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Getting the-most-from-social-security

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Getting the most from Social Security

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Getting the-most-from-social-security

  1. 1. Getting the Most from Social Security
  2. 2. Agenda Know Your Benefit Understand Your Options Maximize Your Benefit Getting Started
  3. 3. Know Your Benefit Sources for retirement income for average income earners to sustain 80% – 100% of pre-retirement income Employer-Sponsored Retirement Plan and Personal Savings Social Security Source: Social Security Administration, Office of Policy. Office of Research, Evaluation Statistics, Fast Facts and Figures About Social Security, 2010.
  4. 4. Know Your Benefit
  5. 5. Source: 2011 Social Security Administration, ssa.gov/retire2/. Know Your Benefit Full Retirement Age Social Security Full Retirement Age Birth Year Full Retirement Age 1943-1954 66 1955 66 + 2 months 1956 66 + 4 months 1957 66 + 6 months 1958 66 + 8 months 1959 66 + 10 months 1960 and later 67
  6. 6. Receive benefits earlier Higher monthly check No penalty for employment Highest monthly paycheck No penalty for employment Smallest monthly check Potential reduction penalty for employment No interim benefits Receive benefits later 62 70 AGE PROS CONS Full Retirement Age Know Your Benefit Your Age and Your Benefit
  7. 7. Electing your benefit — early vs. late Working while collecting your benefit Examining your tax situation Considering your spouse’s benefit Understand Your Options
  8. 8. Understand Your Options Early vs. Late 130% 120% 110% 90% 80% 70% Early vs. Late Benefit Election Assuming Full Retirement Age at 66. Source: Social Security Administration. 100% 62 63 64 65 67 68 69 70 Take Benefits Earlier Take Benefits Later Retire at age 66 with full monthly benefit
  9. 9. Working While Collecting Understand Your Options * Income from work, W-2, and self-employment income. ** At FRA your benefit amount is adjusted to accommodate for the earlier reduction. Age 2011 Earned Income* Limits Considerations Under Full Retirement Age $14,160 For every $2 over the limit, $1 is withheld from benefits In the year Full Retirement Age is reached $37,680 For every $3 over the limit, $1 is withheld from benefits until the month in which full retirement age is reached At Full Retirement Age or older** No limits on earnings None
  10. 10. Examining Your Tax Situation Understand Your Options Note: State and local taxes may differ. * Provisional Income is Adjusted Gross Income including any tax-exempt interest plus 50% of Social Security benefits . Source: 2010 Social Security Administration, http://www.ssa.gov/pubs/10035.html . Single Filing Provisional* Income Benefits Subject to Tax Under $25,000 0% $25,000 - $34,000 Up to 50% Over $34,000 Up to 85% Married Filing Jointly Provisional* Income Benefits Subject to Tax Under $32,000 0% $32,000 - $44,000 Up to 50% Over $44,000 Up to 85%
  11. 11. Consider Spousal Benefits Understand Your Options Option 1 Individual Benefit Option 2 Spousal Benefit Option 3 Survivor Benefit Lower-earning spouse collects his or her own individual benefit Lower-earning spouse may collect a higher spousal benefit (up to 50% of their spouse’s full benefit) if the spouse has filed A widowed spouse may collect survivor benefits (up to 100% of their deceased spouse’s benefit)
  12. 12. Consider Spousal Benefits Understand Your Options Sam and Ann, both age 62 Full Retirement Age: 66 Social Security Benefits Name Age 62 Age 66 Age 70 Ann $675 $900 $1,180 Sam $1,562 $2,071 $2,733 Spousal Benefit $724 $1,035 $1,035
  13. 13. Maximize Your Benefit 1 Benefit will be reduced if not at Full Retirement Age. Both individuals must have filed for Social Security benefits. 2 Effective December 2010, the Social Security Administration published new rules regarding the withdrawal but has not released a final ruling. Visit ssa.gov for the most current information. Social Security Strategy Definition Benefit Claim and Suspend Individuals at FRA or later who have claimed benefits then suspend the benefits. When benefits are reinstated down the road, they will receive a higher benefit amount. Allows spouse to claim spousal benefit, while the higher wage earner can continue to accrue benefits. Can increase the overall lifetime benefits. Claim Now, Claim More Later A FRA individual may claim one-half of their spousal benefit, delay taking their own benefit. 1 Earn delayed credits and then claim their higher personal benefit at a later age or may help spouse to receive greater survivor benefit. Do-Over 2 Individuals are allowed to change their earlier claiming decision. Provides flexibility to cease taking benefits if life situation changes.
  14. 14. Calculate expected Social Security benefit Determine your plan to maximize your benefit Apply for retirement benefits Getting Started Maximize Your Benefit
  15. 15. <ul><li>Most recent Social Security statement </li></ul><ul><li>Most recent tax return </li></ul><ul><li>Most recent pay statement from employer </li></ul><ul><li>Latest statements from all retirement plans </li></ul><ul><li>Latest statement from mutual funds </li></ul><ul><li>Life and disability insurance policies </li></ul><ul><li>Annuity contracts </li></ul><ul><li>Wills and trust document(s) </li></ul>Bring Getting Started Maximize Your Benefit
  16. 16. <FP Name> <FP Firm Name> <FP Contact Information> Questions?
  17. 17. Investors should carefully consider a fund’s investment objectives, risks, charges, and expenses prior to investing. A prospectus containing this and other information can be obtained by contacting a financial professional, visiting principalfunds.com, or by calling 800-222-5852. Read the prospectus carefully before investing. A mutual fund’s share price and investment return will vary with market conditions, and the principal value of an investment when you sell your shares may be more or less than the original cost. The content of this presentation is based upon reliable source material and is believed to be correct as of the time of creation; however it is subject to change at any time without warning. Investors should consider consulting with their tax professionals prior to making decisions due to their unique circumstances. While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that The Principal ® is not rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc., member of the Principal Financial Group ® . Principal Funds Distributor, Principal Shareholder Services, Principal Management Corporation and its affiliates, and Principal Funds, Inc. are collectively referred to as Principal Funds. MM4787Q-01 | 04/2011 | t11040604e4 ©2010 Principal Financial Services, Inc. WE’LL GIVE YOU AN EDGE ® Disclaimers

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