Optimizing Social Security Benefits

Optimizing Social Security Benefits. One of the most important retirement decisions you will make.

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Important information to consider. This material is provided for overview or general informational purposes only. These concepts were derived under current tax and social security laws. Changes in the tax or social security laws may affect the information provided. Provided content is for overview and informational purposes only and is not intended as tax, legal, fiduciary, or investment advice. Any individuals used in scenarios are fictitious and all numeric examples are hypothetical and were used for explanatory purposes only. Not affiliated with or endorsed by the Social Security Administration, the Centers for Medicare & Medicaid Services, or any governmental agency..

Retirement Landscape The Basics The Benefits Additional Aspects to Consider Will it be there? The importance of an integrated retirement.

Retirement Landscape.

Retiring at 65 used to mean a pension, guaranteed Social Security and lifetime healthcare benefits, a gold watch, and a lawn chair..

You may live longer than you think. Woman. Man. 87.

The three-legged stool of retirement Pension/defined benefit plan Social Security benefits Personal savings and retirement accounts.

Social Security: The Basics.

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How it works: When you’re working, you contribute 6.2% of your earnings to Social Security. If you’re self-employed, you contribute 12.4%. Up to $137,700 (in 2020).

Key factors that determine the total benefits you’ll receive: Earnings history When you claim Your longevity Two ways to qualify: You worked and contributed to Social Security for 40 quarters (10 years) Your spouse worked and contributed to Social security for 40 quarters (10 years) You can earn up to 4 credits a year In 2020, you earn one credit for each $1,410 in earnings – up to a maximum of four credits a year.

FRA & PIA. YEAR OF BIRTH FULL RETIREMENT AGE (FRA) 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 67.

Benefits calculated. 35. Highest years of earnings.

You may claim your benefits as early as age 62. Full benefits are available once you reach “Full Retirement Age.” Delaying your benefits beyond your Full Retirement Age is also an option. So, when should you file?.

Age 2020 limit Withholding Below FRA $18,240/year $1 of benefits withheld per $2 of earning above the limit Year of FRA $48,600/year $1 of benefits withheld per $3 in earning above the limit prior to reaching FRA Month of FRA and beyond None $0.

INCREASED BENEFITS 67 $1,728 108% 68 $1,856 116% 69 $1 ,984 124% 70 $2,112 132%.

Average Social Security benefit: $1,503 This includes the 1.6% cost-of-living-adjustment Maximum Social Security benefit Claiming at 62: $2,265 Claiming at FRA (66): $3,011 Claiming at 70: $3,790.

Available Benefits.

Worker Benefits Traditional Social Security retirement benefit Based on 35 highest years of earnings that were taxed for Social Security (inflation adjusted) Permanently reduced when claimed before FRA Permanently increased when claimed after FRA.

Spousal Benefits Entitled to 50% of spouse’s PIA when you achieve FRA Only collected when higher earner claims Permanently reduced if claimed before FRA No increase for delaying beyond FRA.

Ex-spousal Benefits Qualifications: unmarried, 62 or older, married for at least 10 years and divorced for two years Entitled to 50% of ex’s retirement benefit 100% of ex’s survivor benefits No impact on ex-spouse or ex-spouse’s current spouse If you remarried after 60, you’re still eligible for ex-spouse SURVIVOR benefits Not subject to maximum benefit limits.

Ex-spousal BenefitsMultiple Marriage Case Claire, 57 Teacher, $40,000/year Inconsistent career earnings Claire’s PIA is $850 Greg Claire’s first husband Divorced after 15 years Deceased Greg’s PIA is $1,250 Steve Claire’s second husband Divorced after 11 years Steve’s PIA is $1,800.

Widow/Widower/Survivor Benefits Eligible as young as age 60 at permanently reduced benefits Entitled to 100% of deceased spouse’s benefit at your FRA.

Available benefits: Children. Dependent Child Benefits Unmarried 18 or under, legally dependent 50% benefit if parent/legal guardian is living 75% benefit if parent/legal guardian is deceased Who is eligible? Biological children Step-children Adopted child Grandchild Step-grandchild.

“Young Parent” Benefits (Dependent Benefit) For parents of children receiving benefits Eligible until child turns 16 50% benefit based on higher earner’s PIA.

Additional aspects to consider.

Special rules for public servants. Firefighters. Law enforcement.

Windfall Elimination Provision Impacts YOUR OWN Social Security benefit amount.

Cost of living adjustment Helps offset increases in retirement expenses Not guaranteed: 2% increase in 2018 2.8% increase in 2019 1.6% increase in 2020.

Percentage of benefits taxed is based on annual combined income Combined income formula:.

Taxation Example. Man and woman. Mark and Amy: Married, Filing Jointly Annual Income in Retirement Mark: Social Security $18,000 Amy: Social Security $15,000 Mark: Pension $25,000 Mark: IRA Distribution $10,000 Amy: IRA Distribution $12,000 Total Annual Retirement Income: $80,000.

Taxation Example. Man and woman. Mark and Amy: Married, Filing Jointly Annual Income in Retirement Mark: Social Security $18,000 $9,000 Amy: Social Security $15,000 $7,500 Mark: Pension $25,000 Mark: IRA Distribution $10,000 Amy: IRA Distribution $12,000 $63,500 COMBINED INCOME.

Taxation Example. Man and woman. Mark and Amy: Married, Filing Jointly COMBINED INCOME: $63,500 % of Social Security benefits that are taxed Social Security taxable income $0 - $32,000 $32,000 0% $0 $32,001 - $44,000 $12,000 50% $6,000 More than $44,000 $19,500 85% $16,575 $22,575.

Is it going to be there?.

Setting the record straight. Flip calendar. 2035.

Setting the record straight. Flip calendar. 2035.

Possible legislative solutions. Increase Social Security tax rates Higher “maximum earnings” amount subject to Social Security taxes An increase in the Full Retirement Age (FRA) A decrease in future benefits Reduction of COLAs Combination of above.

Integrated Retirement.

Piece of the pie. 2 Social Security Other Income Sources 40 60.

An integrated approach to your retirement income strategy can help you successfully get to the top and back down the mountain. An integrated approach can include: Optimizing your Social Security benefits Using guaranteed lifetime income strategies to achieve retirement security in an era of uncertainty Access to liquidity Preparing for potential healthcare needs and costs.

1 year from claiming date to change your mind Reversal within one year means reimbursing SSA for benefits received After 1 year, you cannot change your election strategy You may be able to increase your benefit beginning at FRA through suspension.

create an integrated strategy that allowed you to retire the way you wanted to without worry or fear of running out of money?.

potentially increase your retirement income by 30–50% with no additional out-of-pocket expenses without increasing risk and guarantee more of your retirement income so that you reach your retirement lifestyle objective?.

Free Social Security & Retirement Income Analysis.

Thank You.