Question

Social Security Administration (SSA) provides social security benefits to a person average of 35

       years of her/his earnings. If the person has less than 35 years of earnings, the administration

       uses $0 income for those years for which she/he has no earnings. Every $0 is replaced by every

       year of earnings. Currently, the person is getting $30,000 yearly benefits for her/his 20 years

       earnings. She/he plans to report $84,000 earnings to SSA next year, her/his increase in monthly

       benefits will be:

       a. $195

b. $190

c. $200

d, $192        

Answer 1

given

Currently, the person is getting $30,000 yearly benefits for her/his 20 years

therefore we can say that $30000 is the average of 15 years of no income (i.e, 0) and 20 years of his earning

let X represents the sum of earnings for 20 years of work

35*30000=X

now it is reported earnings to be 84000

therefore new average is

(X + 84000) / 35 = (35*30000 + 84000) / 35 = 32,400

so increse in benefit = 32400-30000 = 2400

2400 per year so there will 2400/12 =200 increase in monthly benefit

so our required answer is 200 option C

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