Diane Owens, Speaker & Consultant, Step Up Your Social Security

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1 Diane Owens, Speaker & Consultant, Step Up Your Social Security

2 How Age Affects Benefits Benefits Based on Lifetime Earnings If You Work & Get Benefits Spouse s and Widow s Options Don t Forget Medicare Find Your Optimal Retirement Age Explore Your Benefit Options TY 2009 Business Services Online Update

3 Benefit rate depends on your age when you start your benefits: Early Retirement reduced based on # of months before your Full Retirement Age (FRA) Full Retirement Age no reduction Delayed Retirement increased based on # of months after FRA up to age 70

4 Year of Birth FRA Maximum % Decrease for Applying at 62* Maximum % Increase for Delaying to 70* % +32.0% mos % +30.7% mos % +29.3% mos % +28.0% mos % +26.7% mos % +25.3% 1960 on % +24.0% *Waiting until 70 to apply will yield a benefit that is 76% higher than starting at 62.

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7 Step 1: Your earnings are indexed for wage inflation, Step 2: Your highest 35 years of earnings are averaged and Step 3: Divided by 12 to compute your average indexed monthly earnings (AIME) The higher your AIME, the higher your benefit will be when you retire

8 Earnings limits for: Calendar Year 2009 If You Make More, Some Benefits are Withheld: Years Under FRA $14,160 ($1180/mo) $1 for every $2 over limit Year You Reach FRA (only count earnings before FRA month) $37,680 $1 for every $3 over limit Beginning Month You Reach FRA No Limit! No benefits withheld

9 To qualify a spouse must be: At least age 62 (benefits reduced if under FRA) or Any age if caring for child under age 16 or disabled, If divorced, must be unmarried and have been married at least 10 years to worker. Worker must apply for and be entitled to retirement or disability benefits. Exception: Divorced spouse may be eligible if divorce final over two years before. Spouse can receive up to 50% of worker s FRA benefit amount.

10 Sue decides to retire at 62. Her husband, Bill already gets Social Security benefits. Sue s benefit is $1200 at 62 or $1600 at her FRA Bill s benefit at his FRA was $2000 The maximum Sue could get as a spouse is $1000 per month. Since her own benefit is higher, no benefits as a spouse are payable. Sue will receive only her own retirement benefits. Only the higher benefit is payable!

11 Sue decides to wait until her FRA (age 66) to retire. When she does apply, she finds she has a choice: 1. Apply for her own retirement benefit of $1600 or 2. Apply for a $1000 spouse s benefit now and switch at age 70 to her maximum retirement benefit of $2112. Sue has this choice because she waited until her FRA month to apply!

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13 Lifetime Benefits at: Retirement only at 62 ($1200) Wife s at 66 ($1000); Retirement at 70 ($2112) Retirement only at 66 ($1600) Age 66 $57,600 $0 $0 Age 70 $115,200 $48,000 $76,800 Age 75 $187,200 $174,720 $172,800 Age 80 $259,200 $301,440 $268,800 Age 85 $331,200 $428,160 $364,800 Total Benefits Paid by Option and Age Money amounts are for comparison only; they do not reflect future cost of living or benefit increases due to additional work after retirement.

14 To qualify a widow must be: At least age 50 & disabled or, At least age 60 (benefits reduced if under FRA) or Any age if caring for child under age 16 or disabled, If divorced, must be unmarried and have been married at least 10 years to worker. Reduced widow s benefit at age 60 is 71.5% of worker s FRA benefit amount.

15 If you are eligible for both a retirement and widow s benefit, you can choose which benefit to receive first: Reduced widow s benefit, then switch to higher delayed retirement at age 70, or Reduced retirement benefit, then switch to higher widow s benefit at FRA. Get estimates for both options before you decide which is best for you!

16 Part A: Hospital Insurance Covers most inpatient hospital expenses Part B: Supplementary Medical Insurance Covers 80% doctor bills & other outpatient medical expenses after yearly deductible New Premium for 2010: $110.50/month Most will see no increase from 2009 Higher Premium for Higher Income Seniors: Phased in based on Modified AGI on most recent tax return.

17 Consider waiting until your FRA or later to apply for benefits: Additional years of work will increase your benefit and potential benefits to a spouse or survivor. Applying at FRA or later will yield a higher benefit and allow you greater choice in benefit options.

18 If eligible for both your own retirement and spouse or widow s benefits, consider: Applying for the lower benefit first, then switch to a higher benefit at your FRA or age 70. Compare all options to see which yield the greatest lifetime benefits and meet your estimated income needs during retirement.

19 TY 2009 Update

20 Enter up to 5 W-2c Forms per W-3c Can correct prior paper and online reports Alerts user if employee name/ssn entered do not match SSA records. Beginning December 7 th, can select tax year Only years within statute of limitations for corrections will be available ( ) Prepares W-3c for review Provides online receipt and downloadable Adobe Acrobat file for printing

21 If W-2s less than 941 totals, SSA sends notice If W-2s exceed 941 totals, IRS sends notice SSA transmits all W-2 data to IRS on flow basis when reports processed. IRS maintains this data for about 8 prior tax years SSA maintains W-2 data permanently To obtain copies of W-2/W-3 data from SSA, Contact the Employer Reporting Service Center at or employerinfo@ssa.gov for instructions.

22 Social Security Online: Retirement Estimator & Planner Online Publications Disability, Survivors & Medicare Information Government Employee Computations (WEP/GPO) My web site: Speaker & consultant on Social Security programs Personalized Social Security Benefit Analysis Link to my blog Social Security for Boomers