Diane Owens, Speaker & Consultant Step Up Your Social Security

Transcription

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

2 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 by 2/3 of 1% for each month after FRA up to age 70 Average Retiree receives $1294 Maximum Benefit in 2014 at Age 66 is $2642

3 Year of Birth Full Benefit Payable at FRA Maximum % Decrease for Applying at 62* Maximum % Increase for Applying at % 32% mos % 30.6% mos % 29.3% mos % 28% mos % 26.6% mos % 25.3% 1960 on % 24% *Waiting until 70 to apply will yield a benefit that is 76% higher than starting at 62.

4 Earnings limits for: Calendar Year 2014 If You Make More, Some Benefits are Withheld: Years Under FRA $15,480 ($1290/mo.) $1 for every $2 over limit Year You Reach FRA (only count earnings before FRA month) $41,400 $1 for every $3 over limit Beginning Month You Reach FRA No Limit! No benefits withheld

5 To qualify a husband or wife must be: At least age 62 (benefits reduced based on age) Worker must apply for and be entitled to retirement or disability benefits. Worker may suspend benefits after FRA to allow a spouse to receive benefits and still wait until age 70 to receive own checks. Spouse can receive from 35% (at 62) to 50% (at FRA) of worker s full retirement benefit rate. Average couple will receive $2111/month in 2014

6 Ex-spouse can qualify for a divorced wife or husband benefit if: The marriage lasted at least 10 years, He or she remains unmarried and Both the worker and ex-spouse are at least age 62 Ex-spouse must limit earnings from work before FRA to receive benefits, Unlike married couples, the worker does not have either be retired or apply for his/her own retirement benefit as long as they have been divorced at least 2 years.

7 To qualify a widow or widower must be: At least age 60 If divorced, marriage must have lasted at least 10 years. Reduced benefit at age 60 is 71.5% of deceased worker s FRA benefit rate Maximum payable at widow(er) s FRA is 100% of worker s benefit at time of death. The longer the worker waits to apply for retirement (up to age 70), the higher the potential survivor s benefit will be. Average widow(er) will receive $1243/month in 2014

8 Social Security is processing some retirement spouse claims for same-sex couples and paying benefits. Must meet same age and duration of marriage requirements as other couples, Determining factor is legal residency at time of application (or death for survivors): Couples who live in states that recognize same-sex marriages/civil unions will be paid immediately Couples who live in states that do not recognize their marriage should file a claim for benefits to protect their filing date while legal issues are pending.

9 Different strategies can maximize: Income before or after age 70 Income to a surviving spouse Total income received by age Most effective strategy will vary based on: Age and work history Current & future work plans Eligibility for spousal or survivors benefits Estimated longevity (health & family history) Other financial resources available in retirement

10 Bill receives Social Security of $2000. Sue can apply at 62 or wait until age 66 to start her checks. Option 1: If she applies at age 62, she will get a reduced retirement of $1200. She cannot qualify for a spousal benefit because her own retirement is higher. Option 2 & 3: If she waits until age 66, she has a choice: Apply for her full retirement of $1600 or Apply for a $1000 spouse s benefit now and switch at age 70 to her maximum retirement benefit of $2112.

11 Lifetime Benefits at: #1 Start Retirement at Age 62 #2 Start Retirement at Age 66 #3 Start Wife s at Age 66; Switch to Retirement at 70 Age 66 $57,600 $0 $0 Age 70 $115,200 $76,800 $48,000 Age 75 $187,200 $172,800 $174,720 Age 80 $259,200 $268,800 $301,440 Age 85 $331,200 $364,800 $428,160 Age 90 $403,200 $460,800 $554,880 Benefit at Age 70 $1200/month $1600/month $2112/month Break Even Age* ~Age 78 ~Age 76

12 If Bill had not already applied for Social Security, they would have had another option: Bill might have applied for a husband s benefit of $800 at 66 and switched to his maximum retirement of $2640 at age 70 This alternative option would: Maximize Bill s benefit at age 70 and Sue s potential widow s benefit if she survives him, and Probably disqualify Sue from choosing the wife s benefit at age 66 Only one can qualify for a spousal benefit at a time. Compare all available options before deciding on a strategy.

13 Benefits payable to workers of any age who meet certain work and medical requirements: Must have worked 5 years out of the last 10 years before onset of disability and Have a medical condition that keeps worker from earning more than: $1800/month (blind) or $1070/month (all others)

14 Disabled workers of any age can qualify for Medicare beginning with the 25 th month after they become eligible for Social Security disability. Government employees who don t qualify for cash disability benefits may qualify for Medicare before age 65 if they meet the medical requirements for disability.

15 Unmarried dependent children are eligible for benefits if parent is receiving retirement or disability benefits or has died: Up to age 18 (or age19 if still in high school) At any age if disabled before age 22 and unable to work at substantial levels: $1070/$1800/month Dependent grandchildren, adopted children & step-children may also qualify if special requirements are met.

16 Different rules apply to workers who receive a pension from work not covered by Social Security: Windfall Elimination Provision (WEP) reduces retirement benefits for those who are vested in Social Security by up to $400/month below rates shown on the Statement. Exceptions for those who have worked substantially under Social Security for more than 20 years. Government Pension Offset (GPO) reduces potential spousal or survivor s benefits by an amount equal to 2/3 rd of the gross government pension. Exceptions for those who worked the last 5 years before retiring in a job covered by both Social Security & their government pension.

17 If you have not yet applied for benefits, you will need to file an application for Medicare to: Enroll in Part A (Hospital Insurance) at 65 Enroll in Part B (Medical Insurance) no later than month before month you turn 65 if you want coverage at 65 You can defer enrolling in Part B without penalty until you stop working IF you are covered under an employer group health plan as an active employee or the spouse of an active employee. Check with your employer plan first to ask if you should enroll in Medicare Part B at 65 or wait until you retire.

18 Requires a My Social Security account to access sensitive earnings & benefit information: You can log in to View, Print & Save your Social Security Statement to your computer Benefits are based on your highest 35 years of earnings so check your Statement regularly for accuracy! Look for at

19 Beginning September 2014, Statements will be mailed automatically to workers who do not have a mysocialsecurity Account. Paper Statements will now be mailed every 5 years to workers aged and yearly to those aged 60 & older.

20 Decision about when and how to apply is critical to maximizing Social Security benefits. Personalized Benefit Analysis will identify which strategy will work best to meet your client s financial needs To request a Personalized Benefit Analysis: Diane Owens, info@stepupsocialsecurity.com Phone: