What is the calculation of benefits from the u.s social security program?

Expert Solution

Below are the steps to calculate your social security -

Your average indexed monthly earnings or AIME are calculated as the average of your 35 highest-earning inflation indexed years, divided by 12. To calculate your AIME, the SSA takes each year of earnings throughout your working lifetime, up to the Social Security taxable maximum. Then, each year's earnings are adjusted for inflation, or "indexed
Your AIME is applied to the Social Security benefit formula, using the bend points that were in effect for the year in which you turned 62
Any applicable cost of living adjustments are applied to your PIA, based on the year in which you actually claim your retirement benefit
To determine your PIA, your average indexed monthly earnings are applied to a formula. For 2018, the formula is:

90% of the first $895 in AIME

32% of the amount of AIME greater than $895, up to $5,397

15% of the amount of AIME greater than $5,397

Finally, if you choose to start your benefits at any age other than your exact full retirement age, your monthly benefit will be adjusted up or down.

ekkarill92 answered 11 months ago

Tax Drill - Social Security Benefits Determine the taxable amount of social security benefits for the...

Tax Drill - Social Security Benefits Determine the taxable amount of social security benefits for the following situations. If an amount is zero, enter "$0". a. Erwin and Eleanor are married and file a joint tax return. They have adjusted gross income of $36,000, no tax-exempt interest, and $12,400 of Social Security benefits. As a result, $_____ of the Social Security benefits are taxable. b. Assume Erwin and Eleanor have adjusted gross income of $12,000, no tax-exempt interest, and $16,000...

a.[6] Why is the current structure of benefits and funding for U.S. Social Security expected to...

a.[6] Why is the current structure of benefits and funding for U.S. Social Security expected to be unsustainable without a change in the Social Security law? Give as complete a set of reasons as you can. b.[6] Suppose that the only change in the law is a single fixed percentage change in the benefits paid. Every recipient would receive a fixed percentage of the benefit they would receive under current law. Estimate that percentage under the assumption that it will...

Calculation of Social Security Tax and Marginal, Average and Effective Tax Rates on Social Security Taxes...

Calculation of Social Security Tax and Marginal, Average and Effective Tax Rates on Social Security Taxes (LO. 1) Rory earns $70,000 per year as a college professor. Latesia is a marketing executive with a salary of $140,000. With respect to the Social Security tax (OASDI: 6.2%; MHI: 1.45%) calculate the following: (Hint: OASDI 6.2% tax is only on max of $128,400 for the year.) When required, round the total taxes to two decimal places. a. Rory's total FICA taxes: $...

Do social security benefits change, and if so what is the basis.

social security benefits received during the year?

1: The primary cost of the Social Security program is the A :Redistribution of income from...

1: The primary cost of the Social Security program is the A :Redistribution of income from younger to older workers. B: Financial costs of administering the program. C: Benefits paid. D: Reduction in total output the program causes because of work disincentives. 2:Social insurance programs A:Involve an income eligibility test. B:Are a type of welfare program. C:Are means-tested. D: Are event-conditional. 3: A market failure exists when an imperfection in A: Welfare programs prevents an optimal outcome. B: The market...

3. Suppose Social Security (government old age income support program) benefits are reduced by 25% in...

3. Suppose Social Security (government old age income support program) benefits are reduced by 25% in an effort to make the program more financially viable, while Social Security payroll tax rates are left unchanged. a) How would this likely affect annual hours of work among workers close to retirement age (say, age 60)? Explain. b) How would this likely affect annual hours of work among young workers (say, age 25)? Explain. c) Would your answer for young workers be different...

What can be done to improve the financial health of Social Security? Describe the benefits and...

What can be done to improve the financial health of Social Security? Describe the benefits and drawbacks of the major proposals to change Social Security as outlined in the reading, “The Future of Social Security: Proposals You Should Know About.” Which course of action do you favor?

What are the pros and cons of taking Social Security retirement benefits at age 62, at...

What are the pros and cons of taking Social Security retirement benefits at age 62, at normal retirement age, and at age 70. Consider the cash flow and tax implications of each option.

To what extent could the purposes of the social security program be served by a law...

To what extent could the purposes of the social security program be served by a law requiring individuals to purchase retirement insurance from a private firm? Discuss difficulties with such a proposal, and what kinds of regulations might be required to avoid these difficulties.

Question