(4) Compute the AIME (Average Indexed Monthly Earnings) for (a)-(c) below if you
ID: 2759448 • Letter: #
Question
(4) Compute the AIME (Average Indexed Monthly Earnings) for (a)-(c) below if you worked for 35 years.
(a) You have average annual indexed earnings of $20,000 during your career.
(b) You have average annual indexed earnings of $60,000 during your career.
(c) You have average annual indexed earnings of $100,000 during your career.
(5) Compute the AIME for (a)-(c) above if you worked for only 20 years.
The formula for converting AIME to PIA was as follows in 2009. The PIA equals 90% of the first $856 of AIME, plus 32% of the amount of AIME between $856 and $5,157, plus 15% of the amount of AIME between $5,157 and $8,782.
(6) (a) Using the formula above, compute your PIA (Primary Insurance Amount) for an AIME of $6000.
(b) Do the same for an AIME of $9000.
(c) Is this benefit scheme progressive, flat, or regressive?
(7) (a) Your high school basketball coach was born on January 1, 1960 and is deciding whether to claim SS at the early entitlement age. He retired last year and his AIME is set; thus he knows that his PIA will be $1000 if he waits until full retirement. Use this link (http://www.ssa.gov/oact/quickcalc/early_late.html) to find his benefit level if he claims SS at the early entitlement age on December 1, 2016.
(b) Your coach’s spouse has a PIA of $400. If your coach and his spouse wait until the full retirement age to claim their SS benefits, what will his spouse’s benefit level be?
Explanation / Answer
(4) Compute the AIME (Average Indexed Monthly Earnings) for (a)-(c) below if you worked for 35 years.
Annual Indexed Earnings / Divide by 420 (the number of months in 35 years)
(a) You have average annual indexed earnings of $20,000 during your career. = $20,000 /420 = $47.62 AIME
(b) You have average annual indexed earnings of $60,000 during your career.= $60000/420 = $142.86 AIME
(c) You have average annual indexed earnings of $100,000 during your career.= 100000/420 = $238.09 AIME
(5) Compute the AIME for (a)-(c) above if you worked for only 20 years
AIME will be zero in all three case as number of years worked is less than 35.
(6) (a) Using the formula above, compute your PIA (Primary Insurance Amount) for an AIME of $6000.
PIA = 90% x $856 + 32% x $5,144, = $770.4 + $1646.08 = $2416.48
(b) Do the same for an AIME of $9000.
PIA = 90% x $856 + 32% x $5,157 + 15% x $2987 = $770.4 + $1650.24 + $448.05 = $2868.69
(c) Is this benefit scheme progressive, flat, or regressive?
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.