1. Most Businesses Couldn’t Pass a DOL Audit – Could Yours?
2017 Education Series
Most Businesses Couldn’t Pass a DOL Audit – Could Yours?
MAXIMIZING YOUR BENEFITS
Social Security and Retirement Seminar
Presenter
Kurt Czarnowski
Czarnowski Consulting
March 28, 2017

2. Social Security and Retirement Planning: A Hit or Myth Proposition
Kurt Czarnowski
Czarnowski Consulting: Expert Answers to Your Social Security Questions 2

3. A Foundation for Planning Your Future
Social Security provides a foundation on which to build retirement security. However, benefits were never intended to be someone’s sole source of income in retirement, and they must be supplemented.

4. The Social Security Statement
The Social Security Statement is an important planning tool and can now be requested at any time once you have set up a Social Security account.
Social Security estimates are all based on reported wages.
The Statement provides you with benefit estimates and allows you to check your earnings history for accuracy.
Mailings have resumed on a very limited basis, but you can request a Statement anytime at:

5. Use the Retirement Estimator
Convenient, secure, and quick financial planning tool
Immediate and accurate benefit estimates
Lets you create “What if” scenarios based on different ages and earnings
By using Social Security’s online “Retirement Estimator,” you can get “real time” benefit estimates at different ages and based on different future earnings’ projections.
The “Estimator” works with your actual Social Security earnings record and you don’t have to manually enter your work history like you have to do with some other programs. .

6. Full Retirement Age
Year of Birth Full Retirement Age
1937 or earlier 65
& 2 months
& 4 months
& 6 months
& 8 months
& 10 months
1943 –
& 2 months
& 4 months
& 6 months
& 8 months
& 10 months
1960 or later 67
You have options as to when to start receiving benefits, but before considering the various options, you need to make sure you know what is considered your “Full Retirement Age.”
The increase in full retirement age was the result of the 1983 Amendments.

7. Your Age At The Time You Elect Retirement Benefits Affects the Amount
If You’re a Worker and Retire:
At your FRA, you get your full benefit amount.
Before your Full Retirement Age (FRA), you get a reduced monthly payment. 62 is the earliest age at which you can begin to collect benefits.
Past your FRA, you get an even higher monthly payment. However, you can only earn these Delayed Retirement Credits (DRCs) until age 70.
If you start earlier than FRA, your benefit is reduced by roughly ½% per month.
By waiting past FRA, payments are increased by 2/3% per month or 8% per year.

8. Your Age At The Time You Elect Retirement Benefits Affects the Amount
For example, if you were born from 1943 through 1954:
Age 62 75% of benefit
Age % of benefit
Age % of benefit
As an example, if you have a FRA benefit amount of $1,000, you would collect:
--$750 at age 62
--$800 at age 63
--$1,000 at age 66
--$1,080 at age 67
--$1,320 at age 70.
It is ultimately the individual’s choice when to start collecting benefits.

9. How Social Security Determines Your Benefit
Social Security benefits are based on earnings
Step 1 -Your wages are adjusted for changes in wage levels over time
Step 2 -Find the monthly average of your 35 highest earnings years
Step 3 -Result is “average indexed monthly earnings”
Social Security benefits are related to what someone’s earnings have been.
Benefits are calculated according to a formula which uses the highest 35 years during a worker's lifetime of earnings, regardless of when earned.
There is, however, no such thing as a minimum benefit.

10. What You Can Expect at Full Retirement Age
55%
41%
34%
An underlying principle is that Social Security provides a weighted benefit formula that helps lower wage earners by replacing a higher percentage of that person’s pre-retirement earnings.
According to the Social Security Administration website, for the average wage earner, the Social Security payment is only intended to replace about 41% of pre-retirement earnings.

11. You Can Work & Still Receive Benefits
You Can If You Make More,
If You Are Make Up To Some Benefits Will
Be Withheld
Under Full
Retirement Age $16,920/yr. ($1,410/mo.) $1 for every $2
The Year Full Retirement
Age is Reached $44,880/yr. ($3,740/mo.) $1 for every $3
Month of Full Retirement
Age and Above No Limit No Limit
At full retirement age, there is no limit on the amount you can earn without affecting your benefit payments.
If you are under FRA, you are subject to an annual earnings test. You can make up to $15,480 in earned income without any loss of benefits. If you make over that, Social Security reduces your payments by $1 for each $2 that you are over the threshold.
In the year you reach FRA, for the months prior to attaining full retirement age, you can earn up to $41,400/year ($3,450/mo.) without affecting your benefits. For every $3 in earnings above the limit, one dollar in benefits will be withheld.
The annual retirement earnings test exempt amounts are increased annually by the average increase in wages in the U.S.
Note: If some of your retirement benefits are withheld because of your earnings, your benefits will be increased starting at your full retirement age to take into account those months in which benefits were withheld.

12. Spouse’s Benefit Computation
Benefit is 50% of worker’s FRA amount. DRCs have no impact.
Does not reduce payment to worker.
Benefit amount is reduced if spouse is under FRA.
If spouse’s own benefit is less than 50% of the worker’s, the benefits are combined.
A spouse who has not worked or who has low earnings can be entitled to as much as one-half of the retired worker’s full benefit. If you are eligible for both your own retirement benefits and for benefits as a spouse, SSA always pays your own benefits first. If your benefits as a spouse are higher than your retirement benefits, you will get a combination of benefits equaling the higher spouse benefit. If spouses want to get Social Security retirement benefits before they reach full retirement age, the amount of the benefit is reduced. The amount of reduction depends on when the person reaches full retirement age.
For example:
If full retirement age is 65, a spouse can get 37.5 percent of the worker’s unreduced benefit at age 62;
If full retirement age is 66, a spouse can get 35 percent of the worker’s unreduced benefit at age 62;
If full retirement age is 67, a spouse can get 32.5 percent of the worker’s unreduced benefit at age 62.
The amount of the benefit increases at later ages up to the maximum of 50 percent at full retirement age. 12

13. In Addition to the Retiree, Who Else Can Get Benefits?
Divorced Spousal Benefits
Marriage lasted at least 10 years
Ex-spouse is 62 or older and unmarried (you can be married)
If you have been divorced at least two years, and you and your ex-spouse are at least 62, he or she can get benefits even if you are not yet retired
Ex-spouse’s benefit amount has no effect on the amount you or your current spouse can get
Your divorced spouse can get benefits on your Social Security record if the marriage lasted at least 10 years. Your divorced spouse must be 62 or older and unmarried. Also, if you and your ex-spouse have been divorced for at least two years and you and your ex-spouse are at least 62, he or she can get benefits even if you are not retired. Your current spouse cannot receive spouse’s benefits until you file for retirement benefits.
The amount of benefits your divorced spouse gets has no effect on the amount of benefits you or your current spouse can get. 13

14. Widow or Widower Benefit Computation
At full retirement age, 100% of deceased worker’s benefit
At age 60, 71.5% of deceased worker’s benefit
Reduced benefits on one record at age 60, reduced or unreduced benefit on other record at age 62 or older
Full benefits to both widow or widower and divorced widow or widower
Regardless of the change in full retirement age, a widow or widower can still receive 71-1/2% of the worker’s benefit at age 60.
A widow or widower can receive a survivors benefit at age 60 and then switch to a benefit on his or her own work record at age 62. Or, a widow or widower could receive a reduced survivors benefit at age 60 and then file for an unreduced benefit on his or her own work record at full retirement age.

15. Social Security “Strategies”
File and Suspend—NEW LAW
Old rules applied until April 29, 2016;
Since then, if someone asks to have payments suspended, SSA will also suspend the benefits of everyone eligible to collect on that record;
Someone who asks to have payments suspended after April 29, 2016 will no longer be able to receive a lump sum repayment of benefits that have been withheld;
Resumption of payments will be effective with the month after the month the request has been received.
After April 29, 2016, spousal benefits can only be paid if the primary worker is actually collecting benefits him or herself.
Can no longer receive a lump sum repayment of any benefits that have been “suspended.” 15

16. Social Security “Strategies”
Claim Some Now; Claim More Later—OLD LAW
One member of the couple must be at least age 62 and must have applied for own retirement benefits;
Spouse “restricts the scope of the application” and files ONLY for a spouse’s benefit;
Spouse begins to collect up to 50% of other worker’s FRA amount, while earning DRCs on own
Spouse must be at or over Full Retirement Age;
Prior to FRA, spouse cannot restrict scope of application and is “deemed” to be applying for own benefit first
Allows one member of the couple to collect a spousal benefit while not collecting on his/her own account and earning DRCs.
Must be at FRA to be able to collect just a spousal benefit. 16

17. Social Security “Strategies”
Claim Some Now; Claim More Later—NEW LAW
Anyone born January 1, 1954 or earlier, i.e. was age 62 or older by the end of 2015, will operate under the old rules and will still be able to file a “restricted application” at or after FRA;
Anyone born after that date will be subject to “deemed filing” rule, even at FRA;
Extension of “deemed filing” rule does not apply to survivor benefits;
Widow(er) will still be able “pick and choose.”
The option is goes away for anyone born after January 1, 1954. . 17

18. Your Benefits Can Be Taxable
Applies to those with a Modified Adjusted Gross Income (MAGI) above $25,000 (individual) or $32,000 (couple filing jointly).
Up to 85% of benefits received could be treated as ordinary income for federal tax purposes.
Proceeds are transferred back to Social Security.
At the end of each year, people receive a Social Security Benefit Statement (Form SSA-1099).
About half of people who get Social Security pay income taxes on their benefits.
Prior to 1983, Social Security benefits were completely tax free.

19. A Foundation for Planning Your Future
Social Security provides a foundation on which to build retirement security.
But, again, it was never intended to be one’s sole source of income in retirement, and benefits must be supplemented.

20. Disclosure
Raymond James is not affiliated with and does not endorse the opinions or services of Kurt Czarnowski or Czarnowski Consulting. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.
Sources: Graph on slide 9, SOURCE

21. Questions
March 28, 2017

22. Thank you!