Social SecurityRetirement Planning

Edward LaffertyPublic Affairs SpecialistSocial Security AdministrationSocial Security Administration

Simplifying Retirement PlanningSimplifying Retirement Planning

What you should know before you file for retirement

What you should know after you file for retirementretirement

How working affects your benefits F il b fit ( & hild)Family benefits (spouse & child)Medicare

How You Qualify fori fiRetirement Benefits

M t b i d 40 ditMust be insured – earn 40 credits;10 years of work for retirement

2011 credit = $1,120.00,

Can earn maximum of four per yearCan earn maximum of four per year$4,480 in 2011 (4 x 1,120)

A Foundation for Planning Your FutureA Foundation for Planning Your Future

More than 54 Million PeopleMore than 54 Million PeopleGet BenefitsGet Benefits

7 8 million Disabled7.8 million Disabled Workers &

1.9 million Dependents4.5 millionWidows/

WidWidowers

1.9 millionS r i ing

33.7 million Retired

Surviving Children

Workers &2.9 million

Retirement

Disability

Retirement

DisabilityDependents

y

Survivors

y

Survivors

How Retirement Benefits Are Figured

Step 1 Adjust wages for changes in wage levels

How Retirement Benefits Are Figured

Step 1 - Adjust wages for changes in wage levelsStep 2 - Average over most of your working

lif ti (Y hi h t 35 )lifetime--(Your highest 35 years)Step 3 - Convert total earnings to monthly

figure by dividing by 420 (35x12)Step 4 - Formula applied resulting in the FullStep 4 Formula applied resulting in the Full

Retirement Age (FRA) amount Maximum wage taxed in 2011 = $106 800; covered earningsMaximum wage taxed in 2011 = $106,800; covered earnings

Pension based on work not covered by Social Security

If any part of your pension is based on work notcovered by Social Security, you may be affectedcovered by Social Security, you may be affected by the Windfall Elimination Provision.

If you receive a government pension based on work not covered by Social Security, your Social S it ’ id ( )’ b fit bSecurity spouse’s or widow(er)’s benefits may be reduced

When to start receivingi b firetirement benefits

Your age at the time you electYour age at the time you elect retirement benefits affects the amount

Wait until your FRA (65 67) you get yourWait until your FRA (65-67), you get your full benefit

At age 62, you get a lower monthlypayment; permanent reduction

You get an even higher monthlypayment if you work past your fullretirement ageretirement age

Born FRA Pct at 621937 65 80% FRA

1938 65 & 2 months 79.21939 65 & 4 months 78.31940 65 & 6 months 77.51941 65 & 8 months 76 71941 65 & 8 months 76.71942 65 & 10 months 75.81943-1954 66 75% FRA1955 66 & 2 months 74.21956 66 & 4 months 73.3 1957 66 & 6 months 72.51957 66 & 6 months 72.51958 66 & 8 months 71.71959 66 & 10 months 70.81960 & l t 67 70% FRA1960 & later 67 70% FRA

Delayed Retirement Credit (DRC)Delayed Retirement Credit (DRC)Beginning with the month of FRA andBeginning with the month of FRA andending with the month before age 70 allows a credit for any month for which aallows a credit for any month for which a

worker was at least FRA, and was insured for retirement benefits andwas insured for retirement benefits, and did not receive retirement benefitsBorn 1943 or later 8% increase a yearBorn 1943 or later, 8% increase a year DRC increase not paid to spouseDRC i l id t id / )DRC increase only paid to widow/er)

ili dFiling at Age 62, 66 and 70

If you were born between 1943 and 1954:Age 62 75% of benefitAge 66 100% of benefitAge 66 100% of benefitAge 70 132% of benefitg

Suspending BenefitsSuspending Benefits

If FRA l fIf you are FRA, you can apply for retirement benefits, then request to your h t d dhave payments suspended.

Thus, your spouse can receive a spouse's benefit and you can continue to receive ydelayed retirement credits until age 70.

When Do You Get Paid?When Do You Get Paid?

If birth date on 1st 10thIf birth date on 1st - 10th Second Wednesday

If birth date on 11th - 20th Third Wednesday

If birth date on 21st - 31st

Fourth Wednesdayy

l lFile Online

www.socialsecurity.govwww.socialsecurity.gov

OR2 3 th b f t t i t2-3 months before you want to receive payment

S l h i ffi iSet up telephone or in-office appointment

Call toll-free 1-800-772-1213

Available business days, 7:00 a.m. to 7:00 p.m.

R ti th ithdRetire, then withdraw

the individual can withdraw his or her benefits application pp

and repay in one lump sum what they receivedreceived

only once per lifetime – and within 12 months of initial filingmonths of initial filing

Spouses’ Benefits -Currently Married

12 month marriageAge 62 (reduction)Age 62 (reduction)Worker entitledIf d 62 di bl d hild hildIf under 62--disabled child or child

under age 16 in care

Spouses’ Benefits -Currently Divorced

10 year marriage10 year marriageAge 62 (reduction)Worker age 62Ex-spouse not married; worker can be p ;

married

Does not reduce payments made to the worker’s current spousecurrent spouse

Divorced Spouse (Life Case)p ( f )

Age 62Age 62

W i d t l t 10Was married at least 10 years

Currently unmarried

DOES NOT reduce payments made to the worker’s current spouse

Independently Entitled Divorced S (Lif C )Spouse (Life Case)

Meet other divorce requirements, but must be divorced at least two yearsmust be divorced at least two years

Can receive even though ex-spouse not receiving

Ex-spouse at least 62Ex spouse at least 62

Spouse’s Benefit Amounts Spouse s Benefit Amounts

Calculated differently from retirement benefits

Spouse’s benefit - Maximum of 50% of worker’s full retirement age (FRA) if theworker s full retirement age (FRA) if the spouse is at FRA

Does not affect the worker’s monthlyDoes not affect the worker’s monthly benefit amount

B f FRA Before FRA

If insured, spouse must file for own retirement first

then file as a spouse if due additional benefitsthen file as a spouse, if due additional benefits

If spouse is due more on own record, no spouse’s benefit payable

After FRAAfter FRA

If spouse is FRA and eligible for spouse'sIf spouse is FRA and eligible for spouse's benefit and his/her own retirement benefit,

spouse can choose to receive only the spouse's benefit now and

Delay receiving retirement benefits until a later datelater date

N E id f FiliNecessary Evidence for FilingS i l S it N b h li tSocial Security Number, each applicantBirth certificate (only if date of birth allegation doesn't match Social Security records)Social Security records)

W-2 or self-employment tax returnF t i ti tFuture earnings estimateBank information for direct depositInformation re marriages, divorces, etc.Information about military, railroad service

i f fiTaxation of Benefits

Individual filers with combined income between $25,000 and $34,000 = 50% taxable

Individual filers with combined income above $34,000 = 85% taxable

Joint filers with combined income between $32,000 and $44,000 = 50% taxable

Joint filers with combined income above $44,000 = 85% taxable

i f fiTaxation of Benefits

Less than one-third of our current b fi i i t th i b fitbeneficiaries pay taxes on their benefits.

See IRS Publication 915 - Social Security and Equivalent Railroad Retirement Benefits.

i hh ldi d lWithholding Federal TaxesYou are not required to have Federal taxesYou are not required to have Federal taxes

withheld from your Social Security benefit.However you can choose to have Federal taxesHowever, you can choose to have Federal taxes

withheld. You must complete IRS Form W 4VYou must complete IRS Form W-4VYou can only select a percentage (7, 10, 15, or

25 percent) of your monthly benefit amount25 percent) of your monthly benefit amount to be withheld

k f ll iWork Before Full Retirement Age

Limits on how much you can earn and still receive all of your Social Security paymentspayments

Work is wages from employment or earningsWork is wages from employment or earnings from self-employment (SEI)

Does NOT include private pensions, 401Ks, investments, etc.

The Month You Reach FRA…The Month You Reach FRA…

th i li i ithere is no limit on your earnings.If not already receiving benefits,then contact us at the beginning of the year

you reach FRAyeven if you are still working you might be able to receive some or all ofyou might be able to receive some or all of

your benefits for months before you reach FRAreach FRA.

l i i iAnnual Earnings Test Limits

Under FRA Turning FRA during the year

$14 160the year.

$37 680$14,160($1,180/mo.)

$37,680($3,140/mo.)

Under FRAUnder FRA

Rule 1 for

We hold back $1 ofWe hold back $1 of benefits for every $2

th i li itover the earnings limit$14,160,

In Year of FRAf

Rule 1 for

We hold back $1 of benefits for every $3

over the earnings limitover the earnings limit$37,680

l iSample Computation$24 160 earnings$24,160 earnings$14,160 limit$10 000 over limit /2 = $5 000 benefits withheld$10,000 over limit /2 = $5,000 benefits withheld

If ti t b fit ithh ld b fIf retirement benefits are withheld because of your earnings…

b fit ill b i d t FRA t t kbenefits will be increased at your FRA to take into account those months in which benefits

ere ithheldwere withheld.

One-Time Earnings Rule -hNon-Service Months

Usually used first year of retirementUsually used first year of retirement

If t t i f ll ti t (FRA)If not yet in full retirement year (FRA), whenever monthly earnings under $1,180,b fit d dl f l t t lbenefits due regardless of yearly total

In full retirement year (FRA), whenever monthly earnings under $3,140, benefitsd e regardless of earl totaldue regardless of yearly total

Example of the Monthly TestWorking from Jan-Jun 2011, earning $500,000.

Stops work June 30.

FEBJAN APRMAR MAY JUN

p J

Starting July 2011 benefits paid for each Starting July 2011 , benefits paid for each month earning $1,180 or less.

NOVOCT DECSEPAUGJUL

l l i b fiRecalculating benefits

If some of your retirement benefits are withheld because of your earnings,y g ,

your benefits will be increased starting at f ll ti tyour full retirement age

to take into account those months in which benefits were withheld.

Substantial Services for the lf l dSelf-Employed

A th i hi h d tA month in which you devote: more than 45 hours to the business, or between 15 through 45 hours to a business in

a highly skilled occupation. g y pUsually, work from 15 through 45 hours in a

month can be established not substantial ifmonth can be established not substantial if under the monthly limit

Survivor BenefitsSurvivor Benefits

Earliest is age 60, or age 50 if disabledEarliest is age 60, or age 50 if disabled

Any age if you have a child-in-care (under ageAny age if you have a child in care (under age 16) or disabled adult child of the worker

Deceased ex-spouse: if you were married at least 10 years and are single

Note: re-marriage after 60 doesn’t affect id ( ) b fitwidow(er) benefits

How Much Does A Survivor Receive?How Much Does A Survivor Receive?

F ll R i A 100% (FRA)Full Retirement Age 100% (FRA)Age 60 71.5% (FRA)Age 50 (Disabled) 71.5% (FRA)Widow(er) at any age if caring for 75.0% (FRA)Child of worker under 16

or disabled Child 75.0% (FRA)

Reduced benefits on one record at age 60, reduced or unreduced benefit on other record at age 62 or olderg

Who Gets Medicare?65 or older65 or older

- eligible for Soc. Sec. benefits, or - worked 10 years for government entity

Under 65 - receiving Soc. Sec. disability 24 months

permanent kidney failure- permanent kidney failure- Amyotrophic Lateral Sclerosis (ALS)

Filing for MedicareFiling for Medicare

Automatic if you are getting benefits at 65

Contact SSA at age 65, even if you are not getting benefitsgetting benefits

May apply on own record or spouse’s

Parts A and B of MedicareHospital (Part A) Doctors (Part B)Hospital (Part A)

Paid for by 1.45% tax while working

Doctors (Part B)Paid by premiums

deducted from SStax while workingPays 100% of covered

inpatient costs

deducted from SS check

Covers 80% ofinpatient costsLimitations,

deductibles,

Covers 80% of doctor/outpatient bills.

exclusionsVery limited nursing

home coverage

May not need part B if still working.

home coverage

( iff i )PART B (Different premiums)

Standard Medicare Part B monthly premium of $110.50 in 2010, $115.40 in 2011

Premiums rise if your yearly income is y y yabove $85,000 (individual) or $170,000(couple); 5% of Medicare beneficiaries ( p );affected

May not need part B if still workingMay not need part B if still working

M diMedicare coverage

PART A – Hospital InsurancePaid for by taxes while still workingPaid for by taxes while still workingCovers most inpatient hospital expenses2011 deductible - $1,132 hospital stay

of 1-60 days yVery limited nursing home coverage

Medicare coverageMedicare coverage

PART B – Supplementary Medical Insurance

Covers 80% of doctor bills & otherCovers 80% of doctor bills & other outpatient medical expenses after first $162 of appro ed chargesfirst $162 of approved charges

Changes to Part B Standard Monthly PremiumChanges to Part B Standard Monthly Premium

I J 2011In January 2011your monthly premium might be higherbased on your Modified Adjusted Gross

Income (MAGI)( )Premiums rise if your yearly income is above

$85,000 (individual) or $170,000 (couple)$85,000 (individual) or $170,000 (couple)5% of Medicare beneficiaries affected

Enrolling in MedicareEnrolling in Medicare

If receiving Social Security card sent three monthsIf receiving Social Security, card sent three months prior to 65; if not, must file

Can file for “A” three months prior to 65“B” has 7-month enrollment period

3 th b f 65 3 th ft 65- 3 months before age 65 - 3 months after 65

If missed enroll next Jan-Mar thenIf missed, enroll next Jan Mar, then“B” begins July, premium raised 10%

Part C – Medicare Advantage Part C Medicare Advantage

I l d HMO PPO i l d lIncludes HMOs, PPOs, special needs plans, private fee-for-service plans

With Medicare Parts A and B you can choose to receive all of your health care servicesto receive all of your health care services through one of these provider organizations under Part C.

You pay Part B premium & plan premium; l t d ilower costs, more covered services

Other Parts of MedicareOther Parts of Medicare

S i l S it ll i M di A d B lSocial Security enrolls in Medicare A and B only

M di billi M di HMO P D D PlMedicare billing, Medicare HMOs, Part D Drug Plans, etc. are through the Centers for Medicare and Medicaid (CMS)Medicaid (CMS)

Social Security provides “Extra Help” to pay forSocial Security provides “Extra Help” to pay for Medicare Part D for those with limited income and resourcesresources

If Covered by anl l h lEmployer Group Health Plan

P A k ill fil i lPart A - workers, spouses still file timely

Part B - 8-month enrollment period begins earliest of:g

- month employment endsmonth coverage ends- month coverage ends

Check with your employer or insurance carrier to be sure this is the right decision for youis the right decision for you

Medicare Prescription Drug ProgramMedicare Prescription Drug Program

Prescription Drug Program open to anyone on Medicare

Offered through private prescription drugOffered through private prescription drug plans (PDPs) and

By Medicare Advantage plans

Children’s BenefitsChildren s Benefits

Applies to Retirement, Disability and Survivor BenefitsApplies to Retirement, Disability and Survivor Benefits

Children under 18 with parent receiving b fi / d dbenefits/parent deceased

Student benefits paid to unmarriedStudent benefits paid to unmarried children who are full-time students in a secondary schoolsecondary school

“Disabled Adult Child” (over 18) with parent i i / t d dreceiving/parent deceased

Helpful Linkshtt // i l it /http://www.socialsecurity.gov/http://www.socialsecurity.gov/pgm/retirement.htmh // i l i / i 2/http://www.socialsecurity.gov/retire2/http://www.socialsecurity.gov/retire2/near.htmhttp://www.socialsecurity.gov/retire2/yourspouse.htmh // i l i / /di bili hhttp://www.socialsecurity.gov/pgm/disability.htmhttp://www.socialsecurity.gov/pgm/medicare.htm