Monthly Social Security benefits Monthly Benefits The Social Security Administration has a computerized service that determines your benefits because Social Security benefits are based on a fairly complicated formula. In fact, the government is required to provide all covered workers with a Social Security Statement. Identify the range of benefits you can expect. • If you retire at age 62, benefits of to % of yourfull retirement benefits . • If you retire at age 65 to 67, receipt ofyour full retirement benefits . • If you delay retirement until age 70, you can receive an increase in your benefits. Range of Benefits Dmitri, a 66 years old worker, is deciding between retirement either this year or the next year. His average monthly benefit is determined to be $1,635.40. Assume that the benefit is the same for this year and the next year. Compute Dmitri’s annual benefit reduction amounts in each of the following scenarios. • If Dmitri retires this year and secures a part-time job earning $19,000, his annual benefit reduction amount is . • If Dmitri retires this year, secures the same part-time job, and in addition projects interest and dividend earnings of $7,000 per year, what his annual benefit reduction amount is . • If Dmitri retires next year and secures the same part-time job, the annual benefit reduction amount is . Taxes on Benefits Social Security is paid in with after-tax dollars but may be subject to tax if annual income exceeds a base amount. A single taxpayer’s base is $25,000. Married taxpayers filing jointly have a base of $32,000. Married taxpayers filing separately have a base of zero. Suppose Jake is retiring this year at age 67. The following table shows his data. Part-time salary $30,500 Annual savings account interest $300 Annual dividends $2,750 Annual interest on Los Angeles municipal bonds $1,550 Based on the income calculated, Jake will have % of his Social Security benefits taxed.

Monthly Social Security benefits Monthly Benefits The Social Security Administration has a computerized service that determines your benefits because Social Security benefits are based on a fairly complicated formula. In fact, the government is required to provide all covered workers with a Social Security Statement. Identify the range of benefits you can expect. • If you retire at age 62, benefits of to % of yourfull retirement benefits . • If you retire at age 65 to 67, receipt ofyour full retirement benefits . • If you delay retirement until age 70, you can receive an increase in your benefits. Range of Benefits Dmitri, a 66 years old worker, is deciding between retirement either this year or the next year. His average monthly benefit is determined to be $1,635.40. Assume that the benefit is the same for this year and the next year. Compute Dmitri’s annual benefit reduction amounts in each of the following scenarios. • If Dmitri retires this year and secures a part-time job earning $19,000, his annual benefit reduction amount is . • If Dmitri retires this year, secures the same part-time job, and in addition projects interest and dividend earnings of $7,000 per year, what his annual benefit reduction amount is . • If Dmitri retires next year and secures the same part-time job, the annual benefit reduction amount is . Taxes on Benefits Social Security is paid in with after-tax dollars but may be subject to tax if annual income exceeds a base amount. A single taxpayer’s base is $25,000. Married taxpayers filing jointly have a base of $32,000. Married taxpayers filing separately have a base of zero. Suppose Jake is retiring this year at age 67. The following table shows his data. Part-time salary $30,500 Annual savings account interest $300 Annual dividends $2,750 Annual interest on Los Angeles municipal bonds $1,550 Based on the income calculated, Jake will have % of his Social Security benefits taxed.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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7. Monthly Social Security benefits

Monthly Benefits

The Social Security Administration has a computerized service that determines your benefits because Social Security benefits are based on a fairly complicated formula. In fact, the government is required to provide all covered workers with a Social Security Statement.

Identify the range of benefits you can expect.

•	If you retire at age 62, benefits of to % of yourfull retirement benefits .
•	If you retire at age 65 to 67, receipt ofyour full retirement benefits .
•	If you delay retirement until age 70, you can receive an increase in your benefits.

Range of Benefits

Dmitri, a 66 years old worker, is deciding between retirement either this year or the next year. His average monthly benefit is determined to be $1,635.40. Assume that the benefit is the same for this year and the next year.

Compute Dmitri’s annual benefit reduction amounts in each of the following scenarios.

•	If Dmitri retires this year and secures a part-time job earning $19,000, his annual benefit reduction amount is .
•	If Dmitri retires this year, secures the same part-time job, and in addition projects interest and dividend earnings of $7,000 per year, what his annual benefit reduction amount is .
•	If Dmitri retires next year and secures the same part-time job, the annual benefit reduction amount is .

Taxes on Benefits

Social Security is paid in with after-tax dollars but may be subject to tax if annual income exceeds a base amount. A single taxpayer’s base is $25,000. Married taxpayers filing jointly have a base of $32,000. Married taxpayers filing separately have a base of zero.

Suppose Jake is retiring this year at age 67. The following table shows his data.

Part-time salary	$30,500	Annual savings account interest	$300
Annual dividends	$2,750	Annual interest on Los Angeles municipal bonds	$1,550

Based on the income calculated, Jake will have

% of his Social Security benefits taxed.

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