TOOLS & TECHNIQUES OF EMPLOYEE BENEFIT AND RETIREMENT PLANNING
1 1 th Edition
College Course M aterials
Deanna L. Sharpe, Ph.D., CFP?, CRPC?, CRPS?
Associate Professor
CFP? Program Director
Personal Financial Planning Department
University of Missouri-Columbia
Please Note : Correct answers for each question are indicated in bold type. After each question, the number of the page containing information relevant to answering the question is given. When a calculation is necessary or the reasoning behind a given answer may be unclear, a brief rationale for the correct answer is also given.
Part A: Retirement Planning
Government Benefits
Chapter 3: Social Security
True/False
3.1 A worker is currently insured under Social Security if he or she has acquired at least six quarters of coverage during the full 13-quarter period ending with the calendar quarter in which she or she died or became eligible for disability or retirement benefits.
3.2 Workers who continue their employment between age 65 and 70 receive an increase in Social Security retirement benefits.
3.3 Remarriage of a surviving spouse does not affect receipt of a mother’s or father’s benefit from Social Security as long as the surviving spouse is caring for their own or adopted child under age 16 or a child disabled before age 22.
Answer:
3.1 True [p. 30]
3.2 True [p. 35]
3.3 False [p. 31]
Multiple Choice
3.4 Which of the following is (are) true regarding entitlement to Social Security retirement benefits
a. an individual must be fully insured to receive Social Security retirement benefits
b. reduced Social Security benefits are available at age 60
c. age for receiving full Social Security benefits is gradually being increased to 67
d. a and b
e. a and c
Answer: E [p. 30]
3.5 Which of the following is (are) true regarding entitlement to Social Security disability benefits
a. the worker must be currently or fully insured
b. the worker must have been disabled for at least 18 months or expected to be disabled for 18 months
c. the worker must have completed a 6 month waiting period or be specifically exempted from this requirement
d. all of the above
e. only a and c
Answer: A [p. 31]
3.6 Employment after retirement will
a. always result in a loss of all Social Security Benefits
b. result in loss of some or all Social Security Benefits only for those under Normal Retirement Age who have earning above a specified threshold
c. result in loss of $1 of benefits for each $3 of earnings for those at or older than Normal Retirement Age
d. reduce Social Security earnings only if the worker is under Normal Retirement Age and self-employed
e. have no effect on Social Security Benefits
Answer: B [pp. 35-36]
Application
3.7 April Storm had earned 40 quarters of Social Security coverage before she was seriously injured in an auto accident. April was in the hospital for a month, but then began working again at her former place of employment part time. April is entitled to Social Security disability benefits.
a. true
b. false
Answer: B [p. 31 – Although April has the requisite 40 hours of coverage, she was able to return to work in less than a year. Thus, she violates the very strict definition of ‘disabled’ required by the Social Security Administration for disability payments under Social Security.]
3.8 Jane Browder, age 30, has worked full time each year since age 19. Jane was killed in an auto accident just after her sixth wedding anniversary. Her husband and two sons, age 2 and 4 can receive
a. a father’s benefit equal to 100% of Jane’s primary insurance amount (PIA)
b. a child’s benefit for each son as long as he is unmarried and under age 18
c. a disability benefit if her husband or children become disabled, equal to Jane’s primary insurance amount
d. a widower’s benefit paid to Jane’s husband based on her earnings regardless of Jane’s husband’s Social Security benefits from his own employment
e. none of the above
Answer: B [pp. 31-32]
3.9 Howard Stein is 65 this year and his wife, Gertie, is three years younger. They were married a month after Gertie graduated from high school. She has been a full time homemaker all of her adult life. After their youngest child graduated from college, she devoted 20 hours a week to volunteer efforts. Howard will begin drawing Social Security Retirement Benefits this year. Gertie can receive
a. no benefits since she was never employed outside the home
b. a mother’s benefit since she has had children
c. a spouse’s benefit equal to 50% of Howard’s primary insurance amount (PIA)
d. a benefit based on credits earned from her volunteer work
e. a spouse’s benefit equal to less than 50% of Howard’s primary insurance amount (PIA)
Answer: E [p. 31 – Gertie is 62, younger than normal Retirement Age, so she will receive a reduced benefit rather than 50% of her husband’s PIA]
3.10 Juan T. B. and I. B. Cool were married 8 years ago. Their divorce was finalized this week. At age 65, I. B. is eligible for Social Security benefits under Juan’s work record.
a. true
b. false
Answer: B [p.31]