January 20, 2012
Retirement Planning: Social Security Quiz
1. c 2. c. At the full retirement age, a spouse is eligible for half their spouse’s full Social Security retirement benefit amount or their own benefit -- whichever is higher. If Sandy began collecting her own benefit at 62, however, this would affect the calculation of her spousal benefit when her husband retires. Social Security will take her full benefit amount that would have been payable at age 66 based on her own work record (not the amount she has been receiving since she was 62) and subtract that amount from 50 percent of her husband’s amount. If Sandy’s full benefit amount was $650, then Social Security would subtract $650 from the $900 spousal benefit. This would equal $250 and this amount would be added to her current benefit of $500 and her new benefit amount would increase to $750 per month. If Sandy had waited until her full retirement age, 66, to apply for Social Security, then she would have received the higher of her own full benefit amount or 50 percent of Tom’s, which would have been $900 a month.
3. b. If you are under your full retirement age for the entire year, Social Security will deduct $1 from your benefit for every $2 you earn above the annual limit. Here’s more information about the earnings limit.
4. d. A former spouse who meets the requirements to receive a Social Security benefit is treated basically the same as a current spouse. This entitlement does not affect the former spouse’s own Social Security benefit or his or her new family’s. Receiving a Civil Service Retirement System benefit will reduce (or “offset”) your spousal benefit by two-thirds of your CSRS retirement. This will eliminate the benefit entirely in many cases. Read more in this Social Security publication: What Every Woman Should Know.
5. a. It also is interesting to note that 22 percent of elderly married couples rely on Social Security for 90 percent or more of their income. Among elderly Social Security beneficiaries, 54 percent of married couples and 73 percent of unmarried persons receive 50 percent or more of their income from Social Security.
6. d. If you don’t know your full Social Security retirement age, then click here. The earliest you can start receiving Social Security retirement benefits is 62, but the benefit is permanently reduced for applying early.
7. d. Any of these actions answers could increase your Social Security benefit, but there are caveats. For example, if you delay receiving your payment past your full retirement age, you may receive up to a 32 percent increase. If you don’t live very long after you start receiving the benefit, however, the extra money might not have been worth the wait.
8. d. (At least I don’t think you can figure the distance to the moon on SSA’s site.) Here are the specific links mentioned in the question:
9. d. It depends on whether you’re a man or a woman, how old you are when you retire, and a host of other unpredictable elements. So there’s no simple answer. According to data compiled by the Social Security administration, a man reaching age 65 today can expect to live, on average, until 83 -- or 18 years after retirement if he retires at 65. A woman can expect to live, on average, to 85.
10. e. The good news is there are a lot of financial planning resources available. For starters, try Feed the Pig to help you manage your savings.
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Correction: The explanation for the answer to question No. 2 was incorrect, and has been updated.
January 20, 2012