social security maximization your guide to maximize your social security benefits
TRANSCRIPT
Social Security Maximization
Your Guide to Maximize Your Social Security Benefits
As a full-service retirement planning firm, we offer:
• IRA/401(k) rollovers• Asset protection• Income planning• Wealth management• Long-term care solutions• Wealth transfer strategies
Today’s topics
1.Finding your Primary Insurance Amount2.Deciding now or later3.Understanding the divorce factor4.Learning total benefits over your lifetime5.Determining the best option for you6.Protecting the survivor’s benefit7.Managing the impact of taxes 8.Choosing to work9.Uncovering the bottom line10.Filling the income gap
The retirement cliff …
The moment when your “working” income ceases and you start living off the money you set aside.
Your retirement roadmap
62Early
RetirementJune, 2018
66FRA
June, 2022
70Late
RetirementJune, 2026
FILE
The foundationSocial Security planning
The foundation of income planning for anyone who is about ready to retire!
*Source: http://www.ssa.gov/pressoffice/basicfact.htm
112233
Case StudyCase Study: :
Mary BaileyAge: 56
PIA: $900
George BaileyAge: 60
PIA: $1,900
The Baileys
What’s at stake?By using strategies illustrated in the Social Security Maximization report, they can increase their lifetime benefits as much as $170,000.$170,000.
This illustration represents a hypothetical situation and is for informational purposes only.
Importance
• How can you maximize maximize your lifetime benefit?
• WhoWho will provide reliable advice for making these decisions?
• Will Social Security Social Security provide the advice you need?
How many total credits do you need to qualify for Social
Security?
40 Credits40 Credits
http://www.ssa.gov/retire2/credits3.htm
Understanding your monthly benefit
Finding your PIADeciding now or later
Understanding the divorce factorLearning total benefits over your lifetime
Finding your PIAFinding your PIA
• Check Box #1… Check Box #1…
• If you would like to find out how your lifetime of earnings translates into your Primary Insurance Primary Insurance Amount (PIA)Amount (PIA)
Deciding nownow or laterlater
The question everyone should be asking,
"WhenWhen… should I start
taking Social Security?”
Your full retirement age
Year of Birth Full Retirement Age
1937 or earlier 65
1938 65 and 2 months
1939 65 and 4 months
1940 65 and 6 months
1941 65 and 8 months
1942 65 and 10 months
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
Your full retirement age (FRA) (FRA) is dictated by your year of birth.
FRAFRA is the age at which you can begin your full monthly benefit.
In our examples, we will be working with people whose FRAFRA is age 66.
Source: http://www.ssa.gov/retire2/retirechart.htm
62
63
64
656666 67
6869
70
71
720 7 58 069 31 0 081 62 43 2% of PIA
Age 62: Retirement benefits available.For each month you take benefits prior to FRA, the monthly amount is reduced.
Full Retirement Age (FRA):100% of PIA is available as a monthly benefit.
Age 70: the last month that your monthly benefit will increase.
After age 70: the Monthly benefit will no longer increase.
Age
62 75.0%
64 86.7%
66 100.0%
68 116.0%
70 132.0%
Source: http://www.socialsecurity.gov/retirement/1943.htmlhttp://www.socialsecurity.gov/retire2/delayret.htm
Deciding nownow or laterlater
Filing Age Factor Monthly Income
62 75.0% $750
63 80.0% $800
64 86.7% $867
65 93.3% $933
66 100.0% $1,000
67 108.0% $1,080
68 116.0% $1,160
69 124.0% $1,240
70 132.0% $1,320
The factor changes each month you wait.
Between age 62 and 70, there are 96 months you could file.
Each would result in a different benefit amount.
Deciding nownow or laterlater
File immediately if you:•Find your job is unbearable•Are willing to sacrifice retirement income•Are not healthy
Delay filing if you:•Want to maximize retirement income•Want to increase retirement benefits for spouse•Are still working•Are healthy
Deciding now or laterDeciding now or later
• Check Box #2… Check Box #2…
• If you would like to review the impact of taking your benefit at age 62, full retirement age, or age 70 or any month in between
How many years do you have to be
married to receive Social Security benefits from a former spouse?
You need to be married for 10 10
yearsyears.
http://www.ssa.gov/retire2/divspouse.htm
Understanding the divorcedivorce factorfactor
If you have gone through a divorce…
It might affect the retirement benefit to which you are entitled.
Understanding the divorcedivorce factorfactor
• Check Box #3… Check Box #3…
• If you would like to find out how a past divorce might impact your Social Security benefits
Learning total benefits total benefits over your lifetime
How much will your check be each month?
For how many months will you receive it?
Lifetime Benefits
Learning total benefits total benefits over your lifetime
Monthly benefit x Number of expected months Lifetime benefit
Every month Every month you wait…you wait…
Your monthly check goes up.
But, you would get one less monthly check.
Learning total benefits total benefits over your lifetime
• Check Box #4… Check Box #4…
• If you would like to learn about getting the maximum benefit over your lifetime, not just about a monthly check
Since 1993, up to what percentagepercentage of your Social Security
benefit has been subject to income
tax?
Up to 85%85%
http://www.ssa.gov/planners/taxes.htm
Strategies to maximize your lifetime benefit
Determining the best option for youProtecting the survivor’s benefit
Determining the best option for you
For married couples, a simple break-even analysis will usually give the wrong answer, costing you benefit dollars.
Because Social Security offers multiple benefits and strategies!
Retired Worker Benefit:
This is your “own” benefit based on your earnings history and
when you trigger benefits.
Spousal Benefit:
Once your spouse has filed for benefits and you have reached 62,
you are eligible to begin receiving a
reduced portion of his/her Primary
Insurance Amount (PIA).
Survivorship Benefit:
When one married person passes away, the
surviving spouse is eligible to receive the
higher of the two monthly benefits he/she
was receiving.
File and Suspend:
This concept allows for a lower-earning spouse to receive up to 50 percent
of theother’s PIA amount if both spouses file for
benefits at the right time.
Restricted Application:
The higher-earning spouse may be able to
start collecting a spousal benefit on the
lower-earning spouse’s benefit while allowing
his/her benefit to continue to grow.
There are tens of thousands of
calculations that go into finding the precise combination that will give you the largest lifetime benefit.
The Social Security Maximization report
will show exactly what to do.
Determining the best option for you
Through more than 20,00020,000 calculations:
The Social Security Maximization report calculates the lifetime benefit for each strategy and combination
Result:Result: A specific strategy for the highest expected lifetime benefit
Determining the best option for you
By using the Social Security Maximization report, George and Mary can increase their lifetime benefits as much as $170,000$170,000.
This illustration represents a hypothetical situation and is for informational purposes only.
Determining the best option for you
• Check Box #5… Check Box #5…
• If you would like to have a personalized report that shows the best strategy for you … 20,000 calculations to figure it out!
At what age can a surviving spouse begin receiving
Survivorship benefits?
6060 years old
http://www.ssa.gov/survivorplan/survivorchartred.htm
Protecting the survivor’s benefit
The death of a spouse during retirement can be a significant financial strainfinancial strain.
More than 70% 70% of all elderly persons with incomes below the poverty level are womenwomen.
More than half of elderly widows now living in poverty… ……were not poor before the death of their were not poor before the death of their husbandshusbands.
http://assets.aarp.org/rgcenter/ppi/econ-sec/2010-03-poverty.pdf
George and Maryretirement scenario
AssetsAssetsSavings $150,000CDs $200,000Investments $ 50,000Life Insurance Death Benefit $ 25,000Total Assets $425,000$425,000
IncomeIncome George MaryPension $14,400 $ 6,000Social Security $30,096 $ 7,790Income $44,496 $13,790Total Retirement Income $58,286$58,286
This illustration represents a hypothetical situation and is for informational purposes only.
Mary’s survivorship scenarioIncome Income George MaryPension $14,400 $ 6,000Social Security $30,096 $ 7,790
Total Retirement Income $58,286$58,286
Household income is reduced by:Household income is reduced by:$22,190 / year$22,190 / year38%38%
Is this a concern for you? Is this a concern for you?
$36,096$36,096
This illustration represents a hypothetical situation and is for informational purposes only.
Mary’s income solution
Reposition the money from the CD: $200,000$200,000
Income Base:7% for 20 years
Guaranteed Income For Life*
Example:Fixed Indexed Annuity
Year AgeIncome
BaseWithdrawal Percentage
Annual Income
1 70 $200,000
3 72 $228,980 5.50% $12,594
6 75 $280,510 6.00% $16,831
9 78 $343,637 6.00% $20,618
12 81 $420,970 6.50% $27,363
15 84 $515,707 6.50% $33,521
20 89 $723,306 7.00% $50,631
This chart is for illustrative purposes and not intended to be representative of any specific investment vehicle.*Guarantee based on the claims paying ability of the insurance carrier
Protecting the survivor’s benefit
• Check Box #6…Check Box #6…
• If you would like to find out how to protect the survivor’s income
Which vice president had the deciding vote
to increase Social Security taxation to
85%?
Al GoreAl Gore
http://www.ssa.gov/history/InternetMyths2.html
Taxation and working
Managing the impact of taxes Choosing to work
Managing the impact of taxes As much as 85 percent of your benefits may be subject to income taxation.
Nearly every source of income is included:•Wages•Pensions•Dividends•Capital gains•Business income•Tax-exempt interest
YOURSYOURS
NOT YOURSNOT YOURS
Before After
Social Security $10,000 $10,000
Pension $18,000 $18,000
Taxable interest $20,000
Deferred interest $20,000
Income taxes paid $5,536 $801
Managing the impact of taxes
Repositioning her rainy day funds into an annuity saves Mary $4,735 in income taxes!
An annuity is a long-term investment vehicle and may not be suitable in every situation.
Managing the impact of taxes Managing the impact of taxes
• Check Box #7… Check Box #7…
• If you are interested in minimizing (or eliminating!) the taxation of your Social Security benefits
Choosing to work
• AARP found that 80% of baby boomers plan to work during retirement.*
• What effect will that have on your net income?
• Depending on your age, it could cost you up to 50% of your benefits.
*http://assets.aarp.org/rgcenter/econ/boomers_envision_1.pdf
Choosing to work
• Check Box #8… Check Box #8…
• If you would like your report to include the impact of working … in dollars and cents, personalized just for you
You already elected Social Security benefits
and now realize you made a mistake. What
are your options?
If you change your mind within the first 12 months 12 months of electing benefits, you
can withdraw the application and pay back
any benefits.
http://www.ssa.gov/retire2/withdrawal.htm
Uncovering the bottom line
Uncovering the bottom line
By using the Social Security Maximization report, you will know exactly how to capture your highest possible lifetime benefit.
+ $170,000+ $170,000
This illustration represents a hypothetical situation and is for informational purposes only.
Your retirement timeline
62Early
RetirementJune, 2018
66FRA
June, 2022
70Late
RetirementJune, 2026
FILE
Uncovering the bottom lineUncovering the bottom line
• Check Box #9… Check Box #9…
• If you want to learn how to increase your lifetime benefits
Foundation of retirement
Many who retired in the past thought they had enough money saved for retirement!
“I hope so…” or “I know so…”Volatility Index – or Fear GaugeExpected Market Volatility
10-Year TreasuryLong-term Fixed Rates
1990 1995 2000 2005 2010 2013
Source – Yahoo Finance – 1-1-2014VIX is a trademarked ticker symbol for the Chicago Board Options Exchange Market Volatility Index, a popular measure of the implied volatility of S&P 500 index options. Often referred to as the fear index or the fear gauge, it represents one measure of the market’s expectation of stock market volatility over the next 30 day period. (wikipedia.com)The CBOE 10-Year Treasury Note (TNX) is based on 10 times the yield-to-maturity on the most recently auctioned 10-year Treasury note.This chart is for illustrative purposes and not intended to be representative of any specific investment vehicle. Past performance is not indicative of future results.
Traditional trade-offs
No Acceptable Alternatives
You can either expose yourself to an acceptable amount of risk…
Or find an acceptable fixed
rate.
Risk
Safety
1993
Risk
Safety
2014
Acceptable Range
AgeAnnual Return
Portfolio A Year End Balance
Annual Return
Portfolio B Year End Balance
66 32% 633,450 -37% 290,000 67 -3% 588,000 5% 280,171 68 30% 740,641 16% 298,028 69 8% 769,759 5% 285,343 70 10% 819,213 11% 288,250 71 1% 801,045 29% 341,938 72 38% 1,072,227 -22% 236,519 73 23% 1,287,663 -12% 177,673 74 33% 1,685,558 -9% 129,818 75 29% 2,134,671 21% 124,513 76 21% 2,550,208 29% 126,500 77 -9% 2,283,278 33% 134,095 78 -12% 1,976,381 23% 129,239 79 -22% 1,502,887 38% 141,094 80 29% 1,896,101 1% 105,142 81 11% 2,063,447 10% 76,791 82 5% 2,124,645 8% 42,524 83 16% 2,419,867 30% 14,160 84 5% 2,510,157 -3% 0 85 -37% 1,537,562 32% 0
Sequence of returns Starting principal: $500,000Income: 5% of first-year principal Inflation: 3%
If you averaged 8.43%8.43% return over 20 years, does the sequence of the gains and losses matter?
The only difference is the order of returns is reversed!
Sequence risk Sequence risk is real, and you should be aware of it!This illustration represents two hypothetical
investments, are not actual portfolios and are for informational purposes only.
Foundation of retirement
Whether we are rich, poor, or somewhere in between, we all want a happy and successful
retirement.
Knowing where your INCOMEINCOME is coming from is the foundationfoundation of retirement.
$5,607Monthly Income Goal
George and Mary’s income gap
Mary BaileyAge: 56
PIA: $900
George BaileyAge: 60
PIA: $1,900
Solution: Solution: Reposition $130,952
into an income- producing option
$3,157Social Security
$1,700Pension
$750 Gap
This illustration represents a hypothetical situation and is for informational purposes only.
1
2
3
45 6
78
9
10
11
Provides a lifetime income
Offers increases for every year you wait
to start income
Allows you to save as much as you
want into the plan
Potentially leaves a legacy to your family – unlike Social Security
Years
1
3 1000
5 1134
Creating a lifetime income
7 1415
9 1605
Filling the income gapFilling the income gap
• Check Box #10… Check Box #10…
• If you think maximizing your Social Security isn’t enough and you need the rest of your assets to be optimized to fill the income gap
Feedback & Consultation form
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Thank you for attending our Social Security event!