Most retirees aren't aware of the many factors that affect the level of Social Security benefits that they and their family will receive. This presentation provides a first look at what to think about including how benefits are impacted by the age at which you begin, how other income sources can reduce your benefits or cause your benefits to be taxable, and why you need to consider your spouse's benefits along with your own in providing the best solution for your family.

1. Social Security:
When is the right time to start your benefits?
Securities offered through LPL Financial Member FINRA/SIPC

2. Please Note
• All comments in this presentation regarding
Social Security benefits are general in nature and
for informational purposes only. Your specific
benefit amount will depend on personal factors
such as your employment history, marital history,
health status, and age at which you begin
benefits. You should discuss your benefit options
with a representative of the Social Security
Administration before making any final decisions.
You should discuss matters of benefit taxation
with your tax advisor.

3. When can you start benefits?
• Any time between Age 62 and 70
– More than 50% of retirees begin collecting
benefits at Age 62. Only 5% or so wait until after
age 66.
• Your base benefit amount assumes you start
at your Full Retirement Age (FRA).
– If you were born between 1943-1954, your FRA is
Age 66

4. Why does it matter when you start
your benefits?
• The later you start, the higher your monthly
benefit will be.
• If you’re still working, your benefits may be
reduced.
• If you have other income sources, your benefits
may be taxable.
• Worried about outliving your retirement assets?
Social Security benefits provide an inflation-
adjusted income stream for the rest of your life.

5. How much does starting age
impact your benefits?
• Reduced by 5%-7% per year before Full Retirement
Age (FRA)
• Increased by 8% per year after FRA
Source: Social Security Administration

6. Why do most people start benefits
so early?
• Need the income for current expenses
• Want to “get out what they paid in”
• Worried about changes to Social Security
• Actuarial equivalence
– Example: Starting at age 62 with $750/month vs.
Age 70 with $1,320/month  You will be 81 years
old by the time the higher payments catch up to
the earlier payments

7. If you’re still working…
• If you are still working and are not yet FRA for the entire
year, your benefits will be reduced by $1 every $2 you
earn above the annual limit. For 2011, that limit is
$14,160.
• In the year you reach FRA, your benefits will be reduced
$1 for every $3 you earn in the months prior to reaching
FRA that are above a different limit ($37,680 for 2011).
• Once you reach FRA, there are no limitations on
earnings.
• These reduced benefits are not lost forever!
– Your monthly benefit will be recalculated to a higher amount
based on the reductions from prior years.

8. If you have income other than
Social Security Benefits…
• As much as 85% of your benefits may be taxable.
• Combined Income (C.I.) = Half of S.S. benefits + Adjusted Gross Income +
Non-taxable interest
• If you are married filing jointly, none of your benefits are taxable if your
C.I. is less than $32,000. For every dollar over that, $0.50 of your benefits
becomes taxable. At $44,000 and above, every dollar causes $0.85 of your
benefits to become taxable.
– The C.I. levels for Single filers are $25,000 and $34,000
• This can lead to an unpleasant tax surprise!
• What options can you consider to reduce taxes on benefits? It comes
down to timing.
– Delay taking benefits until you stop working.
– Delay taking benefits and take distributions from tax-deferred retirement
accounts or convert these assets to Roth accounts
– Lumping certain income items in one year instead of over multiple years

9. Spousal Benefits
• If you are/were married, you may qualify for benefits on your spouse’s
employment record
• Spouse – You can receive one-half of your spouse’s benefit if your own
benefit would be less, even if you don’t qualify for benefits on your own
– If you receive spousal benefits before your FRA, your benefit will be reduced
for each month you collect early. However, you do not receive any increase in
benefits for delaying payment after FRA. Thus, it makes sense to begin
collecting benefits no later than FRA.
• Widow/widower – You can receive the full benefit of your deceased
spouse at your FRA, or begin reduced benefits as early as age 60
– If the spouse with the shorter life expectancy (usually but not always the
husband) has a much higher benefit, it might make sense to have the lower
benefit spouse start benefits earlier and have the higher benefit spouse delay.
This allows the surviving spouse to collect a relatively high benefit.
• Divorced – If you were married more than 10 years and are not currently
married, you can receive your ex-spouse’s benefit if it is higher than your
own

10. Final Thoughts
• Too many retirees automatically collect
benefits as early as possible. Think through
how the various factors will impact your net
benefit amount.
• Despite the potential for legislative changes, a
high level of Social Security Benefits are one of
the best ways to protect against longevity risk.
• Still confused? Modus Advisors is here to help
you!

11. Want to find out more on how to integrate your Social
Security Benefits with investments and other income
sources? Contact us today.
952-946-1000
Toll-free 877-946-1012
www.modusadvisors.com
Securities offered through LPL Financial Member FINRA/SIPC