1. retirementMATTERS

2. Exploring Social Security Today, we’ll explore: How Social Security works. Issues around the program. Different payment scenarios. What you should know. The information presented here about current Social Security benefits has been reviewed by the Social Security Administration to verify its accuracy.

3. retirementMATTERS Exploring Social Security How Social Security Works

4. retirementMATTERS Exploring Social Security How Social Security works. Workers  Social Security funded from taxation of wages. Beneficiaries $1,294 Average Monthly Benefit

5. retirementMATTERS Exploring Social Security How Social Security works.  As you work, you earn Social Security “credits”.  When you earn 40 credits, you and your spouse qualify for a Social Security Retirement Benefit and for Medicare. First Pay Check 10 40 30 20 You (and your spouse) qualify for benefits Working Career CREDITS

6. retirementMATTERS Exploring Social Security How Social Security works. Your Benefit is determined by:  The averaging will add in zeros to fill years if you have worked less than 35 years. First Pay Check Working Career Averaging your highest 35 years of salary.

7. retirementMATTERS Exploring Social Security How Social Security works.  Paper statements are no longer mailed.  www.SocialSecurity.gov - For electronic statements and for benefit calculator based on your actual record. www.SocialSecurity.gov

8. retirementMATTERS Exploring Social Security What You Should Know

9. What you should know. retirementMATTERS Exploring Social Security  The year you were born determines your Full Retirement Age. 1960 or later Source: www.SocialSecurity.gov Year of BirthFull Retirement Age 1943 – 1954 1955 1956 1957 1958 1959 66 & 2 months & 4 months & 6 months & 8 months & 10 months 67

10. What you should know. retirementMATTERS Exploring Social Security  Your age when you activate your benefit is important! For example, if you were born from 1943 through 1954: Maximum Monthly Benefit FULL RETIREMENT AGE: $2,642 DELAYING TO AGE 70: $3,487

11. What you should know. retirementMATTERS Exploring Social Security  Delayed retirement increases stop at age 70 Age 66Age 66 & 6 monthsAge 67 Full Retirement Benefit100% Retirement Benefit at Age 68108% Retirement Benefit at Age 69 Retirement Benefit at Age 70 116% 124% 112% 120% 128% 116% 124% 132% 8% increase for each year you delay, equaling 0.67% increase per month. Full Retirement Ages

12. What you should know. retirementMATTERS Exploring Social Security  Your amounts are shown on your statement – page 2.

13. What you should know. retirementMATTERS Exploring Social Security Tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). - Not the source for inflation quoted in the media If there is no increase in the CPI-W, then there is no increase to your benefit, as was the case in 2010 and 2011.  Cost –of-Living Adjustments (COLA) PREVIOUS YEARS‘ COLAs 20095.8% 20110.0% 20100.0% 20123.6% 20131.7% 20141.5% THIS YEAR’S COLAs

14. What you should know. retirementMATTERS Exploring Social Security Depends on: Filing Status – individual or joint returns Amount of Combined Income -Individual – income tax on 50% of benefit if combined income is between $25,000 and $34,000 (2013). Income tax on 85% of benefit if combined income is greater than $34,000. -Joint – income tax on 50% of benefit if combined income is between $32,000 and $44,000 (2013). Income tax on 85% of benefit if combined income is greater than $44,000.  Taxes and your Social Security benefit Your adjusted gross income + Nontaxable interest + ½ of your Social Security benefits = Your "combined income" The Guardian Insurance & Annuity Company, Inc. and any of its representatives do not give tax and legal advice. You should consult with your personal tax advisors about your specific situation and circumstances. You may request to have federal income tax withheld from your monthly benefit.

15. What you should know. retirementMATTERS Exploring Social Security Any wages above $41,400 in 2014, Social Security Benefit is reduced $1 for every $3 above limit. 62Full Retirement Age and later Year attaining Full Retirement Age Any wages above $15,480 in 2014, Social Security Benefit is reduced $1 for every $2 above limit. As of the month you reach Full Retirement Age, there is no earnings limit. 100% of the Social Security Benefit is paid.  Working and your Social Security benefit

16. retirementMATTERS Exploring Social Security Different Payment Scenarios

17. retirementMATTERS Exploring Social Security Different payment scenarios. Spousal Benefit Spouse A’s Benefit Spouse B’s Benefit 50% Spousal Benefit Increase given by the program Personal benefit

18. retirementMATTERS Exploring Social Security Different payment scenarios. Widow/Widower’s Benefit Spouse A’s Benefit Spouse B’s Benefit Increase given by the program 100% Widow Benefit Decedent’s benefit stops Remarry? Benefits continue if you remarry when you are age 60 or older. At full retirement age or older Personal benefit

19. retirementMATTERS Exploring Social Security Different payment scenarios. Survivor’s Benefit Widow / Widowers full retirement age or older 100% of decedent’s benefit Widow / Widowers age 60 to full retirement age 71.5 to 99% of decedent’s benefit Disabled Widow / Widowers age 50 through 59 71.5% of decedent’s benefit Widow / Widowers, any age, caring for a child under age 16 75% of decedent’s benefit A child under age 18 (19 if in elementary or secondary school (grades 7 -12)) 75% of decedent’s benefit Benefits to a child stop when he/she attains age 18 unless a student or was disabled before age 22.

20. retirementMATTERS Exploring Social Security Different payment scenarios. For Divorced Spouses Spouse A’s Benefit Ex -Spouse B’s Benefit Increase given by the program 50% Spousal Benefit Marriage lasted for at least 10 years or longer Lower-record spouse remains unmarried Each spouse is entitled to a benefit Each spouse is age 62 or older If higher-record spouse remarries, the new spouse’s benefit is not affected. Personal benefit

21. retirementMATTERS Exploring Social Security Different payment scenarios. File and Suspend – Spouses and Minor Dependants Higher-record Spouse Lower-record Spouse File and Suspends Lower-record Spouse Full Retirement Age At age 70 for Higher-record Spouse Delayed benefit increased by 24% to 32% (depending on full retirement age) Claims 50% Spousal Benefit

22. retirementMATTERS Exploring Social Security Different payment scenarios. Higher-record Spouse Spousal Benefit and Delayed Retirement Credits Higher-record Spouse Lower-record Spouse Delays Retirement Credits Lower-record Spouse Full Retirement Age At age 70 for Higher-record Spouse Delayed benefit increased by 24% to 32% (depending on full retirement age) Spousal Benefit 50%

23. retirementMATTERS Exploring Social Security Issues around the program

24. retirementMATTERS Exploring Social Security Issues around the program.  Ratio of workers to beneficiaries is projected to shrink over time.  By 2033, Social Security Trust Fund is estimated to be exhausted. Workers Beneficiaries  Mass migration of Baby Boomer Generation into retirement.

25. retirementMATTERS Exploring Social Security Issues around the program.  Subject to political agendas.  Chained CPI  Budget deficit

26. retirementMATTERS Exploring Social Security Issues around the program.  Not meant to replace all of your income Sources: The 2011 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, Table VI.F10. Notes: Replacement rates represent the sum of annual scheduled benefit amounts and other retirement income as a percent of career-average annual earnings. Social Security benefits for retired workers at full retirement age (age 66 for workers born 1943 to 1954) in 2011 provide 90 percent of the first $680 of average indexed monthly earnings, 32 percent of additional earnings up to $4,100, and 15 percent of earnings above $4,100. Preretirement Earnings Replacement Rates for Workers Retiring in 2011 at Age 65 Charts = 75% Replacement Rate (RR) of Career Average Earnings Social Security RR Needed from Other Sources to Achieve a 75% RR A “low earner” is someone whose career average earnings are about 45 percent of the national average wage index, a “high earner” has career average earnings of about 160 percent of the average wage index, and a “max earner” has career average earnings of 240 percent of the average wage index. The national average wage index for 2009 was $40,711.61. Low Earners ($19,000 Pre-Retirement Income) 55.2% 19.8% High Earners ($65,000 Pre-Retirement Income) 41.1%33.9% Max Earners ($97,000 Pre-Retirement Income) 27.6% 47.4%

27. retirementMATTERS Exploring Social Security Let’s Recap

28. retirementMATTERS Exploring Social Security How Social Security works.  Funded by taxation of wages.  Averages your highest 35 years of wages.  Earn 40 credits, you (and your spouse) qualify for a benefit.  Read your statement.

29. What you should know. retirementMATTERS Exploring Social Security  Full retirement age depends on year you were born.  Age you activate your benefit affects your benefit’s amount.  Benefit may increase by a cost-of- living adjustment, though not guaranteed each year.  Taxes may be due on your benefit.  Working may reduce your benefit, if you activate it before full retirement age.

30. retirementMATTERS Exploring Social Security Different payment scenarios.  Spousal benefit  Widow/er’s Benefit  Survivor's Benefit  Divorced Spouse Benefit  File and Suspend  Delayed Retirement Credits and Spousal Benefit

31. retirementMATTERS Exploring Social Security Issues around the program.  Funding issues for future benefits.  Part of political agendas that may cause changes to the program.  Not meant to replace all of your income during retirement.

32. retirementMATTERS Exploring Social Security Thank you! Please note that neither The Guardian Insurance & Annuity Company, Inc. (GIAC) nor any of its agents are authorized to give legal or tax advice. Tax laws and regulations are complex and subject to change. For complete details, consult with your attorney or tax advisor. Annuities are issued by The Guardian Insurance & Annuity Company, Inc. (GIAC), a Delaware corporation. Variable annuities are distributed by Guardian Investor Services LLC (GIS). Product provisions and features may vary from state to state. GIAC and GIS are wholly owned subsidiaries of The Guardian Life Insurance Company of America (Guardian) 7 Hanover Square, New York, NY 10004. GIS is a member: FINRA, SIPC. Not a Deposit | Not FDIC or NCUA Insured | May Lose Value | No Bank or Credit Union Guarantee 2013-14532 Current tax law is subject to interpretation and legislative change. The information provided herein is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any federal tax penalties. Information presented herein regarding Social Security is for general education purposes only. You should not rely solely upon this information in making decisions about social security to your specific situation. Ultimately, the Social Security Administration alone makes all final determinations on your eligibility for benefits and the benefit amounts. You should consult with your local Social Security Office and your financial planner before acting upon any information provided herein.