Copper Getting Paid to Wait Social Security Analysis Report Prepared on: 02/23/2017 Prepared by: Brian Doherty

Transcription

1 Copper Getting Paid to Wait Social Security Analysis Report Prepared on: 02/23/2017 Prepared by: Brian Doherty

2 Customer Name : Charles Amanda Date of Birth : 08/12/ /27/1954 Full Retirement Age : Full Retirement Age Benefit: $2,375 $2,200 Marital Status : Married Annual Cost of Living 2.5% Increase: Strategy 1 Strategy 2 Strategy 3 Paid To Wait Amount With This Strategy $194,222 Combined Annual Income When Strategy is Complete $68,112 Extra Income from Restricted Application $57,570 Paid To Wait Amount With This Strategy $137,065 Combined Annual Income When Strategy is Complete $74,232 Extra Income from Restricted Application $49,632 Paid To Wait Amount With This Strategy $0 Combined Annual Income When Strategy is Complete $86,124

3 Before you scroll down to see the charts with your Social Security benefit amounts and the step-by-step explanation of exactly when you should claim your benefits for each suggested strategy --- PLEASE READ THIS SECTION ON THE EXPLANATION OF THE STRATEGIES. Explanation of the Strategies Married Couples What is the Primary Goal of the Paid to Wait Calculator? The primary goal of the Paid to Wait Calculator is to maximize the size of the bigger benefit. Most married couples receive two Social Security benefit checks, one made payable to the husband and the other made payable to the wife. They should try to maximize the size of the bigger benefit. Not only will that increase their Social Security income when they are both alive but it will also maximize the size of the Survivor Benefit. After the first spouse dies, the surviving spouse will only receive one Social Security benefit check, fortunately they can continue to receive the bigger of the two checks. Maximizing the size of the bigger benefit will also maximize the size of the Survivor Benefit, which will leave the surviving spouse with the biggest Survivor Benefit check possible for their particular situation. Many Married Couples Can Get Paid to Wait The Paid to Wait Calculator can help make it easier to maximize the size of the bigger benefit by showing you the ONE claiming strategy that will pay you the most amount of Social Security income while you wait. In other words, while the spouse with the bigger benefit is waiting to claim it at age 70, so they can maximize the size of it, the Paid to Wait Calculator will show them the one claiming strategy that will pay them the most amount of Social Security income while they wait.

4 Can All Married Couples Get Paid to Wait? No, not all married couples can get Paid to Wait but many do. If you can get Paid to Wait, the Paid to Wait Calculator will show you exactly how to do it. How the Paid to Wait Calculator Works Depending on your situation, the Paid to Wait Calculator could show you a maximum of three different suggested claiming strategies, sometimes it may only show you two strategies and in some cases it could only show you one claiming strategy. Most married couples can get Paid to Wait. The first suggested claiming strategy shown, or Strategy 1, is usually the ONE strategy that will pay you the most amount of Social Security income while you wait to maximize the size of the bigger benefit. This strategy usually recommends that the spouse with the smaller benefit, claim their benefit as early as possible, even at age 62. Remember the primary goal is to maximize the size of the bigger benefit and claiming the smaller benefit early will pay the married couple some Social Security income while they wait. How much income they receive depends on the size of the smaller benefit. Also, they will probably receive the smaller benefit for the shortest time because once the first spouse dies, the surviving spouse will continue to receive only the bigger benefit, the smaller benefit check will stop. If one or both of the spouses were born before January 2, 1954, they may be able to use the Restricted Application claiming strategy. This strategy could pay the married couple additional Social Security income, even up to $60,000 in extra income, while they wait. This strategy revolves around the strategic claiming of the Spousal Benefit. The Paid to Wait Calculator will automatically determine if you are eligible to use the Restricted Application strategy and then show you exactly how it would work in your particular situation.

5 What if You Continue to Work? If the spouse with the smaller benefit is younger than their Full Retirement Age (your Full Retirement Age depends on the year you were born and can vary between age 66 to 67), the Paid to Wait Calculator will show you a second strategy or Strategy 2. In this strategy the spouse with the smaller benefit will wait until their Full Retirement Age before they claim their regular Work History Benefit. It will show this strategy in case the spouse with the smaller benefit continues to work between the ages of 62 and their Full Retirement Age. If they claim their Social Security benefits prior to their Full Retirement Age and continue to work, they could earn too much money and have to give back some or all of their Social Security Benefits. BUT, once they reach their Full Retirement Age, they can receive their Social Security benefits, continue to work and never have to give back any of their benefits no matter how much money they make from their job. That is why the Paid to Wait Calculator will show this strategy in which the spouse with the smaller benefit waits until their Full Retirement Age to claim it. What if You Want to Maximize the Size of Both Benefits? The last strategy the Paid to wait Calculator will show is the one that will maximize the size of both spouse s benefits. When this claiming strategy is complete it will provide the married couple with the largest amount of Combined Annual Social Security Income for the rest of their lives. What You Can Expect Each suggested claiming strategy will include a chart of your benefit amounts and a simple explanation of what benefit should be claimed and exactly when to claim it. The important numbers on the chart are highlighted and correspond to the explanations in both the Key Benefit Numbers section and the Next Steps section. What are the Key Benefit Numbers in the Strategies?

6 1) Your Paid to Wait number this is the amount of Social Security income you will receive while you wait to maximize the size of the bigger benefit. Most married couples will have a Paid to Wait number but in some situations they will not. 2) Maxed Out Bigger Benefit the monthly dollar amount of the maxed out bigger benefit. Another reason to max out the size of the bigger benefit is because eventually that benefit will become the Survivor Benefit after the first spouse dies. The surviving spouse is only going to receive one Social Security check after the first spouse dies, the Survivor Benefit. Maximizing the size of the bigger benefit will also maximize the size of the Survivor Benefit. The amount of this benefit and all the other benefits in the chart will increase every year because of Cost of Living or COLA adjustments. The Paid to Wait Calculator assumes an annual COLA increase of 2.5%. 3) Combined Annual Income When the claiming strategy is complete, this shows the combined amount of Social Security income you and your spouse will receive every year for the rest of your lives. This combined benefit amount will also increase every year because of COLA adjustments. What are the Next Steps in the Strategies? This section tells you what benefit to claim and when you should claim it. All the numbered steps in this section correspond to the highlighted Ages and Benefit Amounts in the chart. All of the benefit amounts in all of the strategies increase slightly every year because the Paid to Wait Calculator includes a 2.5% annual Cost of Living or COLA increase. We used a 2.5% COLA increase because that has been the approximate average annual COLA increase over the last 20 years. If some of the benefit amounts in our charts don t match the benefit amounts from your Social Security statements, especially your Full Retirement Age benefit and your benefit at age 70, that is because Social Security does

7 not make any COLA assumptions when calculating your future benefits. If you decide on a particular claiming strategy, please follow the explanation in the Next Steps section to determine exactly when you should claim a specific benefit. Depending on you situation, the Paid to Wait Calculator may tell you to claim a benefit prior to your birthday. For example, it may tell you to claim your Work History Benefit at age 66 years and 8 months or four months before your 67th birthday. On the chart for that particular strategy, which includes your benefit amounts, when a benefit is claimed before a birthday, those benefit payment amounts may be carried over to the next year. For example, if a benefit is claimed at age 66 years and 8 months, you would only receive 4 months of benefit payments before your 67th birthday. On the chart those 4 months of benefit payments could be carried over to the next year and included in the total benefit amount you received at age 67. The chart will indicate this with a # (number sign) or a * (asterisk) that you receive 16 months of benefit payments at age 67, which includes 4 months of payments at age 66 and 12 months of benefit payments at age 67 ( = 16 months of payments). The important thing to remember is to follow the specific instructions in the Next Steps section of exactly when you should claim a benefit. p.s. Don t wait until the last minute to claim your benefits, make an appointment with your local Social Security office at least one month prior to the date you want your benefits to begin. Good Luck With your Claiming Strategy!

8 Age (A/C) Strategy 1 A B C D E F Amanda's Charles's Combined Combined Monthly Monthly Monthly Annual Income Income Income Income # includes 13 months of benefit payments for Amanda Cumulative Annual Income 61/62 $0 $0 $0 $0 $0 62/63 $0 $0 $0 $0 $0 63/64 $1,760 $0 $1,760 $22,880# $22,880 64/65 $1,804 $0 $1,804 $21,648 $44,528 65/66 $1,849 $1,156 $3,005 $36,054 $80,582 66/67 $1,895 $1,184 $3,079 $36,948 $117,530 67/68 $1,942 $1,214 $3,156 $37,872 $155,402 68/69 $1,991 $1,244 $3,235 $38,820 $194,222 69/70 $2,041 $3,635 $5,676 $68,112 $262,334 70/71 $2,092 $3,726 $5,818 $69,816 $332,150 71/72 $2,144 $3,819 $5,963 $71,556 $403,706 76/77 $2,426 $4,321 $6,747 $80,964 $779,822 81/82 $2,745 $4,889 $7,634 $91,608 $1,205,342 86/87 $3,106 $5,531 $8,637 $103,644 $1,686,722

9 Key Benefit Numbers: $194,222 highlighted in Column F - This is the amount of Social Security income Charles & Amanda were Paid to Wait. In other words, while they waited for Charles to claim maxed out Work History Benefit of $3,635 per month at age 70, they were paid $194,222 while they waited. $3,635 highlighted in Column C - Charles's maxed out benefit, which will also become the Survivor Benefit after the first spouse dies. $68,112 highlighted in Column E - Combined Annual Income when claiming strategy is complete. $57,570 - Extra Income From Restricted Application. Next Steps: 1. Age 63/64 - When Amanda is age 62 years and 11 months, Amanda claims reduced Work History Benefit of $1,760 per month (Column B). 2. Age 65/66 - When Charles is age 66, Charles claims and restricts benefit to only a Spousal Benefit and receives $1,156 per month (Column C). It is very important that Charles tells Social Security to restrict benefit to only a Spousal Benefit. You have to wait until your Full Retirement Age before you can restrict your benefit to only a Spousal Benefit and you must also wait for your spouse to first claim their own Work History Benefit. 3. Age 69/70 - When Charles is age 70, Charles switches to maxed out Work History

10 Benefit of $3,635 per month (Column C). This benefit will eventually become the Survivor Benefit after the first spouse dies. The size of the Work History Benefit at age 70 is larger than the amount that appears on your Social Security statement because of retro-active COLA credits. We assumed an annual COLA increase of 2.5%. 4. Age 69/70 - Their Combined Annual Income is $68,112 (Column E).

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12 Age (A/C) Strategy 2 A B C D E F Amanda's Charles's Combined Combined Monthly Monthly Monthly Annual Income Income Income Income # includes 17 months of benefit payments for Charles Cumulative Annual Income 61/62 $0 $0 $0 $0 $0 62/63 $0 $0 $0 $0 $0 63/64 $0 $0 $0 $0 $0 64/65 $0 $0 $0 $0 $0 65/66 $0 $0 $0 $0 $0 66/67 $2,369 $1,185 $3,554 $48,565# $48,565 67/68 $2,428 $1,214 $3,642 $43,704 $92,269 68/69 $2,489 $1,244 $3,733 $44,796 $137,065 69/70 $2,551 $3,635 $6,186 $74,232 $211,297 70/71 $2,615 $3,726 $6,341 $76,092 $287,389 71/72 $2,680 $3,819 $6,499 $77,988 $365,377 76/77 $3,032 $4,321 $7,353 $88,236 $775,285 81/82 $3,430 $4,889 $8,319 $99,828 $1,239,049 86/87 $3,881 $5,531 $9,412 $112,944 $1,763,761

13 Key Benefit Numbers: $137,065 highlighted in Column F - This is the amount of Social Security income Charles & Amanda were Paid to Wait. In other words, while they waited for Charles to claim maxed out Work History Benefit of $3,635 per month at age 70, they were paid $137,065 while they waited. $3,635 highlighted in Column C - Charles's maxed out benefit, which will also become the Survivor Benefit after the first spouse dies. $74,232 highlighted in Column E - Combined Annual Income when claiming strategy is complete. $49,632 - Extra Income From Restricted Application. Next Steps: 1. Age 66/67 - When Amanda is age 66 (Full Retirement Age), Amanda claims Work History Benefit of $2,369 per month (Column B). 2. Age 66/67 - When Charles is age 66 years and 7 months, Charles claims and restricts benefit to only a Spousal Benefit and receives $1,185 per month (Column C). It is very important that Charles tells Social Security to restrict benefit to only a Spousal Benefit. You have to wait until your Full Retirement Age before you can restrict your benefit to only a Spousal Benefit and you must also wait for your spouse to first claim their own Work History Benefit. 3. Age 69/70 - When Charles is age 70, Charles switches to maxed out Work History Benefit of $3,635 per month (Column C). This benefit will eventually become the Survivor

14 Benefit after the first spouse dies. The size of the Work History Benefit at age 70 is larger than the amount that appears on your Social Security statement because of retro-active COLA credits. We assumed an annual COLA increase of 2.5%. 4. Age 69/70 - Their Combined Annual Income is $74,232 (Column E).

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16 Age (A/C) Strategy 3 A B C D E F Amanda's Charles's Combined Combined Monthly Monthly Monthly Annual Income Income Income Income Cumulative Annual Income 61/62 $0 $0 $0 $0 $0 62/63 $0 $0 $0 $0 $0 63/64 $0 $0 $0 $0 $0 64/65 $0 $0 $0 $0 $0 65/66 $0 $0 $0 $0 $0 66/67 $0 $0 $0 $0 $0 67/68 $0 $0 $0 $0 $0 68/69 $0 $0 $0 $0 $0 69/70 $0 $3,635 $3,635 $43,620 $43,620 70/71 $3,451 $3,726 $7,177 $86,124 $129,744 71/72 $3,537 $3,819 $7,356 $88,272 $218,016 76/77 $4,002 $4,321 $8,323 $99,876 $681,972 81/82 $4,528 $4,889 $9,417 $113,004 $1,206,900 86/87 $5,123 $5,531 $10,654 $127,848 $1,800,732

17 Key Benefit Numbers: $3,635 highlighted in Column C - Charles's maxed out benefit, which will also become the Survivor Benefit after the first spouse dies. $86,124 highlighted in Column E - Combined Annual Income when claiming strategy is complete. Next Steps: 1. Age 69/70 - When Charles is age 70, Charles claims the maxed out Work History Benefit of $3,635 per month (Column C). This benefit will eventually become the Survivor Benefit after the first spouse dies. The size of the Work History Benefit at age 70 is larger than the amount that appears on your Social Security statement because of retro-active COLA credits. We assumed an annual COLA increase of 2.5%. 2. Age 70/71 - When Amanda is age 70, Amanda claims the maxed out Work History Benefit of $3,451 per month (Column B). The size of the Work History Benefit at age 70 is larger than the amount that appears on your Social Security statement because of retroactive COLA credits. We assumed an annual COLA increase of 2.5%. 3. Age 70/71 - Their Combined Annual Income is $86,124 (Column E).

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19 Disclaimer This report and the strategies contained herein is intended to be an introduction to some of the Social Security claiming strategies that are most likely to play a role in your retirement planning. It is not intended to be a substitute for personalized advice from a professional advisor. The information presented in this report and on the web site is for educational and illustrative purposes only; it should not be relied upon in your specific circumstances. In addition, our intent is accuracy based on current law. Please keep in mind that Congress may change the law governing benefit amounts at any time. Every effort has been made to ensure this report and web site is as accurate and complete as possible. However, no representations or warranties are made with respect to the accuracy or completeness of the report or web site. It is not our intent to provide professional tax, investment, or legal advice. The strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. This report should be used only as a general guideline and not as the ultimate source of information about Social Security claiming strategies. The content of this report is intended to be informational and educational and DOES NOT constitute financial advice. We strongly recommend that you seek the advice of a tax, legal, and financial services professional before making decisions related to any investment or other financial decisions. Neither Filtech nor its development partners is responsible for the consequences of any decisions or actions taken in reliance upon or as a result of the information provided in this report or web site. The text includes information about some of the tax consequences of Social Security benefits. While nothing contained within should be constructed as tax advice, any taxrelated information is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing,

20 or recommending to another party any transaction or matter addressed in this report. Neither Filtech nor its development partners can be held responsible for any direct or incidental loss resulting from applying any of the information provided herein, or from any other source mentioned. The information provided does not constitute any legal, tax, or accounting advice.