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EDMSocial Security Workshop

Presented by:Rick ScruggsCLU,ChFC

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September 18, 2013

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Ida May FullerFirst Social Security Beneficiary

1. Benefits2. Spousal Benefits3. Survivor Benefits4. Divorce Benefits5. Disability Benefits

Agenda

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If you’re married there are 567 options to claiming your spouse

Did You Know?

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Tax Employee

Employer

Social Security

6.2% 6.2%

Medicare 1.45% 1.45%

Total 7.65% 7.65%

Maximum Taxable Earnings

2013

Social Security (OASDI only)

$113,700

Medicare Unlimited

Social Security Tax Rate for 2013

http://www.ssa.gov

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Average Benefit Maximum

Average Benefit in 2013: $1,231

Maximum Benefit: $2,500

If you are younger than age 60, you can access your statement online

and Set-up your own Social Security Website at:

www.ssa.gov

Your Social Security Statements

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Eligibility

40 quarters of work

How Are Social Security Benefits Calculated?

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Calculation

Look at average of 35 highest earning years of work.

When Can I Receive Social Security Benefits?

Year of Birth Age 62 Benefit Full Retirement Age (FRA)

1943-1954 75% 66

1955 74.2% 66 and 2 months

1956 73.3% 66 and 4 months

1957 72.5% 66 and 6 months

1958 71.7% 66 and 8 months

1959 70.8% 66 and 10 months

1960 and later 70.0% 67

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* If you choose to delay receiving benefits you’ll receive an 8% compound for every year after NRA, but capped at age 70.

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Reasons to Start Benefits Early:

• You’d rather have the money to spend now.

• You may be in poor health and/or have a short life expectancy.

• You may be out of work and need the income now to make ends meet.

You are in good health and/or have a long life expectancy, and you want an increased benefit later.

Reasons to Delay Benefits:

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Impact of Receiving Benefits Before (and After) Full Retirement Age

12Source: http://us.pioneerinvestments.com/lfa/frontdoor.jsp?navid=168&navvr=166

Contemplating Early Retirement

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Joint Income ExampleJames and Denise

• James is contemplating retirement at age of 62 versus waiting until full retirement age of 66.

• • His wife Denise never worked.

• How will retirement at 62 impact the annual Social Security Benefits James and Denise receive?

Joint Income Example: Early Retirement Reduces Annual Household Benefit

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$11,880

$18,000

$0

$4,000

$8,000

$12,000

$16,000

$20,000

Began at 62 Began at 66

Assumptions: Began at Age 62: Assumes husband retires early at age 62, wife is also age 62; he receives reduced monthly benefit of $750/month and she receives reduced spousal benefit of 32%Began at 66: Assumes husband retires at full retirement age of 66 and collects full retirement benefit of $1,000 per month; wife is 66 or older on date of retirement and receives 50% of husbands benefit

Robert and Maria• Both worked

• Both are 66

• Both are collecting

Social Security benefits this

year for the first time

• His monthly benefit is $1500

• Her monthly benefit is $900

• What is the household maximum Social

Security benefit?

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Both Spouses Worked, Retire at Full Retirement Age

Joint Income Example:

16Source: “Frequently Asked Retirement Questions” socialsecurity.gov/planners/faqs.htm accessed July 20, 2011

Both Spouses Worked, Retire at Full Retirement Age

Who

MaxBenefit

Calculation

Husband

$1500

His benefit higher than her benefit

Wife

$900

Her benefit ($900) > half of his benefit ($750)

Total

$2400

Sum of Husband and Wife’s Benefit

Joint Income Example:

Robert and Maria

John and Barbara

• John just turned 66 and reached hisFull Retirement Age

• His wife Barbara is 65. She never worked, but could receive a Social Security Spousal Benefit based on John’s work history.

• John plans to keep working, but would like a little extra money to do the things he enjoys now while he is still healthy

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Joint Income Example: Claim & Suspend

Solution: Barbara collects Spousal Benefits, while John continues to accrue delayed credits on his benefits

Claim Now, Claim More Later

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• David just turned 66 in 2013. Due tohealth concerns, he wantsto retire and start collecting SS

• His wife Susan is 64 and workedmost of her life. Her choices are:

• Receive reduced benefits

• Wait until 66 to collect her full Social Security retirement benefits

• Wait until 70 to collect her Social Security plus delayed credits

• Susan likes her job; wants to maximize their income and Social Security benefits

Alternate Solution: Susan starts Spousal Benefits at 66, while accruing Delayed Retirement Credits on her benefits

http://us.pioneerinvestments.com/lfa/frontdoor.jsp?navid=168&navvr=166

{• Receive the greater of:- Benefits based on your earnings history;

OR

- Benefits based on your spouse’s earnings

history

• Spousal benefit is discontinued

Delaying Social Security not only increases an individual’s own benefit, but can also increase the benefit to a surviving spouse. Upon the death of an individual, the spouse will receive the greater of these two.

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Loss of SpouseSurviving Spouse Will Still Receive Some Benefits

Example:

If both spouses start collecting benefits at age 62, and the husband dies at age 82

If the wife collects at age 62, the husband delays benefits to age 70, and he dies at age 82.

Initial benefit for husband

$12,000 $26,751

Initial benefit for wife (on her own work record)

$12,000 $12,000

Benefit that will continue for surviving spouse

$21,673 $38,133

How delaying Social Security can benefit a surviving spouse

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Divorced Spouses• If you are divorced, but your marriage lasted 10 years or

longer, you may be able to receive benefits on your ex-spouse’s record (even if he or she has remarried ) if:

• Your are unmarried;

• You are 62 or older;

• Your ex-spouse is entitled to Social Security retirement or Disability benefits and

• The benefit you are entitled to receive based on your own work is less than the benefit you would receive based on your ex-spouse’s work.

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{ {What is Social Security’s Definition of disability?• The “inability to engage

in any substantial gainful activity (SGA) by determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a period of not less than 12 months.”

What are Social Security’s Disability Programs?

• Social Security Disability Insurance (SSDI)

• Supplemental Security Income (SSI)

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{Recommended Publications& Tools

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• Choose one of the three methods

• www.socialsecurity.gov/applyforbenefits

• Call 1-800-772-1213

• Make an appointment to visit any Social Securityoffice to apply in person

• Bring (some or all) • Social Security number/card for you and

spouse• Birth certificate• W-2 forms or self-employment tax return for

last year• Military discharge papers• Name of your financial institution, routing

number and account number

How To Apply For Benefits

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Social Security Explorer

Live Demo

• MyRetirementPaycheck.org

• SSA.gov

• Financial Designs

• Lynchburg’s Social Security Administration

• Social Security Literature

Tools

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UnifiedPlan Quarterly Statements

View from the top of page 4

View from the top of page 1

Average man turning 62 today can expect to live to 81*

Average woman turning 62 today can expect to live to 84*

One out of four 65 year olds will live to 90**

One out of ten 65 year olds will live to 95**

What Will You Be Doing on Your 80th or 90th Birthday?

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* Source: Social Security Administration Periodic Life Table**Source: socialsecurity.gov/planners/lifeexpectancy.htm accessed August, 2011

{Questions ?

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