What You Need to Know to Help Maximize Your Retirement Income

Choosing when to start Social Security payments may be one of the most

important decisions you make in the retirement income planning process

It can have a significant impact on how much guaranteed income you and your spouse receive for life!

For example, if you were 60 years old with maximum career earnings and started benefits at age 66:

You could receive more than $600,000 over the next 20 years

Source: www.socialsecurity.gov

And that’s not even including annual cost of living adjustments or spousal benefits if you’re married!

Understanding Your ChoicesUnderstanding Your Choices

1. Take early payments (age 62-64)

2. Start benefits at Full Retirement Age (age 65-67 depending on your year of birth)

3. Delay and get even more (from Full Retirement Age to age 70)

4. Capitalize on spousal benefits

5. Enhance survivor income

The later you claim, the more you can receive!

Source: Social Security Administration

Option 1: Take It EarlyOption 1: Take It Early

Social Security can begin as early as age 62, but benefits will be reduced by as much as 30%Social Security can begin as early as age 62, but benefits will be reduced by as much as 30%

Source: Social Security Administration

Option 2: Start at Full Retirement AgeOption 2: Start at Full Retirement Age

You’ll receive at least 100% of your Social Security benefits if you claim at Full Retirement Age or laterYou’ll receive at least 100% of your Social Security benefits if you claim at Full Retirement Age or later

Plus, you’ll have the opportunity to add more earnings to your work record

Plus, you’ll have the opportunity to add more earnings to your work record

Social Security benefits are based on the average of your 35 highest

years of earnings

Work longer and potentially increase your average earnings

Option 3: Delay and Get Even MoreOption 3: Delay and Get Even More

Waiting until after your Full Retirement Age to begin payments can increase your benefits by up to 8% a yearWaiting until after your Full Retirement Age to begin payments can increase your benefits by up to 8% a year

• The yearly rate of increase depends on your year of birth

• Increases end after you reach age 70, even if you continue to delay taking benefits

• The yearly rate of increase depends on your year of birth

• Increases end after you reach age 70, even if you continue to delay taking benefits

Source: Social Security Administration

Option 4: Capitalize on Spousal BenefitsOption 4: Capitalize on Spousal Benefits

• Married individuals can claim the greater of their own benefit or 50% of their spouse’s benefit at Full Retirement Age (FRA)

• Spousal benefit is reduced up to 35% if claimed prior to the recipient’s FRA

• Divorced spouses can receive spousal benefits if marriage lasted at least 10 years and recipient is currently unmarried

Option 5: Enhance Survivor IncomeOption 5: Enhance Survivor Income

• Widow(er)s can keep their own benefit or switch to the deceased spouse’s benefit if it is higher

• Survivor benefits are available as early as age 60 (age 50 if disabled) but they will be reduced by up to 28.5% if claimed before the recipient’s Full Retirement Age

5 Keys to Deciding When to Start5 Keys to Deciding When to Start

1. Estimate your Social Security benefits

2. Consider how long your retirement will last

3. Determine if you want to continue working

4. Look at the tax consequences

5. Evaluate spousal opportunities

Estimate Your BenefitsEstimate Your Benefits

• Determine how much income you’ll need to retire

• Use the online calculator at www.ssa.gov/estimator to see how much you’ll receive from Social Security

PLANNING TIP: Use the results to help you determine if it makes sense to delay or start right away[ ]

Consider How Long Your Retirement Will LastConsider How Long Your Retirement Will Last

PLANNING TIP: Investors who expect a shorter retirement may want to claim early, even with reduced benefits

Longevity plays a key role in determining which option is best

Total Benefits by Age and Start Time

Note: This illustration assumes a monthly benefit of $2,400 at Full Retirement Age.

◄ Breakeven

◄ Breakeven

[ ]

Determine If You Want to Continue WorkingDetermine If You Want to Continue Working

If you work and take benefits prior to your Full Retirement Age (FRA), some of your benefits may be withheld

Note: The income threshold in this table is for 2013. Source: “2013 Social Security Changes,” Social Security Administration.

PLANNING TIP: Any amounts withheld are only temporary. They’re added back to your benefits after you reach Full Retirement Age, so there’s no penalty for working longer.[ ]

Look at the Tax ConsequencesLook at the Tax Consequences

Depending on how much you earn, you could pay tax on up to 85% of your Social Security benefits!Depending on how much you earn, you could pay tax on up to 85% of your Social Security benefits!

PLANNING TIP: To help minimize taxes, make sure your total income does not exceed the threshold amounts. [ ]

Evaluate Spousal OpportunitiesEvaluate Spousal Opportunities

• Coordinate benefits between both spouses to help increase overall income

• Each spouse has the opportunity to receive both spousal benefits AND their own benefits at different times. For example:

PLANNING TIP: Combine early and delayed benefits to help maximize retirement income for married couples.[ ]

Don’t Overlook Survivor Benefits Don’t Overlook Survivor Benefits

• When you begin Social Security payments can increase the survivor benefit for your spouse

• A surviving spouse should consider which option would provide a higher benefit—their own earnings or the survivor benefit

PLANNING TIP: If the survivor benefit is higher, avoid taking it prior to your Full Retirement Age or your benefit will be reduced by up to 28.5%. [ ]

1. Start Now and Get More Later1. Start Now and Get More Later

Combine early and delayed benefits for married couples to generate more income Combine early and delayed benefits for married couples to generate more income

• With this strategy, the low-earning spouse starts income right away at age 62

• The high earner takes spousal benefits at Full Retirement Age (age 66), delaying his or her own benefits for maximum income

• At age 70, the high earner takes his or her own benefits and the low earner switches to spousal benefits to generate higher income!

Example: Generate $215,016 More Income Over 28 Years! Example: Generate $215,016 More Income Over 28 Years!

Note: Illustration does not reflect any cost of living increases.

Start Now and Get More Later Assumptions: Fred and Jane are married; they are 62 years old with Full Retirement Age (FRA) at 66; and their Social Security benefit at FRA is $2,400 for Fred and $1,000 for Jane

That’s $215,016 more than if Fred and Jane had both elected early benefits at age 62!

• Fred takes his full delayed benefit ($3,168)

• Jane elects spousal benefits to generate more income ($950)

• Jane takes a reduced early benefit ($750)

• Fred elects spousal benefits and receives half of Jane’s benefit ($500)

• Jane continues her own benefit ($750)

2. File and Suspend2. File and Suspend

• This strategy allows the low-earning spouse to receive payments equal to 50% of the high earner’s benefit

• Plus, the high earner continues to delay payments, accruing credits for more guaranteed income at age 70

Help maximize income by filing for benefits at Full Retirement Age and then suspending receipt until age 70Help maximize income by filing for benefits at Full Retirement Age and then suspending receipt until age 70

Example: Generate $78,336 More Income Over 24 YearsExample: Generate $78,336 More Income Over 24 Years

Note: Illustration does not reflect any cost of living increases

File and SuspendAssumptions: Charlie and Mary are married; their Full Retirement Age (FRA) is 66; and their Social Security benefit at FRA is $2,400 for Charlie and $1,000 for Mary

That’s $78,336 more than if Charlie had not suspended his benefit at age 66!

• Charlie takes his own benefit ($3,168)

• Mary continues spousal benefits ($1,200)

• Charlie files and suspends his benefit ($0)

• Mary elects spousal benefits and receives half of Charlie’s benefit ($1,200)

3. Claim Survivor Benefits Early3. Claim Survivor Benefits Early

• This strategy provides the surviving spouse with additional income from age 60 to 69

• Plus, by delaying payments until after Full Retirement Age, the high earner can receive the maximum amount of Social Security benefits based on his or her own earnings at age 70!

For high-earning widow(er)s, consider starting survivor benefits at age 60 to help increase overall incomeFor high-earning widow(er)s, consider starting survivor benefits at age 60 to help increase overall income

Example: Receive an Additional $85,800 in Survivor BenefitsExample: Receive an Additional $85,800 in Survivor Benefits

Survivor Benefits StrategyAssumptions: Bob and Cindy are married; they are 60 years old with Full Retirement Age (FRA) of 66; their Social Security benefit at FRA is $2,400 for Bob and $1,000 for Cindy; and Cindy dies at age 60.

That’s $85,800 in survivor benefits that would have been lost if Bob did not take advantage of these benefits!

• Bob claims survivor benefits and receives 71.5% of Cindy’s benefit ($715)

• Bob takes his own benefit from age 70-90 ($3,168)

Note: Illustration does not reflect any cost of living increases

4. Build an Income Bridge to Help Increase Future Benefits

4. Build an Income Bridge to Help Increase Future Benefits

• If you decide to retire later, you may need to bridge the potential income gap with retirement sources other than Social Security

• Possible solutions: • Fixed annuities

• Variable annuities with optional income benefits

• Retirement accounts like IRAs or 401(k)s

• Mutual funds

• Earnings from work

Choosing the Right Option for You Choosing the Right Option for You

• Carefully think through your Social Security strategy before submitting your benefit claims

• Be sure to ask yourself: When do I really want to retire?

How do I want to spend my retirement?

Do I have the right investments to achieve my goals?

I’m always available to answer questions and to make sure your retirement income strategy remains

consistent with your long-term financial goals.

I’m always available to answer questions and to make sure your retirement income strategy remains

consistent with your long-term financial goals.

Make the Most of Your Social Security Benefits Today!Make the Most of Your Social Security Benefits Today!

Investments, including mutual funds, involve risk, including the possible loss of principal. Please ask me about the risks and fees associated with your current investments and any investments that may be recommended in the future.

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