1. Social Security Anna’s Baseshop Training For Financial Professional use only

2. Life Expectancy Considerations Life Expectancy Upon Retirement at 65 Male age 65 50% chance of living to 85 25% of living to 93 Female Age 65 50% chance of living to 87 25% chance of living to 95 Couple of age 65 At lease one person has a 50% chance of living to 93 At lease one person has a 25% chance of living to 97 Source: Annuity 2000 Mortality Table.

3. Just the Facts 73% of those collecting Social Security Retirement benefit are receiving reduced amounts >76% of all women >71% of all men 15.5% increase over the past 5 years in those over age 85 collecting benefits >4.8Million In 2006 >1,203,834 recipients age 90 or older >256,319 recipients age 95 or older >45,000 recipients 100 or older -39,000 women -6,000 men Source: Social Security Administration's annual statistical supplement 2008

5. Millions Face Shrinking Social Security Payments The trustees who oversee Social Security are projecting there won't be a cost of living adjustment (COLA) for the next two years. That hasn't happened since automatic increases were adopted in 1975.

6. Social Security Taxes Wages To be fully insured, a worker needs 40 credits. A maximum of 4 credits can be earned per year It takes approximately 10 years of working to become fully insured. 3 Months before your birthday, you should received a Social Security Statement estimating what your retirement benefits will be You should verify the earnings record to ensure its accuracy since your benefit is based on that.

7. When Should Benefits be Collected Individuals can elect to receive: Reduced benefits at as early as age 62 Full benefits at fully retirement age –or- Increased benefits, if benefits are delayed beyond fully retirement age.

8. Full Retirement age is increasing to age 67. Depending on the year of birth, your client’s full retirement age can be anywhere between age 65 and 67 Year BornFull Retirement age 1937 or early65 1938-1942 65+2 months for every year after 1937 until 1953 1943-195466 1955-1959 66+2 months for every year after 1954 until 1960 1960 and later 67

9. Early Retirement Benefits: If Clients are fully insured, they can collect Benefit as early as the first full month the recipient attains age 62 What’s the cost Fully Retirement ageMonthly Benefit reduction 6520% 6625% 6730%

10. What if the Client Works During Retirement? 2009 Limit Under full retirement age >$1 of benefits withheld for every $2 in earnings above the limit $14,160/year Year individual reaches full retirement age >$1 of benefits withheld for every $3 in earnings above the limit for months prior to attaining full retirement age $37,680/year Month individual reached full retirement age and beyond >Reduction no longer applies Unlimited Only own wages are considered. Spouse’s wages are not considered.

11. Request for Withdrawal of Application Complete Withdrawal of Application form Indicate reason for withdrawal request Wait for SSA approval Repay all benefits, including spousal benefits, paid to date (If work again) Reapply when ready to begin collecting benefits

12. Delayed Retirement Credit Year of BirthYearly Increase to age 70 1939-19407.0% 1941-19427.5% 1943 or later8.0% If you delay collecting benefits beyond your full Retirement Age, you Will Receive an increase in your Primary Insurance Amount. This DRC is in addition to the Cost of Living Adjustment. 2008 COLA: 5.8%

13. Spousal & Survivor Benefits >Spouse is eligible to receive the higher of whatever benefit he/she may have Earned on his/her own record, or half of Primary Worker’s Primary Insurance Amount (PIA) >Spouse cannot collect on Primary Worker’s record until the Primary files for Benefits. (The Primary can file and elect to suspend benefits). >A Surviving spouse will receive 100% of the primary’s benefit at full retirement Age. However, reduced benefits can begin s early as age 60 Age Monthly Benefit Age Monthly Benefit Spousal Benefit Adjusted Spousal Benefit Survivor Benefit 62$41662$1,614$406$1,862 66$55266$2,257$1,129$577$2,257 70$72970$3,042$400$3,042 Wife’s Earning History Husband’s Earning History

14. Strategically Taking Social Security Two High Wage Earners Wife’s Earning HistoryHusband’s Earning History Age Monthly Benefit Age Monthly Benefit Spousal Benefit Survivor Benefit 62$1,65062$1,682$1,879 66$1,35366$2,277$1,139$2,277 70$1,78670$3,048 If the wife waits until FRA to collect benefits, she can file for spousal benefits only And allow her own to continue to grow. She would receive $1,139. Than at age 70.She would apply to start collecting her own benefit in Lieu of Spousal, and Receive $1,786.

15. Alternative Strategies High Wage Earner Unmarried with Deceased Spouse Deceased Husband’s Benefit Amount $2,481 AgeOwn Monthly Benefit Survivor Benefit 60$0$1,774 62$1,682 66$2,2772,481 70$3,048 Wife’s Earning History Wife could file and collect a survivor benefit at age 60. It would be reduced by 28.5%. She would continue to allow her own benefit to grow, and file at age 70 to start collecting her own benefit of $3,048

16. What if the Individual has Younger Children? Who can collect benefits when you retire? YouYour SpousalYour Unmarried Child Age 62 or older1. Age 62 or over 2. Any age, if caring for your child who is under 16 or disabled before 22 Under 18, or up to 19 if in high school, or any age if disabled before 22

17. Divorced Spouse A divorced spouse can apply for benefits on a work’s record if Had been married to worker for at lease 10 years Has been divorced for at lease 2 years* Is at lease age 62 Is unmarried –and- Not eligible for an equal or higher benefit on his or her own record, or on someone else’s record. The ex-spouse has to be at lease age 62, but not required to have filed. * 2 years does not apply if the individual was eligible for spousal benefit at the time of divorce.

18. Taxation of Social Security Benefit Single or Head of Household Married filling Joint Base amount $25,000Base amount $32,000 $25,000-$34,000=up to 50% taxable $32,000-$44,000=up to 50% taxable Above $34,000=up to 85% taxable Above $44,000=up to 85% taxable 1.Formula: ½ Social Security Benefit plus modified adjusted gross income (mAGI). This is often called “provisional Income” 2. If this amount exceeds the base amount, benefits become taxable

19. Government Pension Offset (GPO) If your are covered by a pension under the civil retirement system rather than Social Security, your spousal and/or survivor benefits will be reduced through A Government Pension Offset. Spouse benefits and Survivor benefit will be reduce by 2/3 of the amount of Your pension. Wife’s Pension Monthly Pension $1,500 Gov’t Pen. Offset $1,000 Age Monthly Benefit Spousal Benefit Adj. Spousal Benefit Adj. Survivor Benefit 62$1,614$862 66$2,257$1,129$129$1,257 70$3,042$2,042 Husband’s Earning History

20. Additional Resource Social Security Administration www.ssa.gov Internal Revenue Service www.IRS.gov 2009 Guide to Social Security