Question 1

Which of the following statements is true regarding Social Security retirement benefits?

Accepted Answer

All of the statements are true regarding Social Security retirement benefits. 
A) It attempts to replace 42% of your average earnings.
B) Not all occupations are covered.
C) Some people's benefits may be taxed.
D) You may retire beginning at age 62 with reduced benefits.

Question 2

For most people, there is really no reason to save for retirement since Social Security will provide retirement benefits until you die.

Accepted Answer

While Social Security does provide retirement benefits, it may not be enough for some people to live on comfortably in their retirement years. Additionally, there is no guarantee that Social Security will be available or sufficient for everyone by the time they retire. Therefore, saving for retirement is important to ensure financial security in your later years.

Question 3

Most employees in the United States today are covered by an employer funded defined-benefit plan.

Accepted Answer

Most employees in the United States today are covered by an employer sponsored defined-contribution plan, such as a 401(k), rather than a defined-benefit plan.

Question 4

How does Uncle Sam determine our Social Security monthly retirement check for all practical purposes?

Accepted Answer

The answer of How does Uncle Sam determine our Social...

Question 5

Robin was born after 1960, therefore, the retirement age for her to receive full Social Security benefits is 65.

Accepted Answer

The retirement age for full Social Security benefits varies based on the year of birth. For those born in 1960 or later, the full retirement age is actually 67.

Question 6

To be eligible for Social Security benefits, you receive one credit for every $1,120 in wages that you earn, up to 4 credits per year. How many total credits do you need to qualify for benefits?

Accepted Answer

To qualify for Social Security benefits, you generally need 40 credits, which typically equates to about 10 years of work.

Question 7

The size of your Social Security benefits are determined by your number of years of earnings, your average level of earnings, and an adjustment for inflation.

Accepted Answer

The size of your Social Security benefits are indeed determined by your number of years of earnings, your average level of earnings, and an adjustment for inflation.

Question 8

An employee's Social Security contributions are invested in a general fund account and will be made available for the employee at retirement.

Accepted Answer

The answer of An employee's Social Security contributions are invested...

Question 9

The Federal Insurance Contributions Act isn't an investment, but rather a mandatory insurance plan that one pays into through salary deductions.

Accepted Answer

The Federal Insurance Contributions Act (FICA) is a mandatory payroll tax that funds Social Security and Medicare programs, and is not an investment vehicle.

Question 10

Social Security is a mandatory insurance program that provides a base level of protection for all of the following occurrences except one. Choose that one.

Accepted Answer

Social Security does not provide insurance for job loss; it primarily covers retirement, disability, and survivors' benefits. Unemployment insurance is a separate program that addresses job loss.

Question 11

How is the size of a person's Social Security retirement benefits determined?

Accepted Answer

The size of a person's Social Security retirement benefits is determined by a combination of factors, including the number of credits earned (which reflects years worked), the average level of earnings over a person's lifetime, and the number of years a person has paid into Social Security.

Question 12

Explain why we do not invest in Social Security. What are the four basic benefits for those who are qualified?

Accepted Answer

The answer of Explain why we do not invest in...

Question 13

Under a funded pension plan, the employer makes regular contributions to a trustee who collects and invests the retirement funds.

Accepted Answer

In a funded pension plan, the employer does make regular contributions to a trustee who invests the retirement funds on behalf of the employees. This is done to ensure that there will be sufficient funds available to pay out the promised benefits at retirement.

Question 14

Social Security benefits are very nice to get and help many current retirees live above the poverty line. Why should someone who is 25 years old today not count on receiving the same type of Social Security benefits when they retire in 45 years from now?

Accepted Answer

The answer of Social Security benefits are very nice to...

Question 15

The system of Social Security is based on young working people paying taxes to support older retired people. The dependency ratio is the number of workers to retirees. Forty years ago it was 16 workers for every one retiree. What will happen to this ratio by the year 2048?

Accepted Answer

The dependency ratio will decline to 2 workers for every 1 retiree by the year 2048. This is due to the aging population and declining birth rates, resulting in a smaller workforce and a larger retiree population.

Question 16

Which of the following benefits is not provided by Social Security?

Accepted Answer

Social Security does not provide education benefits. It primarily provides financial support for retirement, disability, and survivorship. Health benefits are typically provided through Medicare.

Question 17

Social Security is a plan where current workers' contributions pay for current retiree's benefits.

Accepted Answer

Social Security is a pay-as-you-go system where payroll taxes from current workers are used to fund benefits for current retirees.

Question 18

Social Security is a system where current workers' pay taxes that are used to pay current retirees' benefits. How is Social Security funded?

Accepted Answer

Social Security is funded through payroll taxes on employees and employers, up to a certain salary cap. It is not funded by income taxes paid by all Americans. Therefore, only choice E is correct.

Question 19

Social Security is a health care, retirement, disability income, and life insurance plan.

Accepted Answer

Social Security provides benefits for retirement, disability, and survivors' insurance, as well as Medicare health coverage.

Question 20

How will you access in an accurate manner the amount of your retirement income?

Accepted Answer

The answer of How will you access in an accurate...

Quiz 16: Retirement Planning