Maximize Social Security Income

The Financial Wellness Initiative®
Examining Your Financial Health Through
the Financial Wellness Experience!

“Understanding Social Security Keys to

Maximizing Your Retirement Income”
Will you get the most out of Social Security?
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Understanding Social Security Keys to Maximizing Your
Retirement Income… Will You Get the Most Out of Social Security?

Important Disclosure
• The information and strategies we will share during this presentation are
believed to be accurate.
• To get specifics about your particular situation, it is recommended that you
speak directly with the Social Security Administration offices near you.
• The information shared is based upon the current rules and regulations
of the Social Security system. It is VERY possible that these rules may
change in the future.


Items We Will Discuss About Social Security
• Will it be there for me?
• What should I know or do BEFORE applying for Social Security?
• Who is eligible for Social Security?
• How is my Social Security Income calculated?
• How do spousal and survivor benefits work?
• When should I take Social Security?
• Are there strategies to maximize my income?
• What other items should I consider as it relates to my social security?


Will Social Security Be There for Me?
In order to start answering this question,
it may help to understand the size/scope of the system.
According to the Social Security Administration,
almost 58 million Americans will receive
approximately $816 billion in Social Security
benefits in 2013.


Will Social Security Be There for Me?
2013 Beneficiary Data
Social Security
Beneficiaries

Totals by
Group

Monthly Average
Paid Out by SSA

Monthly
Averages

Retired workers

37 million

$46.3 billion

$1,262

- dependents

2.9 million

$1.8 billion

Average
Monthly Benefit

Disabled workers

8.8 million

$10 billion

$1,130

- dependents

2.1 million

$.69 billion

Average
Monthly Benefit

Survivors

6.3 million

$6.6 billion

$1,215
Average
Monthly Benefit

SOURCE: Social Security Administration website:
www.ssa.gov/cgi-bin/currentpay.cgi


How it Works
A “Pay-As-You-Go” System

Current “workers” pay in to the system in order to provide
payments to current “Social Security recipients.”
A total of 12.4% of a workers’ income (up to a maximum) gets paid
into the Social Security trust. For normal W-2 employees, they pay 6.2%
and the employer pays the other half (6.2%) of their wages.

OASDI (Old-Age, Survivors, Disability Insurance)
Operational Cash Flows as a Percentage of GDP

Payroll tax rate rises from 6 percent
in 1961 to 9 percent in 1971 as
program matures

1972 amendments
Formed SSI (Disability) &
Introduced Cost of living
adjustments (COLA)

2013 & Beyond - ?????????

1977 amendments
Changed the formula for
compensation calculations

1983 amendments
Taxation on SS benefits
Introduced benefits for divorcees
Increased payroll tax rate
Changed the earnings test
Increased Normal Retirement Age (NRA)

*Income from individual years excludes interest on the trust funds and is based upon intermediate assumptions.
Source: Social Security Administration, Office of the Chief Actuary.

OASDI (Old-Age, Survivors, Disability Insurance)
Operational Cash Flows as a Percentage of GDP

1957-2012: Actual Data
2013-2085: Projected data under the
intermediate assumptions

Where we are today.

In 2033, the scheduled
benefits would not be
payable under current law.
All reserves would be
exhausted, and the taxes
would be enough to pay 77
percent of scheduled
benefits.

*Income from individual years excludes interest on the trust funds and is based upon intermediate assumptions. Source: Social Security Administration, Office of the Chief Actuary.


Can 5 Years Make a Difference?

2007

2012


2007 Verbiage

2012 Verbiage

About Social Security’s future…

About Social Security’s future…

Social Security is a compact between generations.
For decades, America has kept the promise of
security for its workers and their families. Now,
however, the Social Security system is facing
serious financial problems, and action is needed
soon to make sure the system will be sound when
today’s younger workers are ready for retirement.

Social Security is a compact between generations.
Since 1935, America has kept the promise of
security for its workers and their families. Now,
however, the Social Security system is facing
serious financial problems, and action is needed
soon to make sure the system will be sound when
today’s younger workers are ready for retirement.

In 2017 we will begin paying more in benefits than
we collect in taxes. Without changes, by 2041 the
Social Security Trust Fund will be exhausted* and
there will be enough money to pay only about 75
cents for each dollar of scheduled benefits. We
need to resolve these issues soon to make sure
Social Security continues to provide a foundation
of protection for future generations.

Without changes, in 2033 the Social Security Trust
Fund will be able to pay only about 75 cents for
each dollar of scheduled benefits. We need to
resolve these issues soon to make sure Social
Security continues to provide a foundation of
protection for future generations.

TO SUMMARIZE
The system is projected to see a deficit between revenue
and income for the foreseeable future.

What might happen???


What Might Happen?
(How can we correct the problem?)
Current Reform proposals being studied/considered:
• Reduce cost-of-living adjustments
• Increase the maximum earnings subject to SS taxation
• Reduce benefits for future retirees
• Increase the payroll tax percentage
• Invest some of the trust fund in marketable securities
• Raise the normal retirement age
(Currently 66 for those born between 1943 & 1954;
67 for those born in 1960 and later)


Now on to the IMPORTANT Items…

You and YOUR Benefits!


What Should I Know or Do BEFORE
Applying for Social Security?
 Verify your earnings history
 Estimate your benefits at different ages
 Refer to your SS statement
 Visit www.SSA.gov and use the benefits
estimator calculators
 Evaluate strategies to maximize your benefits
 Consider and plan out ALL of your retirement
income sources


Who is Eligible for Social Security?
Be an employee or a self-employed worker who has earned at
least 40 credits…
•Generally looked at as 40 quarters, or 10 years.
•To earn a credit, you must make a certain amount of money
(at least $1,160 per “credit”).
Be at least age 62…
•Age 62 is currently referred to as “early retirement.”
•Your full retirement age depends upon the year you were born
(more on this in a moment).


Certain members of your family may be eligible for family benefits
based on your record…
•A spouse who is 62 years of age or older.
•A spouse who is under 62 years if he/she is caring for a child under 16
years or disabled.
•Unmarried children under 18 years.
•Unmarried children age 18-19, if they are full time students in
high school.


Certain members of your family may be eligible for family benefits
based on your record…
•Children of any age, if they are disabled from a disability that started
before age 22.
•A divorced spouse, unmarried, age 62 or older, and married to
you for at least 10 years (payments to a divorced spouse are
not counted toward the family benefit limit).


Full Retirement Age (FRA)
Your Year
of Birth

Full (Normal)
Retirement Age

1943-1954

66

1955

66 and 2 months

1956

66 and 4 months

1957

66 and 6 months

1958

66 and 8 months

1959

66 and 10 months

1960 and later

67


How Much Will You Receive?
Benefits depend on:
• How much you earned over
your working career.
• The age at which you apply for
benefits.


How Your Benefit is Calculated
• Formula includes your highest 35
years of earnings (Any missing
years are counted as zeroes in the
average) to find the AIME
• AIME (Average Indexed Monthly
Earnings) goes through a
calculation to determine your PIA, or
Primary Insurance Amount.


How Your Benefit is Calculated
• Your PIA is the amount you will
receive at full retirement age
(remember the chart we just
showed).
• Your benefit will be calculated
according to your PIA and any
reductions or enhancements based
upon what age you elect to retire.


AIME
(Average Indexed Monthly Earnings)
• The first $791 of your AIME is
multiplied by 90%
• The amount between $791 and
$4,768 is multiplied by 32%
• Any amount in excess of $4,768
is multiplied by 15%


Example… Meet Ronald Retiree
• Ronald was born in 1946.
• His AIME (Average Indexed Monthly Earnings)
are $6,500.
Formula is Applied…
• $711.90 ($791 * 90%)
• $1,272.64($4,768 – $791 = $3,977 * 32%)
• Excess = $259.80
($6,500 – $4,768 = $1,732 * 15%)
• For a Total PIA of $2,244.34
($711.90 + $1,272.64 + $259.80)

How’s that for complicated???


What if Ronald Wanted to Apply for Early Benefits?
If Ronald Applied Early…
At AGE:

Benefit Will be
% of PIA:

If PIA is $2,244,
His Benefit Will be:

62

75%

$1,683

63

80%

$1,795

64

86.7%

$1,945

65

93.3%

$2,094

• Ronald’s full retirement age is 66 since he was born between 1943-1954.
• Since his PIA was calculated to be $2,244/mo, that is what he would
receive at age 66.


BUT… What if He Applied for Benefits After
Reaching His Full Retirement Age?
If Ronald Applied After Reaching FRA…
At AGE:

Benefit Will be
% of PIA:

If PIA is $2,244,
His Benefit Will be:

66 (FRA)

100%

$2,244

67

108%

$2,424

68

116%

$2,603

69

124%

$2,783

70

132%

$2,962

• Ronald would earn delayed credits.
• *ONCE YOU REACH AGE 70, YOUR DELAYED CREDITS NO
LONGER INCREASE
• Please Note: cost of Living adjustments are not included, these figures are hypothetical only.


How Do Spousal Benefits Work?
• A spouse is eligible for ½ of his/her
spouse’s full PIA at FRA, that would then
be adjusted depending upon when
elected.
• If spouse qualifies for SS on his/her own
record, they will receive the higher of their
own benefit or the spousal benefit.
• Spouse must be at least age 62 for
the reduced benefit, or 66 for their full
spousal benefit.
• A spouse can NOT earn delayed credits
on spousal benefits after age 66.

IMPORTANT POINT:

Social Security benefits are
Gender neutral


Let’s Look at an Example
• Dave’s benefit is $2,200.
• Diane’s benefit (on her own earnings
history) is $900.
• Diane’s spousal benefit is 50% of Dave’s
benefit, which is $1,100 ($900 from her own
record + $200 of spousal benefit)
• Diane will receive the higher of the two,
which is $1,100.
KEY POINT: Dave (the primary worker) must have applied for
benefits in order for Diane to receive any spousal benefits.
However, he can suspend his payments after he applies in order to
build delayed credits if over FRA). We’ll discuss this in a moment.


Understanding Social Security and Divorce
Some General Rules
•Divorced spouse benefits cease upon remarriage.
•Multiple ex-spouses can receive benefits and the benefits of one
ex-spouse have no impact on the benefits of another.
•Exactly the same as spousal benefits provided the marriage
lasted at least 10 years. (The higher of your benefits or ½ your
spouse’s benefits.)


When a Spouse Dies…
(Understanding Survivor Benefits)
The surviving spouse receives the
higher of the two benefits. The lower
of the two benefits goes away.
Some Basic Rules:
•Except in the case of accident,
marriage must have been for at
least 9 months at date of death.
•Surviving spouse must be at least
age 60 for reduced benefits.


Something to Consider
Let’s look at an example…
•Dean and Margaret have been married for 35 years.
•Margaret’s benefit is $2,100/mo and Dean’s benefit is $1,500/mo.
•Margaret passes away.
•Dean will receive the higher of the two benefits ($2,100/mo).
He will no longer receive his benefit of $1,500/mo.

Represents a loss of $1,500/month in household income!


When Should I Take Social Security?

GAO study issued in June 2011 and
concluded that:
• Those that can delay taking benefits
should do so.
• For the average 65+ year old, SS
makes up approximately 37% of
household retirement income.


The REAL Life Factors to Consider…
• Do you plan to work in retirement?
• REMEMBER:
o If you are under the Full Retirement Age (FRA), you may be
penalized for working.
o In 2013, you would be penalized $1 for every $2 you make
over $15,120 ($1,260/mo).

• Your NEED for the income.
• The short term and long term needs of your spouse.
• Health.
• Life expectancy.


1st Tip for Getting the MOST From Social Security
Live a Long Time…
(Statistics suggest that those that celebrate the most
amount of birthdays live the longest.)


Ready for Some Real Tips?
(That You Have Some Control Over)
 Confirm your earnings record and explore whether or not
it can be improved…
• Do you have missing years?
• Are you certain it is accurate?
 Avoid garnishments that reduce your benefits…
• SS benefits are GENERALLY protected from debt collection
actions. This is true except in the case of:
o Back taxes
o Outstanding federal student loans
o Child support
o Alimony


More Tips
 Consider structuring income to reduce
or eliminate taxation on your benefits.
 If you are a single filer, you will have to
pay taxes on your SS benefits if your
total income is more than $25,000.
 If you are a joint filer, the number is
$32,000. It is possible that up to 85%
of your Social Security benefit is taxed.


Strategy #1 To Maximize Benefits
(Involves Spousal Coordination)
CLAIM and SUSPEND…
•Step 1: At Full Retirement Age (FRA), the spouse with the higher earnings
record applies for SS benefits, but immediately suspends benefits.
•Step 2: The spouse with lower earnings files for spousal benefit.
•Step 3: The spouse with higher earnings record claims their benefit at
age 70 (“un-suspends” their benefit).
KEEP IN MIND…
This strategy may not be done before FRA!


Let’s Explore… Dick and Jane
Dick and Jane are both 66…
• Dick’s benefit at age 66 would be
$2,196.
• Based on Jane’s working record, her
benefit would only be $700, so the
spousal benefit is higher at $1,098.
• If Dick elects to wait to file, his benefit
would be $2,899.
• Dick decides to “claim & suspend”.


Let’s Explore… Dick and Jane
BENEFITS…
• Jane is able to receive spousal
benefits.
• Dick’s benefits continue to grow.
• Survivor benefits will be higher.


Strategy # 2 To Maximize Benefits
(Involves Spousal Coordination)
“The DOUBLE DIP”
Step 1:
At Full Retirement Age, the spouse with the higher earnings record
applies for spousal benefits. (Spouse must be receiving benefits on
his/her record).
Step 2:
At age 70, the spouse with the higher earnings record switches to
his/her own record.


Let’s Explore… Sam and Susie
Sam is 66 and Susie is 62…
•Sam’s benefit (PIA) is $2,196.
•Susie’s benefit (PIA) is $1,000.
•Susie applies for benefits. She receives a
reduced amount of $750/mo.
•Instead of filing on his own record, Sam files
for a spousal benefit on Susie’s record. He
begins receiving $500/mo.
•At age 70, Sam’s benefit will be $2,899.
Meanwhile, he received an additional $500/mo
from 66-70.


Let’s Explore… Sam and Susie
BENEFITS…
• Sam gets benefits from age 66-70.
• Sam’s benefits continue to grow.
• Sam receives ½ of his spouse’s FULL PIA
($500/mo).
• Survivor benefits will be higher as a result
of him deferring HIS benefits.


Caution

• The “DOUBLE DIP” strategy cannot be done before
Full Retirement Age. In this example, Sam had attained FRA.
• Only one spouse is allowed to claim a spousal benefit.
• This is known as “restricting” application to a spousal benefit
(not formally known as the “DOUBLE DIP”).


What ELSE is There to Consider?

 Coordinate when and how you draw Social Security benefits with
your overall financial plan.
 Have a plan that considers how to maximize your Social Security
benefits to their fullest potential.


Have Questions About Your Situation?
Our Retirement Income Maximization Consultation
carefully considers:
How taxes may impact your Social Security benefits.
Strategies you may wish to consider in maximizing your benefits.
Coordinating spousal benefits.
How your overall income plan works with your SS benefits.
How to incorporate Social Security into your overall financial plan.


3 Types of People Who Could Benefit From the
Retirement Income Maximization Consultation
Person

Potential Benefit

Those under age 62

Opportunity to coordinate in advance SS benefit
elections and begin thorough income planning
while exploring potential tax savings opportunities
with current accounts.

Those age 62-70 who have not
elected Social Security yet.

Opportunity to strategically plan SS benefit
decision and coordinate with overall income plan.

Those over age 62 who have
already made Social Security
election

Opportunity to explore the “do-over” or one-time
voluntary suspension of SS benefits and
coordinate with overall retirement income plan.

Take a moment to reflect and evaluate your current
financial situation as it relates to the topic we just covered
that started with the following question…
Understanding Social Security Keys to

Maximizing Your Retirement Income…
Will You Get the Most Out of Social Security?


Examining Your Financial Health Through
the Financial Wellness Experience!

The Financial Wellnes Initiative®

PLAN OF ACTION!
© USA Financial Plug-N-Run®.
Use without license or reproduction without express, written permission
from USA Financial Plug-N-Run®. is strictly prohibited.

Plan of Action
1.Please seek help from a qualified financial services professional –
don’t try and “self-diagnose” or operate on yourself.
2.Please take the time to meet with that individual for a financial
physical or check-up.
3.Remember that a proper “diagnosis” always comes before any
proper “prescription”.
4.A proper “diagnosis” should help identify the problem(s)
not just the symptom(s).

Plan of Action
5.Help the “doctor,” or financial services professional, by being open and
honest – explaining any potential allergies. In other words, if you’ve had
prior bad experiences let them know that… there are often other
remedies or solutions. There could also have been a simple
misdiagnosis or incorrect prescription made previously.
6.If a “prescription” is the best course of action, focus on what the
prescription does and not on what it is called.
7.Understand the circumstance and the method for which the prescription
is to be used.
8.Consider my “definition of insanity”…
“To change nothing and continually do the same thing(s) over and
over, yet expect the results to be better than they were before.”

My Final TWO Parting Questions…
that will indicate to you the value of the

Financial Wellness
Consultation!

Important

Question #1
“Do you plan on living
another 5 or 10 more years…?”
Whether or not you’re planning
on it, Uncle Sam IS!

Here are the government’s life expectancy
numbers* based on age…
Age 55 Today
Expect to live 29.6 years

Age 75 Today

Age 60 Today

Age 80 Today

Age 65 Today

Age 85 Today

Age 70 Today

Age 90 Today

*Source: Department of Treasury Internal Revenue Service, Publication 590 (2011)

Important

Question #2
Would you be better off today if you had known
5 or 10 years ago all the things that you know now…?
(Including what you just learned in today’s session.)

If you are like most people…
Then the obvious answer is…
“…YES, of course
I’d be BETTER OFF TODAY!”

Here is the Purpose for Asking

This Question
My Job is to help make sure that
In 5 or 10 years from now
you don’t have to look back over those
next 5 or 10 years
and come to
that same realization!

…And Here is

The Secret!
The next 5 or 10 years
begins today!
Exclusively with the

Free Financial Wellness
Consultation!

Please Do Not Let Procrastination and Fear
of Change Become Your Worst enemy!
Similar to how a doctor may keep specific time
open for “new patients only”… I’ve set aside specific
time open for you to take advantage of my…

Financial Wellness
Consultation!

Maximize Social Security Income

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