United of Omaha Life Insurance Company Companion Life Insurance Company Mutual of Omaha Affiliates. What Are My Social Security Options?

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1 United of Omaha Life Insurance Company Companion Life Insurance Company Mutual of Omaha Affiliates What Are My Social Security Options?

2 Do You Know Your Social Security Options? Social Security payments are a big part of many people s retirement income and that may be the case for you. If you re nearing retirement or are already retired, you probably have several questions as it pertains to your Social Security payments: How much could I receive in monthly benefits? What if I start taking my Social Security payments before I reach my full retirement age? What if I wait until my full retirement age to begin drawing my benefit? What will my benefit be? If I continue to work, how much of my Social Security benefit would be withheld? What happens when my spouse passes away? Percentage of Americans Who Rely on Social Security 64% 35% rely on benefits for 100% of their income 64% 64% rely on benefits for 50% of their income Source: ssa.gov/news/press/basicfact 2015 data We ll help answer some of your questions and cover a variety of Social Security options available to you. But first, let s take a look at what goes into determining your Social Security benefits.

3 How Are My Worker Benefits Calculated? You can become eligible for Social Security benefits by working at a Social Security covered job for at least 10 years or until you have accumulated 40 quarters in the workforce. To calculate your benefit, 35 of your highest earnings years are averaged (if you haven t worked for 35 years, your benefit will be averaged over the years you ve worked, with the years needed to reach 35 counting as zero). In general, the more years you spend in the workforce and the higher your income, the higher your retirement benefit. What s My Full Retirement Age? Your full retirement age depends on when you were born, which under current laws ranges from 66 to 67 years. Birth Year Full Retirement Age years years, 2 months years, 4 months years, 6 months years, 8 months years, 10 months 1960 and later 67 years To help make your money last longer in retirement, it s important to do your homework with a financial professional. Make sure to check your math prior to retirement to maximize your options.

4 When Can I Start Receiving Benefits? You can begin receiving Social Security payments at age 62, but if you do file at that age you ll only get 75 percent of your full amount. If you wait past your full retirement age to begin receiving payments, you ll get more than 100 percent of your benefit amount. File earlier; receive a smaller check for a longer period. Wait to file, and potentially receive a larger check and a larger survivor benefit for your spouse. An 8 percent delayed retirement credit will be added to your benefit for each year you delay receiving benefits after your full retirement age, which may enhance your benefit by as much as 32 percent. This chart illustrates the payout percentage for someone who is 66 at full retirement age. Age you begin receiving benefits 62 75% 63 80% % % % % % % % Your Social Security payout percentage 34% of the workforce has no savings set aside specifically for retirement. Source:

5 Benefits Available by Marital Status There are a variety of Social Security benefit options available, depending on your marital status. Here s a look at how your marital status can impact your options: Single: If you have never married, or were not married for at least 10 years to an eligible worker, your benefit options are fairly straightforward claim now or claim later. Factors that might impact your decision are whether to wait to earn delayed retirement credits, how the earnings test may impact you (we ll cover that later in this brochure) and how taxes fit into the picture. Married: You are entitled to a spousal benefit and/or a benefit based on your own record if you have qualified. Your minimum benefit at full retirement age is 100 percent of your primary insurance amount or 50 percent of your spouse s benefit, whichever is greater. If your spouse doesn t file for his/her Social Security benefit until after you have started collecting your worker benefit, your benefits may be increased when your spouse files that will bring you up to your maximum benefit amount. If you both file for benefits early and at the same time, you are deemed to have filed for the highest benefit that is available to you and can t delay your own benefit. Because there are many nuances for couples, make sure you are well informed before making a decision. Divorced: If you have been married, even if you ve never worked under Social Security, you may be able to get spousal retirement benefits if: you are at least 62 years of age you are still unmarried you have been divorced for at least two years and were married for at least 10 years Many ex-spouses are eligible for spousal benefits, even if the primary worker has remarried.

6 Your benefit will be based on your ex-spouse s primary insurance amount and is as much as half of the ex-spouse s benefit at your full retirement age. If you are also entitled to a benefit on your own record, you will receive the higher benefit of the two. Taking this benefit does not reduce your former s spouse s own benefit, nor will they be notified of the claim. You can receive a survivor benefit as a divorcee regardless of your age if your former spouse has passed away and you are caring for your child who is under 16 or disabled. Widowed: If you are widowed, you have the option to claim a widow s benefit as early as age 60 (50 if you are disabled). You ll receive benefits that are dependent on several factors one certainty is that you ll receive only one check as a survivor either your own worker benefit or your widow s benefit. If you were counting on both checks to fund your retirement, you may need to replace the lost check. You can receive benefits at any age if you take care of your child who is younger than 16 or disabled. Things to note: If your spouse took early benefits, your survivor s check will be reduced If you file early, there will be a further reduction If you continue to work, you are subject to the earnings test which may reduce your benefit prior to your attainment of full retirement age As a widow, you may use alternative claiming strategies if you are entitled to both worker and survivor benefits. This may help you to receive higher lifetime benefits. Your qualifying children may be entitled to a benefit (capped by a family maximum benefit). If you remarry before age 60, you can t claim a benefit based on your former spouse s record. Your current spouse s record will dictate your benefit. Life insurance can help replace the lost check for survivors and their dependent children, and won t be subject to the earnings test rules if you need the additional dollars before your full retirement age.

7 SOCIAL SECURITY STRATEGIES There are several options to help you make the most of your Social Security benefits. The strategy you select should best fit your needs which could mean starting to collect benefits now or waiting several years to do so. Here s a look at some options that could benefit you:

8 Switching It Up to Maximize Your Benefits Before you file for Social Security benefits, explore your options as they may impact you and your family for the rest of your life and your survivor s life. There are a few key strategies which may help provide an increase in your Social Security payments. These strategies are different depending upon your date of birth due to the Bipartisan Budget Act of 2015: File and Suspend This strategy is available only if you reached full retirement age by April 30, 2016 and filed for your benefit by this date. The higher earner could file for his/her retirement benefit and then suspend the benefit. This allows the lower earning spouse to collect a benefit based on the larger spousal benefit. The high earner could then claim his/her own benefit later and potentially earn delayed retirement credits. While a person may suspend benefits after filing beyond this date, doing so will cut off the benefits anyone else is receiving on this earnings record Restricted Benefit If you or your spouse turned 62 by 2016, the eligible spouse can apply for a spousal benefit once they have reached full retirement age and allow their own benefit to earn delayed retirement credits up to age 70. This allows the eligible spouse to receive a spousal benefit now and potentially claim a larger Social Security benefit later based on their own earnings record Note: For the eligible spouse to claim the spousal benefit, the other spouse must have filed for his/her own retirement benefit or elected to file and suspend their benefit (if eligible) Important Note: The file and suspend and the restricted benefit options for retirees claiming Social Security benefits changed in November If you are younger than 62 at the end of 2015 you can no longer take advantage of these strategies.

9 Other factors may impact your benefit or the benefit of your spouse: Government Pension Offset If you receive a pension from a federal, state or local government based on work for which you didn t pay Social Security taxes, the Social Security Administration will reduce your widow or widowers Social Security benefits by two-thirds of your pension. Windfall Elimination Provision Your Social Security retirement or disability benefit may be impacted if you have worked for an employer, such as the government or another country, who did not withhold Social Security taxes from your salary. If you receive a pension from an employer that fits the criteria mentioned above, a specific formula will be applied to determine the reduction in your benefits. See the ssa.gov site for more details if you think this applies to you. Earnings Test You can get Social Security retirement or survivors benefits and work at the same time. But, if you are younger than full retirement age, Social Security will withhold benefits if your earnings exceed the retirement earnings test exempt amount. It s important to note that any benefits withheld while you are working are not lost. Once you reach full retirement age, your monthly benefit may be increased to account for the months in which benefits were withheld. The Social Security Administration has online calculators that can help you figure out your benefit amount. You can find these calculators at:

10 The following table gives you an idea of how much you ll receive in Social Security benefits for the year 2016, based on your monthly benefits and estimated earnings. For people younger than full retirement age during the whole year If your monthly Social Security benefit is And you earn You ll receive yearly benefits of $700 $15,720 or less $8,400 $700 $16,000 $8,260 $700 $20,000 $6,260 $900 $15,720 or less $10,800 $900 $16,000 $10,660 $900 $20,000 $8,660 $1,100 $15,720 or less $13,200 $1,100 $16,000 $13,060 $1,100 $20,000 $11,060 Note: Visit for additional information. > Example No. 1 Let s say that you file for Social Security benefits at age 62 in January 2016 and your payment is $600 per month ($7,200 for the year). During 2016, you plan to work and earn $20,800 ($5,080 above the $15,720 limit). Then, $2,540 of your Social Security benefits ($1 for every $2 you earn over the limit) would be withheld by withholding your payments from January 2016 through May Beginning in June 2016, you would receive your $600 benefit and this amount would be paid to you each month for the remainder of the year. In 2017, you would be paid the additional $460 withheld in May > Example No. 2 Let s say you weren t yet full retirement age at the beginning of the year, but reach it in November You earned $42,900 in the 10 months from January through October. During this period, $340 would be withheld ($1 for every $3 you earn above the $41,880 limit) by withholding your first check of the year. Beginning in February 2016, you would receive your $600 benefit, and this amount would be paid to you each month for the remainder of the year. In 2017, you would be paid the remaining $260 withheld in January Source: Social Security: How Work Affects Your Benefits, 2016

11 Reducing Taxes on Your Social Security Payments Many people pay taxes on their Social Security benefits depending upon their income. That may have you thinking... are there ways I can reduce the amount of tax I pay on my benefits? The best answer is to plan ahead and talk to your tax advisor. Here are some options to consider: Convert IRA or 401(k) money to a Roth IRA money withdrawn from a Roth IRA doesn t result in a taxable event and likewise does not affect your Social Security taxes. Of course, the amount converted will be income taxable in the year of conversion. Use a deferred annuity to delay income you don t need until the future Reduce 401(k) and IRA balances by spending them down prior to claiming or purchase a period certain annuity to delay taking your Social Security benefits When you do decide to claim your benefit, this should allow you to receive a higher Social Security payment due to the annual delayed retirement credits you have earned and may lower or reduce the tax impact on your income because Social Security payments receive a substantial tax advantage over other sources of income. For more information on taxation see 92% 56.7 million Americans ages 65+ receive Social Security benefits Source: 2014 Social Security Quick Facts, AARP Annuities are long-term investments designed for retirement purposes. It is a contract between you and an insurance company. You make a lump-sum payment or series of payments and in return, the insurer agrees to make periodic payments to you beginning immediately or at some future date. While taxes are typically deferred on earnings growth, when withdrawals are taken from the annuity, gains are taxed at ordinary income rates, and not capital gains rates. If withdrawals are taken prior to age 59 1/2, a 10 percent federal tax penalty may apply and early withdrawals may be subject to withdrawal charges.

12 Mutual of Omaha Insurance Company 3300 Mutual of Omaha Plaza Omaha, NE mutualofomaha.com Key Social Security points to keep in mind: Avoid claiming benefits at age 62, especially if you are still working. Your benefit may be temporarily reduced if you earn over a minimal amount until you are fully retired, and your spouse s survivor income may be impacted Factor in your life expectancy. Be sure to consider delayed retirement credits and their impact on benefits Remember, Social Security may be the only benefit in your retirement plan that is inflation adjusted You may withdraw an early benefit election mistake for twelve months after you begin benefits, but you must repay the benefits you have received if you want to reset your benefit When you re ready to file, you may do so at ssa.gov, by mail or in person at your local office Insurance products and services are offered by Mutual of Omaha Insurance Company or one of its insurance affiliates. Home office: 3300 Mutual of Omaha Plaza, Omaha, NE Affiliates: United of Omaha Life Insurance Company is licensed nationwide except NY and does not solicit business in NY. Companion Life Insurance Company, Hauppauge, NY 11788, is licensed in NY. Each underwriting company is solely responsible for its own financial and contractual obligations. Mutual of Omaha and its representatives do not provide tax or legal advice. Please consult with your own tax and legal advisor regarding your particular situation and the concepts presented herein. Registered representatives offer securities and investment advisor representatives offer advisory services through Mutual of Omaha Investor Services, Inc. Member FINRA/SIPC. All information provided in this brochure is based off of current legislation and any change in legislation could change actual results and optimal strategies.