Question 1

All of your employment income is subject to the FICA tax.

Accepted Answer

Only a portion of your employment income is subject to the FICA tax, as there is a wage base limit for Social Security taxes, although Medicare taxes apply to all employment income without a cap.

Question 2

The more you save for your own retirement,the lower the proportion of your overall retirement income that will need to come from Social Security retirement benefits.

Accepted Answer

This statement is true. By saving more for retirement, individuals can rely less on Social Security benefits and have a higher percentage of their retirement income come from personal savings and investments.

Question 3

For Social Security purposes,the full-benefit retirement age is 67 for those born in 1960 or later.

Accepted Answer

This statement is true. The full-benefit retirement age is 67 for those born in 1960 or later. For those born before 1960, the full-benefit retirement age is 66 or younger.

Question 4

Retirement is the time in life when the major sources of income change from earned income to employer-based retirement benefits,private savings and investments,income from Social Security,and perhaps part-time employment.

Accepted Answer

Retirement is typically characterized by a shift in income sources from earned income from working to other sources such as retirement benefits, savings, investments, and Social Security. Many retirees may also choose to work part-time during retirement to supplement their income.

Question 5

The dollar amount of Social Security benefits received depends on the level of earnings during the working years.

Accepted Answer

The amount of Social Security benefits received is based on the level of earnings during the working years. The more a person earns, the higher their benefit amount may be. However, there are also other factors that can affect the amount of benefits received, such as the age at which a person starts receiving benefits and their overall work history.

Question 6

Social Security is funded via the federal income tax.

Accepted Answer

Social Security is primarily funded through payroll taxes, which are separate from federal income taxes.

Question 7

The number of credits you have earned determines your eligibility for Social Security benefits.

Accepted Answer

The eligibility for Social Security benefits is determined by the number of credits you have earned, which are based on your work history and contributions to the Social Security system through payroll taxes.

Question 8

The number of credits you earn determines the dollar amount of your Social Security benefits.

Accepted Answer

The amount of Social Security benefits you receive is based on your lifetime earnings, not the number of credits you have earned. However, you do need to earn a certain number of credits in order to qualify for Social Security benefits.

Question 9

To receive Social Security benefits,a person must have earned a specified number of credits.

Accepted Answer

In order to qualify for Social Security retirement benefits, a person must have earned a specified number of credits through paying Social Security taxes on their income. Generally, this is 40 credits, which equates to 10 years of work.

Question 10

You must work forty years to be fully insured under Social Security.

Accepted Answer

The number of work credits needed to be fully insured under Social Security typically requires 10 years of work (40 credits), not 40 years.

Question 11

Social Security taxes withheld from an employee's paycheck are commonly called FICA taxes.

Accepted Answer

FICA stands for Federal Insurance Contributions Act, which is the law that mandates Social Security and Medicare taxes. Therefore, Social Security taxes withheld from an employee's paycheck are commonly called FICA taxes.

Question 12

Through the Social Security system,current workers support current retirees.

Accepted Answer

This is the basic principle behind the Social Security system. Workers pay into the system during their working years, and these funds are used to provide benefits to current retirees.

Question 13

Women are less likely to get retirement benefits from their employers.

Accepted Answer

Studies and surveys have shown that women are less likely to receive retirement benefits from their employers than men, and may also receive less money in their retirement accounts due to factors such as the gender pay gap and time taken off for caregiving responsibilities.

Question 14

Retirement is defined as the time period when you stop all work for pay.

Accepted Answer

Retirement refers to the time in life when an individual chooses to permanently leave the workforce behind, but it does not necessarily mean stopping all work for pay. Some people may continue to work part-time, consult, or engage in paid hobbies.

Question 15

Self-employed workers pay a Social Security tax rate that is twice that paid by employees because contributions of self-employed workers are not matched by an employer.

Accepted Answer

This is true. Self-employed workers are responsible for paying both the employer and employee portions of the Social Security tax, which is currently 12.4% of their earnings up to a certain limit. This is double the 6.2% paid by employees whose contributions are matched by their employer.

Question 16

All of your employment income is subject to the Medicare tax.

Accepted Answer

The Medicare tax applies to all employment income with no exemption or exceptions.

Question 17

Most workers pay a 7.65 percent FICA Social Security tax matched by an equal tax paid by their employer.

Accepted Answer

The answer of Most workers pay a 7.65 percent FICA...

Question 18

Wage earners pay Social Security FICA taxes on wage income up to the maximum amount to which the full Social Security tax rate is applied.

Accepted Answer

Wage earners do pay Social Security FICA taxes on wage income up to the maximum amount to which the full Social Security tax rate is applied, so the statement is true. The maximum amount is adjusted annually and for 2021 it is $142,800.

Question 19

Experts estimate that retirees need approximately 50 percent of their preretirement income to live comfortably.

Accepted Answer

Experts typically estimate that retirees need about 70% to 80% of their preretirement income to live comfortably, not 50%. This higher percentage accounts for maintaining a similar lifestyle in retirement.

Question 20

If you save well for your retirement,Social Security will only contribute about 40 percent of your retirement income.

Accepted Answer

The answer of If you save well for your retirement,Social...

Quiz 17: Retirement and Estate Planning