Respond to the discussion response about Social Security.

Social Security is a source of inflation-adjusted income for qualifying retirement, survivors, and disability citizens. Lesson 6 acknowledges that the amount of retirement benefits is based on the average earning over ones working career. Since one's income, career path, and family life is unique there are many scenarios that can occur and impact the calculation of benefits.

The Social Security website, www.ssa.gov,Links to an external site. has a retirement estimator calculator that can run through various scenarios. Primary insurance amount, PIA, is the benefit one could receive if they would draw benefits at their normal retirement age. Their average indexed monthly earnings is calculated based on the 35 highest earning years and then apply a formula to calculate the PIA. "The formula breaks down your average monthly wage into three parts. In 2023, it is: 90 percent of the first $1,115 of your AIME, plus 32 percent of any amount over $1,115 up to $6,721, plus 15 percent of any amount over $6,721," (AARP, 2022).

"The taxable portion of the benefits that's included in your income and used to calculate your income tax liability depends on the total amount of your income and benefits for the taxable year," (IRS, 2023). The IRS states that Social Security benefits can be taxable if the total of half of one's benefits and all other income is greater than the base amount for one's filing status. Overall, I think the taxation method of social security benefits is fair as this keeps people from 'double dipping'.