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SOCIAL SECURITY BENEFITS

Understand the benefits paid by Social Security. Understand how benefits are computed.

Compute federal income tax on benefits that are paid under Social Security.

OBJECTIVES

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Old-Age, Survivors, and Disability Insurance (OASDI)

Social Security benefitfull retirement ageSocial Security statementSocial Security credit

Key Terms

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Example 1

In 2009, Jose had two jobs. He earned $73,440 working at a nursing home the first 8 months. He switched jobs in September and began to work in a hospital, where he earned $42,566. How much Social Security tax did he overpay?

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Example 2 Beth earned $5,600 working part-time during the first

half of the year in 2009. She then left for college and didn’t work. How many Social Security credits did she receive?

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EXAMPLE 3

Marissa reached age 62 in 2007. She did not retire until years later. Over her life, she earned an average of $2,300 per month after her earnings were adjusted for inflation. What is her Social Security full retirement benefit?

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EXAMPLE 4

Marissa from Example 3 retired at age 65. What will her monthly benefit be, since she did not wait until age 67 to receive full retirement benefits?

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EXAMPLE 5

Ryan has retired and is qualified to receive Medicare. In 2008, he paid the standard monthly premium. How much did he pay for the year?