Don't worry, we can help. Let's start with the fundamentals. You know Social Security provides income you can't outlive. But is it enough income? It may replace only 57% of income for lower paid workers ... and only 27% for higher paid workers.. Read on to enhance your Social Security know how.
Social Security pays out approximately $1.9 billion in benefits each day.* Most of the payout comprises retirement and survivor benefits which possess unique characteristics:
For a program so important, it pays to know how it works and consider how you can maximize it.
In order to receive Social Security retirement benefits, a worker needs 40 credits.
The most a worker can earn in a calendar year is four credits.
Benefits are based on a worker’s highest 35 years of earnings indexed for inflation. Years with no earnings count as zero, thus lowering the average career earnings and the monthly retirement benefit.
|Year of Birth||Full Retirement Age|
|1955||66 and 2 months|
|1956||66 and 4 months|
|1957||66 and 6 months|
|1958||66 and 8 months|
|1959||66 and 10 months|
|1960 and later||67|
Benefits are based on Full Retirement Age (FRA). For those born between 1943 through 1954, FRA is age 66 and 0 months. See the chart for other birth years. Starting benefits at any time other than FRA results in either a decrease or an increase in benefits.
Retirement benefits are payable to a worker as early as age 62. A spouse can also receive benefits based on the worker's earnings history.
A spouse can receive up to 50% of the worker’s full retirement benefit, reduced if the spouse is less than full retirement age. The worker must have filed for benefits.
A divorced spouse can receive a benefit even if the ex-spouse is not retired. The divorced spouse must have been married at least 10 years, not have remarried and be at least age 62. The ex-spouse worker must also be at least 62 years of age. Benefits paid to a divorced spouse do not impact the benefits of an ex-spouse worker's current spouse.
Early retirement results in a permanent reduction in benefits from what would have been received at full retirement age.
If a worker files for early retirement, benefits will be reduced 5/9 of 1% each month for the first 36 months plus 5/12 of 1% for the remaining period until the worker reaches FRA. At age 62 this results in a 25% permanent reduction in benefits.
If the spouse of a worker files for early spousal retirement benefits, the reduction is 25/36 of 1% for the first 36 months plus 5/12 of 1% for the remaining period until the spouse reaches FRA. A spouse filing for benefits at age 62 would receive 35% of the worker’s full retirement benefit.
Delayed retirement increases monthly benefits. Benefits are increased on a monthly basis at a rate of 8% per year from age 66 to age 70 (up to a maximum 32% increase over full retirement benefit).
Survivor benefits (when not caring for an eligible child) are payable as early as age 60 for a spouse. This is known as a widow’s or widower’s benefit.
To qualify for survivor benefits, a worker must have a minimum of 40 credits at the time of death if age 62 or older. The requirement decreases one by one each year to a minimum of six credits needed if age 28 or younger.
A surviving spouse can receive benefits as early as age 60 with a reduction for benefits received before the surviving spouse’s full retirement age. A surviving spouse will not receive survivor benefits if remarried before age 60. Remarriage at age 60 or later will not disqualify the surviving spouse from survivor benefits. A divorced spouse, married at least 10 years, must comply with the same rules. Benefits payable to a divorced spouse do not impact the benefits of the surviving spouse.
The amount of survivor benefit payable is 100% of the deceased worker’s full retirement age benefit if death occurs on or before full retirement age and the surviving spouse is at least full retirement age. If the deceased worker earned delayed retirement credits, the surviving spouse’s benefit will be based on the higher amount. At age 60 the minimum benefit would be 71.5% of the full retirement age benefit.
A worker need not be receiving Social Security in order for survivors to be eligible for benefits.
Social Security may be subject to income tax.
Depending on income levels and tax filing status, most (85%), some (50%) or none of the Social Security benefits will be taxable. Benefits are taxed at the marginal income tax rate of the person receiving them.
If you are younger than full retirement age and earn more than certain amounts, your benefits may be reduced.
Social Security does not provide benefits automatically. You must file to receive them.
For maximum benefits, delay until age 70. The chart shows how much more you receive.
If a worker filed for benefits before full retirement age but continues to work, it may be advantageous to suspend benefits at full retirement age. Suspending allows the worker to continue to earn additional benefit increases up to age 70, based on the suspended amount. For workers who suspend after April 2016, all benefits, including spousal and family benefits, will be suspended.
Working couples may find it advantageous for the lower earner to take Social Security at age 62 while the higher earner continues to work until age 70.
Consider filing early if health is a factor. Having an income could be more important than maximizing benefits. The earliest age at which retirement benefits can be claimed is 62.
Some combination of other income sources, such as a pension, savings, retirement plans and employment, will likely be needed. Consider IRAs and nonqualified annuities, both deferred and immediate, for lifetime needs. Consider life insurance to enhance survivorship ease and comfort. Your financial representative has the know how to help you maximize your Social Security benefits.
Contact Your Representative for More Social Security Know How
Payment of benefits under the annuity contract is the obligation of, and is guaranteed by, the insurance company issuing the annuity. Guarantees are based on the claims-paying ability of the insurer. Investment return and principal value of an investment will fluctuate so units, when redeemed, may be worth more or less than their original cost.
Annuities are issued and guaranteed by Western-Southern Life Assurance Company, Cincinnati, OH, Integrity Life Insurance Company, Cincinnati, OH or National Integrity Life Insurance Company, Greenwich, NY. Variable annuities are offered by Touchstone Securities, Inc.,* Cincinnati, OH. All are members of Western & Southern Financial Group. Integrity operates in DC and all states except NY, where National Integrity operates. Western & Southern Life operates in DC and all states except AK, ME, NH, NY and RI. W&S Financial Group Distributors is an affiliated agency of issuer. Issuer has sole financial responsibility for its products. Product availability and features vary by state.
The information presented here is general and eductional in nature. Western & Southern member companies and their agents do not offer tax advice. For specific tax information, consult your attorney or tax advisor.
This program and corresponding material is not affiliated with or endorsed by any government agency. The products offered by Western & Southern Financial Group member companies may not be appropriate for the topics discussed in this material.
No bank guarantee.
Not a deposit.
May lose value.
Not FDIC/NCUA insured.
Not insusred by any federal government agency.