Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance

Authors: Jeff Madura, Hardeep Singh Gill

3rd Canadian Edition

978-0133035575, 133035573, 978-0133970524, 133970523, 978-0134040042

More Books

Students also viewed these Finance questions