HS354 Flashcards
what year is full retirement age 66
1943-1954
what year is full retirement age 67
1960 or later
what years is full retirement age you have to add 2 month for each year
1955-1959
when can you file social security
must be age 61 and 9 months, can claim 3 months early
explain retroactive filing
can request that benefit begins 6 months prior to filing date. must be FRA and only allowed on unreduced benefit - thus FRA
how is date of birth determined
birthday is deemed 1 day before actual birthday
what is the early claiming reduction factor
PIA benefit is reduced by 5/9 for each month of retirement before FRA for first 36 months, then 5/12 for each month after FRA
Delayed claiming explain
claiming after FRA increases benefits by 2/3 of 1 percent for each month of deferral to age 70 (8% a year)
what is max ss benefit at age 62 ( year 2016)
$1,997 a month or $23,967 annually
what is max ss benefit at age 66 ( year 2016)
$2,639 monthly or $31,632 annualy
what is max ss benefit at age 70 year 2016
$3,576 monthly or $42,912 annually
what is average ss benefit in 2016
$1,341 per month
Explain earnings test
Only applies prior to FRA, reduces benefit $1 for every $2 over threshold of $15,720, higher threshold is $1 to every $3 of $41,880 until you reach FRA
Are Earning test dollars lost
earnings test is a forced suspension of benefits, benefits recompute at FRA
define spousal benefit
Once a worker has claimed FRA, a spouse is entitled to 50% of PIA at FRA
when can spousal benefits begin
benefits can begin as early as age 62, but will be subject to early reduction based on spouses age
what is early reduction formula for spouses reduction benefit
25/36 for each month upto 36 months, then
5/12 for additional months
what is spousal reduction for , PIA of $2000 for worker age 70, spouse is age 62, spouses FRA is 66
step 1. spousal reduction is 50% x $2,000 = $1,000 step 2 apply reduction formula 25/36 x 36 months = 25% 5/12 x 12 months =5% 25% + 5% = 30% $1,000 benefit x 70% = $700 thus a $300 reduction
what is divorced spouses ss benefit
married for 10 years, spouse eligible for retirement or widower benefit. divorced spouse can get benefits at age 62 even if former spouse has not claimed benefits as long as worker is eligible for retirement benefits
requirement for divorced spouse benefit
married for 10 years, age 62, divorced for 2 years, unmarried,
can still be eligible for survivor benefit if remarried after age 60
windfall elimination
90% drops to 40% if less than 20 years of covered service. No reduction if 30 years of service and modified reduction if 20- 30 years
what is government offset
2/3 of pension reduces spousal benefit and widows benefit dollar for dollar
survivor benefit is higher of two
what is spousal survivor benefit
full survivors benefit can claim as early as age 60. subject to earnings test
No increase past FRA
can switch between survivor benefit and workers benefit
define provisional income
AGI
+ 1/2 social security
+tax free income
= provisional income
who is effected by tax torpedo
people who pay some tax on ss
68% of people pay not tax on ss
16% of people are fully phased in (thus they pay tax on
85% of their social security benefit)
16% of people pay some tax on their ss benefit
401k withdrawls increase income thus delay withdrawls and spend more tax effecient money to lower your provisional income
what method is the break even analysis
Net present Value approach. compare npv of dollars recieved is start ss at age 62 vs npv of dollars recieved if started later. break even age is age 80 or lower
social security assumptions are
life expectancy is age 84
3% risk free rate of return
break even age is 80
widow benefit options
can choose between workers benefit and survivor benefti
what percent of households have mortgages between ages 60-64
39% have primary mortgages
what percent of percent of people in mid 60’s find it hard to work because of health limitaions
25%
