Types of Social Security Benefits Flashcards
Determining Benefit Amounts
What are AIME?
What is a PIA?
The exact amount of an individual’s Social Security OASDI benefits is determined through a calculation that begins by determining
- The worker’s average indexed monthly earnings (AIME); the average of a worker’s lifetime earnings on which FICA taxes were imposed.
- To these averaged earnings, a formula is applied that yields the primary insurance amount, or PIA.
The PIA is the amount of the retirement benefit the worker will receive when he or she reaches full retirement age, and it is the starting point for determining all other Social Security benefits.
Social Security Retirement Benefits
What does FRA stand for?
What is the current RFA for those born after 1960?
What are the 2 rules regarding SPOUSES earnings when they reach RFA?
What are the 4 rules regarding CHILD’S earnings when they reach RFA?
What is the maximum family benefit?
The amount of monthly retirement benefits a fully insured worker is entitled to is based on
- his or her PIA and
- the age at which he or she elects to receive the benefit.
Full retirement age used to be 65 for all workers. Today, the full retirement age or FRA, is increasing.
- The FRA for workers born between 1943 and 1954 is age 66.
- For those born after 1954 and reaches its current maximum of age 67 for those born in 1960 or later.
Regardless of their FRA, workers can choose to collect permanently reduced benefits as early as age 62.
SPOUSES BENEFIT
- The spouse of a worker eligible for retirement benefits is entitled to benefits as well. At the spouse’s FRA, the benefit equals 50 percent of the worker’s PIA.
- A working spouse may claim either a spouse’s benefit or a worker’s benefit, but not both.
CHILDS BENEFIT
Children of a retired (or disabled) worker are eligible to receive a monthly benefit. This benefit can be up to 50 percent of the worker’s PIA.
To be eligible for benefits, the child must be
- unmarried, and
- 17 years old or younger; or
- 19 years old or younger and a full-time student; or
- any age and disabled from a disability that started before age 22.
MAXIMUM FAMILY BENEFIT
Generally the maximum amount a family may receive on behalf of a worker is 150 to 180 percent of the worker’s full retirement benefit.
What is the Retirement Benefit Earnings Test?
Sometimes a person elects to receive Social Security benefits before he or she reaches FRA and, at the same time, continues to work and earn money.
In this case, the amount of benefit may be reduced.
For every $2 earned over the limit, Social Security benefits are reduced by $1.
This limit, called the retirement benefit earnings test, continues until the worker attains FRA. At that point, no earnings limit is imposed.
How much Social Security Survivor Benefits lump sum is provide at the time of death and what use is it intended for?
What percent of PIA would 2 parents receive?
What percent of PIA would 1 parent receive?
What percent of PIA would a spouse receive?
Spouses can receive benefits as early as … (and if disabled, as early as …)
What is a “blackout period”?
Dependent children as able to receive what % of PIA until what age?
Upon the death of a covered worker, Social Security provides for a lump-sum payment of $255, payable only to a spouse or dependent children, which is intended to help with the costs of a funeral.
In addition to this lump-sum payment, Social Security provides monthly benefits to eligible survivors of a deceased worker’s family.
PARENT’S BENEFITS
If they are age 62 or older, parents of a deceased worker are eligible to receive monthly survivor benefits if the deceased worker had been responsible for at least one-half of their financial support.
- if two parents are eligible, each receives 75 percent of the worker’s PIA;
- if only one parent is eligible, he or she receives 82.5 percent of the worker’s PIA.
SPOUSAL BENEFITS
Upon the death of a Social Security recipient, surviving spouses are entitled to benefits as early as age 60.
If the surviving spouse suffers from a disability, survivor benefits are available as early as age 50.
Benefits range from 71% at age 60 to 100% if @ FRA or older.
If the surviving spouse has a child younger than age 16 (or older, if the child is disabled), the spouse will receive 75 percent of the deceased worker’s PIA.
When the youngest child reaches age 16, these spousal benefits end until the spouse turns age 60. (This period is known as the blackout period.)
CHILD BENEFITS
A deceased worker’s dependent child under age 18 (19 if still in high school) is eligible to receive survivor benefits equal to 75 percent of the deceased worker’s PIA, continuing until the child’s age 18 (19 if still in high school). At age 18 (or 19), these benefits cease unless the child is disabled, in which case they continue indefinitely.
Social Security Disability Benefits
Totally disabled means the worker is unable to engage in any gainful work and the condition must be expected to last at least ___ months (or result in an earlier death).
The benefits begin after the worker has satisfied a waiting period of ___ consecutive months, during which he or she must remain disabled.
There is ____ reduction in disability benefits if they begin prior to full retirement age.
Social Security also provides a monthly benefit if a fully insured worker becomes totally disabled.
- totally disabled means the worker is unable to engage in any substantial gainful work and the condition must be expected to last at least 12 months (or result in an earlier death).
- The benefits begin after the worker has satisfied a waiting period of 5 consecutive months, during which he or she must remain disabled.
- There is no reduction in disability benefits if they begin prior to full retirement age.
What are the current thresholds for Taxation of Social Security Benefits (single and joint filings)?
Any income over these levels may be subject up to ____ percent of the Social Security benefits to tax.
In some cases, Social Security benefits may be subject to income taxation if the recipient’s modified adjusted gross income plus one-half of Social Security benefits exceeds certain threshold levels.
Modified adjusted gross income includes:
- earnings
- pension benefits
- dividends
- taxable investment earnings
- interest on tax-exempt bonds
Current threshold levels are
- $25,000 for single filers
- $32,000 for joint filers
Any income over these levels may subject up to 85 percent of the Social Security benefits to tax.
Key Points
- The PIA is the amount of the retirement benefit the worker will receive when he or she reaches full retirement age, and it is the starting point for determining all other Social Security benefits.
- The FRA for workers born between 1943 and 1954 is age 66. It increases gradually, a month at a time, for those born after 1954 and reaches its current maximum of age 67 for those born in 1960 or later.
- The spouse of a worker eligible for retirement benefits is entitled to benefits as well.
- A working spouse may claim either a spouse’s benefit or a worker’s benefit, but not both.
- Children of a retired (or disabled) worker are eligible to receive a monthly benefit.
- Totally disabled means the worker is unable to engage in any substantial gainful work and the condition must be expected to last at least 12 months (or result in an earlier death)
