The social security administration uses a formula to calculate monthly benefits

Question

The social security administration uses a formula to calculate monthly benefits paid at retirement (age 66) based on an individuals average monthly earnings over his/her lifetime. Vivian's average monthly earnings are $5582. To calculate her monthly retirement befits, do the following based on the monthly amount of $5582. A.) multiply the first $856 by 90% B.) Multiply the amount over $856 but less than or equal to $5157 by 32% C.) Multiply the amount over $5157 by 15% D.) Add the amounts from steps a,b, and c together to find the monthly benefit at age 66. What is Vivian's expected monthly benefit. Please show steps of how you got this answer.

Explanation / Answer

a) y = 0.9x for x < $ 856

b) y = (x - 856)*0.32 for $ 856 < x < $ 5157

c) y = ( x - 5157)*0.15 for x > $5157

If x = $ 5582

So, y = 0.9*856 + (4301)*0.32 + 425*0.15

= $2210.47

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