Question
Range of Benefits Paolo, a 66 years old worker, is deciding between retirement either this year or the next year. His average monthly benefit is
Range of Benefits
Paolo, a 66 years old worker, is deciding between retirement either this year or the next year. His average monthly benefit is determined to be $1,178.80. Assume that the benefit is the same for this year and the next year.
Compute Paolo's annual benefit reduction amounts in each of the following scenarios.
If Paolo retires this year and secures a part-time job earning $16,000, his annual benefit reduction amount is .______ | |
If Paolo 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 Paolo 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 Van is retiring this year at age 67. The following table shows his data.
Part-time salary | $24,500 | Annual savings account interest | $225 |
Annual dividends | $2,000 | Annual interest on Los Angeles municipal bonds | $950 |
Based on the income calculated, Van will have _________________ % of his Social Security benefits taxed.
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