HELPING TO MAKE THE MOST OUT OF YOUR SOCIAL SECURITY

Transcription

1 HELPING TO MAKE THE MOST OUT OF YOUR SOCIAL SECURITY * Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC, a Registered Investment Adviser. Social Security 567, InvestWise Financial, LLC, and NPC are separate and unrelated companies. Estate planning and tax services may be offered by a qualified third party. NPC does not render tax or legal advice.

2 Nine out of ten people age 65 and older are receiving Social Security benefits, and for 32% of them, it represents over 90% of their income. How and when to begin this income is one of the most important decisions many people make concerning retirement. Tens of thousands of people are making their decision everyday, yet many of them do not know what their options are. The Social Security office is well staffed with very trained and knowledgeable employees. The staff answers questions accurately; however, they are instructed not to give advice. Their job is not to advise, but to answer questions and implement decisions. If someone does not know the options, they will not ask about them, and will not be told about them. Learning and considering their options, is a brief, but essential phase of retirement planning. An uninformed choice, unless it is corrected within a year, continues for life! Source: Social Security Administration. Social Security Basic Facts. April,

3 Even though it was written into law in 1935, payroll taxes weren t collected to pay for the system until Originally, you had the choice of taking a lump sum or monthly payout. In the first 3 years, everyone took the lump sum, with Ernest Ackerman being the first American to receive a lump sum payment in He received a total of 17 cents and had paid 5 cents into the program. The first monthly check was issued to Ida May Fuller of Ludlow, VT. She paid a total of $24.75 into the system for 3 years, 1937, 1938, and The first monthly payment she received was for $22.54, and by her second check she had already received more out of Social Security than she had paid into the system. Over her lifetime, she collected just under $23,000 in total Social Security benefits having only contributed $ a return of over 92,000%. Source: Social Security Administration (

4 LIFE EXPECTANCY UPON RETIREMENT Married Couple Age 65 At least one person has a 25% chance to live to age 97 At least one person has a 50% chance to live to age 93 Female Age 65 50% chance of living to age 25% chance of living to age Male Age 65 25% chance of living to age 50% chance of living to age Source: Society of Actuaries Annuity RP-2014 Total Healthy Annuitant rates, Scale MP Figures assume you are in good health.

5 26% 74% Reduced Benefit- Collected Early Full or Increased Benefit Source: Social Security Administration s Annual statistical supplement, 2014.

6 INDIVIDUAL BENEFITS

7 Full Retirement Age (FRA): The age when you are entitled to 100% of your Social Security benefit. Primary Insurance Amount (PIA): The benefit you would receive if you were to elect to start receiving benefits at your full retirement age. Social Security Administration (SSA)

8 Best 35 Years P.I.A. Benefit at age 70 Benefit at age 62 $1,554 a month $1,938 a month $1,072 a month Online Statements are available at Example used as illustration only, actual results will vary. Source: Social Security Administration (

9 40% 30% Assumes Full Retirement Age is 66* 24% 32% 20% 16% 10% 0% -10% -20% -30% % -13% -20% -25% FRA 8% Full Retirement Age (FRA) or earlier and later Source: Social Security Administration. Full Retirement Age: If You Were Born between 1943 and

10 Working Will you work, even part-time, before FRA? Longevity How is your health? Is there a expectation of longevity? Spouse Are you married? If so, what is the age difference between spouses? Whose benefits can the spouse collect?

11 2015 Retirement Earnings Limit Your Age Compared to FRA 2015 Limit What Happens Above the Limit Under FRA $15,720/year $1 of benefits withheld per $2 of earnings above limit Year reach FRA $41,880/year $1 of benefits withheld per $3 in earnings above limit for months prior to reaching FRA Month reach FRA and beyond No Limit No Penalty Applies to any retirement benefits collected before FRA. Earnings limit looks at wages only. Source: Social Security Administration (

12 BREAK EVEN ANALYSIS Age 78 Age Age

13

14 SPOUSAL & SURVIVOR BENEFITS

15 Jeremy PIA: $2,200 50% x $2,200 $1,100 Samantha PIA: $0 Filing at 66 Age 62 FRA Age 70 File Collect File Collect Example used as illustration only, actual results will vary. Source: Social Security Administration (

16 Percentage of FRA Spousal Benefits Maximum Spousal Benefit Amount 150% 100% 70% 75% 83% 92% 100% 100% 100% 100% 100% 50% 0% Age 62 Age 63 Age 64 Age 65 Age 66 (FRA) Age 67 Age 68 Age 69 Age 70 Example used as illustration only, actual results will vary. Source: Social Security Administration (

17 Jeremy PIA: $2,200 Samantha PIA: $600 $1,200 $1,100 $1,000 $800 $600 $800 Spousal $350 Spousal $500 Spousal $308 $400 $200 Own $450 Own $600 Own $792 $0 Age 62 Age 66 (FRA) Age 70 Example used as illustration only, actual results will vary. Source: Social Security Administration (

18 Women Are Collecting Their Husband s Benefits Jeremy PIA: $2,200 Samantha PIA: $600 Husband s Benefit Only 26% Own Benefit Only Jeremy s Benefits (63, 6 months) $1,833 Survivor Benefits $1,833 Combined Benefit 29% 45% Jeremy s Benefits (70) $2,904 Survivor Benefits $2,904 Source: Social Security Administration s Annual statistical supplement, Assumes full retirement age of 66 and primary insurance amount of $2,200. Example used as illustration only, actual results will vary.

19 ADVANCED FILING STRATEGIES

20 Jeremy Married to Samantha Higher wage earner FRA is 66 Samantha Married to Jeremy Lower wage earner FRA is 66

21 Sam Jeremy Jeremy PIA: $2,200 Lives through age 75 Samantha PIA: $600 Lives through age 82 Age (FRA) Collect Individual Benefits - $1,650 Collect Individual Benefits - $450 Collect Adjusted Spousal Benefits - $350 Jeremy s Benefits Sam s Benefits Spousal Benefits Survivor Benefits Total $277,200 = $1,650 $75,600 x 168 months = $450 $58,800 x 168 months = $350 $152,460 x 168 = months $1,815 $564,060 x 84 months Example used as illustration only, actual results will vary.

22 Sam Jeremy Jeremy PIA: $2,200 Lives through age 75 Samantha PIA: $600 Lives through age 82 Age (FRA) Collect Individual Benefits - $2,200 Collect Individual Benefits - $600 Collect Adjusted Spousal Benefits - $500 Both Age 62 Both FRA $550,200 $580,800 Example used as illustration only, actual results will vary.

23 Sam Jeremy Jeremy PIA: $2,200 Lives through age 75 Samantha PIA: $600 Lives through age 82 Age (FRA) $2,904 $792 $308 Both Age 62 Both FRA Both Age 70 $550,200 $580,800 $532,224 Example used as illustration only, actual results will vary.

24 Sam Jeremy Jeremy PIA: $2,200 Lives through age 75 Samantha PIA: $600 Lives through age 82 Age (FRA) File & Suspend $2,904 Collect Individual Benefits - $450 Collect Adjusted Spousal Benefits - $500 Both Age 62 Both FRA Both Age 70 Strategy $550,200 $580,800 $532,224 $588,624 Example used as illustration only, actual results will vary.

25 Sam Jeremy Jeremy PIA: $2,200 Lives through age 85 Samantha PIA: $600 Lives through age 92 Age (FRA) File & Suspend $2,904 Collect Individual Benefits - $450 Collect Adjusted Spousal Benefits - $500 Both Age 62 Both FRA Both Age 70 Strategy $858,060 $976,800 $1,012,704 $1,051,104 Example used as illustration only, actual results will vary.

26 Sam Jeremy Jeremy PIA: $2,200 Lives through age 85 Age (FRA) 70 Samantha PIA: $1,400 Lives through age File & Suspend $2,904 Collect Spousal - $1,100 $1,848 Both Age 62 Both FRA Both Age 70 Strategy $930,060 $1,048,800 $1,156,320 $1,209,120 Example used as illustration only, actual results will vary.

27 Samantha PIA: $2,200 Survivor: $2,500 Lives through age 92 Age (FRA) Survivor Benefits - $1,788 $2,904 Age 62 FRA Age 70 Strategy $753,300 $810,000 $801,504 $1,016,004 Example used as illustration only, actual results will vary.

28 Spousal Benefits Married to ex-spouse for 10+ years Unmarried Both are at least age 62 Divorced for at least 2 years* 10 Survivor Benefits Married to ex-spouse for 10+ years Unmarried or married after age 60 At least age 60 Unmarried 62 *2 years does not apply if the individual was eligible for spousal benefits at the time of divorce. Source: Social Security Administration (

29 Notes Social Security 567 is not affiliated with any government agency, including, but not limited to the Social Security Administration. This material is provided for educational purposes only and does not constitute as advice. The information contained within this PowerPoint is based on current Social Security laws and rules, which may change in the future. Social Security 567 cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. The information provided in these materials does not constitute any legal, tax or accounting advice. Please consult with a qualified professional for this type of advice Social Security 567