Bob, a 66 years old worker, is deciding between retirement either this year or the next year. His average monthly benefit is determined to be $1,089.50. Assume that the benefit is the same for this year and the next year.
Compute Bob’s annual benefit reduction amounts in each of the following scenarios.
|•||If Bob retires this year and secures a part-time job earning $18,000, his annual benefit reduction amount is
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|•||If Bob retires this year, secures the same part-time job, and in addition projects interest and dividend earnings of $7,000 per year, what his annual benefit reduction amount is
|•||If Bob retires next year and secures the same part-time job, the annual benefit reduction amount is
Taxes on Benefits
Social Security is paid in with after-tax dollars but may be subject to tax if annual income exceeds a base amount. A single taxpayer’s base is $25,000. Married taxpayers filing jointly have a base of $32,000. Married taxpayers filing separately have a base of zero.
Suppose Eric is retiring this year at age 67. The following table shows his data.
|Part-time salary||$31,500||Annual savings account interest||$275|
|Annual dividends||$2,500||Annual interest on Denver municipal bonds||$1,350|
Based on the income calculated, Eric will have _____% of his Social Security benefits taxed.