Retirement: 1-6 Social Security Benefits Flashcards by David Freiler

Retirement: 1-6 Social Security Benefits

Ann Brady worked for the same retail store for 25 years prior to her retirement. Her FRA is 66.

(1) If Ann takes her company’s early retirement at age 59, will she then also be eligible for Social Security retirement benefits?
a. Yes
b. No

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b. No,

Benefits are not payable until age 62, and then they are payable at 75% of PIA

5/9
× (the first) 36 months
= 20

+ 5/12
× 12 months (period greater than 36)
= 5

= Total reduction is 25%

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Retirement: 1-6 Social Security Benefits

Ann Brady worked for the same retail store for 25 years prior to her retirement. Her FRA is 66.

(2) If Ann retires at age 63, will she be eligible for Social Security retirement benefits?
a. Yes
b. No

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Yes, but the benefits received up to 36 months before FRA are reduced by 5/9 of 1% for each month Ann is under FRA.

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Retirement: 1-6 Social Security Benefits

Ann Brady worked for the same retail store for 25 years prior to her retirement. Her FRA is 66.

(3) If Ann begins benefits at age 65, is she eligible for Social Security retirement benefits at any time prior to her actual retirement? What effect would her work income have on any such benefits?
a. Yes
b. No

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Yes, but the benefits would be subject to two forms of
reduction.

The benefits would be subject to a reduction of $1 for every $2 of earnings in excess of $15,480 if Ann were under FRA and would be subject to a reduction of $1 for every $3 of earnings in excess of $41,400 each month prior to age FRA in the year Ann attains FRA. No benefit reductions at FRA and over.
Also, the benefits received up to 36 months before FRA are reduced by 5/9 of 1% for each month Ann is under FRA.

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Retirement: 1-6 Social Security Benefits

Dr. Charles Downing, a dentist, practiced dentistry in a general partnership for 15 years prior to his retirement this year at age 55. Is he eligible for Social Security retirement benefits this year?

a. Yes
b. No

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No, he is not eligible until age 62.

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Retirement: 1-6 Social Security Benefits

Inge Svenson is 12 years younger than her husband. He retired this year at his FRA and began to receive retirement benefits. Assuming that all of the Svenson children are in their mid- to late 20s, is Inge eligible for a spouse’s retirement benefit this year?

a. Yes
b. No

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No, she is not eligible until age 62.

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Retirement: 1-6 Social Security Benefits

For the past 35 years, Elizabeth Fielding, age 68, has worked with her husband, Ed, also age 68, in his sole proprietorship. This year, Elizabeth plans to retire. Will she be eligible for Social Security retirement benefits due to her own work?

a. Yes
b. No

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Yes—she is covered as an employee in her husband’s sole proprietorship, so separate benefits are available to her.

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Retirement: 1-6 Social Security Benefits

Garrett Hinsdale has worked as a lawyer for the past 40 years. Now he is 67 years old, works part time as a lawyer, and will make $47,000 in the current year (FRA is 66). Is Garrett eligible for retirement benefits this year? What effect will his earned income have on any such benefits?

a. Yes
b. No

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Yes—Garrett is eligible for benefits because he is over age 62. Earned income has no effect because his age is greater than his FRA.

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Retirement: 1-6 Social Security Benefits

Janis Kopper, age 48, has never been employed outside her home. Her husband worked in a factory for 30 years prior to his death, which occurred last month (he was age 50). The Koppers were childless.

(1) Is Janis eligible for a spouse’s retirement benefit this year?
a. Yes
b. No

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No—her husband was not retired, and she is under age 62.

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Retirement: 1-6 Social Security Benefits

Janis Kopper, age 48, has never been employed outside her home. Her husband worked in a factory for 30 years prior to his death, which occurred last month (he was age 50). The Koppers were childless.

(2) Is Janis eligible for a widow’s benefit this year?
a. Yes
b. No

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No—she has no children, she is under age 60, and she is not disabled.

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Retirement: 1-6 Social Security Benefits

Janis Kopper, age 48, has never been employed outside her home. Her husband worked in a factory for 30 years prior to his death, which occurred last month (he was age 50). The Koppers were childless.

(3) Will Janis ever be eligible for either a spouse’s retirement benefit or a widow’s benefit?
a. Yes
b. No

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Yes—she will be eligible for a widow’s benefit at age 60, or ages 50–55 if disabled (no later than seven years after the month her husband died).

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Retirement: 1-6 Social Security Benefits

Two years ago, Larry Merton, age 35, was laid off from his job of seven years. During his two years of unemployment, he has become a stay-at home dad, caring for his three elementary school-age children. Larry’s wife, Nancy, also age 35, found her first job two years ago, shortly after Larry was laid off. Nancy is now the sole provider for her family. If she dies this year, what benefits will Larry and/or the three young children be eligible to receive?

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Larry will be eligible for a father’s benefit—75% of Nancy’s PIA until the youngest child turns age 16. Each child will be eligible for a child’s benefit—75% of Nancy’s PIA until the child reaches age 18 or is married. All benefits will be reduced proportionately by the family maximum.

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Retirement: 1-6 Social Security Benefits

Orin Petrovski had worked for the federal government since 1973. He was totally disabled in 1985. Is Orin eligible for Social Security disability benefits this year?

a. Yes
b. No

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No, he is not covered because he was hired before January 1, 1984.

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Retirement: 1-6 Social Security Benefits

Quincy Rabinov, age 25, took his first job last year, as a federal prosecuting attorney. In June of this year, he was injured in an airplane crash. It is now August, and he has been unable to return to work.

(1) Is Quincy currently eligible for Social Security disability benefits?
a. Yes
b. No

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No—he did not have the necessary quarters of coverage.

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Retirement: 1-6 Social Security Benefits

(2) If Quincy is unable to return to his work as a prosecuting attorney or if he cannot perform any other job as of March of next year, will he then be eligible for Social Security disability benefits?
a. Yes
b. No

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No—he did not have the necessary quarters of coverage on the date of disability.

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Retirement: 1-6 Social Security Benefits

(3) If Quincy is unable to return to his work as a prosecuting attorney as of March of next year, will he then be eligible for Social Security disability benefits?
a. Yes
b. No

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No—he did not have the necessary quarters of coverage on the date of disability.

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Retirement: 1-6 Social Security Benefits

After working 16 years as a telephone company technician, Susan Tilson, age 40, injured her back in an accident. She has been bedridden for over a year, and she may not be able to walk for several more years.

(1) Is Susan eligible for Social Security disability benefits?
a. Yes
b. No

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Yes—she was fully insured, and she has been disabled for more than one year.

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Retirement: 1-6 Social Security Benefits

(2) If Susan is married and has a child who is age 12, what benefits will her husband and/or child be eligible to receive?
a. 50%
b. 75%
c. 100%

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a. 50%

Her husband is eligible for a spouse’s benefit—50% of Susan’s PIA. Her child is eligible for a child’s benefit—50% of Susan’s PIA. All benefits will be reduced by the family maximum.

Retirement: 1-6 Social Security Benefits

John Clinton is 66, his FRA, and has just retired. Bev, his new wife, is 24 and has decided to apply for her benefit. What is Bev’s benefit?

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Bev is not entitled to a benefit that is based on John’s retirement until she is age 62.

Retirement: 1-6 Social Security Benefits

Bill Summerfield died two months ago. He was 67 and had been receiving his retirement benefit for two years. His wife, Jackie, is disabled and is 56. She has never worked outside the home. Does she qualify for a benefit?

a. Yes
b. No

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Jackie is entitled to receive a disability check from Social Security because she was at least 50 and is the totally disabled widow of a fully insured worker.

Retirement: 1-6 Social Security Benefits

Charlie Schuler has just retired at age 66, his FRA. He has worked for over 40 years in a job covered by Social Security. What will his benefit be? What benefit is his wife, who is also 66, entitled to?

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He will receive a retirement benefit of 100% of his PIA. His wife will receive a benefit that is 50% of Charlie’s PIA.

Retirement: 1-6 Social Security Benefits

Joe Kratzfield is 62 and is sick of working (his FRA is 66). He has discovered that, since he is fully insured, he can retire. What is his benefit if his PIA is $1,000?

$500

$750

$1,000

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He will receive a reduced retirement benefit that is 5/9 of 1% per month or 80% of his PIA, for the first 36 months early and 5/12 of 1% per month or 5% for the next 12 months early. His new benefit is 75% of his PIA, $750.

Retirement: 1-6 Social Security Benefits

Jason Spacell has just retired at age 66 + 8 months. He will receive a retirement benefit of 100% of his PIA, or $1,278 per month. His wife, Lucy, is a housewife and is 63 (her FRA is 66). What is Lucy’s benefit?

$479.25

$579.25

$679.25

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Lucy will receive a benefit that is 37.5% of Jason’s PIA (50% reduced by 25/36 of 1% per month for the first 36 months prior to FRA for early retirement) or $479.25.

50% reduced by 25/36 of 1% per month for the first 36 months prior to her FRA, 66, for early retirement plus 5/12 per month for each month over 36 for a total reduction to 32.5%

Retirement: 1-6 Social Security Benefits

Aaron Jacobson is terminally ill. He has never paid into Social Security. For what benefits is he eligible?

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None

Retirement: 1-6 Social Security Benefits

Mary Clark, age 41, and her husband, Jerry Clark, age 66 and retired (FRA is 66), have four children ages 6, 9, 11, and 13. Jerry and Mary have been married 14 years. His PIA is $1,200 and his family maximum is $2,274. Is Mary entitled to a benefit? Are the children? What are the benefits?

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Yes. Mary’s benefit is 50% PIA, or $600 since she is caring for a child under age 16.

Once the youngest reaches age 16 this benefit would go away.

Yes, the children would each receive a benefit of 50% PIA ($600).

All of the beneficiaries’ benefits would be reduced because they are over the family maximum.

($2,274 – $1,200 = $1,074 is the total amount available for the beneficiaries since Jerry’s benefit is not reduced in this case. $1,074 ÷ 5 = $214.80; each benefit is reduced to $214.80.)

Retirement: 1-6 Social Security Benefits Module Check Summary 5. A fully insured worker is a worker who has accumulated a minimum number of quarters of coverage (credits). A quarter of coverage (credit) is earned for each $1,260 (in 2016) that a worker earns (up to four) per year. How many quarters of coverage must a worker have accumulated in order to be fully insured? 13 25 36 40 (LO 1-6)

40 An employee must accumulate 40 quarters to be fully insured.

Retirement: 1-6 Social Security Benefits Module Check Summary 6. Which of the following workers are covered by Social Security? I. railroad employees with more than 10 years of service II. persons who are in the military III. self-employed individuals IV. domestic employees a. I and II only b. II and III only c. I, II, and III only d. II, III, and IV only (LO 1-6)

d. II, III, and IV only Persons in the military, self-employed individuals, and domestic workers are covered by Social Security. Certain railroad workers are not covered by Social Security. Although persons in the military and self-employed individuals are covered by Social Security, so are domestic workers.

Retirement: 1-6 Social Security Benefits Module Check Summary 7. Which of the following statements is correct regarding Social Security survivor benefits? a. A 40-year-old widow(er) would receive 100% of a deceased worker’s PIA while they have children under the age of 18. b. A widow(er) and children of a deceased worker may be eligible for Social Security survivor benefits if the worker was fully insured. c. The Social Security benefit paid to a widow(er) and children of a deceased worker would not be subject to the family maximum. (LO 1-6)

b. A widow(er) and children of a deceased worker may be eligible for Social Security survivor benefits if the worker was fully insured. The worker can be either fully or currently insured in order for the surviving spouse and children to receive Social Security survivor benefits. The benefit for a widow(er) caring for children under age 16 would be 75% of the deceased worker’s PIA and subject to the family maximum. The Social Security benefit paid to a widow(er) and children of a deceased worker would be subject to the family maximum.

Retirement: 1-6 Social Security Benefits Module Check Summary 9. Mary has been a stay-at-home mother raising her children. They are grown now and she is concerned about what sort of Social Security retirement benefits she may receive. Her husband Jake has been working and paying Social Security taxes for over 40 years. You would advise Mary that which of the following are true? I. She will be entitled to 50% of Jake’s retirement benefit, adjusted downward for early retirement. II. If Jake were to predecease her she would then step-up to his benefit. III. She can begin receiving retirement benefits as early as age 62, regardless of whether Jake has started receiving retirement benefits or not. IV. If Mary were to delay receiving benefits until after her FRA, then her retirement benefit would be increased. a. I, II, and III only b. I, II, and IV only c. I, III, and IV only d. II, III, and IV only (LO 1-6)

b. I, II, and IV only Mary cannot start receiving benefits until Jake’s benefits have begun.

Retirement: 1-6 Social Security Benefits Module Check Summary 19. Which of the following statements is correct regarding an ex-spouse receiving Social Security benefits? a. An unmarried former spouse of a worker is eligible for Social Security benefits based on the worker’s Social Security benefits if their marriage lasted at least 10 years and both of the former spouses are at least age 62. b. Benefit received by an ex-spouse is included to determine if the family maximum has been reached. c. The ex-spouse can only begin receiving Social Security benefits if the worker has filed for benefits. (LO 1-6)

a. An unmarried former spouse of a worker is eligible for Social Security benefits based on the worker’s Social Security benefits if their marriage lasted at least 10 years and both of the former spouses are at least age 62. If a retired spouse qualifies for Social Security benefits, an unmarried former spouse will qualify for spousal benefits if the marriage lasted for at least 10 years and both former spouses are at least age 62. Benefit received by an ex-spouse is not included in calculation of family maximum. As long as both the ex-spouse and worker are at least age 62, the ex-spouse can begin receiving benefits regardless of whether or not the worker has filed for benefits.

Retirement: 1-6 Social Security Benefits Milo Minderbinder has just retired at age 66, his FRA. He has worked for over 40 years in a job covered by Social Security. He will receive a retirement benefit of 100% of his PIA. His wife, Pam, who is also 66, will receive a benefit that is __ of Milo’s PIA. 50% 75% 100% (LO 1-6)

50%

Retirement: 1-6 Social Security Benefits Milly Jorgensen is 62 and is sick of working. Her FRA is 66. She has discovered that, since she is fully insured, she can retire and receive a retirement benefit that is __% of her PIA. 75% 80% 85% (LO 1-6)

75%

Retirement: 1-6 Social Security Benefits Does Social Security recognize common-law marriage for the purpose of paying survivors and spouse’s benefits? (LO 1-6)

Social Security follows the laws of the state where the worker was residing at the time of death or the place where the worker is residing when the spouse applies for benefits. In order for a common-law marriage to be valid, it must have been contracted in a state where common-law marriages are recognized. Many states do not honor common-law marriages, so local laws should be checked. However, most states (even those in which a man and woman could not enter into a valid common-law marriage) will generally recognize a common-law marriage validly entered into in another state. Local laws control on this issue, also.

Retirement: 1-6 Social Security Benefits How many credits are needed to receive benefits? (LO 1-6)

Everyone born in 1929 or later needs 40 Social Security credits (sometimes referred to as “quarters of coverage”) to be eligible for retirement benefits. Up to four credits per year may be earned, so a worker must work in at least 10 years to become eligible for retirement benefits. During the working years, earnings covered by Social Security are posted to the worker’s Social Security record, and he or she earns credits based on those earnings. Each year the amount of earnings needed for a credit rises as average earnings levels rise.

Retirement: 1-6 Social Security Benefits Phil Wayne worked for the last 10 years and now has 40 credits. Does this mean that he will receive the maximum Social Security retirement benefit? (LO 1-6)

No. The 40 credits are the minimum number needed to qualify for a benefit. The amount of the benefit, however, is not based on those credits; it’s based on Phil’s earnings. Social Security will determine Phil’s average earnings over his working years and use a special calculation formula that is set by law. For most people who need 40 credits, the average of their best 35 years of earnings is used to figure the benefit amount.

Retirement: 1-6 Social Security Benefits Retirement benefits that begin at the worker’s age 62 will be reduced by a maximum of 30% for age 67 FRAs (____ of 1% per month for the first 36 months plus 5/12 of 1% per month for periods greater than 36 months) a. 1/2 b. 5/12 c. 5/9

c. 5/9

Retirement: 1-6 Social Security Benefits Retirement benefits that begin at the worker’s age 62 will be reduced by a maximum of 30% for age 67 FRAs (5/9 of 1% per month for the first 36 months plus ___ of 1% per month for periods greater than 36 months) a. 1/2 b. 5/12 c. 2/3

b. 5/12

Retirement: 1-6 Social Security Benefits Retirement benefits that begin at the worker’s age 62 will be reduced by a maximum of 30% for age 67 FRAs (5/9 of 1% per month for the first __ months plus 5/12 of 1% per month for periods greater than __ months) a. 12 b. 24 c. 36

c. 36

Retirement: 1-6 Social Security Benefits Retirement benefits that begin at the worker’s age 62 will be reduced by a maximum of 30% for age 67 FRAs (5/9 of __ per month for the first 36 months plus 5/12 of __ per month for periods greater than 36 months) a. 1% b. 2% c. 3%

a. 1%

Retirement: 1-6 Social Security Benefits retirement or disability benefits paid to a spouse who is age 62 will be reduced by a maximum of 35% assuming an age 67 FRA. The reduction is ____ of 1% per month for the first 36 months plus 5/12 of 1% per month for periods greater than 36 months. a. 1/2 b. 12/36 c. 25/36

c. 25/36

Retirement: 1-6 Social Security Benefits retirement or disability benefits paid to a spouse who is age 62 will be reduced by a maximum of ___ assuming an age 67 FRA. The reduction is 25/36 of 1% per month for the first 36 months plus 5/12 of 1% per month for periods greater than 36 months. a. 35% b. 45% c. 55%

a. 35%

Retirement: 1-6 Social Security Benefits retirement or disability benefits paid to a spouse who is age 62 will be reduced by a maximum of 35% assuming an age 67 FRA. The reduction is 25/36 of 1% per month for the first 36 months plus ___ of 1% per month for periods greater than 36 months. a. 1/2 b. 3/4 c. 5/12

c. 5/12

Fidelity Clair and her ex were married for 17 years, from 1975 to 1992. She worked and qualifies for her own Social Security benefits. Now, at age 64 (date of birth in 1952), Clair is thinking about retirement and wants to know when she should claim. Can she claim a spousal benefit at her FRA and then still allow her own benefit to rise and take her own benefit at 70? a. Yes b. No

a. Yes Because (in this example) she was born before January 2, 1954, she is grandfathered into one additional claiming strategy: the spousal restricted application. That means if Clair waits to claim until her FRA, she will be eligible to claim her spousal benefit first, then switch to her own maximum benefit at age 70. She would collect $1,200/month as an ex-spouse for four years, and then switch to her own benefit of $1,320/month at 70.

Retirement: 1-6 Social Security Benefits Flashcards

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