the basics: what you might expect€¦ · how you qualify for retirement benefits earn 40 credits...
TRANSCRIPT
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THE BASICS: WHAT YOU MIGHT EXPECT
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KEEP IN MIND:
ENACTED 1935
SOCIAL SECURITY VIABILITY: WILL IT BE THERE FOR ME?
SOCIAL INSURANCE
FUNDED BY CURRENT WORKERS
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CURRENT WORKERS FUND THE BENEFITS OF TODAY’S RETIREES
NOW(2015: 2.7 WORKERS)
THEN(1965: 4 WORKERS)
VS.
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HAVE A “PLAN B”
Could Social Security benefits
be reduced?
LOWER POSSIBILITY
IN YOUR
60s
HIGHER POSSIBILITY
IN YOUR
50s
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THE NUMBERS MAY SURPRISE YOU
• Sources: Social Security Administration. Social Security Fact Sheet, 2017. Annual Statistical Supplement to the Social Security Bulletin, 2015 (released April 2016). Income of the Aged Chartbook, 2014, published 2016.
$17,856 (MEN)$14,004 (WOMEN)
AVERAGE ANNUAL SOCIAL SECURITY BENEFIT?
MAXIMUM MONTHLY
BENEFIT IN 2017?
$2,687
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VERY IMPORTANT
INCOME SOURCE:• Guaranteed payment each month• Covers your spouse• Cost of Living Adjustments
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THE BASICS: USING THE SOCIAL SECURITY WEBSITE
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YOUR STARTING POINT: SSA.GOV
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YOUR STARTING POINT: SSA.GOV
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YOUR STARTING POINT: SSA.GOV
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YOUR STARTING POINT: SSA.GOV
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YOUR STARTING POINT: SSA.GOV
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YOUR STARTING POINT: SSA.GOV
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Do not have to be consecutive quarters
HOW YOU QUALIFY FOR RETIREMENT BENEFITS
EARN 40 CREDITS
EARN UP TO 4 CREDITS
PER YEAR
1 CREDIT = $1,300
in wages (in 2017)
Your employer must pay into the system.
Source: Social Security Administration, 2017
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On a deceased spouse’s work record
On a spouse’s work record
WHAT IF I DON’T HAVE 40 CREDITS?
An ex-spouse
Your current spouse
OR Survivor benefits
Current spouse
Ex-spouse
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THE BASICS: CALCULATING YOUR BENEFIT
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CALCULATING YOUR RETIREMENT
BENEFITS:• Full Retirement Age (FRA)• Your work history
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YOU ARE ELIGIBLE FOR FULL SOCIAL SECURITY BENEFITS WHEN YOU REACH YOUR FRA
66 67
YEAR YOU WERE BORN
YOUR FULL RETIREMENT AGE
1943–1954
1960 or later
662 months
1955
664 months
1956
666 months
1957
668 months
1958
6610 months
1959
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YOUR CALCULATED BENEFIT: HIGHEST 35 YEARS OF EARNINGS
Social Security stopped mailing most paper statements in 2017.
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MAKE YOUR WORK HISTORY WORK FOR YOU
AIME = AVERAGE INDEXED MONTHLY EARNINGS
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PIA = PRIMARY INSURANCE AMOUNT
AIME PIA
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CLAIMING EARLY LOCKS IN A PERMANENT PENALTY
FRA66 and 4 months
52 months early60 months early
27%Permanent reduction 30%
Permanent reduction
FRAAge 67
62Claiming Early
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CLAIMING LATER INCREASES YOUR BENEFIT
70Claiming Age
32%Increase 24%
Increase
IF YOUR FRA IS 67
IF YOUR FRA IS 66
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A detailed plan that can help you determine how to use your financial resources to generate income to last the rest of your life.
CREATE A RETIREMENT INCOME PLAN THAT’S UNIQUELY YOURS
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CONSIDER THE CONSEQUENCES OF WHEN YOU CLAIM
SOCIAL SECURITY $1,800 $1,260 $2,232WORK OR SAVINGS $2,200 $2,740 $1,768
77%$972
62 70FRA
Assumes FRA is 67
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THE FIDELITY EXPERIENCE: BUILDING YOUR RETIREMENT INCOME PLAN
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?
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401(k)403(b)457(b)
AnnuitiesTraditional IRA
Roth IRAPension
Military PensionSmall Business
Retirement PlansTaxable Investment
AccountsSocial Security
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CLAIMING STRATEGIES: OVERVIEW
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HOW SOCIAL SECURITY
SEES YOU:• A wage earner• A non-wage earner• The higher-wage earner• The lower-wage earner
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WE BELONG TO AT LEAST 1 OF 4
CATEGORIES:• An individual• A spouse• An ex-spouse• A surviving spouse
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CLAIMING STRATEGIES: IF YOU’RE SINGLE
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SCENARIOS TO CONSIDER
WAIT TILL 70 TO MAXIMIZE BENEFITS?
OTHER RESOURCES TO USE?
CONTINUE WORKING?
70
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CLAIMING STRATEGIES: IF YOU’RE MARRIED
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SPOUSAL BENEFITS:• 2 calculations – which is higher?• Your own work record• Your spouse’s work record
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GENERAL RULE FOR SPOUSES
Cannot exceed
50%of spouse’s
PIA
Reduced payment if you claim before
your FRA
ALWAYSA PENALTY WHEN YOU CLAIM EARLY.
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A TRADITIONAL SCENARIO
SPOUSE’SPIA
YOUR BENEFIT
$2400
$120050%
TOTAL BENEFIT IS
OF YOUR SPOUSE’S PRIMARY INSURANCE
AMOUNT (PIA)
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CLAIMING ON A SPOUSE’S WORK RECORD
SPOUSE’SPIA
50% OF SPOUSE’S PIA
YOUR PIA IS PAID FIRST
$2000
$800
$200
$800
ADDED PAYMENT
YOURBENEFIT
Dually Entitled:• Qualifies on own work
record (earned 40 credits)• Also qualifies as a spouse• At FRA, receives larger of 50% of spouse’s PIA amount or own PIA
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CLAIMING STRATEGIES: IF YOU’RE DIVORCED
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EX-SPOUSES MUST MEET
CERTAIN CRITERIA:• Were married 10 consecutive
years or longer• Divorced for 2 years or longer• You have not remarried• Both you and your ex are
at least age 62
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CLAIMING ON AN EX-SPOUSE’S WORK RECORD
SPOUSE’SPIA
50% OF SPOUSE’S PIA
YOUR PIA IS PAID FIRST
$2000
$800
$200
$800
ADDED PAYMENT
YOURBENEFIT
Ex-spouse benefits applywhether you are the ex-wifeor the ex-husband
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EX-SPOUSE CONFIDENTIALITY:• Between you and the SSA• Marriage certificate• Divorce decree• Ex’s SSN• Other required proof and
documentation
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CLAIMING STRATEGIES: IF YOU’RE A SURVIVING SPOUSE
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SCENARIO: SURVIVING-SPOUSE BENEFITS
Your spouse dies
Only when the higher-earning spouse dies first
You “step into his/her shoes”
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SURVIVOR BENEFIT
CONSIDERATIONS:• Survivor benefits available
as early as age 60, reduced• Can switch between survivor
and individual benefits• You are responsible for
notifying the SSA
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SCENARIO: SURVIVING-SPOUSE BENEFITS
Your ex-spouse dies
Only when the higher-earning spouse dies first
You “step into his/her shoes” if you were married 10 years or longer and you have not remarried (before age 60)
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KEY CONSIDERATIONS
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IT DEPENDS ON HOW MUCH YOU MAKE
Age Earn up to: Benefit reduced:
Younger than FRA $16,920/yr.$1,410/mo. $1 for every $2 over the limit
Reach FRA during year $44,880/yr.$3,740/mo. prior $1 for every $3 over the limit
Reach the month of FRA No limit on earnings No reduction
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Adjusted Gross Income+ Nontaxable Interest+ Half of Social Security Benefits
IT DEPENDS ON YOUR “COMBINED INCOME”
Tax Filing Combined Income % of Benefit
Joint $32,000–$44,000> $44,000
Up to 50%Up to 85%
Tax Filing Combined Income % of Benefit
Individual $25,000–$34,000> $34,000
Up to 50%Up to 85%
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GOVERNMENT PENSION
OFFSET (GPO)• Reduces or eliminates spousal
benefits if you have a pension• Public workers receive full pension
benefits first, and may receive some spousal benefits after offset is applied
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WINDFALL ELIMINATION
PROVISION (WEP)• Applies if you’ve earned 40 credits
and have a pension from a non–Social Security employer
• A different formula is used to calculate PIA
• Reductions are not reflected on your statement
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LET’S SUMMARIZE
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START AT THE BEGINNING
• Review your Social Security statement• Check your topics at SSA.gov• Take your time
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YOUR FIDELITY REPRESENTATIVES
• Ready to answer your specific questions• Can help you build your retirement
income plan
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YOUR NEXT STEPS:
1. Sign up at SSA.gov/MySocialSecurity2. Organize your financial picture3. Contact Fidelity today
1-800-Fidelityfidelity.com/branchlocator
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Investing involves risk, including risk of loss.
Views expressed are as of the date indicated and may change based on market and other conditions. Unless otherwise noted, the opinions provided are those of the speakers and not necessarily those of Fidelity Investments.
This information is intended to be educational and is not tailored to the investment needs of any specific investor.
Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917 © 2017 FMR LLC. All rights reserved.
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