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What Are Annuities?

Annuities can be a paramount way of saving for retirement. They are designed to assist in reaching long term financial goals such as the ability to create an income stream, put aside money for the future or to provide guaranteed lifetime income. Annuities also offer deferred tax status so you do not pay taxes until there is a withdrawal which helps your savings grow faster. Different annuities have advantages and disadvantages that should be carefully considered in choosing the right option.

Fixed Deferred Annuities
Fixed deferred annuities offer tax-deferral advantages with a set interest rate and can provide steady growth in value over time for long term retirement goals as they are not exposed to stock market fluctuations. Taxes are deferred until withdrawals are taken.

Features and Benefits:

  • Guaranteed Fixed Interest Rates
  • Protection from Market Volatility
  • Income Options
  • Tax Deferral

Guaranteed Fixed Interest Rates1
Fixed deferred annuities lock in a specified interest rate during the contract accumulation period (the period before annuity payments begin) allowing the money within your contract to grow slowly and steadily over time.

Protection from Volatility
You’ll be protected against the effects of market fluctuations when you choose a fixed deferred annuity. Provided you don’t make withdrawals, your principal is protected and will grow in value.

Income Options
Fixed Deferred Annuities offer income options that can provide guaranteed short term and/or long term income for life depending on individual needs.2

Deferral
Fixed Deferred Annuities offer a fixed rate of interest which allows the money value in the annuity to increase as the principal earns interest and as the interest on that principal compounds. Fixed annuities are free from current income taxes which allows your money to grow. Taxes are paid on the money in the event of a withdrawal.

Income Annuities
A type of annuity that provides guaranteed income for life with limited or no liquidity or for a period of time of your choice — either immediately or at a future date. As an additional source of income outside of Social Security or a pension, Income Annuities are designed to help convert a portion of your retirement savings into a predictable stream of guaranteed income for a specific amount of time or that you can't outlive.

Features and Benefits:

  • Guaranteed Income
  • Tax Efficiency
  • Income Options

Guaranteed Income
An Income Annuity gives you the confidence of knowing you will have the money you need for everyday expenses when the paycheck ends.

Tax Efficiency1
If you have already paid taxes on money used to purchase an income annuity, part will be taxable earnings and part of each annuity payment will be considered a return of the amount you paid for the annuity (your purchase payment).

Income Options
Income Annuity options offer the flexibility of the policy holder to decide when to and how often the income will be received (within contract limits). With the fluctuations in the financial markets, you can have peace of mind knowing Income Annuities can provide guaranteed income.3

1 Guarantees are based on the claims-paying ability of the issuing company.2 Taxable withdrawals are subject to ordinary income tax and, if made prior to age 59½, may be subject to a 10% federal income tax.The information provided is not written or intended as specific tax or legal advice. Our representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel. Taxable withdrawals are subject to ordinary income tax and, if made prior to age 59½, may be subject to a 10% federal income tax


Medicare Health Plans

The Basics of Medicare
Before taking the big step in enrolling in Medicare, a little education can go a long way.

An education in Medicare can be a daunting task. Like learning a new language, there are the words, their meanings and structure that need to make sense to become knowledgeable and fluent in the language.  In the language of Medicare, we’re here to make that as easy as possible.

For a better understanding of how Medicare works, we can help break this information down. Starting from the basics of the various plans and their unique parts, formularies and cost-sharing ideas, tier ranges and coverage, you will become fluent in the ways Medicare works for you.

Medicare Program – General Information
Medicare is a health insurance program for:

  • people age 65 or older,
  • people under age 65 with certain disabilities, and
  • people of all ages with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a kidney transplant).

Medicare has:

Part A Hospital Insurance – Most people don’t pay a premium for Part A because they or a spouse already paid for it through their payroll taxes while working. Medicare Part A (Hospital Insurance) helps cover inpatient care in hospitals, including critical access hospitals, and skilled nursing facilities (not custodial or long-term care). It also helps cover hospice care and some home health care. Beneficiaries must meet certain conditions to get these benefits.

Part B Medical Insurance
 – Most people pay a monthly premium for Part B. Medicare Part B (Medical Insurance) helps cover doctors’ services and outpatient care. It also covers some other medical services that Part A doesn’t cover, such as some of the services of physical and occupational therapists, and some home health care. Part B helps pay for these covered services and supplies when they are medically necessary.

Prescription Drug Coverage – Most people will pay a monthly premium for this coverage. Starting January 1, 2006, new Medicare prescription drug coverage will be available to everyone with Medicare. Everyone with Medicare can get this coverage that may help lower prescription drug costs and help protect against higher costs in the future. Medicare Prescription Drug Coverage is insurance. Private companies provide the coverage. Beneficiaries choose the drug plan and pay a monthly premium. Like other insurance, if a beneficiary decides not to enroll in a drug plan when they are first eligible, they may pay a penalty if they choose to join later.

Source:  https://www.cms.gov/Medicare/Medicare-General-Information/MedicareGenInfo/index.html

Medicare Part A

Medicare Part A (Hospital Insurance) helps cover inpatient care in hospitals, including critical access hospitals, and skilled nursing facilities (not custodial or long-term care). It also helps cover hospice care and some home health care. Certain conditions must be met to get these benefits.
Cost: Most people don’t have to pay a monthly payment, called a premium, for Part A. This is because they or a spouse paid Medicare taxes while working. If a beneficiary doesn’t get premium-free Part A, they may be able to buy it if they (or their spouse) aren’t entitled to Social Security, because they didn’t work or didn’t pay enough Medicare taxes while
working, are age 65 or older, or are disabled but no longer get free Part A because they returned to work.
If they have limited income and resources, their state may help them pay for Part A (see page 60). For more information, they can visit www.socialsecurity.gov on the web or call the Social Security Administration at 1-800-772-1213. TTY users should call 1-800-325-0778.

Source:   https://www.cms.gov/Medicare/Medicare-General-Information/MedicareGenInfo/Part-A.html

Medicare Part B

Medicare Part B (Medical Insurance) helps cover doctors’ services and outpatient care. It also covers some other medical services that Part A doesn’t cover, such as some of the services of physical and occupational therapists, and some home health care. Part B helps pay for these covered services and supplies when they are medically necessary.
Cost: The Medicare Part B premium each month ($99.90 per month in 2012). In some cases, this amount may be higher if the beneficiary didn’t sign up for Part B when they first became eligible.
Caution: If the beneficiary didn’t take Part B when they were first eligible, the cost of Part B will go up 10% for each full 12-month period that they could have had Part B but didn’t sign up for it, except in special cases. They will have to pay this penalty as long as they have Part B.
They also pay a Part B deductible each year before Medicare starts to pay its share. The Part B deductible for 2012 is $140.00. The beneficiary may be able to get help from their state to pay this premium and deductible.
Medicare deductible and premium rates may change every year in January.   

Source:    https://www.cms.gov/Medicare/Medicare-General-Information/MedicareGenInfo/Part-B.html

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Social Security Maximization

Social Security

The most common question for pre-retirees is - when do I take my social security benefits?

When it comes to Social Security retirement benefits, your age, marital status, health and financial needs are all important considerations.

With more than 10 years of unprecedented market volatility, corporations eliminating over 85k pension plans since the mid 80's and a government agency (SSA {Social Security Administration} with 2,728 filing rules) is prohibited from dispensing advice, we offer expert advice on when and how to file for the optimal Social Security filing benefits.

Utilizing guaranteed income financial products, we work with you to design a plan to protect you and your family from unanticipated circumstances and market instabilities so common in our everyday life. We realize you've worked hard for your money.

Our mission is to work even harder to make sure you collect the maximum amount of Social Security payments and filling any income gaps in coverage with appropriate financial products designed to meet your high standards.

Filing for Benefits

The Social Security Administration website at http://www.ssa.gov provides a wealth of information on Social Security retirement benefits.

The age at which you begin receiving benefits is one of the most important factors affecting the amount of your monthly benefit.

The power of delayed retirement credits
For each year after full retirement age that you delay taking benefits, delayed retirement credits increase your monthly benefit amount. The percentage of increase depends on the year you were born.

If you were born in 1943 or later, your benefit increases by 8% each year until you reach age 70. After that, no additional delayed retirement credits are earned.2

Working After You Begin Collecting

You can keep working after Social Security retirement or survivors benefits begin. If you are at full retirement age or older, there is no reduction of your Social Security benefits, regardless of how much you earn from work.

Before your full retirement age, earnings are subject to an “earnings test.” If your income exceeds a specified amount, Social Security will withhold all or a portion of your benefits.

1 Source: Social Security Administration Benefits Planner
2 Source: Social Security Administration, http://www.ssa.gov/pubs/EN-05-10147.pdf
The information provided is not written or intended as specific tax or legal advice. Our representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel. Final decisions about Social Security filing strategies always rest with you and should always be based on your specific needs and health considerations. It is important to acquire as much information as possible in order to make an informed Social Security claiming decision because one year after the Social Security claiming decision is made, the options for change are extremely limited. The Social Security program was created by an Act of Congress. It is subject to change. In the past, Congress has made changes to the law which has had an impact on Social Security benefits. Congress can make changes to the law at any time, which might impact benefits in the future.

Bad Advice From SSA (Social Security Administration)

Widows Got Bad Social Security Claiming Advice From SSA: IG Report

Misinformed Social Security filings resulted in about $131.8 million in underpayments to beneficiaries age 70 and older, the SSA Inspector General found.


Employees of the Social Security Administration have been asleep at the wheel when advising widows and widowers of the enhanced benefits that come with delaying claims to full retirement age, according to a report from the agency’s Inspector General.

According to the report, an estimated 11,123 beneficiaries were eligible for higher benefits had they delayed claims until age 70.

The misinformed filings resulted in about $131.8 million in underpayments to beneficiaries age 70 and older, and another $9.8 million in annual payments for those under age 70.

“SSA policy states its employees must explain the advantages and disadvantages of filing an application and the filing considerations so the claimant can make an informed filing decision,” the IG’s report says.

But the agency’s employees did not meet those obligations. “We did not find any evidence in the agency’s automated system to support the claimant’s decision to elect to file for retirement benefits, as required,” the report added.

The report also found that SSA did not have controls in place to alert employees as to when delaying benefits was in applicants’ best interest.

The findings in the report were based on a sample of 50 beneficiaries, 82% (41 individuals) of whom were eligible for a higher monthly benefit had they delayed claiming the retirement portion of their benefits until after age 70.

For the seven beneficiaries under age 70 that inadvisably claimed early in the SSA’s sample, the loss in benefits will be substantial. Upon reaching age 70, the average loss in benefits will be $5,185 annually.

When widows or widowers are entitled to benefits that exceed their individual retirement benefits, they have the option of delaying filing for the retirement portion of their benefits until age 70 in order to receive a higher monthly benefit. They can file limited claims that allow access to the widow benefit before age 70.

In one example, a beneficiary was paid retirement and widow’s benefits after filing an application in January 2011, six months before her 66th birthday.

From August 2015, when she turned 70, to September 2017, she was paid total benefits of $39,708. Had she delayed her retirement benefit until age 70, she would have been entitled to another $13,000 in benefits during that period.

“We did not find any evidence that SSA employees informed the widow about her option to delay her retirement application up to age 70 to increase her retirement benefits,” the report says.

The decision when to file for benefits belongs solely to claimants, the report notes. But SSA policy requires employees to electronically document when unfavorable filing decisions are made.

The IG recommends that the agency “take action” regarding the 41 beneficiaries in the sample that received lower benefits due to inaction from agency employees, though it did not say whether that action would include repaying benefits that were lost.

The office also recommends reviewing the remaining 13,514 beneficiaries that are potentially impacted from early filings, and exploring new controls to assure beneficiaries are informed of the option to delay retirement portions of benefits.


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Do I Need Life Insurance?

Life insurance has several purposes. Its most important function is to replace the earnings that would cease at the death of the insured. For businesses, life insurance is a way to protect key employees and the business itself. A third purpose is to use life insurance to pay potential estate taxes.

If you die during your earning years, your family could suffer a severe economic loss as a result of losing your current and future income. Unfortunately, your family would still have to pay its regular bills, the mortgage, and outstanding debts, and perhaps even continue saving for college and retirement. Unless you're independently wealthy, achieving these goals may be virtually impossible for your family with the loss of your steady income. Life insurance offers a way for your family to continue living comfortably and without worry.

Employers often purchase life insurance policies on key employees to insure against the loss of services or income that might result after an employee's death. Here, the proceeds from the policy are paid to the company. Life insurance works for business partners too, where one business partner purchases a policy to insure against the financial loss that might result from the other partner's death or to buy out the partner's heirs.

Life insurance is also used to pay potential federal estate taxes. Since these taxes must be paid in cash, life insurance can be a good way to ensure the fulfillment of this obligation.5

 4. https://us.axa.com/axa-products/life-insurance/questions/why-do-i-need-life-insurance.html 5. gradientfinancialgroup.com Newsletter  Insurance products and services are offered through Craig Colley | Coliday and is not affiliated with Gradient Securities, LLC. Some of these materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. The above information is not intended to provide, and should not be relied on for, tax, legal, or accounting advice.

Social Security for Married Couples

Social Security Claiming Strategies for Married Couples 1

Deciding when to begin receiving Social Security benefits is a major financial issue for anyone approaching retirement because the age at which you apply for benefits will affect the amount you'll receive. If you're married, this decision can be especially complicated because you and your spouse will need to plan together taking into account the Social Security benefits you may each be entitled to. For example, married couples may qualify for retirement benefits based on their own earnings records, and/or for spousal benefits based on their spouse's earnings record. In addition, a surviving spouse may qualify for widow or widower's benefits based on what his or her spouse was receiving.

One claiming strategy that has been used to boost Social Security income was recently eliminated by new rules contained in the Bipartisan Budget Act of 2015. However, depending on your age, you may still have a limited window to take advantage of this strategy before the new rules take effect. It can be used in a variety of scenarios, but here's how they generally work.

File for one benefit, then the other

To file a restricted application and claim only spousal benefits at age 66, you must have turned age 62 by January 2, 2016. At the time you file, your spouse must have already claimed Social Security retirement benefits or filed and suspended benefits. If you were born in 1954 or later, you will not be able to use this strategy because under the new rules, an individual who files a benefit application will be deemed to have filed for both worker and spousal benefits and will receive whichever benefit is higher. He or she will no longer be able to file only for spousal benefits and will not be able to switch from one benefit to another at a later date.

A second strategy that can be used to increase household income for retirees is to have one spouse file a restricted application for spousal benefits at full retirement age, then switch to his or her own higher retirement benefit later.

Once a spouse reaches full retirement age and is eligible for a spousal benefit based on his or her spouse's earnings record and a retirement benefit based on his or her own earnings record, he or she can choose to file a restricted application for spousal benefits, then delay applying for retirement benefits on his or her own earnings record (up until age 70) in order to earn delayed retirement credits. This may help to maximize survivor's income as well as retirement income, because the surviving spouse will be eligible for the greater of his or her own benefit or 100% of the spouse's benefit.

This strategy can be used in a variety of scenarios, but here's one hypothetical example that illustrates how it might be used when both spouses have substantial earnings but don't want to postpone applying for benefits altogether. Liz files for her Social Security retirement benefit of $2,400 per month at age 66 (based on her own earnings record), but her husband Tim wants to wait until age 70 to file. At age 66 (his full retirement age) Tim applies for spousal benefits based on Liz's earnings record (Liz has already filed for benefits) and receives 50% of Liz's benefit amount ($1,200 per month). He then delays applying for benefits based on his own earnings record ($2,100 per month at full retirement age) so that he can earn delayed retirement credits. At age 70, Tim switches from collecting a spousal benefit to his own larger worker's retirement benefit of $2,772 per month (32% higher than at age 66). This not only increases Liz and Tim's household income but also enables Liz to receive a larger survivor's benefit in the event of Tim's death.


1.https://www.foremostadvice.com/fmaweb/Advisor/PresentationCenterDetails.aspx?iplf=gb&cat=GovernmentBenefits 2. http://www.huffingtonpost.com/2015/02/13/how-to-say-i-love-you_n_6652608.html 3. http://www.foodnetwork.com/recipes/food-network-kitchens/brownie-batter-truffles.html?oc=linkback  5. gradientfinancialgroup.com Newsletter  Insurance products and services are offered through Craig Colley | Coliday and is not affiliated with Gradient Securities, LLC. Some of these materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. The above information is not intended to provide, and should not be relied on for, tax, legal, or accounting advice.

Course Corrections to Consider

Retirement planning course corrections to consider4

It’s no secret that millions of Americans are approaching their retirement years with meager savings and high anxiety about their financial security. And a recent study from Merrill Lynch and Age Wave reveals steps that Americans are willing to take to get their retirement back on track.

The overwhelming majority (88 percent) of people surveyed said their primary objective is peace of mind, while just 12 percent say they want to accumulate as much wealth as possible. But peace of mind means different things to different people:

  • 57 percent report they want to live comfortably within their means.
  • 39 percent say they want to have the financial resources to live the life they choose.
  • 34 percent want to feel they could handle a major unexpected expense.
  • 25 percent want to feel confident they won’t outlive their money.
  • 17 percent want to provide for their family if something happens to them.

Only 8 percent of survey respondents feel personal finances can be discussed openly, while the remainder consider the topic a private matter or one that can be discussed with a spouse or partner or only very close family and friends. It would certainly help if older workers and retirees would share their ideas and insights with their family and friends.

What changes are people willing to make to enhance their  financial security in retirement? Here are steps the survey found Americans are willing to take:

  • 90 percent would be willing to cut back on their expenses. Perhaps they can focus on spending just enough to meet their basic living needs and what truly makes them happy.
  • 79 percent would seek financial advice. In this case, they’ll want to make sure their advisers are qualified and act in their best interests.
  • 77 percent would increase the use of tax-protected retirement accounts.
  • 75 percent would seek expert advice on how to pay lower taxes. Note that this may not be a good use of time for Americans with meager savings, since they could already be in a very low tax bracket when they retire.
  • 66 percent would sell real estate or other personal belongings. Finding the best way to deploy home equity is a good use of time for older workers and retirees who own a home but have modest retirement savings.
  • 64 percent would postpone taking Social Security. This is a smart move for many retirees.
  • 43 percent would withdraw the cash value from a life insurance policy. Such people would want to explore their options: some policies allow the holder to convert the policy’s cash value into a lifetime annuity.

In addition to taking these steps, older workers would be wise to develop a strategy for generating lifetime retirement income, explore their options for continuing to work and make sure they have adequate medical insurance that supplements Medicare.

As you can see, your financial security in retirement has many moving parts. It is well worth spending hours and days planning for peace of mind in your retirement years, so you can go enjoy the rest of your life.5

1. http://travel.aarp.org/articles-tips/articles/info-09-2014/fall-foliage-trips-photo.html#slide3 2. Broadridge Investor Communication Solutions, Inc. Copyright, 2017 3. http://allrecipes.com/recipe/13801/apple-butter-spice-cake/ 4. http://www.cbsnews.com/news/retirement-planning-course-corrections-to-consider/5. https: //www.forbes.com/sites/robertlaura/2017/05/26/7-of-the-best-retirement-quotes-to-get-you-to-and-through-it/#5baea2db6c2b 6. gradientfinancialgroup.com Newsletter  Insurance products and services are offered through Craig Colley | Coliday and is not affiliated with Gradient Securities, LLC. Some of these materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. The above information is not intended to provide, and should not be relied on for, financial, insurance, tax, legal, or accounting advice.

CAN WOMEN BE DIFFERENT THAN MEN?

How women can be different than men, financially speaking 1

We all know men and women are different in some fundamental ways. But is this true when it comes to financial planning? In a word, yes. In the financial world, women often find themselves in very different circumstances than their male counterparts.

Everyone wants financial security. Yet women often face financial headwinds that can affect their ability to achieve it. The good news is that many women today find themselves in a better position to achieve financial security for themselves and their families.

More women than ever are successful professionals, business owners, entrepreneurs, and knowledgeable investors. Their economic clout is growing, and women's impact on the traditional workplace is still unfolding positively as women earn college and graduate degrees in record numbers and seek to successfully integrate their work and home lives to provide for their families. So what financial course will you chart?

Some key differences

On the path to financial security, it's important for women to understand what they might be up against, financially speaking:

Women have longer life expectancies.

Women live an average of 4.8 years longer than men.1 A longer life expectancy presents several financial challenges for women:

This could mean that they will need to stretch their retirement dollars further

They may be more likely to need some type of long-term care, and may have to face some of their health-care needs alone

If they are married, they are more likely to outlive their husbands, which means they could have ultimate responsibility for disposition of the marital estate.

Women generally earn less and have fewer savings.
According to the Bureau of Labor Statistics, within most occupational categories, women who work full-time, year-round, earn only 83% (on average) of what men earn.2 This wage gap can significantly impact women's overall savings, Social Security retirement benefits, and pensions.

The dilemma is that while women generally earn less than men, they need those dollars to last longer due to a longer life expectancy. With smaller financial cushions, women are more vulnerable to unexpected economic obstacles, such as a job loss, divorce, or single parenthood. And according to U.S. Census Bureau statistics, women are more likely than men to be living in poverty throughout their lives.3

Women are more likely to take career breaks for caregiving.

Women are much more likely than men to take time out of their careers to raise children and/or care for aging parents.4 Sometimes this is by choice. But by moving in and out of the workforce, women face several potential financial implications:

Lost income, employer-provided health insurance, retirement benefits, and other employee benefits

Less savings

Often a lower Social Security retirement benefit

Possibly a tougher time finding a job, or a comparable job (in terms of pay and benefits), when reentering the workforce

Increased vulnerability in the event of divorce or death of a spouse

In addition to stepping out of the workforce more frequently to care for others, women are more likely to try to balance work and family by working part-time, which results in less income, and by requesting flexible work schedules, which can impact their career advancement (and thus the bottom line) if an employer unfairly assumes that women's caregiving responsibilities will come at the expense of dedication to their jobs. 

Women are more likely to be living on their own.

Whether through choice, divorce, or death of a spouse, more women are living on their own. This means they'll need to take sole responsibility for protecting their income and making financial decisions.

Women sometimes are more conservative investors.
Whether they're saving for a home, college, retirement, or a trip around the world, women need their money to work hard for them. Sometimes, though, women tend to be more conservative investors than men,5 which means their savings might not be on track to meet their financial goals.

Women need to protect their assets.
As women continue to earn money, become the main breadwinners for their families, and run their own businesses, it's vital that they take steps to protect their assets, both personal and business. Without an asset protection plan, a woman's wealth is vulnerable to taxes, lawsuits, accidents, and other financial risks that are part of everyday life. But women may be too busy handling their day-to-day responsibilities to take the time to implement an appropriate plan.

A financial professional can help
Women are the key to their own financial futures--it's critical that women educate themselves about finances and be able to make financial decisions. Yet the world of financial planning isn't always easy or convenient. In many cases, women can benefit greatly from working with a financial professional who can help them understand their options and implement plans designed to help provide women and their families with financially secure lives.6

If you have questions about how we can help please me, Craig Colley at 949-216-8459.

Sources

1 NCHS Data Brief, Number 229, December 2015 2, 4 U.S. Department of Labor, Bureau of Labor Statistics, Women in the Labor Force: A Databook, December 20153 U.S. Census Bureau, Current Population Reports, P60-252, 20155 U.S. Department of Labor, Women and Retirement Savings Online Publication, dol.gov; accessed January 2016 6 gradientfinancialgroup.com Newsletter  Insurance products and services are offered through Craig Colley | Coliday and is not affiliated with Gradient Securities, LLC. Some of these materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Get a Bigger Social Security Benefit

How to Get a Bigger Social Security Retirement Benefit  1

Many people decide to begin receiving early Social Security retirement benefits. In fact, according to the Social Security Administration, about 72% of retired workers receive benefits prior to their full retirement age. But waiting longer could significantly increase your monthly retirement income, so weigh your options carefully before making a decision.

Timing counts

Your monthly Social Security retirement benefit is based on your lifetime earnings. Your base benefit--the amount you'll receive at full retirement age--is calculated using a formula that takes into account your 35 highest earnings years.

If you file for retirement benefits before reaching full retirement age (66 to 67, depending on your birth year), your benefit will be permanently reduced. For example, at age 62, each benefit check will be 25% to 30% less than it would have been had you waited and claimed your benefit at full retirement age (see table on next page).

Alternatively, if you postpone filing for benefits past your full retirement age, you'll earn delayed retirement credits for each month you wait, up until age 70. Delayed retirement credits will increase the amount you receive by about 8% per year if you were born in 1943 or later.

The chart below shows how a monthly benefit of $1,800 at full retirement age (66) would be affected if claimed as early as age 62 or as late as age 70. This is a hypothetical example used for illustrative purposes only; your benefits and results will vary.

Early or late?

Should you begin receiving Social Security benefits early, or wait until full retirement age or even longer? If you absolutely need the money right away, your decision is clear-cut; otherwise, there's no ''right" answer. But take time to make an informed, well-reasoned decision. Consider factors such as how much retirement income you'll need, your life expectancy, how your spouse or survivors might be affected, whether you plan to work after you start receiving benefits, and how your income taxes might be affected.5

1Broadridge Investor Communication Solutions, Inc. Copyright 2016.2  http://www.history.com/topics/halloween/jack-olantern-history/interactives/halloween-by-the-numbers3 Broadridge Investor Communication Solutions, Inc. Copyright 2016.http://www.foodnetwork.com/recipes/paula-deen/cheesy-squash-casserole-recipe.html#lightbox-recipe-image 5 gradientfinancialgroup.com Newsletter  Insurance products and services are offered through Craig Colley | Coliday and is not affiliated with Gradient Securities, LLC. Some of these materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

How Earnings Affect Social Security

How Earnings Affect Social Security 1

If you begin to receive Social Security retirement (or survivor's) benefits before you reach full retirement age, money you earn over a certain limit will reduce the amount of your Social Security benefit. In 2016, your benefit will be reduced by $1 for every $2 of earnings in excess of $15,720*

The chart below shows the effect of annual earnings of $10,000, $20,000, and $30,000 on a $12,000 annual Social Security benefit ($1,000 monthly) for someone who hasn't yet reached full retirement age.

Source:  Social Security Administration, 2015

*Special rules apply in both the year you reach full retirement age and the year you retire if you have not reached full retirement age. If you are interested in learning when is the best time to apply for Social Security Retirement Benefits please call us at 949-216-8459 to set up a complimentary appointment to review your situation.

Four Common Questions About Social Security 4

As you near retirement, it's likely you'll have many questions about Social Security. Here are a few of the most common questions and answers about Social Security benefits.

Will Social Security be around when you need it?

You've probably heard media reports about the worrisome financial condition of Social Security, but how heavily should you weigh this information when deciding when to begin receiving benefits? While it's very likely that some changes will be made to Social Security (e.g., payroll taxes may increase or benefits may be reduced by a certain percentage), there's no need to base your decision about when to apply for benefits on this information alone. Although no one knows for certain what will happen, if you're within a few years of retirement, it's probable that you'll receive the benefits you've been expecting all along. If you're still a long way from retirement, it may be wise to consider various scenarios when planning for Social Security income, but keep in mind that there's been no proposal to eliminate Social Security.

If you're divorced, can you receive Social Security retirement benefits based on your former spouse's earnings record?

You may be able to receive benefits based on an ex-spouse's earnings record if you were married at least 10 years, you're currently unmarried, and you're not entitled to a higher benefit based on your own earnings record. You can apply for a reduced spousal benefit as early as age 62 or wait until your full retirement age to receive an unreduced spousal benefit. If you've been divorced for more than two years, you can apply as soon as your ex-spouse becomes eligible for benefits, even if he or she hasn't started receiving them (assuming you're at least 62). However, if you've been divorced for less than two years, you must wait to apply for benefits based on your ex-spouse's earnings record until he or she starts receiving benefits.

If you delay receiving Social Security benefits, should you still sign up for Medicare at age 65?

Even if you plan on waiting until full retirement age or later to take your Social Security retirement benefits, make sure to sign up for Medicare. If you're 65 or older and aren't yet receiving Social Security benefits, you won't be automatically enrolled in Medicare Parts A and B.

You can sign up for Medicare when you first become eligible during your seven-month Initial Enrollment Period. This period begins three months before the month you turn 65, includes the month you turn 65, and ends three months after the month you turn 65.

The Social Security Administration recommends contacting them to sign up three months before you reach age 65, because signing up early helps you avoid a delay in coverage. For your Medicare coverage to begin during the month you turn 65, you must sign up during the first three months before the month you turn 65 (the day your coverage will start depends on your birthday). If you enroll later, the start date of your coverage will be delayed. If you don't enroll during your Initial Enrollment Period, you may pay a higher premium for Part B coverage later. Visit the Medicare website, www.medicare.gov to learn more or call the Social Security Administration at 800-772-1213.

Will a retirement pension affect your Social Security benefit?

If your pension is from a job where you paid Social Security taxes, then it won't affect your Social Security benefit. However, if your pension is from a job where you did not pay Social Security taxes (such as certain government jobs) two special provisions may apply.

The first provision, called the government pension offset (GPO), may apply if you're entitled to receive a government pension as well as Social Security spousal retirement or survivor's benefits based on your spouse's (or former spouse's) earnings. Under this provision, your spousal or survivor's benefit may be reduced by two-thirds of your government pension (some exceptions apply).

The windfall elimination provision (WEP) affects how your Social Security retirement or disability benefit is figured if you receive a pension from work not covered by Social Security. The formula used to figure your benefit is modified, resulting in a lower Social Security benefit.5


1 4 5 Broadridge Investor Communication Solutions, Inc. Copyright 2016.2  http://www.history.com/topics/halloween/jack-olantern-history/interactives/halloween-by-the-numbers 3 http://www.recipeboy.com/2014/09/nutella-cheesecake-pumpkin-bread/ 6 http://www.history.com/topics/thanksgiving/history-of-thanksgiving  5 gradientfinancialgroup.com Newsletter  Insurance products and services are offered through Craig Colley | Coliday and is not affiliated with Gradient Securities, LLC. Some of these materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

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