1. For financial professional use only Slide 1 of 19 CL ST Web 24 (12/15) Columbus Life Insurance Company, Cincinnati, Ohio is licensed in the District of Columbia & all states except New York. ADVANCEDMARKETS Social Security Claiming Strategies are Changing Morgan F. Scott, JD VP, Advanced Markets

2. For financial professional use only Slide 2 of 19 CL ST Web 24 (12/15) Columbus Life Insurance Company, Cincinnati, OH, and its representatives, does not give legal or tax advice. Any discussion of federal taxes in this presentation is not intended to be complete or cover all situations. The comments are general in nature and should not be considered tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Federal and state laws and regulations are complex and are subject to change. Changes in such laws and regulations may have a material impact on pre-and/or after-tax investment results. You should consult counsel or other specialized advisor for more complete information

3. For financial professional use only Slide 3 of 19 CL ST Web 24 (12/15) Agenda - Calculation of retirement benefit - Claiming at different ages - Variations for married couples - Impact of 2015 changes on marital claiming strategies

4. For financial professional use only Slide 4 of 19 CL ST Web 24 (12/15) Calculation of Social security retirement benefit is an “earned” benefit Must have accumulated a minimum of 40 credits to be entitled to a retirement benefit This is effectively 10 years of contributing to Social Security Different qualifications apply for disability and family benefits Source: SSA.GOV

5. For financial professional use only Slide 5 of 19 CL ST Web 24 (12/15) Calculation of Primary Insurance Amount The monthly benefit that is payable at Full Retirement Age (FRA), calculated by the Social Security Administration Payments at other ages are increased or decreased based on this benefit Amount is monthly average of 35 years of highest wages, adjusted for inflation, (AIME) and multiplied by replacement percentages at several bend points Source: SSA.GOV

6. For financial professional use only Slide 6 of 19 CL ST Web 24 (12/15) Jill Age 62 Worked since she was 24 Her earnings for each year are multiplied by an inflation factor The highest 35 years are aggregated and the result divided by 420 (AIME) First $826 x 90% ($743) Next $4,154 x 32% ($1,329 for a total of $2,155) Balance x 15% (for a Maximum Benefit of $2,663)

7. For financial professional use only Slide 7 of 19 CL ST Web 24 (12/15) When the monthly benefit at Full Retirement Age is known, the amount that will be payable at other ages can be determined. –For purposes of illustration, assume that the full retirement age benefit is $1,000 per month Most workers claim between the ages of 62 and 70 Claiming early will result in a reduced benefit. After FRA, benefit will increase by 8% per year with delayed retirement credits Source: SSA.GOV

8. For financial professional use only Slide 8 of 19 CL ST Web 24 (12/15) Age% of Benefit$ per Month 6275%$750 66 (FRA)100%$1000 70132%$1320 Claiming at other ages will result in pro-ration of benefit. Inflation adjustment is not shown Percentages will be different if FRA is more than 66 Once benefit is started it cannot be increased except through inflation adjustments Source: SSA.GOV

9. For financial professional use only Slide 9 of 19 CL ST Web 24 (12/15) There is a clear benefit to deferring until age 70 because the benefit increases by 8% (delayed retirement credits) per year from 66 to 70 Not everyone can defer –Need income earlier –Short life expectancy (poor health) –Don’t believe the system will last Crossover points –A higher benefit started later will be more beneficial but only if the worker lives beyond the crossover point FRA (66) v. Earliest possible start (62) - about age 78 Latest possible start (70) v. FRA (66) – about 81 Source: SSA.GOV

10. For financial professional use only Slide 10 of 19 CL ST Web 24 (12/15) The previous discussion is still applicable but becomes more complicated when clients are married because each spouse may be entitled to their own benefit Two additional benefits are available –a spousal benefit –a survivor’s benefit The general rule for married couples is that a spouse is entitled to the highest available benefit – either their –own benefit –their spousal benefit –the survivor benefit Source: SSA.GOV

11. For financial professional use only Slide 11 of 19 CL ST Web 24 (12/15) The spousal benefit is 50% of the worker’s benefit at FRA. –The spousal benefit is subject to pro-rata reductions if taken prior to the spouse’s FRA. –Delayed retirement credits are not available on the spousal benefit. The spousal benefit may be claimed if the working spouse has filed for benefits and the spouse is at least 62 years old The survivor’s benefit is the higher of the benefit the deceased spouse’s benefit or the spouse’s own benefit –Surviving spouse can claim as early as 60 (reduced benefit) –Surviving spouse cannot have remarried prior to age 60 Source: SSA.GOV

12. For financial professional use only Slide 12 of 19 CL ST Web 24 (12/15) Example: Tom – age 66 Benefit of $1,000 per month Gloria – age 62 Spousal benefit of $500 per month at her FRA Tom files for benefits and Gloria claims a spousal benefit. Gloria will receive $350 per month (70% of $500) Variation: Gloria is 66 and Tom is 62. Tom claims his benefit at age 62 and receives $750 per month. Gloria will receive a spousal benefit of $500 per month.

13. For financial professional use only Slide 13 of 19 CL ST Web 24 (12/15) A few observations before a discussion of some more sophisticated strategies: –Married workers often are eligible for their own SS benefit and a spousal benefit –In some circumstances it is possible to switch from one benefit to the other to obtain delayed retirement credits –Maximizing the benefit payout will also result in a surviving spouse receiving the highest possible benefit –Claiming strategies depend on: Relative ages of spouses Each spouse’s work record Other income Life expectancy (but this is less important than for single persons) Source: SSA.GOV

14. For financial professional use only Slide 14 of 19 CL ST Web 24 (12/15) Two common filing strategies for married couples –restricted application –file and suspend Restricted Application: –Typically both spouses have a benefit in their own right. One spouse takes his or her benefit and the other takes a spousal benefit. At some point the spouse taking the spousal benefit takes his or her benefit at a higher level, either because they have reached FRA or to take advantage of delayed retirement credits –Bipartisan Budget Act of 2015 – “deemed filing” rule applies at all ages, not just prior to FRA Persons age 62 before 1/1/2016 can still use technique Source: SSA.GOV

15. For financial professional use only Slide 15 of 19 CL ST Web 24 (12/15) File and Suspend: –The worker spouse has to have filed for benefits before the other spouse can file for a spousal benefit. This does not necessarily mean that the worker spouse has to start receiving benefits as he or she can suspend the benefit to take advantage of the delayed retirement credits –Bipartisan Budget Act of 2015 changes rule so that suspension of benefits applies to all benefits associated with worker’s benefit being suspended (includes spousal and family benefits) –Technique is available to anyone (over FRA) who files and suspends on or before April 30, 2016. –Current recipients of benefits under file and suspend will continue to receive benefits Source: SSA.GOV

16. For financial professional use only Slide 16 of 19 CL ST Web 24 (12/15) Earned income could cause reduction in benefits Under year of full retirement age –2016 exemption is $15,720 –Loss of benefits is $1 for every $2 earned above exemption Calculation is different for earned income in year of full retirement age up to month of full retirement age Source: SSA.GOV

17. For financial professional use only Slide 17 of 19 CL ST Web 24 (12/15) Up to 85% of benefits includable in taxable income Tax rate depends on amount of other income and deductions Columbus Life Tax App has a simple calculator Consult your tax advisor 2015 Source: SSA.GOV

18. For financial professional use only Slide 18 of 19 CL ST Web 24 (12/15) It is easy to make this much more complicated than necessary For any clients, need for income will dictate claiming age For single clients, life expectancy (consideration of crossover point) may influence claiming decision For married couples, maximizing benefit for one of the couple is primary objective as this will also be the amount of the survivor benefit Both the File and Suspend and the Restricted Application strategies will continue to be available – but only for a limited time

19. For financial professional use only Slide 19 of 19 CL ST Web 24 (12/15) Contact the Advanced Markets group Email AdvancedMarkets@columbuslife.comAdvancedMarkets@columbuslife.com Phone 800-677-9696 option 3