1. Compliments of Madison Park Capital Advisors & Kurt Czarnowski
Social Security and Retirement Planning:
A Hit or Myth Proposition
Kurt Czarnowski
Czarnowski Consulting: Expert Answers to Your Social Security Questions
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2. Compliments of Madison Park Capital Advisors & Kurt Czarnowski
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.
Copyright Czarnowski Consulting, 2015

3. Compliments of Madison Park Capital Advisors & Kurt Czarnowski
The Social Security Statement
The Social Security Statement is an important planning tool, as it provides you with estimates for retirement, survivor and disability benefits.
It also provides a year-by-year break out of what Social Security has recorded as your earnings. It is important to verify that Social Security records are accurate.
SSA has now resumed mailing paper “Statements” on a limited basis. However, you can now request one at any time once you have created your personal, online “My Social Security” account.
The Statement provides you with benefit estimates and allows you to check your earnings history for accuracy.
You can now request a Statement anytime at
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4. Compliments of Madison Park Capital Advisors & Kurt Czarnowski
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
You can get estimates of your future Social Security retirement benefits using Social Security’s online “Retirement Estimator.”
You must enter certain ID information about yourself to use, such as your name, date of birth, Social Security number, place of birth and mother’s maiden name.
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. .
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5. Compliments of Madison Park Capital Advisors & Kurt Czarnowski
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.
Some people now refer to “full retirement age” as “Normal Retirement Age.”
In addition, the Medicare eligibility age of 65 has not changed. You should apply for Medicare 3 months before your 65th birthday, even when you plan to apply for your retirement or spouse’s benefits later.
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6. Compliments of Madison Park Capital Advisors & Kurt Czarnowski
Your Age At The Time You Elect Retirement Benefits Affects the Amount
If You’re a Worker and Retire:
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.
At your FRA, you get your full benefit amount.
Past your FRA, you get an even higher monthly payment. However, you can only earn these Delayed Retirement Credits (DRCs) until age 70.
Regardless of your full retirement age, reduced benefits can still be paid as early as age 62. Payments are reduced by roughly ½% per month for each month you collect prior to your Full Retirement Age. This is also a permanent reduction.
At FRA, you receive !00% of what your work and earnings entitle you to collect.
If you wait past FRA to start, your monthly benefit is increased by 2/3% per month for each month that you don’t collect. (This translates in to an 8% per year increase.)
These are referred to as Delayed Retirement Credits (DRCs), although they only can be earned until age 70.
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7. Compliments of Madison Park Capital Advisors & Kurt Czarnowski
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.
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8. Compliments of Madison Park Capital Advisors & Kurt Czarnowski
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.
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9. Compliments of Madison Park Capital Advisors & Kurt Czarnowski
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.
For the average wage earner, the Social Security payment is only intended to replace about 41% of pre-retirement earnings.
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Spouse’s Benefit Computation
Benefit is 50% of worker’s FRA amount. DRCs have no impact.
If spouse’s own benefit is less than 50% of the worker’s, the benefits are combined.
Benefit amount is reduced if spouse is under FRA.
Does not lower payment to worker.
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 66, a spouse can get 35 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.
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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.
Benefits paid to a surviving divorced spouse who is 60 or older (age 50 if disabled) will not affect the benefit rates for other survivors receiving benefits.
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12. Compliments of Madison Park Capital Advisors & Kurt Czarnowski
Social Security “Strategies”
“File and Suspend”
“Claim Some Now; Claim More Later”
“Combined Strategies”
“No Can Do Over”
Here are some ways that a couple can “maximize” the Social Security benefits which are received.
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Social Security “Strategies”
File and Suspend
One member of the couple must be at or over Full Retirement Age;
Files for own retirement benefits and immediately requests that benefit payments be suspended;
Worker earns DRCs since no payments being made
Spouse can begin to collect up to 50% of worker’s FRA amount;
Spouse must be at least age 62
Eligible children can begin to collect as well
Allows for spousal benefits to be paid while the primary worker is earning DRCs.
Primary worker must be at FRA; spouse must be at least age 62.
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Social Security “Strategies”
Claim Some Now; Claim More Later
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 file 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.
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Social Security “Strategies”
Combined Strategies
One member of couple “files and suspends” while the other member files for spouse’s benefits only;
Both must be at or over Full Retirement Age
Allows some benefits to be paid while both members of the couple earn DRCs going forward;
If couple still married, both CANNOT receive just spouse’s benefits at the same time.
However, divorced couples can do just that, if divorce was finalized at least two years previously
This allows for some Social Security benefits to be received while both members of the couple delay collecting their own retirement benefit in order to earn DRCs.
Both must be at FRA to take advantage of this strategy.
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Social Security “Strategies”
The Do Over
Since December, 2010, more properly called “The No Can Do Over;”
An individual may still withdraw an application, but only within 12 months of the first month of entitlement;
Also limited to only one withdrawal in a lifetime;
At FRA, can request benefit suspension in order to earn DRCs, even if payments had already started.
Previously, SSA’s “withdraw and refile” policy had allowed someone to repay any benefits received without being charged interest.
No longer available as a “strategy.”
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17. Compliments of Madison Park Capital Advisors & Kurt Czarnowski
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 $15,720/yr. ($1,310/mo.) $1 for every $2
The Year Full Retirement
Age is Reached $41,880/yr. ($3,490/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.
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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.
Copyright Czarnowski Consulting, 2015

19. Compliments of Madison Park Capital Advisors & Kurt Czarnowski
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.
Copyright Czarnowski Consulting, 2015