A Closer Look at Your Social Security Benefits

A Closer Look at Your Social Security Benefits
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Important Information to Consider:
Prudential Annuities, its distributors and representatives do not provide tax, accounting, or legal advice. Please consult your own attorney or accountant. This guide presents a general overview of certain rules related to Social Security and the ideas presented are not individualized for your particular situation. The Bipartisan Budget Act of 2015 made significant changes to some of the concepts discussed in this presentation. Where necessary, these changes are noted and explained. This information is based on current law which can be changed at any time.

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Agenda Over the next hour we will discuss the following items.

Funding and Calculation of Benefits
Becoming eligible 40 quarters (10 years) of wages that were subject to Social Security payroll taxes Quarters do not need to be consecutive Quarters do not expire and will remain on Social Security record Benefits calculated based on average of the 35 highest years of earnings $0 used in all years less than 35 Will result in a lower benefit If your clients pay taxes into Social Security, it does not automatically make them eligible to receive benefits. To be eligible to receive Social Security benefits, they must work and pay Social Security taxes for 40 quarters. The quarters do not need to be consecutive nor do they expire. Once a taxpayer has worked and paid Social Security taxes for the 40 quarters, he/she is eligible to receive benefits. [CLICK]The benefit amount is determined by the taxpayer’s work history. Benefits are calculated by averaging the 35 highest years of income. If a taxpayer does not have 35 years of earnings history, those years will count as $0 in the calculation. As a result, this will lower the benefits the taxpayer will receive as it will have the effect of lowering the average. [Optional Talking Points for Women] Women spend 27 years in work force while men work nearly 40 years. While the good news is that there are more women in the workforce now than at any other time in history, they continue to earn less than men, are more likely to work part-time and to leave the workforce temporarily to serve in a caregiver role. Lower earnings combined with fewer full-time years in the workforce mean that women are less likely to receive benefits from employer-based retirement plans, more likely to receive smaller Social Security benefits, and have fewer personal savings for retirement. . [Women Institute for a Secure Retirement (WISER) 2013] Benefits are calculated based off of the best 35 years of earnings. For each year out work, a zero is used in the calculation. Due to maternity and family leave, women are out of the workforce Source: “How You Earn Credits”, SSA Publication No , ICN ; January 2015

When Is My Full Retirement Age (FRA)?
Date of Birth Full Retirement Age 66 66 and 2 months 1955 66 and 4 months 1956 66 and 6 months 1957 66 and 8 months 1958 66 and 10 months 1959 When will your clients reach their full retirement age? At their full retirement age they are eligible for their full social security retirement benefit. [Read Slide] 67 1960 and later Source: “Retirement Benefits”; SSA Publication No , ICN ; January 2015

Can I Take My Benefits Early?
Age FRA 66 Age FRA 67 62 62 25% reduction 20% reduction 13.3% reduction 6.7% reduction Full benefits 30% reduction 25% reduction 20% reduction 13.3% reduction 6.7% reduction Full benefits 63 63 64 64 65 65 66 66 If your clients decide to take Social Security early, their benefits will be reduced. Depending on when their full retirement age is, their Social Security benefit may be reduced as much as 30%. It is important to remember that, the reduced benefit would generally be your clients permanent benefit for the rest of their life.’ [Optional Talking Points for Women] More of an impact on women who tend to have longer life expectancies as they are electing a lower benefit for a longer period of time. 67 Source:

Taking Benefits and Working
Full Retirement Age (FRA) No penalty In the Year Full Retirement Age (FRA) is reached Give up $1 in benefits for every $3 earned above a $41,880 limit* Under Full Retirement Age (FRA) [OPTIONAL SLIDE] Besides age, there are other factors to consider when determining when to begin Social Security payments. Depending on your clients’ age, if they are still working and collecting Social Security benefits, their benefits could be reduced. [READ SLIDE] Give up $1 in benefits for every $2 earned above a $15,720 limit* * 2016 Limits; source: as of November 2015

Working While Collecting Social Security
John is age 62 with a $12,000 annual benefit Still working, earns $25,000 per year $9,280 over the earnings threshold Will give up $4,640 of benefits Receives only $7,360 in benefits this year At full retirement age, no longer any benefit reduction [Optional Slide] Let’s look at an example of how working while collecting Social Security can affect your clients benefit. Let’s meet John. His benefit at age 62 is $12,000. This reflects all reductions since he is below full retirement age. He also is still working, earning $25,000. He is $9,280 over the threshold ($25,000 – $15,720). This means his benefit is reduced $4,640 – and instead of receiving $12,000 he will only receive $7,360 ($12,000 – $4,640). This is a hypothetical example for illustrative purposes only.

Benefits of Waiting Increase in benefits for clients with Full Retirement Age (FRA) of 66/67 Age FRA 66 Age FRA 67 67 68 8% increase 16% increase 24% increase 32% increase 8% increase 16% increase 24% increase 68 69 69 70 70 If you decide to wait until after your full retirement age, your Social Security benefits may be increased. From your full retirement age until you reach age 70, for every year you delay taking your Social Security benefits, your benefits will increase by 8%. After age 70, while it is possible to delay taking your benefits, the 8% increase does not continue. This means there is no incentive to delay taking benefits after age 70. Source:

Benefits of Waiting Breakeven Points: Age 70 vs. 66: Age 81
When should you take Social Security? Let’s look at some examples of breakeven points based on the age you decide to take your Social Security benefits. None of us know for sure how long we’ll actually live, but let’s make some assumptions for the purposes of our examples. For those that expect to live to or beyond their life expectancy, it may make sense to delay taking Social Security benefits. Let’s assume that you will receive a 3% cost-of-living adjustment every year: take distributions at age 62 (assuming a monthly payment of $1500), the total Social Security benefit at age 95 is $1,039,143 take distributions at age 66 (assuming a monthly payment of $2000), the total Social Security benefit at age 95 is $1,285,117 take distributions at age 70 (assuming a monthly payment of $2640), the total Social Security benefit at age 95 is $1,531,112 Even if you don’t live to 95 it may make sense to delay benefits. If you delay taking distributions until:[CLICK] 66 instead of 62, and you live past age 76, you will receive more Social Security benefits.[CLICK] 70 instead of 62, and you live past age 79, you will receive more Social Security benefits.[CLICK] 70 instead of 66 and live past age 81, you will receive more Social Security benefits. The longer you live past those “breakeven points,” the more benefits you will receive. This is a hypothetical example for illustrative purposes only. This assumes a full retirement age benefit of $24,000 a year, an annual cost of living adjust of 3%, and the client living to age 95.

Taxation of Social Security Benefits
Benefits may be taxable depending on the amount of your provisional income Provisional Income includes: ½ Social Security benefits Income from municipal bonds Wages Business income Interest Capital gains Dividends Traditional IRA distributions Rental income And more… Provisional Income does not include: Tax-deferred build-up inside IRAs, 401(k)s and annuities Income from Roth IRAs Non-taxable income from life insurance [Speaker: Read left-hand column: What Provisional Income includes] [Click in right-hand column and read] Your Social Security benefits may be taxable depending on the amount of your provisional income. Your provisional income equals ½ of your Social Security benefit plus other income you have received during the year, even tax-free savings bond interest. Once you have determined the amount of your provisional income, you can determine how much of your Social Security benefit will be taxable.

Taxation of Social Security Benefits
Benefits only taxable if provisional income exceeds: Married Filing Jointly $32,000 = Social Security not taxable $32,000 - $44,000 = up to 50% taxable Above $44,000 = up to 85% taxable Single or Head of Household $25,000 = Social Security not taxable $25,000 - $34,000 = up to 50% taxable Above $34,000 = up to 85% taxable There are taxation thresholds that were put into place in 1983 with the idea that only wealthy individuals would be paying these taxes. These thresholds are not indexed for inflation and the numbers of middle class people paying these taxes—and the amounts that they pay—are only increasing. The thresholds are as follows: [CLICK -- review amounts for Single taxpayers.] [CLICK – review amounts for Married Filing Jointly.] Source: “Retirement Benefits”, SSA Publication No , ICN ; Jan 2015 Prudential Annuities, its distributors and representatives do not provide tax, accounting, or legal advice. Please consult your own attorney or accountant.

Spousal Benefits Now that we have discussed individual benefits, let’s move on to spousal benefits.

Spousal Benefits Personal earnings record, or Spouse’s earnings record Married individuals can claim Social Security benefits based on Spousal benefit is up to 50% of their spouse’s Social Security benefit Cannot claim spousal benefit until the spouse files for benefits If electing based on spouse’s earnings record [OPTIONAL SLIDE] It should be noted that it is possible to receive benefits even if the taxpayer never worked or did not have enough credits to be eligible for benefits. Someone who is married can receive Social Security benefits based on their spouse’s earnings history. If a married taxpayer has met the 40 quarter requirement, he or she can elect to receive benefits based on their own personal earnings record or their spouse’s. [CLICK] A spousal benefit is up to 50% of the working spouse’s Social Security benefit. However, the spouse cannot claim spousal benefits until the working spouse files for benefits. Source: “Retirement Benefits”; SSA Publication No , ICN ; January 2015

Spousal Benefits How is the spouse’s benefit calculated?
Gary’s full retirement age benefit: $2,000 Amy has no earnings history Amy is entitled to greater of: 50% of Gary’s benefit: $1,000 Amy’s own benefit: $0 Amy’s benefit is increased to $1,000: The $1,000 increase is Amy’s spousal benefit Let’s look at how this would work. Let’s look at an example of a married couple Amy and Gary. Assume Gary has, at full retirement age, a Social Security benefit of $2,000. Amy has no earnings history. Amy would be entitled to $1,000. Why? Half of her husband’s benefit is $1,000, and since his wife Amy has no benefit on her own, her spousal benefit will be $1,000.

Taking Spousal Benefits Early
Lower-earning spouse files for benefits before Full Retirement Age Own benefit reduced Spousal benefit reduced as well Age FRA 66 Age FRA 67 62 62 35% spousal benefit 37.5% spousal benefit 41.7% spousal benefit 45.8% spousal benefit 50% spousal benefit 32.5% spousal benefit 35% spousal benefit 37.5% spousal benefit 41.7% spousal benefit 45.8% spousal benefit 50% spousal benefit 63 63 64 64 65 65 Now let’s look at how a spousal benefit can be reduced. If the lower-earning spouse takes Social Security before they reach their full retirement age, not only will their own benefit be reduced as we showed earlier, but the spousal benefit, if taken, will be reduced as well. These tables show spousal benefit percentage reductions. 66 66 67 Source:

Taking Spousal Benefits Early
Amy, the lower earning spouse, files for benefits before her Full Retirement Age Gary’s FRA benefit: $2,000 Amy’s FRA benefit: $0 Amy’s FRA spousal benefit is $1,000 What if Amy takes benefits at age 62? At age 62, her spousal benefit is reduced to 35% Receives $700 per month instead of $1,000 per month Let’s look at an example with the same husband and wife. Here Amy decides to take her spousal benefit at age 62. If she takes benefits at age 62, assuming her full retirement age is 66, her spousal benefit will be reduced by 35%, leaving her with a Social Security benefit of $700. ($2000 X 35% = $700) This is a hypothetical example for illustrative purposes only.

Survivor Benefits Surviving spouse can receive or step up to the benefit of the deceased spouse If survivor is full retirement age, 100% of spouse’s benefit Survivor benefits reduced if received before full retirement age – up to 28.5% Exceptions for widowers with children who are under 16 Survivor benefits generally begin at age 60 Advantageous if greater when full retirement age reached Survivor can switch to his or her own benefits Another way a spouse can receive Social Security benefits is when his/her spouse passes away. This type of benefit is known as survivor benefits. If the surviving spouse is at full retirement age, the benefit will step up to 100% of the deceased spouse’s benefit. Survivor benefits can start as early as age 60, but if they begin this early the benefit will be reduced. It is important to remember that a spouse can collect survivor benefits, and at some later point switch over to his/her own benefits. In other words, collecting survivor benefits will not have an effect on your own benefits. Source: “Survivor Benefits”; SSA Publication No , ICN ; July 2015

Social Security and Other Pension Benefits
Government Pension Offset Affects spousal / survivor benefits if the spouse / survivor has a pension from a government 2/3 of what you receive from your government pension will be subtracted from your Social Security benefit Windfall Elimination Provision If you are entitled to a Social Security retirement benefit, and work for, or have worked for, an employer who does not withhold Social Security taxes from your salary (such as a government agency), your Social Security “Primary Insurance Amount,” PIA (the benefit you would receive if you elect to begin receiving retirement benefits at your normal retirement age), may be subject to a reduction. Generally, the reduction would be the lesser of : 50% of the non-Social Security pension or $413 (in 2015) Pension from an employer where Social Security taxes were paid is not taken into consideration [Optional Slide] [Read Slide] These reductions are not reflected in your Social Security statement. Source: “Windfall Elimination Provision”, SSA Publication No , ICN , August 2015; “Government Pension Offset”, SSA Publication , ICN , July 2015

Can I Collect Benefits from a Divorced Spouse?
Spousal benefits Survivor benefits Spousal benefits: Your marriage lasted at least 10 years Cannot be remarried Your ex-spouse is entitled to Social Security Survivor benefits: Marriage lasted for 10 years At least age 60 or older Cannot remarry until over age 60 If you are divorced, you can still collect benefits from your ex-spouse’s Social Security record as long as the marriage lasted at least 10 years. In other words, when determining your benefits, you will calculate them as if you are still married. If your divorced ex-spouse has passed away, you can collect survivor benefits so long as the marriage lasted for at least 10 years, you are age 60 or older and you don’t remarry until over age 60 (unless the latter marriage ends, whether by death, divorce, or annulment). Source: “What Every Woman Should Know”, SSA Publication No ICN ; September 2015

Social Security Maximization Strategies
The last section we will cover today involves strategies to maximize Social Security.

Age 62 Jen and Matt are married and both 62 years old 66 Matt’s full monthly Social Security benefit at age 66 will be $2,000 85 Matt dies at age 85 92 Jen dies at age 92 Let’s look at an example involving Matt and Jen. This couple is considering different options for beginning their social security benefits. [Read Slide.] What are their options? Jen stayed home and raised the family, so she has no earned Social Security benefits of her own This is a hypothetical example for illustrative purposes only.

Option 1: File Early At Age 62 Matt files, lives 23 years Reduced benefit of $1,500 month / $18,000 year for 23 years Jen files, lives 30 years Reduced spousal benefit of $700 month / $8,400 year for 23 years Survivor benefit of $1,650 month / $19,800 year for 7 years Option number one is for Matt and Jen to both begin benefits at age 62. Since Jen does not have a Social Security record of her own, she will need Matt to file for benefits to enable her to become eligible for spousal benefits. The first option is to have Matt file for his Social Security benefit today. When he does this, Jen will become eligible to begin her spousal benefits. Since she is below her full retirement age, instead of 50% of Matt’s benefit, she will receive 35% of Matt’s benefit. Since Matt is also below full retirement age, his benefit will have a 25% reduction – so instead of the $2,000 per month he is entitled to at age 66, he will receive $1,500 per month. Assuming that Matt lives until age 85 and Jen lives until age 92, Matt will receive his $18,000 per year payment for the next 23 years. Note that this figure could increase for Social Security Cost of Living Adjustments (COLA). Jen will receive her own spousal benefit for the next 23 years until Matt dies. At that point, she will begin her survivor benefit. Since Matt began his social security benefit before his full retirement age and Jen is beginning her survival benefit after her full retirement age, she will receive 82.5% of Matt’s full retirement age benefit. If this rule did not exist Jen’s survivor benefits would only increase to what Matt was receiving - $1,500. Because of this rule though her benefit will increase to $1,650 per month .Note that figure could be larger if there are COLAs. This is a hypothetical example for illustrative purposes only.

Option 2: File At Full Retirement Age Matt files at 66, lives 19 years Receives $2,000 per month / $24,000 per year Jen files at 66, lives 26 years Receives $1,000 per month / $12,000 per year for 19 years Survivor benefits of $2,000 month / $24,000 year for 7 years Option #2 is for Matt and Jen to both file at age 66. [Read slide] This is a hypothetical example for illustrative purposes only.

Option 3: Matt Files & Suspends* Matt files at 66, lives 19 years, suspends benefits until age 70 At age 70, receives $2,640 per month / $31,680 per year Jen files at 66, lives 26 years Receives $1,000 per month / $12,000 per year for 19 years Survivor benefits of $2,640 month / $31,680 year for 7 years Another option is for Matt to file at age 66, but then immediately suspend his benefits. By doing this he will not begin receiving his Social Security benefits yet, but Jen can begin to receive her spousal benefits. At age 70, Matt will begin his Social Security benefits. There is limited opportunity to take advantage of this strategy. Under §831(b) of the Bipartisan Budget Act of 2015, Pub. L , an individual who suspends personal benefits after April 29, 2016 is deemed to be suspending all benefits payable on that record. Spousal benefits will only be payable against an individual who suspends benefits prior to April 30, 2016. [Read Slide] * Under §831(b) of the Bipartisan Budget Act of 2015, Pub. L , an individual who suspends personal benefits after April 29,2016 is deemed to be suspending all benefits payable on that record. Spousal benefits will only be payable against an individual who suspends benefits prior to April 30, 2016.

Total Payout: Matt Files & Suspends at 66 $475,200 of his benefits $228,000 of spousal benefits $221,760 of survivor benefits $924,960 Matt and Jen Claim at 66 $456,000 of his benefits $228,000 of spousal benefits $168,000 of survivor benefits $852,000 Matt and Jen Claim at 62 $414,000 of his benefits $193,200 of spousal benefits $138,600 of survivor benefits $745,800 Here are the total payout amounts for each of the different scenarios for Matt and Jen. Remember, this is all the same client and they could have chosen any of the options. The file and suspend strategy results in the largest dollar amount for both Matt and Jen. [CLICK in paragraph two] [CLICK in paragraph three] This is a hypothetical example for illustrative purposes only.

File and Suspend Increases benefits for couples who retire at different ages Things to remember Married couples are eligible for benefits based on their earnings history or their spouse’s earnings history Individuals cannot collect spousal benefits until the other spouse files for benefits Individuals who have reached full retirement age can file for their personal benefits and then immediately suspend those benefits Spouse who suspends the benefits continues to receive delayed retirement credits (DRC) An individual who suspends personal benefits after April 29, is deemed to be suspending all benefits payable on that record. Spousal benefits will only be payable against an individual who suspends benefits prior to April 30, 2016. Let’s review some important information about the File and Suspend strategy. It allows married couples who retire at different times to increase benefits. This approach works really well where one spouse has either no personal earnings history (i.e., homemaker) or a very limited earnings history. To understand the approach, it is important to remember a couple of things. [Read Slide or use below talking points] First, married couples are eligible for benefits based on their earnings history or their spouse’s earnings history Second, individuals cannot collect on their spouse’s earnings history until the other spouse files for benefits Third, individuals who have reached full retirement age can file for their personal benefits and then immediately suspend those benefits Fourth, the spouse who suspends the benefits continues to receive delayed retirement credits (DRC) Finally, an individual who suspends personal benefits after April 29, 2016 is deemed to be suspending all benefits payable on that record. Spousal benefits will only be payable against an individual who suspends benefits prior to April 30, 2016

Social Security Maximization Strategy
Age 62 66 70 85 92 Adam is looking to retire at age 70, his Social Security benefit will be $2,640 per month Adam dies at age 85 Meghan dies at age 92 Adam and Meghan are married and both 66 years old Meghan’s full monthly Social Security benefit at age 66 will be $1,500 per month Let’s look at an example involving a Adam and Meghan. This couple is considering different options for beginning their social security benefits. [Read Slide.] What are their options?[Click, Click, Click] This is a hypothetical example for illustrative purposes only.

Option 1: Meghan files and Adam waits Meghan files for benefits at age 66 She receives $1,500 per month / $18,000 per year for 19 years Survivor benefits of $2,640 month / $31,680 per year for 7 years Adam files in four years at age 70 The first option is for Meghan to file for Social Security this year. Adam is looking to take advantage of the deferred retirement credits, so he will not begin his benefits until age 70. Adam receives $2,640 per month / $31,680 per year for 15 years This is a hypothetical example for illustrative purposes only.

Option 2: Adam files a Restricted Application* Meghan files at 66, her benefits are unaffected At age 66, Adam files a Restricted Application* Entitled to 50% of Meghan’s benefit In the first four years he receives $750 per month / $9,000 per year At age 70, he switches to his own benefit Over the next 15 years, he receives $2,640 per month / $31,680 per year The second option is for Meghan to file for her benefits at age 66, the full retirement age for both her and Adam. By doing this, Adam is able to file for spousal benefits only – allowing him to receive 50% of Meghan’s benefit. This strategy does not affect his own benefit from increasing by 8% per year. When Adam reaches age 70, he will then switch to his own benefit. As with the file and suspend strategy, recent legislation has limited the scope of this opportunity. Under §831(a) of the Bipartisan Budget Act of 2015, Pub. L , Social Security claimants born after will no longer be able to restrict claims exclusively to spousal benefits. Those born before will retain the right to file a restricted application. This is a hypothetical example for illustrative purposes only. * Under §831(a) of the Bipartisan Budget Act of 2015, Pub. L , Social Security claimants born after will no longer be able to restrict claims exclusively to spousal benefits. Those born before will retain the right to file a restricted application.

Total Payout: Adam Uses Restricted Application $36,000 of spousal benefits $475,200 of his benefits $342,000 of her benefits $221,760 of survivor benefits $1,074,960 $1,038,960 Meghan Files At 66 / Adam Files At 70 $475,200 of his benefits $342,000 of her benefits $221,760 of survivor benefits By using the restricted application strategy, from ages Adam is able to collect a total of $36,000 in benefits that he otherwise would not have been able to. [CLICK in paragraph 2] This is a hypothetical example for illustrative purposes only.

Restricted Application
Increases benefits for couples with their own earnings history who may be retiring at different ages Things to remember: Individuals can collect spousal benefits and allow their personal earnings history benefits to receive delayed retirement credits Individuals cannot collect benefits on their spouse’s earnings history until their spouse files for benefits Only claims filed by individuals who have reached full retirement age and who were born before may be restricted to a spousal claim Claims filed by Individuals born after are deemed to be claims for both personal and spousal benefits Here are some important factors with this strategy. Like File and Suspend, this strategy increases the spousal benefit component of Social Security. However, in this case, this strategy can be used to increase benefits for married couples who have their own personal earnings history and would normally file for benefits using that history. Or put another way, the individual personal earnings history benefits are larger than the spousal benefits so it would normally not make sense to apply for spousal benefits. The big difference in this strategy is that we are assuming that spouses wish to retire at different ages, either due to an age spread or career choice. The important thing to remember is an individual at full retirement age or later and who was born before January 1, 1954 can collect spousal benefits and allow the individual’s personal earnings history benefit to collect DRC. Also, remember that we have been mentioning that an individual cannot collect spousal benefits until the spouse files for benefits.

Let’s Summarize the Recent Changes to Social Security
The Bipartisan Budget Act of 2015: Change to File and Suspend Spousal benefits would be eliminated for any applications filed and suspended after April 29, 2016 Change to Restricted Application Restricted Application would be eliminated for those turning 62 after December 31, 2015 No Cost-of-Living Adjustment for 2016 Only the third time in the last 40 years Although significant structural changes may not happen immediately, Congress is beginning to act to shore up Social Security. This was recently demonstrated by a 2015 bipartisan budget proposal that would effect spousal benefit payments for some future retirees. Specifically, under the proposal, benefit maximization strategies such as File and Suspend and Restricted Application would be eliminated for most future retirees. In the case of File and Suspend, spousal benefits for a suspended application would no longer be able to be collected 6 months following the passage of the legislation. Those who have filed and suspended and a spousal benefit is being collected would be exempt from the new rules. As a result, beneficiaries considering File and Suspend would be wise to consider accelerating their decision to meet this deadline. In the case of Restricted Application, only those who have qualified for benefits prior to 2016 would be eligible for spousal benefits under a Restricted Application. Finally for existing retirees, for only the third time in history, retirees will see no cost-of-living adjustment in their benefit payment in 2016.

Impact of Recent Changes by Age
Under Age 62: Social Security will likely comprise a smaller portion of your income in retirement. Plan accordingly. Age 62 or older: Those who are age 62 prior to 2016 can file “Restricted Application.” Age 66 and older before April 30, 2016: Can leverage the full power of “File and Suspend” and “Restricted Application.” However, you must take advantage of “File and Suspend” before April 30, 2016. [Read slide] So, this gives you a glimpse into the upcoming changes to Social Security and its potential impact on your retirement plan. That said, some of you may still have an opportunity to take advantage of these strategies so let’s talk about them for a few minutes.

Retirement Income – Then and Now
“Social Security is the largest source of income for most elderly Americans today, but Social Security was never intended to be your only source of income when you retire. You also will need other savings, investments, pensions or retirement accounts to make sure you have enough money to live comfortably when you retire.” Without changes, in 2033 the Social Security Trust Fund will be able to pay only about 77 cents for each dollar of scheduled benefits.* Without changes, in 2033 the Social Security Trust Fund will be able to pay only about 77 cents for each dollar of scheduled benefits.* “Social Security is the largest source of income for most elderly Americans today, but Social Security was never intended to be your only source of income when you retire. You also will need other savings, investments, pensions or retirement accounts to make sure you have enough money to live comfortably when you retire.” As you think about how you will use Social Security as part of your retirement income plan, remember what the Social Security Administration says about their own program on their statements: [CLICK] [READ] Social Security is the largest source of income for most elderly Americans today, but Social Security was never intended to be your only source of income when you retire. You also will need other savings, investments, pensions or retirement accounts to make sure you have enough money to live comfortably when you retire. [READ] Without changes, in 2033 the Social Security Trust Fund will be able to pay only about 77 cents for each dollar of scheduled benefits.* As you prepare for retirement you will need multiple sources of retirement income.

Retirement Income – Then and Now
Pensions are playing a smaller role for Americans as they prepare for retirement. The number of traditional employer pension plans has decreased from a peak of 175,000 in 1983 to fewer than 25,000 today (USAA, “Retirement Income: It’s Up To You Now”, 2012). As a result of this decline in pension plans, there is a greater emphasis on the need for increased personal saving and investing wisely. What strategies are available to help increase your Social Security benefits? Other than Social Security, what other guaranteed income sources do you have? How important is it to you to have a source of guaranteed income? Source: Prudential Annuities 2013

Generating Supplemental Income
Explore the advantages of a Variable Annuity: A guaranteed income stream for as long as you live Tax-deferred growth (with more control over the timing of taxes) Professionally managed investment options with tax-free rebalancing Basic death benefit protection That being said, variable annuities offer all of these benefits.

Summary Monitor your Social Security statements
Statements are now available online. Go to socialsecurity.gov to create a secure user account and view your statement Evaluate impact of commencement dates on your retirement plan Work with a Financial Professional to review your income sources and evaluate if a variable annuity can help fill any income gaps in retirement [Read Slide.]

Questions?

Disclosures Investors should consider the features of the contract and the underlying portfolios' investment objectives, policies, management, risks, charges and expenses carefully before investing. This and other important information is contained in the prospectus, which can be obtained from your financial professional. Please read the prospectus carefully before investing. Variable annuities are issued by Pruco Life Insurance Company (in New York, by Pruco Life Insurance Company of New Jersey), Newark, NJ (main office) and distributed by Prudential Annuities Distributors, Inc., Shelton, CT. All are Prudential Financial companies and each is solely responsible for its own financial condition and contractual obligations. Prudential Annuities is a business of Prudential Financial, Inc. Annuity contracts contain exclusions, limitations, reductions of benefits and terms for keeping them in force. Your licensed financial professional can provide you with complete details.

Disclosures A variable annuity is a long-term investment designed for retirement purposes. Investment returns and the principal value of an investment will fluctuate so that an investor’s units, when redeemed, may be worth more or less than the original investment. Withdrawals or surrenders may be subject to contingent deferred sales charges. Withdrawals and distributions of taxable amounts are subject to ordinary income tax and, if made prior to age 59½, may be subject to an additional 10% federal income tax penalty, sometimes referred to as an additional income tax. Withdrawals, other than from IRAs or employer retirement plans, are deemed to be gains out first for tax purposes. Withdrawals reduce the account value, death benefits, and the annual amount of living benefit available. All guarantees, including optional benefits, are backed by the claims-paying ability of the issuing company and do not apply to the underlying investment options. This material was prepared to support the marketing of variable annuities. Prudential, its affiliates, its distributors and their respective representatives do not provide tax, accounting or legal advice. Any tax statements contained herein were not intended to be used for the purpose of avoiding U.S. federal, state or local tax penalties. Please consult your own independent advisor as to any tax or legal statements made herein. Equity Securities Risk – The value or price of a particular stock or other equity or equity-related security owned by a portfolio could go down and you could lose money. © 2015 Prudential Financial, Inc. and its related entities. Prudential Annuities, Prudential, the Prudential logo, the Rock symbol, and Bring Your Challenges are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. ORD203392 [WO# , ML ]

A Closer Look at Your Social Security Benefits

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A Closer Look at Your Social Security Benefits

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Presentation on theme: "A Closer Look at Your Social Security Benefits"— Presentation transcript:

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