Module 3 Quiz Flashcards
A worker’s primary insurance amount (PIA) is the amount they receive from Social Security
A) in their first year of retirement, regardless of age.
B) at age 62.
C) as a survivor benefit.
D) if he or she began payments at full retirement age.
D) if he or she began payments at full retirement age.
The PIA is the amount the worker would receive if he or she began payments at full retirement age.
For a worker whose full retirement age is 66 or later, the annual delayed retirement credit percentage for the years you delay receipt of benefits beyond (FRA) is
A) 6%.
B) 8%.
C) 32%.
D) 5%.
B) 8%.
For those whose full retirement age is 66, they will receive an 8% “raise” for each year they delay filing after FRA, up until a maximum age of 70. This equals to a total increase of 32% above their primary insurance amount (PIA). The delayed retirement credit is accrued 8/12th of a percent per month for each month the worker delays starting Social Security retirement benefits based on their own record. This increase in the worker’s benefit also increases the spouse’s survivor benefit if the worker predeceases the spouse.
Delaying receipt of benefits (for example until age 70) will result in all of the following except
A) permanently reduced benefit amount.
B) higher annual cost-of-living adjustments.
C) larger survivor benefits for the surviving spouse.
D) receipt of delayed retirement credits.
A) permanently reduced benefit amount.
Delaying receipt of benefits will allow you to earn delayed retirement credits, and your future cost-of-living adjustments will be higher because they will be based on a higher base. Also, the increased base will ultimately be used to determine survivor benefits.
Ann has reached her full retirement age (FRA). She can elect to receive $1,000 now, or delay receipt by two years. She expects to live until age 90. Ignoring outside factors, when should she begin her benefits?
A) Now, at FRA
B) Split the difference and delay for one year
C)
Not enough information to determine
D) Two years from now
D) Two years from now
By delaying two years, her benefit will increase 16%, to $1,160.
Forfeiting: $1,000 x 24 months = $24,000
Gaining: $160/month
$24,000 / $160 = 150 months or 12.5 years. 68 + 12.5 = 80.5
Ann would need to live until age 80.5 to “break even.” Because she is expecting to live until age 90, she should opt to delay receipt of benefits.
Michael, a 62-year-old single man, is considering beginning his Social Security benefits to supplement his income of $18,000 per year. How much will he lose in Social Security benefits due to the earned income restrictions?
A) $1 for every $3 earned
B) $1 for every $4 earned
C) $0
D) $1 for every $2 earned
C) $0
Because his earned income is below the $21,240 (2023) earnings cap for singles, he will not be impacted by the earned income benefit reduction.
If provisional income exceeds all the thresholds given, then a maximum of ___________ of Social Security benefits are subject to taxation.
A) 20%
B) 85%
C) 50%
D) 37%
B) 85%
If provisional income exceeds the stated threshold, a maximum of 85% of the excess amount is taxable as ordinary income.
Brent and Carol are married and file jointly. They have an AGI of $70,000 and they receive a combined Social Security benefit of $15,000. They have no tax-exempt income. What is the maximum percentage of their Social Security benefit that will be subject to taxation?
A) 0%
B) 50%
C) 100%
D) 85%
D) 85%
Provisional income = $77,500. This is well over the $44,000 threshold, so 85% of their Social Security benefit will be the maximum amount subject to taxation.
Spousal retirement benefits can be claimed as early as age ______.
A) 70
B) 62
C) 66
D) 60
B) 62
Spousal retirement benefits can begin as early as age 62, assuming that the worker spouse has filed to collect his or her own benefit.
What is the unit benefit formula percentage used by the BRS program?
A) 2.5%
B) 1.0%
C) 5.0%
D) 2.0%
D) 2.0%
this accepted reduction, the Department of Defense (DOD) will pay 1% and match up to an additional 4% of the member’s TSP contribution.
Carla is collecting $600 per month from a government pension and is also eligible to receive a Social Security spousal benefit of $1,000 per month. Due to the GPO, her Social Security spousal benefit will be reduced to ____________.
A) $1,000
B) $300
C) $0
D) $600
D) $600
Due to the GPO, her Social Security spousal benefit will be reduced by 2/3 of her state government pension amount, or $400. $1,000 - $400 = $600.
David began receiving Social Security benefits in June 2023. He later learned that he should have delayed receipt of his benefits until a later age. He has until _______ to pay back all payments and refile for increase benefits at a future date.
A) June 2024
B) December 2024
C) There is no “redo” option.
D) December 2023
A) June 2024
Claimants have 12 months from the date they filed their original claim to pay back all payments, and they can then refile for increased benefits at a later date. This strategy (repaying all benefits within 12 months of filing) can be employed to increase benefits at any age. There is another strategy that can only be used after attaining FRA: “suspending” benefits. For example, Anita, who is single, started receiving her benefits three years early. Her PIA is $2,000/month. Starting three years early meant a 20% reduction, so her actual benefit is $1,600/month. She will reach her FRA of 67 next month. She has recently taken a new job and does not need her Social Security income. She would like to increase her monthly Social Security benefits down the road when she eventually retires from her new job. She has taken Social Security benefits for more than 12 months so she cannot pay back the benefits received and reset her claiming age. However, if she suspends her benefit starting at her FRA of age 67, she can earn delayed retirement credits. Delayed retirement credits increase PIA by 8/12ths of a percent per month until age 70. If she suspended her Social Security until she was 70, she would earn a delayed credit of 24% of her PIA. Assuming her PIA stayed at $2,000/month, a 24% increase would mean an additional benefit of $480/month. This would be added to her $1,600/month and her final benefit at age 70 would be $2,080/month. Note: If her working from 67 to 70 or older meant she made enough to replace some of her 35 highest inflation-adjusted years of working, then her PIA would also increase due to her higher earnings history.
Since 1982, the growth rate of federal employees has
A) increased at a steady rate until 2008 and then has been decreasing at a study rate.
B) been increasing at a steady rate.
C) been decreasing at a steady rate.
D) remained relatively flat.
D) remained relatively flat.
Federal government employment has essentially remained flat since 1982. The annualized growth rate in federal employment between 1982 and 2020 was 0.04%/year.
Mary is 69 years old. She is receiving $1,800 per month in Social Security. Her husband Ralph, age 67, who has not worked enough quarters outside the home to be covered in his own right, receives 50% of what Mary receives each month ($900). Assume that Mary dies tomorrow. What will Ralph’s Social Security benefit be? Assume he has reached his survivor FRA.
A) $0
B) $1,800
C) $900
D) $900 + $1,800, or $2,700
B) $1,800
The $900 spousal benefit stops at Mary’s death, and Ralph might begin receiving 100% of Mary’s old-age Social Security benefit. The survivor benefit is a two-step calculation. First, the surviving spouse gets whatever check the deceased worker was receiving. The deceased worker might have been receiving a smaller check for starting earlier than the deceased worker’s FRA or the deceased worker may have received delayed retirement credits. No matter what, the first step is that the surviving spouse starts by receiving whatever check the worker was receiving or was entitled to receive. The second step is to check if the surviving spouse is starting survivor benefits earlier that the surviving spouse’s survivor FRA. The surviving spouse’s survivor FRA is a schedule that is two years behind the worker’s FRA. If the surviving spouse has not yet achieved the survivor’s FRA, then the amount the deceased worker was receiving is reduced by a percentage that reflects the number of months between the survivor’s FRA and age 60. For people born in 1962 or later, the survivor FRA is age 67. Age 67 is 84 months from age 60. The reduction at age 60 is always 28.5%. Thus, those who are born in 1962 or later have a monthly reduction of 0.339%/month (28.5%/84 months = 0.339%/month). Note that the surviving spouse having filed early for his or her Social Security benefits does not impact the survivor benefit. For example, if Ralph would have been able to file for Social Security benefits at age 62, but Mary does not die until after Ralph achieved his survivor FRA, then Ralph’s early benefits under another aspect of Social Security would not harm his survivor benefits.
Bob and Helen just won the lottery. The benefit this year will be $50,000, and it will increase over the next 19 years. Bob’s monthly Social Security benefit is $1,800; Helen’s monthly Social Security benefit is $1,200. Bob is age 68, and Helen is age 69. Which one of the following is a correct statement about Bob and Helen’s old-age Social Security benefits?
A) Their benefit will be reduced by $1 for every $2 that the lottery winnings exceed this year’s limit in outside earnings.
B) Up to 85% of their Social Security benefit must be included in gross income.
C) Up to 50% of their Social Security benefit must be included in gross income.
D) Since they are both past Social Security’s full retirement age, the lottery benefit will not reduce the Social Security benefit or increase the taxes on it.
B) Up to 85% of their Social Security benefit must be included in gross income.
Since Bob and Helen are married, filing jointly, and their gross income exceeds the base amount of $44,000, then up to 85% of their Social Security benefit must be included in gross income, regardless of age. Since Bob and Helen are over Social Security’s full retirement age, the Social Security benefit would not be reduced because of additional earned income. Also, lottery winnings are not earned income, but they are taxable income. With $50,000/year of income, they are over the $44,000 limit even before including half their Social Security, so up to 85% of their Social Security benefits will be subject to income taxes.
Henry and his wife Etta will both reach their FRAs this month, and they both plan to begin receiving Social Security benefits next month. Etta’s primary insurance amount (PIA) is $1,900; Henry’s PIA is $975. What will their maximum Social Security benefit be?
A) They will both receive their respective PIAs.
B) They should be concerned about the family maximum benefit.
C) Etta will receive $1,900, and Henry will receive 50% of Etta’s PIA.
D) Henry will receive his PIA plus 50% of Etta’s PIA; Etta will receive her PIA plus 50% of Henry’s PIA.
A) They will both receive their respective PIAs.
They will both receive their respective PIAs. Henry would receive 50% of Etta’s PIA only if his PIA was less than 50% of Etta’s PIA. The family maximum benefit for a couple with no ancillary beneficiaries does not apply when both are receiving benefits based on their own earnings histories.
