1. A Public Service Presentation provided by the Society of Certified Senior Advisors

2. What this Presentation Will Cover Social Security – Retirement – How to Qualify – How Social Security Income is Determined – How Do I Receive My Benefits – Taxes and Social Security – Survivor Benefits – Disability and Social Security

3. Social Security Overview Social Security began in 1935 and was designed to be a financial “safety net” to ensure the well being of retired workers and their families The 5 major components of Social Security are: – Retirement – Disability and SSI – Survivor’s Benefits – Medicare

4. Retirement Social Security (S.S.) is designed to be a foundation It is not designed to be the only income source in retirement – Financial advisors recommend to use S.S. as 30% of retirement income – Average worker uses S.S. as 40% of retirement income – 1 out of 5 seniors uses S.S. as their only income source The Social Security program will undergo changes in order to keep the system solvent and functioning

5. How Do I Qualify? By working and paying Social Security taxes workers earn credits Credit requirements are dependent on your birth year – Anyone born after 1929 needs 40 credits to receive benefits – 1 credit earned in covered employment, with a maximum of 4 per year – Individuals are “fully insured” after 10 years (40 credits)

6. How Do I Qualify? – Workers who stop working prior to earning 40 credits cannot receive benefits At full retirement age workers can receive full benefits – 65 used to be standard, but this varies based on year of birth:

7. How Do I Qualify? Reduced retirement benefits can be collected as early as age 62 (with 40 credits) – Benefits are about 25% less than they are at full retirement age Although Social Security retirement age varies, Medicare eligibility remains at 65

8. How is Social Security Income Determined? Retirement benefits are calculated on lifetime earnings under the Social Security system – Generally, your 35 highest years of earnings are averaged – Zero is averaged in for every year under 35 years of work Calculating Social Security Income – The benefit computation is complex and not simple

9. How is Social Security Income Determined? – Social Security sends a yearly statement to everyone age 25 or older (that has paid S.S. taxes) and not received benefits Statements arrive 3 months prior to your birthday – Statements can be requested by asking for a form SSA-7004 from the S.S. Administration or at www.socialsecurity.gov/online/ssa-7004.html www.socialsecurity.gov/online/ssa-7004.html – Go to www.socialsecurity.gov/planners to estimate your benefitswww.socialsecurity.gov/planners

10. How Do I Receive My Benefits? To receive Social Security benefits you must apply – It takes about 3 months from when you apply to when you will receive benefits – To get info on applying call 1-800-772-1213 or go to www.socialsecurity.gov www.socialsecurity.gov Social Security benefits can still be received while you are working – There is no income restriction on receiving benefits after full retirement age

11. How Do I Receive My Benefits? – If you are under full retirement age, every $1 in benefits is deducted for each $2 earned above the annual limit Earnings limit changes yearly – The year you reach full retirement age, $1 in benefits is deducted for each $3 you earn above a different limit, only applied to earnings before the month you reach full retirement age. Earnings limit changes yearly

12. How Do I Receive My Benefits? Social Security benefits can be increased by a percentage (depending on DOB) – Delaying receiving benefits beyond full retirement age means you will draw a higher percentage – The benefit increase stops at age 70, even if you continue to delay taking benefits.

13. Taxes and Social Security Some people have to pay federal income taxes on their Social Security Benefits – Only applies if you have substantial other income (wages, businesses, interest, dividends, etc.) No one pays federal income tax on more than 85% of their Social Security Benefits If you are between the annual limits you may pay income tax on 50% of benefits

14. Taxes and Social Security Each January you are sent a statement (Form SSA- 1099) showing amounts of benefits you received – This is used on your tax returns to calculate if S.S. Benefits are subject to tax and at what rate Federal taxes can be withheld from Social Security benefits – This is not required, but can be simpler than paying out each year or each quarter Combined income = sum of adjusted gross income, + nontaxable interest, + ½ of your S.S. Benefits

15. Investment Income Non-work sources of income do not count as wages for the earnings test These Include: – Inheritance payments – Pensions – Income from investments – IRA distributions – Interest – Other sources determined by the Social Security program

16. Survivor Benefits Family members eligible to receive survivor benefits are: – Widow (er) – receive full benefits at retirement age or reduced benefits as early as 60 – Disabled Widow (er) – as early as age 50 – Widow (er) – at any age if they take care of deceased’s child who is: under age 16 or disabled and receiving S.S. benefits

17. Survivor Benefits – Unmarried Children under 18 (up to 19 if still in high school) – Children All Ages – disabled before age 22 and remain disabled – Dependent Parents – age 62 or older

18. Disability and Supplemental Security Income Provides a distribution of cash in the event of interruption of employment – Disability – Unemployment Benefit is based on work record only – Must be “fully insured” under Social Security rules 5 month waiting period for benefits – Benefits continue till able to work, or till beneficiary reaches retirement age – Call 800.772.1213 for more information

19. Resources Social Security Administration Website, www.ssa.gov www.ssa.gov Working with Seniors (2009), Society of Certified Senior Advisors