a look at the bigger picture - nfp · understanding social security . a look at the bigger picture...

For Broker/Dealer Use Only. Do Not Use With Consumers. CABD.5075 (08.12)

Understanding Social Security A look at the bigger picture

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For Broker/Dealer Use Only. Do Not Use With Consumers.

Important Information Protective Life refers to Protective Life Insurance Company and its affiliates, including Protective Life & Annuity Insurance Company. “Understanding Social Security” offered by Protective Life Insurance Company in all states except New York and in New York by Protective Life & Annuity Insurance Company. Both companies are located in Birmingham, AL. This presentation contains educational information about the Social Security program and is not intended to promote any products or services offered by Protective Life Insurance Company. These materials contain statements regarding the availability of and details surrounding the Social Security and Medicare programs. These statements represent only our current understanding of Social Security and Medicare in general and are not to be considered legal or tax advice by consumers. Details of the Social Security and Medicare programs are subject to change at any time. Neither Protective Life nor its representatives offer legal or tax advice. Consumers should consult with their legal or tax adviser regarding their individual situations before making any tax related decisions.

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Why is Social Security Important?

• 96% of Americans are entitled to benefits • Benefits can be more substantial than you

think Sam, 66

Life-long high wage earner

$2,366/month

Sue, 66 Non-working

spouse $1,183/month

$42,588 Per Year

$1,000,000

Information on this slide sourced from www.ssa.gov

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The Challenge

• “We can’t depend on Social Security to last – so why include it?”

• “I don’t understand the program or decisions involved with taking benefits.”

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Income Transfer Between Generations

Workers and Employers pay taxes this month

Payments to Beneficiaries for next month

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A Great System in 1937

• Paid only the Retired Worker • Paid at Age 65 • Life expectancy was 63

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Not as Good of a System Today

• Baby Boomers did not have enough children • Parents of Boomers are living longer • Average life expectancy today is 83 • Living at 65*

– 25% will live past 90 – 10% will live past 95

*SSA Publication No. 05-10147, ICN 480136, August 2012, When to Start Receiving Retirement Benefits

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Not Such a Great System Today

The Number of Workers per Beneficiary is Decreasing

5 3 2 1960 2010 2035

Source: Social Security 2011 Trustees Report: Section II.D, Projection

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So When Will it be Bankrupt?

Social Security Trust Funds will be exhausted in 2033, at which point only about 75% of benefits could be paid.

Calendar Year

Source: Social Security Board of Trustees Annual Report, April 25, 2012.

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How to Help Clients Prepare for Retirement

• Social Security Benefits • Pensions • Personal Savings

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The Social Security Statement

www.ssa.gov/mystatement

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Online Retirement Estimator www.socialsecurity.gov/estimator

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Age and Benefits

• At age 62, you get a lower monthly payment • permanently

• At full retirement age, you get your full benefit

• You get an even higher monthly payment if you work past your full retirement age

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Sooner or later?

$7,000 difference per year Additional $210,000 of income over 30 years

Age 62 Age 66 Age 70

$750/month $9,000/year

$1,000/month $12,000/year

$1,320/month $15,840/year

-25% +32%

+76%

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What’s the Right Decision?

• Individual decision • Everyone’s situation is different • Prepare in advance to make this decision • Look at other income coming in • Will they still be working?

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Who else qualifies for benefits?

• Current spouse could receive ½ • Former spouse could receive ½ • Children under 18 (or 19 if still in high

school) • Disabled children

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What about Survivor’s Benefits

• Widow or Widower • Reduced benefits at age 60 • If disabled, as early as age 50 • At any age if caring for a child under 16 or disabled • Divorced widows/widowers may qualify

• Children • Not married under age 18 (under 19 if still in high

school) • Not married and disabled before age 22

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Important Information

Protective Life refers to Protective Life Insurance Company and its affiliates, including Protective Life & Annuity Insurance Company. “Understanding Social Security” offered by Protective Life Insurance Company in all states except New York and in New York by Protective Life & Annuity Insurance Company. Both companies are located in Birmingham, AL. These materials contain statements regarding the availability of and details surrounding the Social Security and Medicare programs. These statements represent only our current understanding of Social Security and Medicare in general and are not to be considered legal or tax advice by consumers. Details of the Social Security and Medicare programs are subject to change at any time. Neither Protective Life nor its representatives offer legal or tax advice. Consumers should consult with their legal or tax adviser regarding their individual situations before making any tax related decisions.

CAC.1061 (07.12) For Broker/Dealer Use Only. Do Not Use With Consumers.

Questions?

2013 NFP STRATEGY SUMMIT INTERNAL USE ONLY. Not for public distribution.

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a look at the bigger picture - nfp · understanding social security . a look at the bigger picture...

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