Social Security and Medicare

Henry is up for retirement after 35 long years at his pharmacy. Before retiring, he would like to know how much he would receive each month from Social Security if he were to retire. During his 35 years, Henry averaged an annual salary of $45,620. Assuming he would recieve 42% of his annual average each year, how much can Henry expect to receive from Social Security on a monthly basis?

$1,596.70

Determine the total annual FICA tax for an annual salary of $38,480.

$2,943.72

Bob just turned 66 years old and is considering retirement. His average annual salary over the last 35 years is $50,760. Assuming that he will receive 42% of his average annual salary, what will be his annual Social Security benefit?

$21,319.20

Knowing that a 6.2% Social Security tax is applied to a maximum wage of $106,800, the maximum amount of Social Security tax that could ever be charged in a single year is:

$6,621.60

Determine the total annual FICA tax for an annual salary of $165,000.

$9,014.10

1a) Calculate how much Cindy will have to pay in Social Security tax (6.2%) based on this salary. 1b) Calculate how much Cindy will have to pay in Social Security tax if the tax was increased by 1.89%. 2a) Calculate Cindy's annual Social Security benefit (about 42%) if her salary remains unchanged until she retires (annual average is $45,000). 2b) Calculate Cindy's annual Social Security benefit if her salary remains unchanged but benefits (based on her annual salary of $45,000) were cut from 42% to 29%. 3) If Cindy were given a choice between the increase in Social Security tax now or the decrease in Social Security benefits when she retires, which would you recommend she choose? Explain your answer thoroughly.

1a) $45,000 * 0.062 = $2,790 1b) 6.2% + 1.89% = 8.09%; $45,000 * 0.0809 = $3640.50 2a) $45,000 * 0.42 = $18,900 2b) 42% - 13% = 29% $45,000 * 0.029 = $13,050 3) You should probably recommend she pay the extra taxes now. If the tax were increased by 1.89%. Cindy would have to pay an extra $3640.50 - $2,790 = $850.50 per year for the 32 years before she retires. This adds up to $27,216 over the length of 32 years. On the other hand, if benefits were decreased from 42% of her salary to 29% of her salary the time of Cindy's retirement (approximations), she would receive $18,900 - $13,050 = $5,850 less per year after she retires. This adds up to $58,500 in just 10 years.

Christina will be retiring next month from her job after 35 years as a school bus driver. Over the last 35 years, Christina's annual salary averaged $22,040. She expects to receive some money each month from Social Security and plans to take the rest of the money she needs to pay the monthly bills from savings. Each month her bills total to about $1,375. Assuming her annual Social Security benefit will be 42% of her salary average, how much will she need to take from savings each month to help pay the bills?

At least $603.60

Determine the total annual FICA tax for an annual salary of $110,330.

$8,221.39

Determine the total annual FICA tax for an annual salary of $63,250.

$4,838.63

Jennifer is excited to be retiring after 35 years of service as a high school English teacher. Over the past 35 years, Jennifer's average annual salary was $26,443. How much can Jennifer expect to receive on a MONTHLY basis from Social Security, assuming she will receive 42% of her average annually?

$925.51

Which group or groups can typically draw benefits that are funded by Social Security taxes? I. Disabled workers II. Laid-off workers III. Family members of deceased workers

I and III

One possible solution to a diminishing Social Security payroll is to increase the Social Security tax by 1.89%. How would such an increase effect the tax on an annual salary of $54,000?

Annual tax would increase by $1,020.60.

Sam is thinking of retiring from his job after many years of faithful service. During the last 35 years at his job, his annual salary averages to $37,991. Every month, his bills total $1,755. How much money would Sam need each month to supplement his monthly Social Security benefit (assuming his annual benefit is 42% of his salary average) and still be able to pay his bills?

At least $425.32

Which of the following is a benefit Social Security does not offer?

Automobile insurance

Which of the following statements accurately describes the result of a decreasing worker-per-beneficiary ratio in the Social Security system?

Fewer taxed workers than beneficiaries means that more money is being drawn from the system for the money put in. This leaves a shortage of money in the system making benefits for future beneficiaries unsure.

Social Security offers all but which of the following benefits?

Home loans

Social Security

In the U.S, Social Security is a social insurance program created to aid individuals in retirement or those that have become disabled.

Medicare

Medicare is a social insurance program focused on providing medical insurance to individuals 65 or older, or who meet specific criteria.

Which of the following statements accurately describes the result of an increasing worker-per-beneficiary ratio in the Social Security system?

More taxed workers than beneficiaries means that the system is collecting more money for the money being drawn out. This leaves money in the system and secures benefits for future beneficiaries.

Which of the following characteristics does apply to Medicare Part A but does not apply to Medicare Part B?

NOT Available to the spouse of beneficiaries

Payroll tax

Payroll tax is a tax imposed on an employee's wage or salary in the form of Social Security and Personal Income taxes to pay for federal or state programs.

Which of the following statements explains the relationship between Social Security and Medicare taxes?

Social Security is applied to all wages up to $106,800. Medicare is applied to all wages without limit.

Calculate the Social Security and Medicare tax that would be applied to an annual salary of $35,400.

Social Security tax: $2,194.80, Medicare tax: $513.30

Calculate the Social Security and Medicare tax that would be applied to an annual salary of $56,010.

Social Security tax: $3,472.62, Medicare tax: $812.15

Calculate the Social Security and Medicare tax that would be applied to an annual salary of $125,000.

Social Security tax: $6,621.60, Medicare tax: $1,812.50

FICA

The Federal Insurance Contributions Act tax, or FICA tax, is a tax placed on wages to fund Social Security and Medicare.