AGENDA
• Social Security Basics
• Claiming Options
• SSI Maximization Strategies
• Real-Life Case Scenarios
• Maximizing Your SS Benefit
• Questions/Comments
INITIAL THOUGHTS
This presentation is designed to assist you in exploring the available options you have to maximize your Social Security. This presentation is not intended to be a retirement, benefit, or estate plan nor is it a specific recommendation for a retirement, benefit, or estate plan.
This material is for informational purposes only. Many of the topics presented may also involve legal, tax, accounting or other issues, which there is absolutely no intention of offering such advice, and this presentation and any other oral or written communication should not be construed as such. Maximization strategies can be complicated and vary depending on individual situations so individuals interested in this topic should consult a Social Security representative.
As you explore your Social Security situation, we hope that you find this presentation useful.
THE SIGNIFICANCE OF SS• For Americans age 65 and older with a household
income of $57,957 or more, SS provides about 42% of incomeⁱ
• The four most important sources of retirement income for Seniors age 65 and olderⁱⁱ are:
% of Seniors Utilizing
Median Annual Payment
Social Security 86% $15,701
Asset Income 49% $1,260
Pensions 27% $12,700
Employment 26% $28,000
ⁱ Income of the Population 55 or Older, 2010, Social Security Administration, 2012ⁱⁱ The 4 Most Important Sources of Retirement Income: US News, Emily Brandon, March 22, 2012
WHO IS ELIGIBLE?
A worker who has accumulated a minimum of 40 work credits (approx. 10 years of work)
Benefits based on average of the 35 highest years of earnings
A spouse or someone married for at least 10 years to an eligible worker
WHEN CAN YOU CLAIM?• The benefits are on the age
when they are claimed
• Earliest age is 62
• Latest age is 70
• Full Retirement Age – an important concept also known as “FRA”• Currently 66 to 67 - depending on
your year of birth
HOW CAN YOU CLAIM?
Create an Account on:http://www.ssa.gov/myaccount/
CLAIMING AGE AFFECTS MONTHLY BENEFITS
• Age 62 – monthly benefits will be reduced by 25%-30% depending on your year of birth
• FRA (66-67) – entitled to 100% of full benefit
• Age 70 – monthly benefit could be as much as 132% of full benefit
CLAIMING AGE AFFECTS MONTHLY BENEFITS
Year of Birth FRA % Reduction Age 62
1943-1954 66 25%
1955 66 and 2 months 25.83%
1956 66 and 4 months 26.67%
1957 66 and 6 months 27.50%
1958 66 and 8 months 28.33%
1959 66 and 10 months 29.17%
1960 + 67 30%
OPTIMIZING BENEFITS BY DELAYING START DATE
Benefits at Age
Start Benefit Age 70 75 80 85 90
62 $144,000 $234,000 $324,000 $414,000 $504,000
64 $124,776 $228,756 $332,736 $436,716 $540,696
66 $96,000 $216,000 $336,000 $456,000 $576,000
68 $55,680 $194,880 $334,080 $473,280 $612,480
70 $0 $158,400 $316,800 $475,2000 $663,600
*FRA of 66 with full retirement benefits of $2,000/ month and no COLA. For Illustrative purposes only
WORKING IN RETIREMENT
• A portion of your Social Security benefits could be reduced if you claim before your FRA and continue to work
• For 2014, if you claim between age 62 and FRA, your benefits will be reduced by $1 for every $2 above $15,480 earned
• Example: If someone earns $20,480 ($5,000 over limit), their benefits would be reduced by $2,500
HOW IS SS TAXED?
• Depends on your “combined income” or “provisional income”• Combined income is:
• Your adjusted gross income (AGI)
• Any tax-exempt interest you earned
• 50% of your SS benefits
• Taxable portion of Social Security is the minimum of three amounts• 85% of Social Security benefits
• 50% of benefits plus 85% of combined income beyond second threshold
amount
• 50% of combined income beyond first threshold plus 35% of combined
income beyond the second threshold
THE TAX THRESHOLDS
Income AmountTaxable Amount
$32,000 or less for joint filers ($25,000 for single filers)
0%
Between $32,000 and $44,000 ($25,000 and $34,000 for single filers)
Up to 50%
Greater than $44,000 ($34,000 for single filers)
Up to 85%
SPOUSAL BENEFIT• Spouse must be age 62 or older to qualify
• Worker must first file for Social Security benefits
• If spousal benefits are claimed at spouses FRA, the spousal benefit is half of the spouse’s primary insurance amount (PIA)
• Spousal benefits are permanently reduced if claimed before reaching FRA
• If you elect to take your spousal benefit at your FRA, you can delay receiving your worker based benefits on your work history and switch to your benefit later to increase the monthly benefit you will receive
“FILE AND SUSPEND” STRATEGY• This strategy can be done when the higher earning
– or older – worker reaches FRA
• You file for Social Security benefits to enable your spouse to receive the spousal benefits
• The higher earning – or older – worker immediately suspends their own benefits and they can continue to earn additional retirement credits until age 70
SOCIAL SECURITY BENEFITS AND DIVORCE• As a divorced spouse, you may be entitled to Social
Security benefits based on the ex’s work record if:
You were married for at least 10 years
You are unmarried (doesn’t matter whether ex has remarried)
Your own worker benefit would be lower than your ex-spouse’s benefit
SURVIVOR BENEFIT
• The earliest a widow(er) can start to receive Social Security benefits is age 60
• If you receive survivor benefits starting between age 60 and your FRA, the benefits are reduced by a percentage
• If your own benefits are more than your survivor benefits, you can select your own benefits instead, but not both
OTHER SOCIAL SECURITY TOPICS• There are many other factors not discussed dealing
with Social Security. Some include:
If you work for a federal, state or local government agency you may be eligible for a pension based on earnings not covered by Social Security. This can affect the amount of your Social Security benefit
Taxation of your Social Security benefits
Disability benefits
• Example using file and suspend strategy
David Julie
Client Name David Briggs Julie Briggs
Gender Male Female
Date of Birth 12/3/1956 8/26/1958
Current Age 56 55
Life Expectancy 85 90
Annual Salary $73,600.00 $60,000
Full Retirement Age (FRA) 66 and 4 months 66 and 8 months
Inflation 2.00% 2.00%
EXAMPLE 1 - CLIENT SUMMARY
EXAMPLE 1 - SUGGESTED STRATEGY
David files for his benefits at full
retirement age 66 and 4 months and
suspends until age 70
Julie files for spousal benefits at age 66
and 8 months (her FRA)
Julie begins to take her benefits at age 70
Lastly, Julie receives survivor benefits
EXAMPLE 1 - STRATEGY COMPARISON
Both Take Benefits at Age 62
Both Take Benefits at FRA
Both Take Benefits at Age 70
Suggested Strategy
$1,200,000 $1,600,000 $2,000,000
$1,446,017
$1,578,876
$1,631,318
$1,730,874
20% In
crea
se!
• Example with 8 year age difference
Ryan Heather
Client Name Ryan Turner Heather Turner
Gender Male Female
Date of Birth 6/27/1952 1/23/1960
Current Age 61 53
Life Expectancy 84 90
Annual Salary $48,000.00 $0.00
Full Retirement Age (FRA) 66 67
Inflation 2.00% 2.00%
EXAMPLE 2 - CLIENT SUMMARY
EXAMPLE 2 - SUGGESTED STRATEGY
Ryan files at age 70
Heather files for benefits at age 67 (her
FRA)
Heather’s benefits are less than half of
Ryan’s so she gets spousal benefits to
make up the difference at her FRA 67
Lastly, Heather receives survivor
benefits
EXAMPLE 2 - STRATEGY COMPARISON
Both Take Benefits at Age 62
Both Take Benefits at FRA
Both Take Benefits at Age 70
Suggested Strategy
$0 $400,000 $800,000 $1,200,000 $1,600,000
$745,662
$796,750
$804,778
$1,580,633
112% Incre
ase!
IMPORTANCE OF STARTING PLANNING EARLY
You want to maximize the Social Security benefits that you receive
Knowing your approximate Social Security income, you can plan so that your retirement savings lasts through your lifetime
We can provide you a free Social Security and Retirement income analysis based on your situation
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