Social Security Basics

Transcription

1 Savvy Social Security Planning for Boomers Orientation Series Social Security Basics By Elaine Floyd, CFP Director of Retirement and Life Planning, Horsesmouth, LLC 1

2 Key things to know How benefits are calculated 2

3 Key things to know How benefits are calculated Effect of early or delayed claiming 3

4 Key things to know How benefits are calculated Effect of early or delayed claiming Rules for spouses & divorced spouses 4

5 Key things to know How benefits are calculated Effect of early or delayed claiming Rules for spouses & divorced spouses Rules for widows and widowers 5

6 Key things to know How benefits are calculated Effect of early or delayed claiming Rules for spouses & divorced spouses Rules for widows and widowers How working affects benefits 6

7 Key things to know How benefits are calculated Effect of early or delayed claiming Rules for spouses & divorced spouses Rules for widows and widowers How working affects benefits How COLAs affect benefits 7

8 Key things to know How benefits are calculated Effect of early or delayed claiming Rules for spouses & divorced spouses Rules for widows and widowers How working affects benefits How COLAs affect benefits Taxation of benefits 8

9 Key things to know Windfall Elimination Provision & Government Pension Offset 9

10 Key things to know Windfall Elimination Provision & Government Pension Offset Medicare 10

11 Key things to know Windfall Elimination Provision & Government Pension Offset Medicare Solvency issues and reform proposals 11

12 How benefits are calculated Pages of the Financial Advisor s Guide to Savvy Social Security Planning for Boomers 12

13 How benefits are calculated Steps in calculating primary insurance amount or PIA (SSA does this; you don t) 1. Tally each year's earnings on which Social Security taxes were paid 13

14 How benefits are calculated Steps in calculating primary insurance amount or PIA (SSA does this; you don t) 1. Tally each year's earnings on which Social Security taxes were paid 2. Apply index factor to each year's earnings (varies with age) 14

15 How benefits are calculated Steps in calculating primary insurance amount or PIA (SSA does this; you don t) 1. Tally each year's earnings on which Social Security taxes were paid 2. Apply index factor to each year's earnings (varies with age) 3. Take 35 highest years' earnings and find the total 15

16 How benefits are calculated Steps in calculating primary insurance amount or PIA (SSA does this; you don t) 1. Tally each year's earnings on which Social Security taxes were paid 2. Apply index factor to each year's earnings (varies with age) 3. Take 35 highest years' earnings and find the total 4. Divide total by 420 (the number of months in 35 years) 16

17 How benefits are calculated Steps in calculating primary insurance amount or PIA (SSA does this; you don t) 1. Tally each year's earnings on which Social Security taxes were paid 2. Apply index factor to each year's earnings (varies with age) 3. Take 35 highest years' earnings and find the total 4. Divide total by 420 (the number of months in 35 years) 5. Result is AIME, or average indexed monthly earnings 17

18 How benefits are calculated Steps in calculating primary insurance amount or PIA (SSA does this; you don t) 1. Tally each year's earnings on which Social Security taxes were paid 2. Apply index factor to each year's earnings (varies with age) 3. Take 35 highest years' earnings and find the total 4. Divide total by 420 (the number of months in 35 years) 5. Result is AIME, or average indexed monthly earnings 6. Apply formula to AIME: multiply "bend points" by 90%, 32%, and 15% 18

19 How benefits are calculated Steps in calculating primary insurance amount or PIA (SSA does this; you don t) 1. Tally each year's earnings on which Social Security taxes were paid 2. Apply index factor to each year's earnings (varies with age) 3. Take 35 highest years' earnings and find the total 4. Divide total by 420 (the number of months in 35 years) 5. Result is AIME, or average indexed monthly earnings 6. Apply formula to AIME: multiply "bend points" by 90%, 32%, and 15% 7. Total = PIA 19

20 Benefits based on highest 35 years of earnings up to taxable maximum Maximum Taxable Social Security Earnings Year Max earnings Year Max earnings Year Max earnings 1968 $7, $37, $76, $7, $39, $80, $7, $42, $84, $7, $43, $87, $9, $45, $87, $10, $48, $90, $13, $51, $94, $14, $53, $97, $15, $55, $102, $16, $57, $106, $17, $60, $106, $22, $61, $106, $25, $72, $110, $29, $65, $113, $32, $68, $117, $35, $72, $118,500 Social Security Administration 20

21 Average Indexed Monthly Earnings (AIME) for baby boomer born in 1954 Maximum earnings since 1976 $3,961,077 in total indexed earnings 420 months = $9,431 AIME 21

22 Primary Insurance Amount (PIA) Baby Boomer born in 1954 Maximum Social Security earnings every year since age 22 AIME = $9,431 PIA formula: $856 x.90 = $ $4,301 x.32 = $1, ($5,157 - $856 = $4,301) $4,274 x.15 = $ ($9,431 - $5,157 = $4,274) Total = $2, PIA = $2, Amount worker will receive at full retirement age 22

23 Effect of early or delayed claiming Pages of the Financial Advisor s Guide to Savvy Social Security Planning for Boomers 23

24 Full retirement age 24

25 Effect of early or delayed claiming Benefit for baby boomer born Age % of PIA Benefit if PIA is $2,700* , , ⅔ 2, ⅓ 2, , , , , ,564 *Not counting cost-of-living adjustments 25

26 Effect of early or delayed claiming Benefit for baby boomer born Age % of PIA Benefit if PIA is $2,700 Benefit with 2.7% COLAs ,025 2, ,160 2, ⅔ 2,340 2, ⅓ 2,520 2, ,700 3, ,916 3, ,132 3, ,348 4, ,564 4,411 26

27 Two ways to analyze claiming decision Breakeven age Relative income 27

28 How to analyze claiming decision Breakeven age Considers cumulative benefits under two claiming scenarios 28

29 How to analyze claiming decision Breakeven age Considers cumulative benefits under two claiming scenarios Calculates catch-up age at which cumulative benefits from later-claiming scenario overtake cumulative benefits from early-claiming scenario 29

30 How to analyze claiming decision Breakeven age Considers cumulative benefits under two claiming scenarios Calculates catch-up age at which cumulative benefits from later-claiming scenario overtake cumulative benefits from early-claiming scenario Views Social Security as an asset 30

31 31

32 How to analyze claiming decision Relative income Considers relative income under two claiming scenarios 32

33 How to analyze claiming decision Relative income Considers relative income under two claiming scenarios Compares income at an advanced age (say, 85) under early vs. late claiming scenarios 33

34 Income How to analyze claiming decision Considers relative income under two claiming scenarios Compares income at an advanced age (say, 85) under early vs. late claiming scenarios Views Social Security as longevity insurance 34

35 35

36 Rules for spouses Pages 51-52, 81-93, of the Financial Advisor s Guide to Savvy Social Security Planning for Boomers 36

37 Rules for spouses Traditional: Nonworking wife receives 50% of husband s PIA if she applies at FRA (or 35% at 62) 37

38 Rules for spouses Traditional: Nonworking wife receives 50% of husband s PIA if she applies at FRA (or 35% at 62) If wife has own earnings, and if she applies before FRA, she ll receive her own reduced benefit first. If spousal benefit is higher, an amount will be added so combined benefit equals spousal benefit. If spousal benefit is not higher, she will not be paid a spousal benefit. 38

39 Rules for spouses Traditional: Nonworking wife receives 50% of husband s PIA if she applies at FRA (or 35% at 62) If wife has own earnings, and if she applies before FRA, she ll receive her own reduced benefit first. If spousal benefit is higher, an amount will be added so combined benefit equals spousal benefit. If spousal benefit is not higher, she will not be paid a spousal benefit. If application is made after FRA, a spouse can choose to receive own or spousal benefit (i.e., can restrict application to spousal benefit and let own benefit build delayed credits. Budget Act update: must be born before 1954 to file restricted application) 39

40 Rules for spouses Traditional: Nonworking wife receives 50% of husband s PIA if she applies at FRA (or 35% at 62) If wife has own earnings, and if she applies before FRA, she ll receive her own reduced benefit first. If spousal benefit is higher, an amount will be added so combined benefit equals spousal benefit. If spousal benefit is not higher, she will not be paid a spousal benefit. If application is made after FRA, a spouse can choose to receive own or spousal benefit (i.e., can restrict application to spousal benefit and let own benefit build delayed credits. Budget Act update: must be born before 1954 to file restricted application.) Husband must file for benefits in order for wife to receive spousal benefit (and vice versa) 40

41 Rules for spouses Traditional: Nonworking wife receives 50% of husband s PIA if she applies at FRA (or 35% at 62) If wife has own earnings, and if she applies before FRA, she ll receive her own reduced benefit first. If spousal benefit is higher, an amount will be added so combined benefit equals spousal benefit. If spousal benefit is not higher, she will not be paid a spousal benefit. If application is made after FRA, a spouse can choose to receive own or spousal benefit (i.e., can restrict application to spousal benefit and let own benefit build delayed credits. Budget Act update: must be born before 1954 to file restricted application.) Husband must file for benefits in order for wife to receive spousal benefit (and vice versa) No delayed credits for spousal benefits 41

42 Rules for spouses Key takeaway: Coordination of spousal benefits is extremely complex. Better to work with actual cases than try to apply rules of thumb. (Estimate benefit amounts and use Spousal Planning Calculator) 42

43 Strategies from the Center for Retirement Research at Boston College File and suspend Claim now claim more later 43

44 Strategies from the Center for Retirement Research at Boston College File and suspend High-earning husband files for own benefit at 66 to make wife eligible for her spousal benefit 44

45 Strategies from the Center for Retirement Research at Boston College File and suspend High-earning husband files for own benefit at 66 to make wife eligible for her spousal benefit Husband suspends own benefit to earn DRCs to age 70 45

46 Strategies from the Center for Retirement Research at Boston College File and suspend High-earning husband files for own benefit at 66 to make wife eligible for her spousal benefit Husband suspends own benefit to earn DRCs to age 70 Budget Act update: No spousal or dependent benefits payable on a benefit suspended after April 30,

47 Example of file and suspend Jack and Jill are both

48 Example of file and suspend Jack and Jill are both 66. Jack s PIA = $2,000. He plans to delay his benefit to age

49 Example of file and suspend Jack and Jill are both 66. Jack s PIA = $2,000. He plans to delay his benefit to age 70. JilI s PIA = $800. She wants to start benefits now. 49

50 Example of file and suspend Jack and Jill are both 66. Jack s PIA = $2,000. He plans to delay his benefit to age 70. JilI s PIA = $800. She wants to start benefits now. If Jill files for Social Security, she will receive her own benefit of $800 per month. She is not eligible for a spousal benefit because Jack hasn t filed. 50

51 Example of file and suspend Jack and Jill are both 66. Jack s PIA = $2,000. He plans to delay his benefit to age 70. JilI s PIA = $800. She wants to start benefits now. If Jill files for Social Security, she will receive her own benefit of $800 per month. She is not eligible for a spousal benefit because Jack hasn t filed. So Jack files and suspends (before April 30, 2016). Jill files for her spousal benefit and receives $1,000 per month. 51

52 Example of file and suspend Jack and Jill are both 66. Jack s PIA = $2,000. He plans to delay his benefit to age 70. JilI s PIA = $800. She wants to start benefits now. If Jill files for Social Security, she will receive her own benefit of $800 per month. She is not eligible for a spousal benefit because Jack hasn t filed. So Jack files and suspends (before April 30, 2016). Jill files for her spousal benefit and receives $1,000 per month. When Jack turns 70 he resumes his benefit and receives 4 years worth of 8% annual delayed credits, or $2,640 per month 52

53 Strategies from the Center for Retirement Research at Boston College Claim now, claim more later or restricted application High-earning husband files a restricted application for his spousal benefit at 66 (wife must have filed for her own benefit) 53

54 Strategies from the Center for Retirement Research at Boston College Claim now, claim more later High-earning husband files a restricted application for his spousal benefit at 66 (wife must have filed for her own benefit) Husband switches to his own benefit at 70 54

55 Strategies from the Center for Retirement Research at Boston College Claim now, claim more later High-earning husband files a restricted application for his spousal benefit at 66 (wife must have filed for her own benefit) Husband switches to his own benefit at 70 Budget Act Update: Restricted application available only to spouses born before

56 Example of claim now, claim more later Dan and Dora are both 66 56

57 Example of claim now, claim more later Dan and Dora are both 66 Dan s PIA is $2,000. He wants to delay benefits to age

58 Example of claim now, claim more later Dan and Dora are both 66 Dan s PIA is $2,000. He wants to delay benefits to age 70 Dora s PIA is $1,800. She wants to start benefits now. 58

59 Example of claim now, claim more later Dan and Dora are both 66 Dan s PIA is $2,000. He wants to delay benefits to age 70 Dora s PIA is $1,800. She wants to start benefits now Dora files for her benefit and receives $1,800 per month. 59

60 Example of claim now, claim more later Dan and Dora are both 66 Dan s PIA is $2,000. He wants to delay benefits to age 70 Dora s PIA is $1,800. She wants to start benefits now Dora files for her benefit and receives $1,800 per month Dan files for his spousal benefit and receives $900 per month. 60

61 Example of claim now, claim more later Dan and Dora are both 66 Dan s PIA is $2,000. He wants to delay benefits to age 70 Dora s PIA is $1,800. She wants to start benefits now Dora files for her benefit and receives $1,800 per month Dan files for his spousal benefit and receives $900 per month When Dan turns 70 he switches to his maximum benefit of $2,640 per month. 61

62 Rules for divorced spouses Page 53, 97-98, of the Financial Advisor s Guide to Savvy Social Security Planning for Boomers 62

63 Rules for divorced spouses Same rules as for spousal benefits if applicant: Is at least 62 63

64 Rules for divorced spouses Same rules as for spousal benefits if applicant: Is at least 62 Was married to worker at least 10 years 64

65 Rules for divorced spouses Same rules as for spousal benefits if applicant: Is at least 62 Was married to worker at least 10 years Is currently unmarried 65

66 Rules for divorced spouses Same rules as for spousal benefits if applicant: Is at least 62 Was married to worker at least 10 years Is currently unmarried Former spouse must be at least 62 (does not need to have filed for benefits if divorce occurred more than two years ago) 66

67 Rules for divorced spouses Same rules as for spousal benefits if applicant: Is at least 62 Was married to worker at least 10 years Is currently unmarried Former spouse must be at least 62 (does not need to have filed for benefits if divorce occurred more than two years ago) Worker s own benefit (and benefits for current spouse) not affected 67

68 Rules for divorced spouses Same rules as for spousal benefits if applicant: Is at least 62 Was married to worker at least 10 years Is currently unmarried Former spouse must be at least 62 (does not need to have filed for benefits if divorce occurred more than two years ago) Worker s own benefit (and benefits for current spouse) not affected Strategy for divorced clients: Receive divorced-spouse benefit from while delaying own benefit (Budget Act update: must have been born before 1954) 68

69 Rules for divorced spouses Key takeaway: Ask about former marriages. Integrate divorced-spouse benefits into the planning 69

70 Rules for widows and widowers Pages 92-93, of the Financial Advisor s Guide to Savvy Social Security Planning for Boomers 70

71 Rules for widows and widowers Survivor benefit = 100% of deceased spouse's benefit including delayed credits (even if benefit is unclaimed due to delaying to 70) 71

72 Rules for widows and widowers Survivor benefit = 100% of deceased spouse's benefit including delayed credits (even if benefit is unclaimed due to delaying to 70) Can apply for survivor benefit at age 60 but benefit will be reduced; widows should be encouraged to file at 66 to maximize income in old age (can receive own benefit from 62 to 66 if qualify) 72

73 Rules for widows and widowers Survivor benefit = 100% of deceased spouse's benefit including delayed credits (even if benefit is unclaimed due to delaying to 70) Can apply for survivor benefit at age 60 but benefit will be reduced; widows should be encouraged to file at 66 to maximize income in old age (can receive own benefit from 62 to 66 if qualify) Remarriage before age 60 negates survivor benefit unless that marriage ends 73

74 Rules for widows and widowers Survivor benefit = 100% of deceased spouse's benefit including delayed credits (even if benefit is unclaimed due to delaying to 70) Can apply for survivor benefit at age 60 but benefit will be reduced; widows should be encouraged to file at 66 to maximize income in old age (can receive own benefit from 62 to 66 if qualify) Remarriage before age 60 negates survivor benefit unless that marriage ends Strategy for high-earning widow(ers): Take survivor benefit at 60 and switch to maximum earned benefit at 70 (earnings test applies before FRA) 74

75 Rules for widows and widowers Key takeaways: High-earning spouse should delay to age 70 in order to maximize survivor benefit. Coordinate survivor and earned benefits for widow(er)s entitled to both. 75

76 How working affects benefits Pages 53-54, of the Financial Advisor s Guide to Savvy Social Security Planning for Boomers 76

77 How working affects benefits Earnings test if under FRA: $1 in benefits withheld for every $2 earned over $15,720 in

78 How working affects benefits Earnings test if under FRA: $1 in benefits withheld for every $2 earned over $15,720 in 2016 Earnings test in year attain FRA, in months before birth month: $1 in benefits withheld for every $3 earned over $41,880 in

79 How working affects benefits Earnings test if under FRA: $1 in benefits withheld for every $2 earned over $15,720 in 2016 Earnings test in year attain FRA, in months before birth month: $1 in benefits withheld for every $3 earned over $41,880 in 2016 Earnings test applies to all benefits -- retirement, spousal, survivor -- while under FRA 79

80 How working affects benefits Earnings test if under FRA: $1 in benefits withheld for every $2 earned over $15,720 in 2016 Earnings test in year attain FRA, in months before birth month: $1 in benefits withheld for every $3 earned over $41,880 in 2016 Earnings test applies to all benefits -- retirement, spousal, survivor -- while under FRA At FRA benefit will be adjusted to remove actuarial reduction for months in which benefit was withheld 80

81 How working affects benefits Earnings test if under FRA: $1 in benefits withheld for every $2 earned over $15,720 in 2016 Earnings test in year attain FRA, in months before birth month: $1 in benefits withheld for every $3 earned over $41,880 in 2016 Earnings test applies to all benefits -- retirement, spousal, survivor -- while under FRA At FRA benefit will be adjusted to remove actuarial reduction for months in which benefit was withheld After FRA no reduction in benefits for working 81

82 How working affects benefits Earnings test if under FRA: $1 in benefits withheld for every $2 earned over $15,720 in 2016 Earnings test in year attain FRA, in months before birth month: $1 in benefits withheld for every $3 earned over $41,880 in 2016 Earnings test applies to all benefits -- retirement, spousal, survivor -- while under FRA At FRA benefit will be adjusted to remove actuarial reduction for months in which benefit was withheld After FRA no reduction in benefits for working Don't confuse reduction of benefits with taxation of benefits 82

83 How working affects benefits Key takeaway: Consider client s earnings when deciding when to apply 83

84 How COLAs affect benefits Pages 54-55, of the Financial Advisor s Guide to Savvy Social Security Planning for Boomers 84

85 How COLAs affect benefits Cost-of-living adjustment announced in October; affects benefits received in January 85

86 How COLAs affect benefits Cost-of-living adjustment announced in October; affects benefits received in January COLAs based on CPI-W from 4 th quarter of one year through 3 rd quarter of next 86

87 How COLAs affect benefits Cost-of-living adjustment announced in October; affects benefits received in January COLAs based on CPI-W from 4 th quarter of one year through 3 rd quarter of next COLA for 2016: 0% 87

88 How COLAs affect benefits Cost-of-living adjustment announced in October; affects benefits received in January COLAs based on CPI-W from 4 th quarter of one year through 3 rd quarter of next COLA for 2016: 0% For long-term planning, trustees estimate annual COLAs of 2.7% 88

89 How COLAs affect benefits Key takeaway: COLAs magnify impact of early or delayed benefits. (See Calculators) 89

90 Taxation of benefits Pages of the Financial Advisor s Guide to Savvy Social Security Planning for Boomers 90

91 Taxation of Social Security benefits Filing status Provisional income* Amount of SS subject to tax Married filing jointly Under $32,000 $32,000 - $44,000 Over $44,000 0 Up to 50% Up to 85% Single, head of household, qualifying widow(er), married filing separately & living apart from spouse Under $25,000 $25,000 - $34,000 Over $34,000 0 Up to 50% Up to 85% Married filing separately and living with spouse Over 0 Up to 85% *Provisional income = AGI + one-half of SS benefit + tax-exempt interest 91

92 Taxation of benefits Key takeaway: Consider taxation of benefits when deciding when to apply. May be better to delay Social Security and draw from IRAs and other resources first. Engage tax advisor for complete tax analysis. 92

93 Windfall Elimination Provision Pages of the Financial Advisor s Guide to Savvy Social Security Planning for Boomers 93

94 Windfall Elimination Provision If client worked in non-social Security covered job, Social Security benefit may be reduced 94

95 Windfall Elimination Provision If client worked in non-social Security covered job, Social Security benefit may be reduced First bend point reduced to 40%-90% depending on how long worked in Social Security-covered job (no reduction if 30 years of substantial earnings; see table on page 56) 95

96 Windfall Elimination Provision If client worked in non-social Security covered job, Social Security benefit may be reduced First bend point reduced to 40%-90% depending on how long worked in Social Security-covered job (no reduction if 30 years of substantial earnings; see table on page 56) Maximum WEP reduction for person turning 62 in 2016: $428 96

97 Windfall Elimination Provision If client worked in non-social Security covered job, Social Security benefit may be reduced First bend point reduced to 40%-90% depending on how long worked in Social Security-covered job (no reduction if 30 years of substantial earnings; see table on page 56) Maximum WEP reduction for person turning 62 in 2016: $428 Key takeaway: Always ask clients about work history and prepare for WEP reduction if main career was in non Social Security-covered job (most common: civil service, teachers & health care workers who opted out of Social Security) 97

98 Government Pension Offset Pages 57 and 93 of the Financial Advisor s Guide to Savvy Social Security Planning for Boomers 98

99 Government Pension Offset Similar to WEP but affects spousal and survivor benefits if wife (or husband) receives a pension from non Social Security-covered job 99

100 Government Pension Offset Similar to WEP but affects spousal and survivor benefits if wife (or husband) receives a pension from non Social Security-covered job Spousal/survivor benefit reduced by two-thirds of the amount of the pension 100

101 Government Pension Offset Similar to WEP but affects spousal and survivor benefits if wife (or husband) receives a pension from non Social Security-covered job Spousal/survivor benefit reduced by two-thirds of the amount of the pension Example: wife (or husband) receives $3,000/month pension from teaching job. Any spousal or survivor benefits she/he may be entitled to will be reduced by $2,000 (two-thirds of $3,000) 101

102 Government Pension Offset Similar to WEP but affects spousal and survivor benefits if wife (or husband) receives a pension from non Social Security-covered job Spousal/survivor benefit reduced by two-thirds of the amount of the pension Example: wife (or husband) receives $3,000/month pension from teaching job. Any spousal or survivor benefits she/he may be entitled to will be reduced by $2,000 (two-thirds of $3,000) Key takeaway: Always ask about work history and pensions from non Social Security-covered jobs. Prepare clients for GPO reduction when estimating benefits. 102

103 Medicare Pages of the Financial Advisor s Guide to Savvy Social Security Planning for Boomers 103

104 Medicare starts at age 65 Medicare 104

105 Medicare Medicare starts at age 65 If already receiving Social Security, Medicare is automatic 105

106 Medicare Medicare starts at age 65 If already receiving Social Security, Medicare is automatic If delaying benefits, should apply for Medicare 3 months prior to 65 th birthday; if fail to apply by 4 th month after 65 th birthday, penalty will be added to Part B premium 106

107 Medicare Medicare starts at age 65 If already receiving Social Security, Medicare is automatic If delaying benefits, should apply for Medicare 3 months prior to 65 th birthday; if fail to apply by 4 th month after 65 th birthday, penalty will be added to Part B premium If still working and covered by employer plan (or spouse's group plan) that covers 20 or more employees, can delay applying for Medicare with no penalty 107

108 Medicare Medicare starts at age 65 If already receiving Social Security, Medicare is automatic If delaying benefits, should apply for Medicare 3 months prior to 65 th birthday; if fail to apply by 4 th month after 65 th birthday, penalty will be added to Part B premium If still working and covered by employer plan (or spouse's group plan), can delay applying for Medicare with no penalty Medicare involves deductibles and copayments and does not cover everything; supplemental insurance may be necessary 108

109 Medicare Medicare starts at age 65 If already receiving Social Security, Medicare is automatic If delaying benefits, should apply for Medicare 3 months prior to 65 th birthday; if fail to apply by 4 th month after 65 th birthday, penalty will be added to Part B premium If still working and covered by employer plan (or spouse's group plan), can delay applying for Medicare Medicare involves deductibles and copayments and does not cover everything; supplemental insurance may be necessary Medicare does not cover long-term care 109

110 Medicare Key takeaway: Every boomer needs a crash course in Medicare in order to avoid penalties, take advantage of benefits, and purchase additional coverage as needed. 110

111 Solvency issues and reform proposals Pages of the Financial Advisor s Guide to Savvy Social Security Planning for Boomers 111

112 Solvency issues and reform proposals According to the 2015 trustees report released in July 2015: The OASDI trust fund currently holds $2.7 trillion in special-issue Treasury securities 112

113 Solvency issues and reform proposals According to the 2015 trustees report released in July 2015: The OASDI trust fund currently holds $2.7 trillion in special-issue Treasury securities In 2014, total income was $884 billion, total expenses were $859 billion for an increase to the trust fund of $25 billion 113

114 Solvency issues and reform proposals According to the 2015 trustees report released in July 2015: The OASDI trust fund currently holds $2.7 trillion in special-issue Treasury securities In 2014, total income was $884 billion, total expenses were $859 billion for an increase to the trust fund of $25 billion Income is expected to exceed costs until

115 Solvency issues and reform proposals According to the 2015 trustees report released in July 2015: The OASDI trust fund currently holds $2.7 trillion in special-issue Treasury securities In 2014, total income was $884 billion, total expenses were $859 billion for an increase to the trust fund of $25 billion Income is expected to exceed costs until 2022 Starting in 2022, trust fund Treasury securities will begin to be liquidated 115

116 Solvency issues and reform proposals According to the 2015 trustees report released in July 2015: The OASDI trust fund currently holds $2.7 trillion in special-issue Treasury securities In 2014, total income was $884 billion, total expenses were $859 billion for an increase to the trust fund of $25 billion Income is expected to exceed costs until 2022 Starting in 2022, trust fund Treasury securities will begin to be liquidated By 2034 trust fund will be exhausted; income will be enough to pay 79% of promised benefits 116

117 Solvency issues and reform proposals According to the 2015 trustees report released in July 2015: The OASDI trust fund currently holds $2.7 trillion in special-issue Treasury securities In 2014, total income was $884 billion, total expenses were $859 billion for an increase to the trust fund of $25 billion Income is expected to exceed costs until 2022 Starting in 2022, trust fund Treasury securities will begin to be liquidated By 2034 trust fund will be exhausted; income will be enough to pay 79% of promised benefits Numbers are revised each year as actual experience and assumptions change 117

118 Solvency issues and reform proposals According to the 2015 trustees report released in July 2015: The OASDI trust fund currently holds $2.7 trillion in special-issue Treasury securities In 2014, total income was $884 billion, total expenses were $859 billion for an increase to the trust fund of $25 billion Income is expected to exceed costs until 2022 Starting in 2022, trust fund Treasury securities will begin to be liquidated By 2034 trust fund will be exhausted; income will be enough to pay 79% of promised benefits Numbers are revised each year as actual experience and assumptions change Social Security reform may include raising payroll taxes on high-income workers, raising the retirement age, revising the formula for future benefits, changing the COLA formula, or some combination of these 118

119 Where to go for more information 119

120 Where to go for more information See list of articles and papers in Appendix B 120

121 Where to go for more information See list of articles and papers in Appendix B Watch your for biweekly newsletter 121

122 Where to go for more information See list of articles and papers in Appendix B Watch your for biweekly newsletter Read all previous newsletters posted on (Note: newsletters prior to Nov. 2, 2015 were written under the old rules) 122

123 Where to go for more information See list of articles and papers in Appendix B Watch your for weekly newsletter Read all previous newsletters posted on (Note: newsletters prior to Nov. 2, 2015 were written under the old rules) Post questions on 123

124 Where to go for more information See list of articles and papers in Appendix B Watch your for weekly newsletter Read all previous newsletters posted on (Note: newsletters prior to Nov. 2, 2015 were written under the old rules) Post questions on Go to use search tool 124

125 Where to go for more information See list of articles and papers in Appendix B Watch your for weekly newsletter Read all previous newsletters posted on (Note: newsletters prior to Nov. 2, 2015 were written under the old rules) Post questions on Go to use search tool Call the SSA hotline at

126 Good luck! 126