Given the Current Tax Rate Structure and Promised Benefit Levels

question 198

Multiple Choice

Given the current tax rate structure and promised benefit levels, persons that are currently 40 years old or younger can expect to earn approximately what real rate of return on their Social Security contributions?

• A) 0 percent
• B) 2 percent
• C) 10 to 12 percent
• D) 15 to 20 percent

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Definitions:

Present Value

The current estimated value of future money amounts or cash flow sequences, based on a specified return rate.

Annual Interest Rate

The percentage of the principal that a borrower must pay as interest over the course of one year, affecting the total cost of loans or the yield from investments.

Annuity

A monetary instrument offering regular, fixed payments to someone, commonly employed to generate a revenue flow for retired individuals.

Semiannual Interest

Interest that is computed and disbursed semi-annually, commonly associated with bonds and loans.