Getting the Most from Social Security

Social Security Workshop – Richland Public Library

Tom Doncaster CLU, CWM

Doncaster Insurance & Financial Services, Inc.

March 21, 2014

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Agenda

Know Your Benefit

Understand Your Options

Maximize Your Benefit

Getting Started

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Know Your Benefit

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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.

Know Your Benefit

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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

Source: 2011 Social Security Administration, ssa.gov/retire2/.

Know Your Benefit

Full Retirement Age

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Receivebenefitsearlier

Higher monthlycheck

No penalty for employment

Highest monthlypaycheck

No penalty for employment

Smallest monthlycheck

Potential reductionpenalty for employment

No interimbenefits

Receivebenefits later

62 70AGE

PROS

CONS

Full Retirement Age

Know Your Benefit

Your Age and Your Benefit

Electing your benefit — early vs. late

Working while collecting your benefit

Examining your tax situation

Considering your spouse’s benefit

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Understand Your Options

Understand Your Options

Early vs. Late

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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 EarlierTake Benefits Later

Retire at age 66 withfull monthly benefit

Working While Collecting

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Understand Your Options

Age Employment Income 2013 Limits

Considerations

Under Full Retirement Age

$15,120For every $2 over the limit, $1 is withheld from benefits

In the year Full Retirement Age

is reached$40,080

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

* At FRA your benefit amount is adjusted to accommodate for the earlier reduction.

Examining Your Tax Situation

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Understand Your Options

Filing Single

Provisional Income

Benefits Subject to Tax

Under $25,000 0%

$25,000 - $34,000 Up to 50%

Over $34,000 Up to 85%

Note: State and local taxes may differ.

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%

Source: September 2012 Social Security Administration, http://www.ssa.gov/pubs/10035.html.

Consider Spousal Benefits

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Understand Your Options

Option 1Individual Benefit

Option 2Spousal Benefit

Option 3Survivor 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)

Consider Spousal Benefits

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Understand Your Options

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

Sam and Ann, both age 62

Full Retirement Age: 66

Maximize Your Benefit

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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 spouse’s benefit, delay

taking their own benefit.

Earn delayed credits and then claim their higher personal benefit at a later age or may help spouse

to receive greater survivor benefit.

Do-OverIndividuals are allowed to change

their earlier claiming decision.Provides flexibility to cease taking benefits if life situation changes.

Evaluate what you expect to receive from Social Security

Determine when to start taking benefits

Apply for retirement benefits

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Getting StartedMaximize Your Benefit

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• An estimate of your Social Security benefits

• Most recent tax return

• Most recent pay statement from employer

• Latest statements from all retirement plans

• Latest statement from mutual funds

• Life and disability insurance policies

• Annuity contracts

• Wills and trust document(s)

Bring

Getting StartedMaximize Your Benefit

Jonathan Doncaster

Doncaster Insurance & Financial Services, Inc.

509-735-9519

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Questions?

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 none of the member companies of The Principal® are 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.

Insurance products and plan administrative services are provided by Principal Life Insurance Company a member of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.

Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc.

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©2013 Principal Financial Services, Inc.

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Disclaimers