Calculations & Formulas Flashcards
1
Q
Identify the following formula
“Wage Replacement Ratio”
A
Expenses in Retirement
÷
Pre-Retirement Income
=
WRR
2
Q
Calculate the
“Wage Replacement Ratio”
A
Sum of Expenses During WLE
(e.g., Retirement Savings, FICA, Mortgage if paid off, etc)
÷
Pre-Retirement Income
=
WRR
3
Q
Identify the FICA
“Federal Insurance Contributions Act”
A
- Both employers and employees each contribute to the system through FICA payments
- FICA consist of 6.2 percent for OASDI and 1.45 percent for Medicare for a total of 7.65%
4
Q
Identify the Income Limits for FICA
A
- The OASDI portion of 6.2 percent applies to income up to the Social Security wage base ($137,700 for 2020)
- While the Medicare portion applies to all income with no limit.
