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Social Security - When Should You Start Receiving Retirement Benefits

so it's the security webinar when you

should start receiving retirement

benefits many people assume that they

have to begin receiving Social Security

retirement benefits as soon as they

retire and stop working but that's not

the case retiring and claiming Social

Security benefits are different that

different you have options and learning

about them may help you make a well

informed decision about when to start

receiving your benefits so I'm just

going to give you guys a couple minutes

to read through this disclosure just

that we work with CUSO financial

services and and bottom there those are

the states that I am currently licensed

in

an approach retirement when to claim

your Social Security retirement benefit

is one of the biggest financial

decisions you'll need to make should you

begin receiving benefits at your full

retirement age which is 66 to 67

depending on your year of birth should

you begin receiving a smaller monthly

benefit before your full retirement age

which is as early as age 62 or should

you wait past full retirement age to

receive a larger monthly benefit you can

delay receiving benefits up to age 70 as

important as your decision is there is

no one-size-fits-all answer it's a

personal decision that must be made

based on your unique circumstances of

course sometimes the answer is simple

you may have to claim Social Security

benefit as early as possible if you need

Social Security income right away to

meet day to day living expenses perhaps

because of illness disability or

unemployment if that's not the case

though if you have other sources of

retirement income or you want to

continue working for example you'll want

to take the time to make an informed

well reasoned decision about your Social

Security benefits if you're like most

people you've paid into the Social

Security system for years and you'd like

to get the most out of out of it that

you can so to start here are two major

reasons why when you claim Social

Security is so important first when you

claim benefits can significantly affect

your overall retirement income with

pensions disappearing Social Security

remains the major source of guaranteed

lifetime retirement income for most

Americans

once you apply your retirement benefit

will be locked in for the remainder of

your life in most circumstances not not

counting annual inflation adjustments or

read calculations to account for

additional work so taking time to

explore your options now can help you

make your make sure you have enough

retirement income later the timing of

benefit can also affect your spouse

because he or she may be entitled to

receive spousal retirement benefits and

survivor benefits based on the amount

that you receive there's a lot to

consider there's a lot to consider as

you make this decision here are some of

the factors in this present age

we'll discuss your full retirement age

and how your benefit is calculated the

amount of your future retirement benefit

and the effect of taking benefits

earlier late how many years you expect

to spend in retirement based on life

expectancy whether you plan to continue

working your other retirement income

sources your income tax picture and how

your decision will affect your spouse

benefit if her he or she can disease so

let's start with the two basic things

you need to know as you begin to explore

your options first what is your full

retirement age it's the age at which you

can receive a full or unreduced Social

Security retirement benefit your full

retirement age ranges from 66 to 67

depending on the year you were born as

shown on this chart if you begin

receiving benefits earlier than this age

you'll receive a reduced benefit if you

begin receiving benefits after this age

you'll receive a higher benefit because

you will earn delayed retirement credits

other benefits that you or your family

members can receive are also based on

what you're eligible to receive at your

full retirement age the second thing

you'll want to understand is how your

full retirement benefit is calculated

the benefit calculation is complicated

and beyond the scope of this

presentation but here's a brief overview

of it your Social Security benefit is

based on the number of years you've been

working and your earnings over those

years to qualify for Social Security

retirement benefits you must have worked

at least 10 years in Social Security

covered employment when you become

eligible for benefits at age 62

the Social Security Administration

calculates your full retirement benefit

your highest 35 years of earnings are

indexed to adjust for inflation then

they are averaged finally a formula is

applied to determine what's called your

full retirement benefit you may also

hear your full retirement benefit

referred to as your basic benefit or

primary insurance amount if your if you

retire at full retirement age you will

receive 100% of this amount but if you

begin receiving the retirement benefits

early your benefit will be reduced by a

certain percentage for each month you

receive benefits

early something a closer look at how

much you'll receive if you want to start

receiving benefits early than your full

retirement age currently the earliest

age at which you can receive Social

Security retirement benefit is 62 but

choosing to claim benefits early has

financial consequences because it will

permanently permanently reduce the

amount you'll receive your benefit is

reduced by a certain percentage for each

month you receive benefits early if your

full retirement age is 66 this equates

to 25% benefit reduction at age 25 if

your full retirement age is 67 this

equates to a 30% reduction here's an

example let's say your full retirement

age is 66 and you decide to apply for

benefits at age 62 your benefit will be

25% less than it would be at age 66 as

this chart shows an 18 or $1,800 monthly

benefit taken at age 66 will be reduced

by 25% to one thousand three hundred and

fifty dollars if taken at age 62 instead

however you'll receive benefits for a

longer period of time

48 to 60 months longer then you begin

receiving benefits at your full

retirement age and this is certainly a

big factor this will be discussed later

but first let's look for let's look at

how your benefit will be affected if you

decide to delay retirement instead if

you delay receiving Social Security

benefits you'll receive delayed

retirement credits that will permanently

increase your benefit your benefit will

increase her each month you delay

receiving benefits or 8% per year past

your full retirement age up until age 70

note that your that we are only talking

about the benefits based on your own

earnings record you won't receive

delayed retirement credits for survivor

benefits or spousal benefits to continue

with the example from the previous slide

if your full retirement age is 66 and

you decide to delay receiving benefits

until age 60 your benefit at age 70 will

be 32% more than at age 66

as this chart shows for each year you

delay Oh

$1,800 monthly benefit taken at age 66

will increase by 144 dollars per year

and will be worth two thousand three

hundred and seventy-six dollars if taken

at age seventy instead of 866 this final

chart shows the range of monthly

benefits you might receive if you if

your full retirement benefit at age 66

is $1,800 depending on when you choose

to begin receiving benefits in our

hypothetical example if one thousand

eight hundred dollars the full

retirement benefit age 66 the monthly

benefit of two thousand three hundred

and seventy-six dollars at age 70 is

seventy-six percent more than the

monthly benefit of one thousand three

hundred and fifty dollars taken at age

62 a big increase however what this

chart doesn't show is that you'll

receive benefits for eight years longer

if you claim them at age 62

rather than age 70 and that can add up

to a lot of money in this example if you

receive one thousand three hundred and

fifty dollars benefit for eight years

you would have received one hundred and

one hundred twenty-nine thousand six

hundred dollars by age 70 not including

any cost-of-living adjustments so we

return to the fundamental question is it

better to opt for a smaller monthly

benefit at age 62 but receive it for a

longer period of time or is it better to

claim at age seventy to receive the

highest monthly benefit possible again

there's no one-size-fits-all answer in

part it depends on how long you can

afford to delay receiving benefits and

on how long you expect retirement to

last how long will retirement last

there's no way to know for sure but

retirement may last longer than you

think according to the Social Security

Administration one in three retirees

will live to age to be age 90 with one

in seven living to be age 95 so you may

even want to plan for this maximum

lifespan to reduce the risk that you'll

live longer than you expect and simply

run out of money for example if you wait

a few years to claim benefit you'll

receive a high

your monthly benefit for life and

remember because you'll receive annual

cost-of-living adjustments if prices

rise your benefit will generally keep

pace with inflation

unlike most other sources of retirement

income if you're married you'll need to

consider the joint life expectancies of

you and your spouse which will often

differ from your individual life

expectancies in thinking about working

well into your 60s and 70s to increase

your retirement savings you may be

wondering whether you can receive your

Social Security benefit while you

continue work the answer is yes many

people choose to apply for Social

Security benefit before they actually

retire but as you may have heard

earnings from work may affect your

Social Security benefit if you're under

full retirement age if you're under full

retirement age and your earnings exceed

a certain amount called the annual

earnings limit part of your benefit will

be withheld reducing the amount you

receive from Social Security but once

you reach full retirement age you can

work and collect full Social Security

benefits earnings from a job won't

affect your benefit at all if you're

under full retirement age the rule is

that one dollar in benefits will be

withheld for every two dollars you earn

over the annual earnings limit this

limit generally changes every year in

2018 the limit was seventeen thousand

and forty dollars in the year you reach

full retirement age a special rule

applies one dollar in benefits will be

withheld for every three dollars you

earn over the annual earnings women in

2018 this woman is forty-five thousand

three hundred and sixty dollars as

mentioned earlier at or after full

retirement age earnings will not affect

your benefit however to clear up a

common misconception you're not actually

losing your benefit because you choose

to work so you don't need to try to

limit your earnings if some of if some

of your benefits are withheld you'll

receive a higher monthly benefit at full

retirement age because the Social

Security Administration will recalculate

your benefit every year and give you

credit for any of those earnings that

are withheld so the effect working will

have on your benefit is only temporary

and in additional earnings you have may

actually increase your benefit later the

Social Security Administration website

has a tool called the retirement

earnings test calculator that you can

use to see how earnings before

retirement age might affect your benefit

one of most important factors to

consider as you decide when to begin

receiving Social Security benefits is

how your decision will affect your

overall retirement income plan

most people have several sources of

retirement income including Social

Security benefit income from savings and

investments earnings from a job

and pension benefits how much retirement

income do you need and how the Social

Security fit into that plan if you have

less than adequate retirement savings or

no pension you may need to rely more

heavily on your Social Security income

leading you to claim benefits as early

as as early if you need retirement

income as soon as possible or conversely

encouraging you to postpone claiming

benefits so that you can earn the

highest benefit possible but if you have

been able to accumulate substantial

retirement assets you may have more

flexibility when it comes to timing your

Social Security benefits for example

it's possible that claiming your Social

Security benefits sooner rather than

later will allow you to delay with

withdrawing funds from tax advantage

investments such as 401k plan 403 B

plans or traditional IRAs allowing them

to accumulate tax deferred a bit longer

alternatively tapping other retirement

assets first may allow you to postpone

claiming Social Security benefits

thereby allowing you to accrue delayed

retirement credits

Paquette may also be a consideration

depending on what income you have in

addition to your social security benefit

now taxes aren't going to be a big

concern for everyone if you have little

or no income other than Social Security

then your Social Security income

generally won't be taxable however I'm

sorry

we're back here however if you have

income from sources other than Social

Security you may end up having to pay

federal income taxes on your benefit as

shown on the chart 50% to 85% of your

Social Security benefit may be taxable

depending on your combined income from

Social Security and other sources and

your tax filing status for example let's

say you're single and collect a Social

Security benefit of $20,000 per year and

have $35,000 in earnings from a job up

to 85 percent of your benefit may be

taxable because your adjusted gross

income plus one-half of your social

security income is greater than thirty

four thousand per year the important

point to remember is that when you're

making your decision about when to begin

receiving your Social Security benefits

federal and in some case state income

taxes may be a consideration if you have

substantial taxable income such as

earned income taxable patient income or

investment then it also gives the number

four thousand jointly

intermarried there's another important

question you'll need to ask before you

decide when to claim benefits how will

my decision affect my spouse that's

because when you begin receiving your

retirement benefits can dramatically

affect your spouse's benefit during

retirement and thus your household

income your decision can also affect any

survivor benefit your spouse may be

entitled to and your spouse has

decisions to make - together you'll need

to consider what the most appropriate

combination of claiming ages is based on

your ages earnings and life expectancies

other people such as your dependent

children or a former spouse may also be

eligible for benefits based on your

earnings record but the rules are

different and they're not covered in

this presentation

when you're married and both you and

your spouse have worked in jobs covered

by Social Security each of you may be

entitled to retirement benefits based on

your own earnings record as you'll

recall at your full retirement age you

are entitled to receive 100% of your

full retirement benefit and you can

receive reduced benefits as early as age

62 you or your spouse may also be

entitled to spousal benefits for example

if your spouse has had low lifetime

earnings he or she may be entitled to a

spousal benefit based on your earnings

record that is larger than a retirement

benefit based on his or her own earnings

record at your spouse is full retirement

age the spousal benefit will generally

equal 50% of your full retirement

benefit however that amount will be

reduced if your spouse files early for

example if your spouse is full

retirement age is 66 and he or she filed

at age 62 your spouse will receive only

35 percent of your full retirement

benefit amount this reduction is

permanent so it's important to clearly

carefully consider the implications of

filing early and keep in mind that your

spouse can collect spousal benefits

until you have filed for your retirement

benefit I'm sorry keep mind your spouse

can't collect spousal benefits until you

have filed for your retirement

addition to retirement benefits and

spousal benefits married couples must

consider survivor benefits when you

claim your Social Security benefit can

greatly affect the amount of income

available to your spouse should you die

because your surviving spouse will

generally receive the benefit that you

were receiving at the time of your death

unless your spouse is already receiving

a higher benefit based on this on his or

her own earnings record if your spouse's

life expectancy is much longer than

yours

this can be especially important

consideration survivor benefits may be

payable as early in age 16 however a

benefit reduction will apply if the

surviving spouse begins collecting a

survivor benefit between age 60 and his

or her full retirement age here's a

hypothetical example that illustrates

why it's important for spouses to

carefully choose when to begin receiving

Social Security retirement benefits in

this example both spouses are able to

claim benefits based on their own

records spousal benefits are not

considered as this table shows if both

spouses choose to claim benefits in age

62 their joint monthly income will be

two thousand seven hundred and eighty

four dollars but if both spouses wait

until age 70 their joint monthly income

will increase to five thousand two

hundred and forty-one dollars a

difference of two thousand four hundred

and fifty seven dollars per month that's

almost $30,000 per year addition by

waiting longer to claim retirement

benefits vows one may also substantially

increase spouses spouse to s monthly

survivor benefit since Social Security

generally pays the surviving spouse the

larger of his or her own retirement

benefit or the benefit his or her spouse

had been receiving of course this

illustration does not take into account

of the other factors that this

hypothetical couple might need to

consider in your own situation and

overall income plan will be unique

you heard so this is regarding the

restricted application strategy you may

have heard that new rules included in a

legislation passed at the end of 2015

effectively eliminated Social Security

claiming strategies that couples were

using to maximize their Social Security

income however one of these strategies

is still available to some individuals

who were grandfathered in under the old

rules if you were born on or before

January 1st 1954 and meet certain

requirements you still potentially have

a limited window of opportunity to take

advantage of a claiming strategy called

filing a restricted application for

spousal benefits the strategy allows you

to collect a spousal benefit at full

retirement age then later collect your

own worker benefit here's how this

strategy typically works for those who

still qualify assume that you are

eligible for Social Security retirement

benefits on your spouse's earnings

records this is your spousal benefit and

on your own wordings record this is your

worker benefit once you reach full

retirement age at 66 you may opt to file

a restricted application for spousal

benefits if your spouse has already

filed for his or her own worker benefit

this allows you to collect spousal

benefits and postpone receiving your own

worker benefit in order to accumulate

delay the requirement credits on your

own benefit this may help you maximize

your joint Social Security retirement

income because delayed retirement

credits will increase your benefit by

approximately 8% for each year you wait

up until age 70 this strategy also

potentially increases a survivor's

Social Security benefit should the

higher earning spouse die first remember

upon the death of a spouse the surviving

spouse is generally entitled to receive

the greater of his or her own benefit or

the benefit his or her spouse was

receiving here's an example to

illustrate the concept once housed let's

call her Diane first files for

retirement benefits based on her own

earnings record then add his full

retirement age the other cells let's

call him Mike files a restricted

application for spousal benefits based

on Diane's record then later at age 70

Mike switches over to his own benefit

which is now 32 percent more than it

would have been at full retirement age

due to delayed retirement credits by

using this strategy Diane and Mike have

increased their jointly monthly Social

Security income and have potentially

increased the survivor benefit available

to Diane assuming that Mike dies first

and that his benefit was higher than

hers again filing stricted application

isn't available to everyone where you

need to meet certain requirements you

might have been born on or before

January 1st 1954 you can only use this

strategy once you reach full retirement

age 66 and your spouse must have already

filed for retirement benefits based on

his or her own earnings record note that

the spouse who files first in the

strategy doesn't need to have reached

full retirement age but even if it's an

option the restricted application

strategy isn't right for everyone you'll

need to consider factors such as age

differences benefit different excuse me

benefit differences other sources of

retirement income life expectancy and

income taxes when deciding whether to

use this strategy presentation has

explored some of the major questions

that you'll want to consider as you

decide when to begin receiving Social

Security benefits to recap here are some

of the reasons you may decide to claim

benefits early as well as some reasons

why you might decide to claim benefits

later remember the choice really is

yours it's up to you based on your

unique needs and circumstances

requirement retirement can be an

exciting time but it comes with

financial challenges when you're ready

to make decisions about your Social

Security benefits take time to explore

all your options

at starting point if you haven't already

done so I heard you to go to the Social

Security website where you have a couple

of relatively easy ways to estimate what

retirement benefits you might receive

first you can sign up to access your

Social Security Statement online so that

you can view your actual earnings record

and and what you can expect to receive

under current law if you apply at age 62

at full retirement age and at age 70 if

you're already age 60 you also have the

option of receiving this statement in

the mail every year about three months

before your birthday the second way to

ins that estimate your Social Security

benefit is to use the Social Security

Administration's retirement estimator

which is also available at the website

this calculator allows you to input

various scenarios based on current law

and has to make your future benefits as

you near age 62 you should also contact

the Social Security Administration to

discuss your options representatives are

not allowed to give you advice when

about when to start your benefit but

they will be happy to explain your

options and the rules that apply when it

comes time to apply for Social Security

benefit you can do that online by phone

or in person

all that's going to enhance your

financial life one day at a time

questions are always welcome and that's

all I have for the presentation today

thank you everyone and have a great rest

of your day