Social Security Test
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What is the maximum portion of an individual’s annual Social Security benefits that can be taxable?
2 / 27
Sam was born on May 1, 1960. He will turn 67 years old on May 1, 2027. His FRA is 67. He will apply at his FRA for his retirement benefits. Which statement would apply to Sam’s first benefits payment?
3 / 27
Kathy files for her retirement benefits at age 64 at 80% of her Primary Insurance Amount. She suspends these benefits at her FRA of 67 and restarts these benefits at age 70. Which statement would apply to her age-70 benefits level?
4 / 27
Laura is single, she filed for her retirement benefits at age 63, three years before her FRA of 66. At age 65 (that is, 24 months after she filed for benefits), which statement would apply to her?
5 / 27
Damon began his retirement benefits 24 months before his FRA. Now, eight months later, he wants to withdraw his application for retirement benefits. Which of the following statements would reflect his situation?
6 / 27
Jim told the Social Security Administration that he expects to earn $5,210 per month in each month of 2021 for total earnings of $62,520. He attains FRA in August 2021 at which time he wants to apply for his retirement benefits. The applicable earnings limit for 2021 is $50,520, but his 2021 earnings will be $12,000 above this limit, [$5,210 x 12]. In the absence of the earnings test, his retirement benefits would be $2,000 per month with the first payment for the month of August, but received in September. How, if at all, would this earnings test affect his 2021 Social Security benefits?
7 / 27
Becky recently applied for her Social Security retirement benefits at age 64. In the absence of the earnings test, she would receive $2,000 per month in benefits in 2021. She estimated her 2021 earned income at $12,000 above the earnings test limit. Which statement reflects how the earnings test would affect her Social Security benefits in 2021?
8 / 27
David is 67, his FRA, when he is diagnosed with an illness that will cause him to die in one year. His PIA is $2,000. Alice, his wife, is also 67 with an FRA of 67. Her PIA is $1,900. What is the claiming strategy that will maximize their joint lifetime benefits, if David dies in one year and Alice lives into her mid-80s or longer?
9 / 27
Joy has a Primary Insurance Amount of $2,000 and FRA of 66. When she was 63, she became disabled. If she filed for disability benefits at age 63, what would be the size of her disability benefits?
10 / 27
In order for a divorced woman to receive spousal benefits based on her ex-husband’s earnings record, which of the following is not a necessary condition?
11 / 27
A single father, who is alive, has one daughter eligible for benefits based on his earnings record. His PIA is $2,000 and his FRA is 67. He files for his retirement benefits at age 62 and gets $1,400 per month. His daughter would be eligible for benefits of what amount?
12 / 27
Continue with the Scott and Beth case above. Scott dies. What would be Beth’s level of Social Security survivor benefits (before COLAs) assuming she has already attained her FRA for survivor benefits?
13 / 27
Scott has a PIA of $2,600, but he began his Social Security benefits one year after attaining FRA at $2,808 per month. That same month, his wife, Beth, decided to file for spousal benefits. She is a public-school teacher who receives a pension of $1,800 per month from her job that is not covered by Social Security taxes. She never worked in a job where she paid Social Security taxes. Thus, her PIA is $0. She is 67, which is her FRA. What would be her level of Social Security spousal benefits?
14 / 27
Thomas began his retirement benefits of $2,000 per month at his FRA. He dies unexpectedly, when Amanda, his wife, is 65, two years before her FRA of 67. Her PIA is $1,500 and she has not started her Social Security benefits. Her life expectancy is 80. Which of the following strategies would likely be Amanda’s best claiming strategy?
15 / 27
Alan began his retirement benefits of $2,000 per month at his FRA. He dies unexpectedly, when Sally, his wife, is 65, two years before her FRA of 67. Her PIA is $2,200 and she has not started her Social Security benefits. Her life expectancy is 80. Which of the following strategies would likely be Sally’s best claiming strategy?
16 / 27
David has a PIA of $2,500, while Jill, his wife, has a PIA of $1,900. They are both in Group 3, (that is, born after January 1, 1954). They are both 63 years old with FRAs of 66 years and 10 months. David just learned that he has cancer and is expected to live two more years. Jill’s life expectancy is 88 years. What is their optimal Social Security claiming strategy?
17 / 27
Mark has a PIA of $2,000, an FRA of 66, and was born in December 1953 (thus, he is in Group 2). Joan, his wife, has a PIA of $1,600, an FRA of 66 and four months, and was born on December 2, 1956 (thus, she is in Group 3 and she is three years younger than Mark). Mark has a life expectancy of 79 and Joan has a life expectancy of 85. Which of the following claiming strategies would both be an eligible strategy and one that would likely maximize their joint expected real lifetime benefits?
18 / 27
Jim is five years older than Margaret. Jim has a PIA of $2,400 and life expectancy of 80. Margaret has a PIA of $2,000 and a life expectancy of 81. They are both in Group 3 (that is, born after January 1, 1954) and have FRAs of 67 for all benefits. Based on their life expectancies, when should each spouse claim Social Security benefits if their objective is to maximize their joint real lifetime benefits?
19 / 27
Tom has a PIA of $2,000 and FRA of 66. He died at 67 having never begun his retirement benefits. Betty, his wife, was 60 at the time of his death. If she waits until her FRA for survivor (a.k.a., widow’s) benefits to apply for these benefits, what would be the amount of her monthly survivor benefits (before COLAs)?
20 / 27
Kathy is in Group 3 (that is, she was born after January 1, 1954). She will attain age 63 in February 2023. Her FRA is 67 and her PIA is $600. In February 2023, her husband, Larry, will turn 67. He has a Primary Insurance Amount (PIA) of $2,000. He will wait until age 70 to file for his retirement benefits. If Kathy files for her benefits at age 63 in February 2023, which statement is accurate?
21 / 27
The additional monthly Social Security benefits for delaying the start of benefits one more month increases from 5/12% to 5/9% of Primary Insurance Amount at Date 1 and it increases from 5/9% to 2/3% of PIA at Date 2. Select the appropriate combination of Date 1 and Date 2 from the following.
22 / 27
To maximize expected cumulative lifetime benefits, a single individual should delay filing for retirement benefits until age 70 if his or her life expectancy is, at least, approximately what age? (The breakeven age between starting benefits at 69 and 70 varies slightly with a person’s FRA, but it is always nearest one of these ages. The correct answer is that age.)
23 / 27
To minimize longevity risk, a single individual with modest financial assets and a Full Retirement Age of 67 should begin Social Security benefits at what age?
24 / 27
If a single individual lives to what age will the cumulative lifetime Social Security retirement benefits be approximately the same no matter what age these benefits are begun?
25 / 27
Someone’s Primary Insurance Amount is based in part on his or her Average Indexed Monthly Earnings (AIME). AIME denotes the average indexed monthly earnings for that worker’s highest n-years of earnings, with earnings indexed before age 60 by the national Average Wage Index. What is n in this statement (that is, AIME is based on the largest how many years of earnings)?
26 / 27
Greg has a Full Retirement Age (FRA) of 67 and a Primary Insurance Amount (PIA) of $2,000. If he begins his Social Security retirement benefits at age 67 and three months, what will be the level of his monthly benefits (before COLAs)?
27 / 27
Judy has a Full Retirement Age (FRA) of 67 and a Primary Insurance Amount (PIA) of $2,000. If she begins her Social Security retirement benefits at age 68, what will be the level of her monthly benefits (before COLAs)?
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