HS 354 Sources of Retirement
Income Questions & Accurate
Answers
Old Age, Survivors and Disability Insurance system
(OASDI) - correct answer ✔✔Social Security as also know as?
Medicare - correct answer ✔✔What is Social Security combined with to provide a level of
retirement security for the vast majority of Americans?
Most would not complain that they don't get their money's worth from a policy because it
didn't burn down. They would be content with protection from catastrophic loss and happy that
nothing happened. Planners need to show that lack of adequacy of retirement income is a real
catastrophic concern. Explaining to the clients that losing money if they die after 62 is just one
way to look at the decision. Insurance from extreme poverty in old age may be more important
than extra dollars to enhance a lifestyle in the early years of retirement. - correct answer
✔✔How might a planner use other forms of insurance when communicating with clients?
A. One of six Americans receives benefits from the system.
B. Approximately 96 percent of working-age Americans are covered by the system.
C. Who receives Social Security?
(1) 34.7 million retired workers
(2) 8.2 million disabled workers
(3) 4.4 million widows and widowers
(4) 2.5 million spouses
(5) 1 million adults disabled since childhood
,(6) 3.4 million children - correct answer ✔✔How many people receive Social Security benefits?
A. There is a 6.2% payroll tax (also known as FICA) up to the taxable wage base. Both the
employer and employee pay this tax.
B. There is a 1.45% FICA tax on all income.
C. There is a 12.4% Social Security self-employment tax (aka SECA tax) up to the taxable wage
base; half of the tax is deductible from income. 2% lower in 2012.
D. There is a 2.9% SECA tax on all income. - correct answer ✔✔How is Social Security funded?
A. Old-age and survivors insurance
B. Disability insurance
C. Medicare Part A
D. Medicare Part B - correct answer ✔✔What are the 2 Social Security trust funds and Medicare
fund?
A. Worker must earn 40 coverage credits to earn the basic retirement benefit.
B. Must earn a minimum of $4,800 (2014) and earn 4 quarters of coverage.
C. That means only 10 years of substantial employment to qualify.
D. Benefit formula is applied to what is referred to a average indexed earnings looking at 35
highest years of wage history.
E. If fewer than 35 years of work, 0's go into the calculation of the formula. A person would
benefit from additional years of work.
F. Full benefits begin at full retirement age, but reduced benefits can begin at 62 and deferral
credits can be earned till 70. - correct answer ✔✔What is the eligibility for worker's retirement
benefits?
A. A nonworking spouse age 62 can claim benefits if there is a benefit based on their own work
history. Can get the greater of the worker's or spousal benefit.
B. Spouse caring for a child under 16 can receive full benefits regardless of the spouse's age.
,C. Benefits can also be paid to dependent, unmarried children under 18 (under 20 if in
secondary school).
D. Benefits to children 18 or older who were disabled before age 22.
E. There is a family maximum for 2 benefit families.
F. Divorced spousal benefit is paid to an unmarried divorced spouse as long as the marriage
lasted 10 years, this doesn't affect the total family benefit. - correct answer ✔✔What are the
additional Social Security benefits paid once an eligible worker claims benefits?
A. Discriminates in favor of lower paid workers.
B. The amount of income SS replaces is called the SS replacement ratio.
C. $18.8k in 2013 (and comparable amounts in previous years) would receive about $10.4k
which replaces about 55% of earnings. A worker in the maximum taxable amount ($117k in
2014) would get benefits to replace about 25% of prior earnings.
D. This means affluent clients need to save more. No SS benefits for earnings over the base. -
correct answer ✔✔What is the amount of Social Security retirement benefits?
In 2011 due to budget cuts the paper statements stopped. Due to demand, in February of 2012
those 60 and over started receiving paper statements. In May of 2012 the online statement
started. Late 2012 those turning 25 received received paper statements. - correct answer
✔✔When did Social Security paper benefit statements end?
It's created by the individual. The account is created with personal information and is protected
with a username and password. The statement contains client information:
A) The full retirement age and their estimated benefit
B) Estimate benefit at 62 and 70
C) Estimated eligible disability benefit
D) Estimated survivors benefit for children and spouse
E) Medicare eligibility
F) Earnings record (should be verified for full benefit)
, G) Estimated taxes by the client and employer
It provides information:
A) The windfall-elimination provision
B) The government pension offset
C) Potential benefit changes due to law
D) Phone numbers for Social Security and Medicare
E) Social Security's future
F) Links to qualify
G) How the benefits are estimated
H) Considerations for retirement
I) Relevant publications - correct answer ✔✔The online Social Security statement
A) For 1 in 5 it's their only source of income.
B) For 1 in 3 it's 90% of their income.
C) For 2 in 3 it's 50% of their income.
D) These are not expected to change. - correct answer ✔✔What do the source of income
statistics tell us?
Theory 1: Men only think of themselves and ignore their wives needs (this is not likely).
Theory 2: Financial ignorance. People more financially literate are more likely to defer Social
Security.
Theory 3: Social convention. The standards and norms practiced by a majority of the population.
Theory 4: For those with a defined benefit plan it could be the retirement age for the plan. The
defined benefit may not be enough to sustain the client. Those with a 401(k) may be able to use
this to delay taking Social Security.
Theory 5: Fears of Social Security failing. This is irrational thinking, it will change, but it won't
end.
Income Questions & Accurate
Answers
Old Age, Survivors and Disability Insurance system
(OASDI) - correct answer ✔✔Social Security as also know as?
Medicare - correct answer ✔✔What is Social Security combined with to provide a level of
retirement security for the vast majority of Americans?
Most would not complain that they don't get their money's worth from a policy because it
didn't burn down. They would be content with protection from catastrophic loss and happy that
nothing happened. Planners need to show that lack of adequacy of retirement income is a real
catastrophic concern. Explaining to the clients that losing money if they die after 62 is just one
way to look at the decision. Insurance from extreme poverty in old age may be more important
than extra dollars to enhance a lifestyle in the early years of retirement. - correct answer
✔✔How might a planner use other forms of insurance when communicating with clients?
A. One of six Americans receives benefits from the system.
B. Approximately 96 percent of working-age Americans are covered by the system.
C. Who receives Social Security?
(1) 34.7 million retired workers
(2) 8.2 million disabled workers
(3) 4.4 million widows and widowers
(4) 2.5 million spouses
(5) 1 million adults disabled since childhood
,(6) 3.4 million children - correct answer ✔✔How many people receive Social Security benefits?
A. There is a 6.2% payroll tax (also known as FICA) up to the taxable wage base. Both the
employer and employee pay this tax.
B. There is a 1.45% FICA tax on all income.
C. There is a 12.4% Social Security self-employment tax (aka SECA tax) up to the taxable wage
base; half of the tax is deductible from income. 2% lower in 2012.
D. There is a 2.9% SECA tax on all income. - correct answer ✔✔How is Social Security funded?
A. Old-age and survivors insurance
B. Disability insurance
C. Medicare Part A
D. Medicare Part B - correct answer ✔✔What are the 2 Social Security trust funds and Medicare
fund?
A. Worker must earn 40 coverage credits to earn the basic retirement benefit.
B. Must earn a minimum of $4,800 (2014) and earn 4 quarters of coverage.
C. That means only 10 years of substantial employment to qualify.
D. Benefit formula is applied to what is referred to a average indexed earnings looking at 35
highest years of wage history.
E. If fewer than 35 years of work, 0's go into the calculation of the formula. A person would
benefit from additional years of work.
F. Full benefits begin at full retirement age, but reduced benefits can begin at 62 and deferral
credits can be earned till 70. - correct answer ✔✔What is the eligibility for worker's retirement
benefits?
A. A nonworking spouse age 62 can claim benefits if there is a benefit based on their own work
history. Can get the greater of the worker's or spousal benefit.
B. Spouse caring for a child under 16 can receive full benefits regardless of the spouse's age.
,C. Benefits can also be paid to dependent, unmarried children under 18 (under 20 if in
secondary school).
D. Benefits to children 18 or older who were disabled before age 22.
E. There is a family maximum for 2 benefit families.
F. Divorced spousal benefit is paid to an unmarried divorced spouse as long as the marriage
lasted 10 years, this doesn't affect the total family benefit. - correct answer ✔✔What are the
additional Social Security benefits paid once an eligible worker claims benefits?
A. Discriminates in favor of lower paid workers.
B. The amount of income SS replaces is called the SS replacement ratio.
C. $18.8k in 2013 (and comparable amounts in previous years) would receive about $10.4k
which replaces about 55% of earnings. A worker in the maximum taxable amount ($117k in
2014) would get benefits to replace about 25% of prior earnings.
D. This means affluent clients need to save more. No SS benefits for earnings over the base. -
correct answer ✔✔What is the amount of Social Security retirement benefits?
In 2011 due to budget cuts the paper statements stopped. Due to demand, in February of 2012
those 60 and over started receiving paper statements. In May of 2012 the online statement
started. Late 2012 those turning 25 received received paper statements. - correct answer
✔✔When did Social Security paper benefit statements end?
It's created by the individual. The account is created with personal information and is protected
with a username and password. The statement contains client information:
A) The full retirement age and their estimated benefit
B) Estimate benefit at 62 and 70
C) Estimated eligible disability benefit
D) Estimated survivors benefit for children and spouse
E) Medicare eligibility
F) Earnings record (should be verified for full benefit)
, G) Estimated taxes by the client and employer
It provides information:
A) The windfall-elimination provision
B) The government pension offset
C) Potential benefit changes due to law
D) Phone numbers for Social Security and Medicare
E) Social Security's future
F) Links to qualify
G) How the benefits are estimated
H) Considerations for retirement
I) Relevant publications - correct answer ✔✔The online Social Security statement
A) For 1 in 5 it's their only source of income.
B) For 1 in 3 it's 90% of their income.
C) For 2 in 3 it's 50% of their income.
D) These are not expected to change. - correct answer ✔✔What do the source of income
statistics tell us?
Theory 1: Men only think of themselves and ignore their wives needs (this is not likely).
Theory 2: Financial ignorance. People more financially literate are more likely to defer Social
Security.
Theory 3: Social convention. The standards and norms practiced by a majority of the population.
Theory 4: For those with a defined benefit plan it could be the retirement age for the plan. The
defined benefit may not be enough to sustain the client. Those with a 401(k) may be able to use
this to delay taking Social Security.
Theory 5: Fears of Social Security failing. This is irrational thinking, it will change, but it won't
end.
