Transcript TRAINING - DMI Marketing

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Social Security Simplified
TRAINING
Presented by:
Damon La Tanzi
Vice President – Sales & Marketing
DMI Marketing, Inc.
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Introduction to Terminology
Most Common Abbreviations Used in Social Security Planning
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FRA – Full Retirement Age
Based on Date of Birth – Age When You Receive 100% of SSI
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Minimum & Maximum Ages
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Born After 1937
Minimum Age 62
Maximum Age 70
FRA - Full Retirement Age
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Born 1943-1954
FRA Age 66
See Chart at SSA.gov
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COLA – Cost of Living Adjustment
Used to Determine Increase in SSI – Set Each Year by CPI(W)
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COLA – Cost of Living Adjustment
Used to Determine Increase in SSI – Set Each Year by CPI(W)
1975-2012
1990-2012
Average COLA
Average COLA
4.1%
2.7%
Per Year
Per Year
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COLA – Cost of Living Adjustment
Used to Determine Increase in SSI – Set Each Year by CPI(W)
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AIME – Average Indexed Monthly Earnings
Based on Your Entire Work History
How to Calculate AIME
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Top 35 Working Years
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Adjusted for Inflation
Similar to COLA for SSI
AIME Helps Determine PIA
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Primary Insurance Amount
3 “Bend Points”?
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90% - 32% - 15%
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PIA – Primary Insurance Amount
The Basis for Determining Full Retirement Age Benefits
The PIA Formula
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Step 1 - AIME
3 “Bend Points” – 2013 Figures
90% of First $791
+ 32% of $792-$4,768
+ 15% Amount Over $4,768
Primary Insurance Amount
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PIA – Primary Insurance Amount
The Basis for Determining Full Retirement Age Benefits
The PIA Formula
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Example
AIME = $8,000
- $791 * 90% = $711.90
- $3977 * 32% = $1272.64
- $3232 * 15% = $484.80
PIA = $2,469.34
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Longer Wait = More Benefits?
Full Retirement Age
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Benefit $2,000/mo.
$24,000/yr.
Minimum Age – 62
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Benefit $1,500/mo.
$18,000/yr.
Maximum Age – 70
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Benefit $2,640/mo.
$31,680/yr.
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Can I Work & Collect Benefits?
If your begin collecting benefits before your Full Retirement Age,
the amount of “Earned Income” you can make without penalty is
significantly reduced.
2013 Numbers
Before FRA (62-65)
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Exempt Amount $15,120
$1 Reduction/$2 Income
During FRA (66)
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Exempt Amount $40,080
$1 Reduction/$3 Income
Monthly Offset
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Introduction to SSI Taxes
When will Social Security Benefits Become Taxable?
Individual Filing
Married Filing Jointly
• 0% of Benefits Taxable
• 0% of Benefits Taxable
• Less Than $25,000
• Less Than $32,000
• 50% of Benefits Taxable
• Greater Than $25,000
• Less Than $34,000
• 85% of Benefits Taxable
• Greater Than $34,000
• 50% of Benefits Taxable
• Greater Than $32,000
• Less Than $44,000
• 85% of Benefits Taxable
• Greater Than $44,000
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Social Security Filing Strategies
There are 3 different ways to file for Social Security Benefits
No Special Filing
File & Suspend
File Restricted
No unique strategies are
used to earn delayed
retirement credits.
One spouse files for benefits
and does not collect any
benefit payments
One spouse files for spousal
benefits after the previous
spouse files
From these 3 strategies and the different filing age
combinations, we get several additional filing strategies…
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Social Security Filing Strategies
There are 3 different ways to file for Social Security Benefits
Both Spouses File
for Benefits
You Suspend
Spouse Files
Spouse Suspends
You File
You File Restricted
Spouse Files
Spouse Files
Restricted
You File
You Suspend
Spouse Files
Restricted
Spouse Suspends
You File Restricted
No Benefits
at this Age
In Social Security Explorer, you will see 8 different filing
combinations as shown in the illustration above…
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Review of Switching Strategies
The two most commonly used “Switching Strategies” are
“File & Suspend” and “Filing a Restricted Application”
File & Suspend
Restricted Application
At Full Retirement Age, one spouse files
for benefits and immediately suspends
payments. This spouse receives
Delayed Retirement Credits of 8% per
year until age 70 and will receive 132%
of their Full Retirement Age benefit.
All COLA adjustments will be based on
the larger amount.
At Full Retirement Age, one spouse files
a restricted application and begins
collecting benefits based on the other
spouse’s benefit amount. The first
spouse must have already filed for
benefits for the second to receive the
50% spousal benefit. At age 70, the
second spouse collects their benefit.
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Most Common Maximization Strategy
By combining the two strategies, both spouses are able to receive
132% of their Full Retirement Age Benefit starting at age 70.
File & Suspend
Restricted Application
At Full Retirement Age, one spouse files
for benefits and immediately suspends
payments. This spouse receives
Delayed Retirement Credits of 8% per
year until age 70 and will receive 132%
of their Full Retirement Age benefit.
All COLA adjustments will be based on
the larger amount.
At Full Retirement Age, one spouse files
a restricted application and begins
collecting benefits based on the other
spouse’s benefit amount. The first
spouse must have already filed for
benefits for the second to receive the
50% spousal benefit. At age 70, the
second spouse collects their benefit.
COMBINE
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How Does the Strategy Work?
By combining the two strategies, both spouses are able to receive
132% of their Full Retirement Age Benefit starting at age 70.
Today’s Example
• Joe files and suspends at age 66
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• Benefit grows at 8%/yr
• Plus COLA at 3%/yr
• Benefits start at age 70
• Grows from $2000  $3247/mo.
Deborah files restricted at age 66
• Collects 50% spousal benefit
• Her Benefit grows at 8%/yr
• Plus COLA at 3%/yr
• Grows from $1000  $1722/mo.
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Social Security Explorer Software
In the first appointment, we use the Social Security Explorer Software
to create the initial report and show the client what is at stake.
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$349 Annual Subscription
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Works on All Browsers
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How to Get a Copy for FREE!
Including iPad and Android Tablets
Start ASAP vs. Using Our
Recommended Strategy
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The Sales Process
Using the Social Security Simplified System
GENERATE
THE LEAD
Seminar
Or
Direct Mail
MAXIMIZE
SSI BENEFITS
FILL THE
INCOME GAPS
1st Appointment
2nd Appointment
Walk client through the
Social Security Explorer
Report Process
Prepare Supplemental
“Simplified Report” and
discuss solutions to Income
Gaps
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The DOs & DON’Ts of SSI Planning
Our goal is to provide the Maximization Report, not to
act as an intermediary between the client and the SSA
WHAT TO DO
• Educate yourself on Social Security
Strategies for Married Couples
• Visit SSA.gov to learn about different
filing strategies and how to file
• Purchase Social Security Explorer and
become familiar with the interface
• Learn basic terminology and most
commonly used acronyms
• Attend weekly training webinars
WHAT NOT TO DO
• Assist client in the filing process or fill
out paperwork for the client when filing
for benefits
• Call Social Security Administration with
the client or on the client’s behalf
• Discuss or illustrate specific tax
situations with clients unless you have
proper licensing
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1st Appt: Fact Find
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Prospect must bring:
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SS Statements
Financial Statements
Complete Client Worksheet
Answer general questions
Prepare them for 2nd appt
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Before 2nd appt: Social Security Explorer
Joe – Age 63 Deborah – Age 61
FILE ASAP VS. USING OUR RECOMMENDATION
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Before 2nd appt: Social Security Explorer
Joe – Age 63 Deborah – Age 61
FILE ASAP VS. USING OUR RECOMMENDATION
File ASAP
Recommended
$1,134,036
$1,570,768
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Creating the “Simplified Report”
We use the benefit values from the Social Security Explorer Report
Information Needed:
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Agent Name(s)
Spouse Names
Spouse Ages
Spouse FRA Benefit
Investment Rate (0%)
COLA Rate (3%)
Desired Monthly Income
Immediate Amount
Recommended Strategy
Estimated Benefits
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2nd Appt: SSE & Income Gap
Joe – Age 63 Deborah – Age 61
FILE ASAP VS. USING OUR RECOMMENDATION
Recommended
$1,570,768
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2nd Appt: SSE & Income Gap
Joe – Age 63 Deborah – Age 61
$180,000
$160,000
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
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2nd Appt: Teeing up the Annuity Sale
Using the Simplified Report to Make Lifetime Income Annuity Sales
Joe – Age 63 Deborah – Age 61
Let’s Take a Closer Look…
•
Years 1-7
In order to maximize Social Security,
the client will need to use other assets
or continue to work. This will start the
conversation about existing retirement
accounts, such as 401(k), IRA, Pension
and brokerage accounts.
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2nd Appt: Teeing up the Annuity Sale
Using the Simplified Report to Make Lifetime Income Annuity Sales
Joe – Age 63 Deborah – Age 61
Let’s Take a Closer Look…
•
Years 1-7
In order to maximize Social Security,
the client will need to use other assets
or continue to work. This will start the
conversation about existing retirement
accounts, such as 401(k), IRA, Pension
and brokerage accounts.
•
Years 7-22
While both spouses are still living,
there will be an income gap of
approximately 20-27%. To fill this gap,
we can use an Indexed Annuity with a
lifetime benefit rider that defers for 7
years and provides a minimum of
$20,000 in lifetime income.
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3rd Appt: Making the Annuity Sale
Using the Simplified Report to Make Lifetime Income Annuity Sales
Joe – Age 63 Deborah – Age 61
Using Joe’s Age, we will need
approximately $213,000 to
guarantee $20,000/yr.
income starting in 8 years
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3rd Appt: The Life Sale
Using the Simplified Report to Make No Lapse Life Sales
Joe – Age 63 Deborah – Age 61
Let’s Take a Closer Look…
•
Years 23-29
When the first spouse dies, the income
gap increases significantly due to a
reduction in Social Security Income.
Option 1: Insure 100%
Buying a no lapse policy today for the
full income gap at the death of the
first spouse.
Joe – Age 63 $415,000  $830/mo.
Option 2: Insure 50%
Buying a no lapse policy today that
covers half of the income gap at the
death of the first spouse.
Joe – Age 63 $207,500  $430/mo.
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Call DMI Marketing at
1-800-322-6342
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