average indexed monthly earnings

What is the name for the period of years during which no Social Security benefit is payable to the surviving spouse of a deceased, fully insured worker until the survivor qualifies for his or her own benefits?

blackout period

Determining Benefit Amounts

determined through a calculation that begins by determining the worker's average indexed monthly earnings (AIME). T

what fully insured workers are eligible for

disability benefits (after meeting additional requirements) retirement benefits survivor benefits at the worker's death Medicare Part A benefits without paying a premium

Social Security Disability Benefits: maximum family survivor benefits

f that maximum amount is exceeded because of benefits to multiple dependent children and to the surviving spouse, then each person's benefit is reduced proportionately.

Jenny was born in 1940 and is now eligible for full death, retirement, and disability benefits under Social Security. What is her Social Security worker status?

fully insured

Social Security benefits are a function of a worker's average indexed monthly earnings and primary insurance amount (PIA). What is a worker's PIA?

the amount of the retirement benefit the worker will receive at normal retirement age