1 / 15

Understanding Social Security: Key Components for Retirement Planning

This session covers the fundamentals of Social Security under the OASDI framework, exploring its three main components: retirement, disability, and survivorship. Participants will learn essential terms such as Primary Insurance Amount (PIA), Full Retirement Age (FRA), and benefit reductions due to age and earnings. The session also discusses qualifying for Social Security disability and survivor benefits, illustrated by a real-life family example. Important issues, like tax implications on benefits and income thresholds, will also be addressed, equipping financial planners with crucial knowledge for advising clients.

dea
Télécharger la présentation

Understanding Social Security: Key Components for Retirement Planning

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. CERTIFIED FINANCIAL PLANNER CERTIFICATION PROFESSIONAL EDUCATION PROGRAMRetirement Planning & Employee Benefits Session 2Fundamentals of Social Security

  2. Session Details

  3. OASDI Old Age, Survivors, and Disability Insurance has three main components: • Retirement (old age) • Disability (disability of wage earner) • Survivorship (death of wage earner)

  4. Key Terms in OASDI Programs • Quarter of coverage ($1,200 in 2014) • Currently insured/Fully insured • Average Indexed Monthly Earnings (AIME) • Full retirement age (FRA) • Primary Insurance Amount (PIA) • Spousal benefit • Benefit reductions due to age • Benefit reductions due to earnings • Events that trigger the end of benefits • Divorced spouse coverage (married 10 years)

  5. Full Retirement Age

  6. Benefit Reductions Due to Earnings

  7. Retirement Earnings Test Example

  8. Qualifying for Social Security Disability Benefits • Disabled worker must be fully insured (at least 40 quarters) and • Have worked for at least 20 of the last 40 quarters

  9. Qualifying for Social Security Survivor Benefits • Deceased worker must have been either fully insured (40 quarters) or • Currently insured (at least 6 of last 13 quarters)

  10. Social Security Benefit Review

  11. Johnson Family Example • Robert Johnson died at age 35. Survivors are: • Wife, Jane (age 35). • Daughter, Juli (age 6). • Son, Bobby (age 3). • His PIA is $1,200. • Maximum family benefit is $2,250.

  12. Family Limits 35 40 45 47 48 55 60 65 66 50 Jane’s Age *If widow(er) is disabled within seven years of spouse’s death. Social Security payments may begin at age 50. † If benefits begin at 60. 71.5% PIA; at 62.75% PIA: at 65, 100% PIA.

  13. Income Tax on Social Security Benefits

  14. Income Tax on Social Security Benefits Thresholds are arrived at by using “provisional income.” The main components of provisional income are: • AGI • Tax-exempt interest income (muni bonds) • One-half of OASDI benefits

  15. CERTIFIED FINANCIAL PLANNER CERTIFICATION PROFESSIONAL EDUCATION PROGRAMRetirement Planning & Employee Benefits Session 2End of Slides

More Related