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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%

SSI MAXIMIZATION STRATEGIES

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

REAL-LIFE CASE SCENARIOS

• 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

Social Security Maximization

Calculator

SSI MAX - SIMPLE FORM

SSI MAX - SAMPLE REPORT

Questions/Comments?