1. Understanding Social Security A look at the bigger picture
CAC (02.13)

2. Important information
This presentation is intended as educational information about the Social Security and Medicare programs and is not intended to promote any products or services offered by Protective Life Insurance Company. These materials contain information regarding the availability of and details surrounding the Social Security and Medicare programs. The information represents only our current understanding of Social Security and Medicare in general and should not be considered legal or tax advice by consumers. Details of the Social Security and Medicare programs are subject to change at any time.
Neither Protective Life nor its representatives offer legal or tax advice. Consumers should consult with their tax or legal advisor regarding their individual situations before making any legal or tax-related decisions. To gain a better understanding of the range of options and benefits you are entitled to under Social Security, please contact your advisor, for a no obligation consultation. In the meantime, you can visit for additional details.
This presentation contains educational information about the Social Security program and is not intended to promote any products or services offered by Protective Life Insurance Company.
These materials contain information regarding the availability of and details surrounding the Social Security and Medicare programs. The information represents only our current understanding of Social Security and Medicare in general and should not be considered legal or tax advice by consumers. Details of the Social Security and Medicare programs are subject to change at any time. Neither Protective Life nor its representatives offer legal or tax advice. Consumers should consult with their tax or legal advisor regarding their individual situations before making any legal or tax-related decisions. To gain a better understanding of the range of options and benefits you are entitled to under Social Security, please contact your advisor, for a no obligation consultation. In the meantime, you can visit for additional details.
<<CLICK>>

3. Agenda Introduction Social Security: Then and Now Your benefits
Working in retirement
Taxes
Conclusion
You may think of Social Security as a simple thing—you sign a form around your 65th birthday, then sit back and cash the checks. But the truth is, there are many decisions to make when it comes to receiving benefits. Those choices can affect the level of income you receive for the rest of your life, and possibly even your spouse’s.
During our time together today, we will take a closer look at the Social Security program: its benefits; how those benefits may be affected by your decision about when to receive them; whether you take them while still working; and the tax consequences. We’ll also focus on spousal benefits, as well as ex-spousal benefits.
As we do so, feel free to jot notes down in the workbooks we’ve provided. <<HOLD UP WORKBOOK>> These booklets follow the presentation, but also expand the discussion so that, later on -- when you sit down with your advisor -- you’ll be able to work through your specifics together, before making any decisions about your Social Security benefits.
<<CLICK>>

4. Social Security: Then and Now
In 1935…
63 was the average life expectancy
Exclusively for retirees
More people paying in than taking out
Social Security is one of the largest government programs. It has been around for a while; signed into law in 1935, with the first monthly payments beginning in 1940.
Needless to say, a lot has changed since then. In 1935, average life expectancy was just 63 years old, which was also retirement age and the age when Social Security benefits began for retirees.
The program was designed purely to provide benefits to retired workers.
And when the first monthly benefits checks started rolling out in 1940, the program had more people contributing to the system than they had withdrawing benefits. Overall, a pretty good system, that worked pretty well at the time.
<<CLICK>>
Facts on this slide sourced from

5. Social Security: Then and Now
Life Expectancy:
Man, age 65: 83
Woman, age 65: 85
Survivors’ benefits, spousal benefits, benefits for children, and disability benefits
Less money coming in than going out
Fast forward to today, and the program looks pretty different.
First of all, men and women who reached retirement age in 2012, on average, are expected to live another years. That means that today’s retiree will be receiving many more monthly benefit checks than the average retiree of the 1940s.
Not only are we living longer, but Social Security has grown from a program that just supports retirees to a program that include survivors’ benefits, benefits for a retiree’s spouse and children, and disability benefits.
The trifecta of longer life expectancies, more benefits offered, and a large aging population has created a considerable amount of stress on the Social Security program. This means the amount of benefits being paid out exceeds the amount of money coming in through FICA taxes.
So where does your retirement fit in?
<<CLICK>>

6. Where does Social Security fit in your picture?
Most of you have followed headlines about Social Security for years, and given what we just discussed, you might be wondering if it’s something that will be around when you retire. Can you factor Social Security benefits into your plan?
The answer, for now, is yes. For those of you planning to retire soon, Social Security will likely be a significant part of your retirement income. According to the Social Security Administration, about 96 percent of all Americans qualify for benefits. Currently, Social Security replaces about 40 percent of an average wage earner’s income after retiring.
What makes up the rest of your retirement picture? Most likely, a combination of private pensions, savings and investments, your 401(k), IRA, any inheritance you may have. Even if you have built up a substantial retirement nest egg, Social Security benefits can be significant and should not be ignored.
Go ahead, take a moment to circle your sources of retirement income on page 3 of the workbook, and fill in your estimates. <<PAUSE>> This will help your advisor later when you develop a plan for retirement.
*SSA Publication No , March 2012, ICN
<<CLICK>>

7. Your benefits: How much could they really be?
In 2013:
Maximum benefit is $2,533 monthly, or $30,396 annually
Equivalent to the investment income on a $600,000 asset…
While I’ve emphasized that your social security benefits are just a piece of the retirement income pie, remember, those benefits can add up. In 2013 a higher wage- earner—someone who paid the maximum into Social Security each year and who files for benefits in 2013—would expect to receive in excess of $30,000 for the full year.
For a double-income couple, with each spouse entitled to benefits under their own records, annual benefits could add up to a significant amount of income—even before income from savings is considered.
In fact, <<PAUSE>> think about what it would take to generate $30,000 in investment income from your own investments. Assuming your investment is earning 5%, how much will it take to add up to $30,000? Let’s find out…divide 30,000 by .05…
<< CALCULATE IN HEAD OR REACH FOR A CALCULATOR AND DIVIDE 30,000 BY .05>>
… The number we come up with is 600,000. Which means you would need roughly $600,000 in savings to generate $30,000 in annual income. That’s a pretty substantial benefit.
<<CLICK>>
Facts on this slide sourced from

8. Your benefits: How much could they really be?
Amounts are not inconsequential
Adjust for inflation
Last your lifetime
Can also last your spouse’s lifetime
Better still, Social Security benefits are adjusted annually for inflation and are designed to last your lifetime. Your benefits can even continue throughout your spouse’s lifetime if he/she outlives you.
Once you understand these benefits, it becomes clear that Social Security is an income stream that can play a key role in funding your retirement.
<<CLICK>>

9. Determining your benefit
You’ve been “saving” for years:
40 credits required
Maximum 4 credits per year
$1,160 earnings = 1 credit
Take the highest 35 years of earnings, monthly average
Whether or not you’ve given much thought to Social Security over the years, you’ve been involved in the program since the first time you had wages withheld for FICA taxes. Those FICA contributions you’ve been making ever since will be returned to you in the form of monthly Social Security benefits checks and hospital insurance (better known as Medicare).
Throughout your working years, you have been accumulating Social Security credits. The credits are based on the amount of your earnings. In 2013, you will receive one credit for every $1,160 of earnings, up to the maximum, which is four credits per year. In order to collect retirement benefits, you need to have accumulated 40 credits, which is equivalent to 10 years of work.
In general, your benefit amount will be based on your average indexed monthly earnings during the 35 years in which you earned the most. There are calculators available on SSA.gov, that can help you estimate your benefits. Your advisor can help you with choosing the right resources.
<<CLICK>>
Facts on this slide sourced from

10. How do I find out about my benefits?
Paper annual statements: Discontinued
Recognize one of these? <<POINT TO STATEMENT IMAGE ON SLIDE>>
The Social Security Administration used to send you a statement with an estimate based on your earnings history every year, a few months before your birthday. And just like everything else going paperless and electronic, so has the Social Security Administration. You may not have even noticed it yet; you are no longer receiving your statements by mail.
But you still have an annual statement that needs to be reviewed. By going to ssa.gov and clicking on “Get your Social Security Statement Online”, you can fill out some personal information to create a profile, and then view your current statement. It’s important that you review this each year—you want to make sure the earnings match up with what you have actually earned. If there are any errors, let Social Security know immediately so you can make sure the errors do not affect your benefits. Your advisor can walk you through the process and help you make sure your statement is accurate.
Having a full understanding of all of your retirement income sources—including Social Security—is very important to the overall planning process, and to evaluating your retirement income strategy.
<<CLICK>>

11. When can I start receiving benefits?
Full Retirement Age – age when you can start receiving full benefits
Between ages 65-67
Reduced benefits at age 62
Increased benefits after full retirement age
Sounds good, right? So when can you sign up?
With a few exceptions, the earliest date for filing for benefits is age 61 years 9 months. While the benefit payments won’t commence until age 62, it takes a few months for the paperwork to be processed and for benefit payments to begin.
But the actual age at which you qualify for full retirement benefits is somewhere between ages 65 and 67, depending on your birth date. The chart on the next slide is reprinted in your workbook on page 5 to make it easier for you can determine your own “retirement age” according to Social Security.
<<PAUSE FOR PAGE FLIPPING>>
While benefits can begin at age 62, they’ll be seriously discounted from what they would be if you waited until your age of full retirement to claim them—something we’ll discuss further in a few moments.
And while we all may think of 65 as the retirement age, as you can see from the chart that’s a thing of the past. For those born after 1937, the full retirement age rises until it reaches 67 for those born after 1959.
For instance, if we have anyone here today who was born between 1943 and 1957, then 66 is going to be the magic number for you!
<<CLICK>>
Facts on this slide sourced from

12. Full retirement age 67 is the new 65 for Baby Boomers… Year of Birth 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 or later 67
Use this chart to match up your birth year with your Full Retirement Age.
<<CLICK>>
67 is the new 65 for Baby Boomers…
Facts on this slide sourced from

13. If you decide to file early, how much will your reduction in benefits be?
If your full retirement age is 66, and you decide to take benefits at age 62, your benefits are reduced roughly 25%. If your full retirement age is 67, the reduction for taking benefits at age 62 rises to 30%. Now consider if you spend 30 years in retirement, how costly that reduced income flow could be—especially after taking inflation into account.
Assume your annual benefits would be $20,000 at full retirement. Discounting that by 25% means …
<<PAUSE TO MAKE CALCULATION>> … losing $5,000 a year in income …
<<PAUSE AGAIN FOR CALCULATION>>……so, in 30 years, that would be $150,000 less income before even considering inflation.
That is quite a bit of money to leave on the table.
<<CLICK>>

14. 30 more years? Why worry?
Average life expectancy of 65-year-old woman: 20 more years
Average life expectancy of 65 year old man: 17 more years
You may be wondering why you should worry about the effect of the discount over 30 years. After all, that seems like a really long time — almost as much time as you spent working. But remember the life expectancies we talked about earlier…the average life expectancy of women who reaches age 65 is 20 more years — and that men who live to age 65 will, on average, live an additional 17 years.
Since these are averages, that means many 65-year-olds—about 50%--will actually live longer…and spending 30 years in retirement does not seem so unlikely.
In fact, the population of Americans in their 90s and 100s is expected to boom in coming decades, which makes planning for a LONG retirement even more important.
<<CLICK>>
Facts on this slide sourced from

15. When filing early makes sense:
Health problems
Financial issues
Already retired
Single income households/lower wage earners
School age children at home
While most of your will be focused on planning for a long retirement and maximizing your benefits, there are situations in which filing early makes the most sense.
For instance, those with health issues or financial stress may benefit from taking early benefits, even if those benefits are reduced. Other individuals who may want to consider filing early are those who are already retired, those who earn less than their spouse or are in a single income household, and pre-retirees who have school age children.
<<CLICK>>

16. Spousal Benefits
Consider each spouse’s earning record, age and situation
Now that we’ve covered some of the basics surrounding your own benefits, let’s take a few minutes to explore the spousal benefits available through Social Security. These may lead to increased benefits for your household. It’s important to consider each of your situations together, to maximize the benefits you will bring to your household through retirement. Factors to consider are each of your ages, your benefit amounts, your health and how long each of you plan to work.
Understanding how spousal benefits are paid is critical to making the most out of your Social Security benefits. Make sure to work with your advisor to help determine which spousal options make the most sense in your situation.
Now we’ll go over some of the high level details of spousal benefits…
<<CLICK>>

17. Spousal Benefits
Spousal benefit is the higher of: Their own work benefit OR
50% of their living spouse’s benefit (100% of their deceased spouse’s benefit)
Whether or not your spouse has earned the right to Social Security benefits on their own work record, they are eligible for a spousal benefit under your Social Security record. That spousal benefit equals 50% of the your full benefits. It is also adjusted for inflation each year.
Spouses who have their own earnings record have a choice—to receive either 50% of their husband’s or wife’s benefits, or to receive the benefits they earned on their own, whichever is greater.
When one spouse dies before the other, the survivor has another choice to make. If they’ve been receiving benefits on their own earnings record and their deceased spouse had a higher benefit, they can “upgrade” to the higher benefit as the survivor.
Again, make sure you work with your advisor to help determine which options make the most sense for you.
<<CLICK>>
Facts on this slide sourced from

18. Benefits for the divorced
The marriage lasted at least 10 years
The divorce has lasted at least two years
The former spouse is entitled to benefits
The claiming ex-spouse is unmarried
The claiming ex-spouse is at least 62
The claiming ex-spouse cannot qualify for a higher benefit on their own earnings record
Another element of spousal benefits is EX-spousal benefits. Which means if you were married previously, you may still be able to apply for spousal benefits…or your ex may be able to file for half of yours if: <<POINT TO EACH BULLET ON SLIDE AS YOU REPEAT IT>>
Your previous marriage lasted at least 10 years
Your divorce has lasted at least two years
Your former spouse is entitled to benefits
The claiming ex-spouse is unmarried
The claiming ex-spouse is at least 62
The claiming ex-spouse cannot qualify for a higher benefit on their own earnings record
By the way, <<PAUSE>> filing for benefits under your ex-spouse’s record does not affect the amount they will receive when they file, nor will it impact their current spouse’s ability to receive benefits if a remarriage is involved. The former spouse does not even have to file for benefits first; he or she just needs to be at least 62.
<<CLICK>>
Source: SSA.gov, Qualifying for divorced spouse benefits, updated 03/02/12

19. Still working
Want to receive benefits while you’re still working AND before your full retirement age?
Consider the effect…
How many of you think you will retire, but then still work?
The good news is, you can continue to work and still receive Social Security benefits, but there may be limits, depending on your age.
Your earnings during and after the month you reach full retirement age will not reduce your Social Security benefits. BUT, if you work and decide to take benefits before full retirement age, your benefits will be significantly reduced. In this case, you not only need to consider the discount for taking benefits early, but also the fact that earnings limit reductions can reduce your benefit even more.
<<CLICK>>

20. Working while receiving benefits before full retirement age
Benefit is reduced $1 for every $2 earned above the earnings limit*
*$15,120 for 2013
…those who claim benefits prior to their full retirement age, while still earning wages, are subject to an earnings limit test. Here’s how it works, your benefit will be reduced $1 for every $2 you earn above the earnings limit. In 2013, the earnings limit is $15,120.
The earnings limit can have a significant impact on the amount of your benefits, and this is another important issue you’ll want to consider if you plan to take your benefits before your full retirement age.
Fortunately, there are strategies that <<HOST’S NAME>> can discuss with you to help you manage both taxes and earnings more effectively. If you are considering working in retirement and/or taking your Social Security benefits early, make sure you talk with <<HOST'S NAME>> about these decisions, and how to best implement them into your larger retirement income strategy.
<<CLICK>>
Facts on this slide sourced from

21. Taxes and Social Security
Wages taxed throughout earnings years
Payments from Social Security system taxable throughout benefit years
While the Social Security Administration reports that less than a third of its recipients pay taxes on their retirement benefits, it’s likely that many of you in this room will. If you will be receiving full benefits from two wage-earners’ records or will be receiving additional retirement income from other sources, it’s possible that your benefits will be taxable.
The next several slides discuss tax concepts in retirement. This information is for educational purposes only. Please note that neither Protective Life nor its representatives offer legal or tax advice. You should consult with your legal or tax advisor regarding your individual situation before making any tax-related decisions.
<<CLICK>>
The next several slides discuss tax concepts as they relate to your retirement. This information is for educational purposes only. Please note that neither Protective Life nor its representatives offer legal or tax advice. You should consult with your legal or tax advisor regarding your individual situation before making any tax-related decisions.
Facts on this slide sourced from

22. How much is taxable? Provisional income: all income from wages
pensions
investments
any non-reportable income (interest on tax-exempt bonds)
any other exclusions to income
half of your Social Security benefits
Just how much of your benefits are taxable depends on your other sources of income. The formula to determine whether you need to pay taxes on your benefits is available in your workbook on page 11. This calculation will need to be made each year when your tax return is prepared. By adding up all of your “provisional income”, you can determine the amount of taxes you will owe. Provisional income includes pensions, investments, any non-reportable income and other exclusions to income and HALF of your social security benefits.
However, your advisor can help you estimate the amount of potential taxes, and to see if there are any strategic moves you can make to lessen the tax liability.
<<CLICK>>
Source: IRS Publication ,

23. How much is taxable? Income amount Taxable amount
$32,000 or less for joint filers
($25,000 for single filers) 0%
Between $32,000 and $44,000
($25,000 and $34,000 for single filers)
Up to 50%
Greater than $44,000
($34,000 for single filers)
Up to 85%
This chart will shows you how much is actually taxable. You may notice that based on these amounts <<POINT TO SLIDE>> it is likely that most of you will pay taxes on at least some of your benefits. But the good news is that the maximum amount of benefits subject to taxes is 85%.
If your provisional income is $32,000 or less for joint filers ($25,000 for single filers), Social Security benefits are free of Federal taxation, although state taxes may still apply.
If your provisional income is between $32,000 and $44,000 ($25,000 and $34,000 for single filers), up to 50% of Social Security benefits must be reported on Form 1040.
If your provisional income is greater than $44,000 ($34,000 for single filers), up to 85% of the benefits will be taxed as ordinary income.
Make sure to work with your advisor to help estimate your provisional income, and to better understand the effect taxes may have on your retirement income.
<<CLICK>>
Source: IRS Publication ,
Facts on this slide sourced from

24. Your advisor can help Talk to you about your options
Develop strategies to maximize benefits
Look at the big picture
In our time here today, we’ve only hit the high points. With a program like Social Security, there are many different approaches and strategies to be considered, so you will want to sit down with an advisor, like <<HOST’S NAME>>, who can help you with decisions that can influence your total retirement plan.
To assist these conversations, we’ve included a checklist <<HOLD UP WORKBOOK AND POINT TO PAGE 12>> of information you should have ready when you evaluate your options on page 12.
<<CLICK>>

25. Your advisor can help When and how to begin the filing process
When and how to file for Medicare
How to maximize your benefits
How to coordinate your Social Security benefits with your other sources of retirement income to last through your lifetime
<<HOST’S NAME>> will be able to consult with you on when and how to begin the filing process, when and how to file for Medicare. He/she will work with you to maximize your benefits through Social Security and make sure you coordinate your social security benefits with your other sources of retirement income.
What we’ve presented today is really just the beginning. But, <<HOST’S NAME>> can help you all along the way.

26. Retirement: The Big Picture
Social Security
Investments
Annuities and Life Insurance
When you talk to your advisor about social security, he/she can work with you to see the bigger picture that is your retirement. Together you can talk about your investment strategy, how you will be spending during retirement, and how annuities and life insurance may fit into your bigger retirement picture.
When you picture yourself in retirement, remember to factor in all of the elements that can help bring it all into focus.
<<CLICK>>

27. IMPORTANT INFORMATION
Protective Life refers to Protective Life Insurance Company and its affiliates, including Protective Life & Annuity Insurance Company. This seminar is presented by Protective Life Insurance Company in all states except New York and in New York by Protective Life & Annuity Insurance Company. Both companies located in Birmingham, AL.
These materials contain information regarding the availability of and details surrounding the Social Security and Medicare programs. The information represents only our current understanding of Social Security and Medicare in general and should not be considered legal or tax advice by consumers. Details of the Social Security and Medicare programs are subject to change at any time. Neither Protective Life nor its representatives offer legal or tax advice. Consumers should consult with their tax or legal advisor regarding their individual situations before making any legal or tax-related decisions.
Before we close, please take a moment to note that this seminar is presented by Protective Life Insurance Company in all states except New York and in New York by Protective Life & Annuity Insurance Company. Both companies are located in Birmingham, Alabama. These materials include information regarding the availability of, and details surrounding, the Social Security and Medicare programs. These statements represent only our current understanding of Social Security and Medicare in general, and should not be considered legal or tax advice by consumers. Details of the Social Security and Medicare programs are subject to change at any time. Neither Protective Life not its representatives offer legal or tax advice. Consumers should consult with their legal or tax adviser regarding their individual situations before making any tax-related decisions.
<<CLICK>>

28. Questions and Answers
To gain a better understanding of the range of options and benefits you are entitled to under Social Security, please contact your advisor for a no-obligation consultation. In the meantime, you can visit the Website SocialSecurity.gov for additional details.
Thank you for having me, today. Now, let’s open up this meeting for questions.
To gain a better understanding of the range of options and benefits you are entitled to under Social Security, please contact your advisor, for a no obligation consultation. In the meantime, you can visit for additional details.