CH 11 SS HW

docx

School

Bowling Green State University *

*We aren’t endorsed by this school

Course

4140

Subject

Finance

Date

May 25, 2024

Type

docx

Pages

Uploaded by SargentValorGoldfinch43

FIN 4140 / MBA 5570 Homework Chapter 11 – Social Security For these short-answer questions, summarize these topics consistent with how we discussed them in class. If you were not in class, read Chapter 11 of the textbook before answering. If you use outside sources other than the textbook or the PPT slides posted on Canvas, you must provide a link to your sources at the bottom of the assignment. 1. Describe how Social Security is funded. (see PPT slides on Canvas or CH11 page 570) Social Security in the United States is primarily funded through a payroll tax system. General revenue and interest on trust fund assets also contribute to its funding. 2. Describe how a person’s social security retirement benefit is calculated. (CH11) A person's Social Security retirement benefit is calculated based on their highest-earning 35 years of work, with the average indexed monthly earnings determining the benefit. The benefit amount depends on when they start receiving benefits relative to their Full Retirement Age, with adjustments for early or delayed retirement, and annual cost-of-living adjustments are applied to keep pace with inflation. 3. How does retiring early or retiring late affect the calculation of Social Security benefits. (CH11, pages 589-590) Retiring early before your Full Retirement Age reduces your Social Security benefits, with a permanent monthly reduction of about 0.56% per month before FRA. Delaying retirement past your FRA increases your benefits, with roughly 0.67% added per month up to age 70, potentially resulting in a 24% higher benefit than your full amount. 4. How is Social Security retirement income taxed? (CH11, pages 595-599) Social Security retirement income can be taxed based on your total income and filing status. Up to 85% of your Social Security benefits may be subject to federal income tax if your combined income exceeds certain thresholds, with state taxes potentially applying as well, depending on where you live. 5. How does marriage/divorce impact a person’s social security benefits? (CH11, page 619) Marriage can grant access to spousal and survivor's benefits based on your spouse's work record, while divorce may allow you to claim benefits based on your ex-spouse's record if certain conditions are met, typically without affecting their benefits. 6. How is the term “impairment” defined for the purpose of determining eligibility for social security disability income? (CH11, pages 600-601)

In the context of determining eligibility for Social Security disability benefits, an "impairment" is defined as a medically diagnosed physical or mental condition that severely restricts an individual's ability to engage in substantial gainful activity for at least 12 months or result in death. 7. Who is eligible to receive social security survivor benefits? (CH11, page 602) Social Security survivor benefits are available to surviving spouses, dependent children, and dependent parents of a deceased worker. Divorced spouses may also be eligible if they were married for at least ten years and meet specific age criteria.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version