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Today’s young workers can expect to spend 20 or
more years in retirement, so it is important to begin
financial planning as early as possible.
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Social Security replaces an
average of about 40% of
pre-retirement earnings.
Financial planners generally
agree that retirees will need
70-80% of pre-retirement
earnings to enjoy a
comfortable retirement.
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To learn how to save and
invest for retirement, visit
www.mymoney.gov.
The website provides
helpful information
furnished by over 20
federal agencies, including
Social Security.
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How Do You Qualify for
Retirement Benefits?
You need to work to earn
Social Security “credits”
Each $1,220 in earnings
gives you one credit
You can earn a maximum
of 4 credits per year
Example: To earn 4 credits in 2015, you must earn at least $4,880. Earning 40
credits (10 years of work) throughout
your working life will qualify you for a retirement benefit.
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How Social Security
Determines Your Benefit
Social Security benefits are based on how much an individual earned
and paid in Social Security taxes while working
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”
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If your average monthly earnings are = $5,200
90% of First $826 = $ 743
32% of Earnings over $826 through $4,980 $4,154 = $1,329 ($4,980 -$826=$4,154)
15% of Earnings over $4,980 $220 = $ 33
Your monthly benefit would be $2,105
2015 Retirement Benefit
Computation Example
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If any part of your pension is based
on work not covered by Social
Security, you may be affected by the
Windfall Elimination Provision.
Windfall Elimination Provision
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Windfall Elimination Provision
(WEP) - 2015
Normal Computation WEP Computation
90% of the First $826 40-85% of the First $826
32% of the Next $4,154 32% of the Next $4,154
15% of the Remainder 15% of the Remainder
Because your pension is based on work not covered by Social
Security, you may be affected by the Windfall Elimination
Provision.
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Full Retirement Age Chart
Year of Birth Full Retirement
Age
1943-1954 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 and later 67
The amount of benefits is affected by
the age when your client decides to
retire.
Early Retirement:
–Benefits as early as 62
–25 to 30 % reduction
Full Retirement:
–Full benefits at full retirement age
(100%)
Delayed Retirement:
–Benefits increase automatically if
retirement is delayed past full
retirement age up to age 70
–8 % per year
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Use the Retirement Estimator
www.socialsecurity.gov/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
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Benefits for Family Members
Spouses:
At age 62
At any age if caring for a child under age 16
or disabled
Is not entitled to a higher benefit on his or
her own record
Divorced Spouses:
Marriage lasted 10 years & they are
unmarried
Unmarried Children:
Up to age 18
Age 18-19 & still in high school
Disabled before the age of 22
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Spouse’s Benefit Computation
Benefit is 50% of worker’s unreduced benefit
Reduction for early retirement
If spouse’s own benefit is less than 50% of the worker’s, the benefits
are combined
Does not reduce payment to worker
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Who Can Get Survivors Benefits?
Widow/Widower:
Worker’s full benefit at their Full Retirement Age
• (If deceased worker received full retirement or disability benefits)
Reduced benefits as early as age 60, or age 50 if disabled
• (71.5% of deceased worker’s unreduced benefit)
At any age if caring for a child younger than 16 or disabled
Can receive reduced benefits at age 60 and then reduced or unreduced benefits at
age 62 or older
Remarriage after age 60 (50 if disabled)
Full benefits paid to both widow/widower and divorced widow/widower
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Government Pension Offset (GPO)
If you receive a government pension based
on work not covered by Social Security, your
Social Security spouse’s or widow(er)’s benefits may be
reduced.
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Example:
$4,200 of government pension 2/3 = $2,800
Social Security spouse’s benefits = $750
No benefit payable by Social Security
Government Pension Offset (GPO)
Applies to Spouse’s Benefits Only
2/3 of amount of government pension will be used
to reduce the Social Security spouse’s benefits
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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.
How Earnings Affect Retirement Benefits
If You Are You Can Make Up To
Rate Benefits are
Withheld
Under Full Retirement Age $15,720/yr. ($1,310/mo.)
$1 for every $2
The Year Full Retirement
Age is Reached $41,800/yr. ($3,490/mo.) $1 for every $3
Month of Full Retirement
Age and Above No Limit No Limit
If You Work & Receive Benefits
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What Will You Need When Applying for Your Social Security Benefits?
Social Security number for each applicant
Birth certificate(if date of birth allegation doesn't match Social Security
records)
Latest W-2 or self- employment tax return
Earnings estimate
Bank information for direct deposit
Information about marriages and divorces
Information about military or railroad services
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Retirement Strategies
Pick and Choose: (Claim Now, Claim More Later)
If you are between full retirement age and 70 and your spouse is already receiving benefits, you can apply for spousal benefits, delay your own benefit and earn delayed retirement credits at 8% up to age 70 at which time your own benefit could very well be higher.
File and Suspend:
If you are of retirement age and your spouse is full retirement age but does not want to receive his/her benefits, your spouse can apply for benefits and request payments to be suspended. These allows you to receive benefits on your spouse’s Social Security record even though he/she is not receiving theirs.
Do Over at Risk:
If you file for benefits early and within 12 months you now regret your decision you can withdraw your claim, pay back all the benefits you receive and restart them at higher amount based on your age at time of re-applying.
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About 1/3 of people who get Social Security pay income taxes on their
benefits.
At the end of each year, you’ll receive a Social Security Benefit Statement
(Form SSA-1099).
Use this statement to complete your Federal income tax return to find out
if you have to pay taxes on your benefit.
Your Benefits May Be Taxable
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Your Benefits May Be Taxable
Couple, Married Filing Joint Tax Return
$31,999 or less - no Federal tax
$32,000 - $44,000 - pay Federal tax on 50% of Social Security benefit
More than $44,000 - pay Federal tax up to
85% of Social Security benefit
Individual Tax Return
$24,999 or less - no Federal tax on Social Security benefit
$25,000 - $34,000 - pay Federal tax on 50% of Social
Security benefit
More than $34,000 - pay Federal tax up to 85% of Social Security benefit
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Who Qualifies for Medicare ?
Age 65
24 months after entitlement to Social Security disability
• Amyotrophic Lateral Sclerosis (ALS)
Permanent kidney failure and receive maintenance
dialysis or a kidney transplant
If you filed for Social Security benefits before age 65, you will be
automatically enrolled
If you are close to 65, still working and not receiving benefits you will have to
sign-up
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Medicare Coverage
Part A - Hospital Insurance
Covers most inpatient hospital expenses
2015 Deductible $1,260
Signing up for Medicare prohibits you from participating under
employer Health Saving Accounts
Part B - Medical Insurance
Covers 80% doctor bills & other outpatient medical expenses
after first $147 in approved charges
2015 Standard Monthly Premium $104.90
Part C – Health care services through a provider organization
Part D - Medicare Prescription Drug Plan
Covers a major portion of prescription drug costs for Medicare
beneficiaries
Enroll With Medicare prescription drug provider not SSA
When Can I Sign Up for Medicare Part B?
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Initial enrollment – 7 month period
• 3 months before and 3months after 65th birthday
Special enrollment – still working
• Anytime you are still covered by employer group health plan
• During the 8-month period that begins the month after the employment
or coverage ends whichever happens first
• COBRA is not considered coverage based on active enrollment
Annual General Enrollment
• January thru March with July being effective month of coverage
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Medicare Savings Program
– Helps pay Part B premiums & for some the Part A & B deductibles
and coinsurance
Extra Help
– Helps pay for the cost of Part D
premiums, deductibles, and co-
payments
www.socialsecurity.gov/prescriptionhelp/
Medicare Savings Programs
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Medicare
For More Information:
1-800-MEDICARE
(1-800-633-4227)
TTY 1-877-486-2048
www.medicare.gov
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Connecting With Social Security
• Online Services
– www.socialsecurity.gov
• Call Social Security to
schedule an appointment
– 1-800-772-1213
– TTY 1-800-325-0778
• Apply at local Office
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Applying for Retirement Benefits
You can apply online for
Retirement Benefits by
visiting
www.socialsecurity.gov
and clicking “Benefits”
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my Social Security
Your Online Account ... Your Control ...
www.socialsecurity.gov/myaccount
my Social Security is an easy-to-access,
easy-to-use portal to view and update some
of your own Social Security information.
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Who Can Create a
my Social Security Account?
A valid E-mail address;
A Social Security number; and
A U.S. mailing address.
You must be at least 18 years old and have:
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If you don’t get benefits, you can—
View, save, and print your online
Social Security Statement.
If you do get benefits you can—
Get your benefit verification letter;
Check your benefit and payment
information and your earnings record;
Change your address and phone number; and
Start or change your direct deposit.
my Social Security Services
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Your Online
Social Security Statement Provides
Estimates of the retirement and disability benefits you may receive;
Estimates of benefits your family may get when you receive Social
Security or die;
A list of your lifetime earnings according to Social Security’s records;
The estimated Social Security and Medicare taxes you’ve paid;
Information about qualifying and signing up for Medicare; and
A printable version of your Social Security Statement.
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What you can do Online
www.socialsecurity.gov
Online Services:
Request forms and pamphlets
Benefit Eligibility Screening Tool (BEST)
Create your online account
Apply for Retirement, Disability, Medicare, and Extra Help with
Medicare Part D
Retirement Estimator
Planners for Retirement, Disability, and Survivors
Request an Online Social Security Statement
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my Social Security provides an online benefit
verification letter immediately.
Visit: www.socialsecurity.gov/myaccount
My Social Security is the fastest, easiest and most secure
way to access your personal Social security Information