CRPC | MAKING THE MOST OF SOCIAL SECURITY RETIREMENT BENEFITS EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS VERIFIED

CRPC | MAKING THE MOST OF SOCIAL SECURITY RETIREMENT BENEFITS EXAM QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS VERIFIED Terms in this set (301) A worker's primary insurance amount (PIA) is the amount they receive from Social Security 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 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 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) of 66 in 2020. 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? Two years from now. By delaying two years, her benefit will increase 16%, to $1,160. Forfeiting: $1,000 24 months = $24,000 Gaining: $160/month 24,000 / $160 = 150 months or 12.5 years 66 + 12.5 = Ann would need to live until 78 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 $14,000 per year. How much will he lose in Social Security benefits due to the earned income restrictions? $0 Because his earned income is below the $18,240 (2020) 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. 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 $50,000 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? 85% Provisional income = $57,500. This is 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 _. 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. Jeff and Betsy both attained their FRA in time to employ the "restricted application for spouses" strategy. Jeff's PIA at his FRA was $2,000 and Betsy's was $1,200. If they employ the "restricted application for spouses" strategy, Betsy will begin receiving $ per month. $1,200 Betsy, the spouse with the lower Social Security benefit, will take her own $1,200 benefit. Jeff, the spouse with the higher Social Security benefit, will receive a $600 spousal benefit, deferring receipt of his own benefit until age 70. The plan is for Jeff to receive the delayed retirement credit. This will increase his monthly benefit and it will also increase the survivor benefit for Betsy. The "restricted application for spousal benefits only" was available to people born on or before Jan 2, 1954 and who has achieved their FRA. Thus, it is no longer possible for anyone to initiate this strategy as of Jan 3, 2020. However, retirement planners need to understand this strategy because many people have implemented it. 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 _. 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 2020. 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. June 2021 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 can be employed to increase benefits by waiting past FRA and then receiving delayed retirement credits. Jerry was born in 1954. What age does Social Security consider to be his full retirement age (FRA)? 66 Persons born in would have an FRA of 66. A person can begin receiving early Social Security retirement benefits at age 62, but with a reduction from what would be received at FRA. 2020 is the last year that people reach FRA at age 66. For the next six years FRA will be increasing by two months/year. In 2027, FRA will be 67 because under the current law, those born in 1960 or later must be age 67 to achieve their FRA. 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. $1,800 The $900 spousal benefit stops, and Ralph will 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 25/36th of 1% for the first 36 months and 5/12th of 1% for all months in excess of 36 months. 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.