1 [CLICK to stop music] Welcome to Social Security Benefits: What? When? How? I’m glad you have joined us. Before we start the workshop, let me share with you what we hope to accomplish. Please note that the information provided in this workshop is not written or intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek advice from your own tax or legal counsel. That being said, let’s begin. [CLICK]

2 Adult Financial Education Foundation, a non-profit corporation, is devoted to helping improve the financial literacy of adults 50 and over who are concerned about their retirement savings and how to ensure a safe, secure future. We develop courses of study that educate students about financial terms, concepts, and strategies in a classroom setting giving them tools they need to make smart decisions about their financial future. This program is brought to you by Adult Financial Education Services, a non-profit corporation, is devoted to helping improve the financial literacy of adults 50 and over who are concerned about their retirement savings and how to ensure a safe, secure future. We develop courses of study that educate students about financial terms, concepts, and strategies in a classroom setting giving them tools they need to make smart decisions about their financial future. For more information about AFES, visit them on the web at [CLICK] AFES is not affiliated with or endorsed by the Social Security Administration or any government agency

3 800-000-0000 Joe Advisor ABC Financial Group, Inc. 123 Main StreetAnytown, US 01234 Let me introduce myself. (Give a brief personal background, then talk about your organization and give its location.) [this slide can be customized to include your name/company name/logo/address/phone number and again at the end of the presentation] I feel strongly that providing my clients and my community with the information and education they need to make informed, thoughtful financial decisions is important. I will start with a quick definition of Social Security and discuss how to determine the amount of your Social Security benefit. Then, we’ll discuss some options that may be available to you, and discuss ways to maximize your Social Security benefit. Last, we’ll look at other sources of income that might be available to you in retirement. [CLICK]

4 Workbook Key Points Helpful Examples and Case StudiesReference Information First, let’s talk about your workbook. We find that most people are far more likely to remember something they write down than something they just hear. This workbook is designed to allow you to write down salient points, and allows plenty of room for you to write your own notes, too. It’s yours to keep, and will hopefully be a valuable resource for you. You’ll notice that the graphics throughout the workbook are taken directly from the PowerPoint presentation, making it easy for you to follow the presentation without having to write down all the details – they are there for you to review at your leisure later! Feel free to underline or circle items you have questions about. Let’s get started. [CLICK]

5 What is Social Security?What is Social Security? [CLICK] Social Security is a guaranteed lifetime income that will account for about 40% of the retirement income you will need, assuming you are an average earner who will need 80%-90% of your pre-retirement income. [CLICK] Income from other sources (retirement plan distributions, annuities, other savings)

6 Will Social Security benefits be there for you?Will it be enough? What other income sources will you have after you retire? Are any of these sources guaranteed to provide income throughout your retirement? Will Social Security benefits be there for you? A valid concern, given that we’re hearing in the news that the program will run out of money soon. Social Security, formally known as The Old-Age, Survivors, and Disability Insurance Program, was enacted by President Franklin D. Roosevelt in At that time, most people were expected to live to age 63. Social Security became available at age 65. This program was designed to benefit a very few lucky souls who lived longer than expected, not virtually every citizen, and it was designed actuarially to achieve that. When people are drawing more off the program than they put it into it – in record numbers – it fails to work. On that note, you may find this bit of trivia interesting: The first American to receive a monthly Social Security check was a legal secretary from Ludlow, Vermont named Ida May Fuller. [CLICK] She received monthly Social Security checks for $22.54 until her death in 1975 at age 100. By the time of her death, Fuller had collected $22, from Social Security monthly benefits. She had worked only three years, and had contributed only $24.75 to the program. So, you see, the program was flawed from the very beginning. When you start receiving your Social Security check [CLICK] Will it be enough? Remember, Social Security typically only covers 40% of most retirees income needs; will it cover 40% of your anticipated expenses? [CLICK] What other income sources will you have after you retire? Do you have savings? Retirement accounts? Annuities? [CLICK] Are any of these sources guaranteed to provide income throughout your lifetime? What about your spouse’s? One of the most important decisions you need to make before you retire is when and how to claim your Social Security benefits. Over half of today’s retirees claim their Social Security benefits as soon as they become eligible at age 62, but they may significantly and permanently impact their income and benefits for the rest of their lives by doing so. Simply by waiting to claim your benefits until your full retirement age, you could increase your payments by as much as 8 percent a year. There are 7 strategies, 81 age combinations, and 567 sets of calculations to consider when determining how and when to apply for your Social Security benefits. Over the course of your lifetime, the difference between the best and worst possible decision of when to start your Social Security benefits can be well over $100,000! [CLICK]

7 “Will I outlive my money?”59% of Americans are worried - or “very worried” - about not being able to maintain their current standard of living*... much less ENJOY their retirement. *Gallup poll, April 2014 The number one question retirees ask is… [CLICK] “Will I outlive my money?” [CLICK] 59% of Americans are worried – or “very worried” – about not being able to maintain their current standard of living. One of the greatest fears of retirees and near-retirees is the fear of outliving their assets. In our parents’ day, many employers offered traditional pensions that could be counted on to provide a steady income for retirees, but as we all know, very few companies offer pension plans nowadays. Social Security offers benefits similar to a pension, with some additional benefits. It provides a guaranteed income stream, and also offers some longevity protection, spousal protection, and even some inflation protection. Social Security benefits are part of the answer when asking, “Will my money last as long as I do?” [CLICK]

8 Social Security Benefit: What? When? How?1. Determining what your Social Security benefit will be 2. Understanding what options are available to you, and when 3. Learning how to maximize your lifetime benefit When considering your Social Security benefit options, there are actually three questions to be answered that could potentially enhance your retirement income. They are: [CLICK] Determining what your Social Security benefit will be [CLICK] Understanding what options are available to you, and when And [CLICK] Learning how to maximize your lifetime benefit The first step is determining what your expected Social Security benefit might be. [CLICK]

9 Your Social Security StatementSummarizes your earnings that were subject to payroll taxes Shows how much you and your employer(s) paid in Social Security and Medicare taxes Estimates your retirement benefits based on retiring at different ages If you have worked and accumulated a minimum of 40 work credits - essentially 40 fiscal quarters, or about 10 years of work – you are entitled to receive Social Security retirement benefits. Your Primary Insurance Amount (or PIA) is the amount upon which all of your benefits are based. It is determined by the average of the highest 35 years of earnings in which you paid payroll taxes. If you were employed less than 35 years, worked part-time, or had long periods of unemployment, the years in which you had low or zero earnings will be averaged into your calculation and might lower the total benefit available to you. If you are the spouse of an eligible worker, you can collect Social Security benefits regardless of whether you worked or not. In fact, even the former spouse of an eligible worker might be entitled to Social Security benefits, if they were married for at least 10 years and have not remarried. Your Social Security Statement summarizes your earnings that were subject to payroll taxes, shows how much you and your employer(s) paid in Social Security and Medicare taxes, and estimates your retirement benefits based on retiring at different ages. [CLICK]

10 Set up a Social Security Account OnlineView your statement online at Create your own personal Social Security account to: Review your Social Security and Medicare benefits Update your address Change your direct deposit data Some of you may have received a Social Security Statement in the mail. The statements are no longer being sent to all workers, but if you are 60 and older and are not yet receiving Social Security benefits you should still receive an annual Social Security Statement in the mail. If you did not receive a hard copy in the mail, you can view your statement online by visiting and creating your own personal Social Security account on the website. This will be helpful once you’re receiving Social Security benefits, too, because it will allow you to review your Social Security and Medicare benefits, update your address, and change your direct deposit data at any time online. [CLICK]

11 Eligible versus EntitledAn eligible worker is one who has accumulated the minimum number of quarters of work for Social Security benefits and is at least 62 years old. An entitled worker is one who has applied for benefits - whether or not they are receiving the benefits or have suspended them. It is important to differentiate between two terms the Social Security Administration uses that are sometimes confused: “eligible” and “entitled.” [CLICK] An eligible worker is one who has [CLICK] accumulated the minimum number of quarters of work for Social Security benefits [CLICK] and is at least 62 years old. [CLICK] An entitled worker is one who has [CLICK] applied for benefits – whether or not they are receiving the benefits or have suspended them. These terms are important because being entitled both allows and disallows various benefits. [CLICK]

12 WEP & GPO WEP – Windfall Elimination ProvisionReduces your benefit if you receive a pension from work where Social Security taxes were not taken out of your pay GPO - Government Pension Offset Reduces your spouse's or widow's or widower's benefits if you receive a pension from a federal, state, or local government based on work where you did not pay Social Security taxes Two other aspects unique to the Social Security Administration that may affect some of you: [CLICK] WEP, or the Windfall Elimination Provision, affects how your benefit is calculated if you receive a pension from work where Social Security taxes were not taken out of your pay, such as a government agency or an overseas employer. If you worked for traditional employers long enough to qualify for Social Security benefits, a modified formula will be used to calculate your benefit amount, resulting in a lower Social Security benefit than you otherwise would receive. [CLICK] GPO is the Government Pension Offset provision, which states that if you receive a pension from a federal, state, or local government based on work where you did not pay Social Security taxes, your Social Security spouse's or widow's or widower's benefits may be reduced. [CLICK]

13 Now What? COLA – Cost of Living Adjustments Claiming AgeWorking After Making Your Claim Taxation of Benefits Spousal Benefits Common Claiming Strategies Okay, so you now have your Social Security Statement and know what your expected benefit will be at the age you desire to retire. Now what? There are several aspects of Social Security that you should understand in making a decision as to how and when to claim your benefits. Let’s talk about two aspects that are relevant to everyone: [CLICK] Cost of Living Adjustments – the part of Social Security that offers inflation protection – and [CLICK] Claiming Age. We’ll also talk about [CLICK] how working might affect your benefits, [CLICK] how your benefits might be taxed, [CLICK] Spousal Benefits, and some of the more common [CLICK] Claiming Strategies. [CLICK]

14 COLA YEAR 2011 2012 2013 2014 2015 2016 2017 COLA 0.00% 3.60% 1.70% 1.50% 0.30% Every year the IRS calculates the Cost of Living Adjustment, or COLA, based on the increase in the Consumer Price Index from the third quarter three years ago through the third quarter of the prior year. Some years the increase is higher than others; some years there is no increase at all; historically, it has averaged to be about 4% each year. For the past five years it has averaged 1.7%. COLA, in effect, provides inflation protection by helping to maintain the purchasing power of this piece of your retirement income, but it is a variable amount. [CLICK]

15 Claiming Age Earliest age: 62 Full Retirement Age (FRA):66 (born ) 67 (born 1960 or later) Latest Age: 70 One of the most critical decisions to make – the one you may have the most control over – is your Claiming Age. The earliest age at which one is eligible for benefits is 62 [CLICK] ; full retirement age is 66 [CLICK] or 67 [CLICK] , depending on your year of birth, and the latest age is 70 [CLICK] . These ages are important because they affect how MUCH of your entitled benefit you will receive, and when. [CLICK]

16 AGE PROS CONS Receive benefits earlier Smallest monthly check 62Possible reduction penalty if employed Full Retirement Age Higher monthly check No benefits age 62 to FRA No penalty if employed Highest monthly check No benefits age 62 to 70 70 No penalty if employed Claiming benefits at age 62 would allow you to [CLICK] receive your benefits earlier, but will [CLICK] PERMANENTLY reduce your lifetime benefits by 25-30%, depending on the year you were born. You may be subject to [CLICK] a reduction penalty if you are employed; we’ll talk more about this later. If you choose to wait until your full retirement age of either 66 or 67, you would receive 100% of your Primary Insurance Amount – your PIA - [CLICK] and [CLICK] would not be penalized if you work. [CLICK] This would mean you would not receive benefits between age 62 and FRA. It is important to note that the maximum Social Security Benefit available to a worker retiring at Full Retirement Age in 2016 is $2,639 down from 2015 which was $2,663 per month. If, however, you choose to wait to file until AFTER your FRA, your monthly benefits would increase by about [CLICK] 8% per year, until – at the latest age you can claim benefits, 70 – your monthly benefit would be about 132% of your PIA amount. It is important to note, though, that there is NO advantage to waiting to claim benefits past age 70; the annual increase in your monthly benefit does NOT continue to grow after age 70. Again, there is [CLICK] no penalty if you work, and [CLICK] you would not receive benefits age [CLICK]

17 Some important definitionsDeemed Filing requires that a claimant filing for ANY benefit before their FRA must file for ALL benefits available to them at that time. Restricted Application is available to workers who have reached FRA and allows them to restrict their application to just one of the benefits they are eligible for. Voluntary Suspension is available to workers who have reached FRA, file for benefits, and simultaneously suspend the payments. The Social Security Administration has a few terms and rules unique to their process that you should be aware of. On Nov 2, 2015, the President signed into law a few changes that affect how you can claim going forward. These changes will affect some of these terms. [CLICK] “Deemed filing” requires that a claimant filing for ANY benefit before their FRA must file for ALL benefits available to them at that time. For instance, if the claimant is filing for their own benefits and is eligible for spousal benefits, they must claim spousal benefits when they become entitled. [CLICK] “Restricted application,” on the other hand, is available to workers who have reached FRA and allows them to restrict their application to just one of the benefits they are eligible for. A spouse might file for spousal benefits, but elect to delay collecting benefits on their own work history, thus allowing them to grow. This option will no longer be available to those who turn 62 after Dec 31, Applicants must turn 62 before that day to be eligible to draw benefits based on their spouse’s income while their spouse is not currently receiving benefits. [CLICK] “Voluntary suspension” is another option available to claimants who have reached FRA. In this case, a claimant might file for benefits, but simultaneously suspend the payments. These suspended benefits would continue to grow to age 70, but the claimant’s spouse would now be able to file for spousal benefits. We’ll talk more about how these strategies might help you maximize your Social Security benefits later in the presentation. [CLICK]

18 your Social Security benefits?When should you start taking your Social Security benefits? It depends. When should YOU start taking your benefits? [CLICK] It depends. The premise of waiting until your full retirement age makes sense if you expect to live a long life. In essence, if you drew 132% of your benefit at age 70 and lived to age 79, you would receive the same amount of money as you would had you claimed 100% of your benefit at your full retirement age. If you live to be older than 80, you come out ahead and each and every year for the rest of your life. If you have a family history of longevity, are in good health, and have access to our modern medicine making it possible for more and more people to live longer, healthier lives… this might be a strategy to consider. There are, however, compelling reasons NOT to wait. If you are not in good health or your life expectancy is less than most people, then by all means, start taking your benefit as soon as it is available to you at age 62 or at your FRA. Financial need is another compelling reason: if you need additional funds to support yourself, then you are probably better off taking early retirement at age 62 rather than struggle financially for an additional four years. It is critical to determine the Breakeven Point to determine at what age waiting to take a higher benefit will equal your lifetime benefits should you take a lower benefit at an earlier age. This will help you determine the likelihood of your ability to maximize your lifetime benefits. [CLICK]

19 AGE 2015 Earned Income Limits ReductionHow will working impact your Social Security benefits? AGE 2015 Earned Income Limits Reduction 62 to Full Retirement Age For every $2 over the limit, $1 is withheld from your benefits $16,920 For every $3 over the limit, $1 is withheld from your benefits Full Retirement Age $44,880 Another key consideration is whether or not to continue working after you have elected to receive your benefit. If you have wages – income from working, not passive income from investments, etc. – and take your Social Security benefits between age 62 and your full retirement age, your benefits will be reduced based on how much you make and your age. Other income, like government benefits, investment earnings, interest, pensions, annuities, and capital gains do not count. However, your contribution to a pension or retirement plan if it is included in your gross wages would count. [read the slide] There is NO reduction in benefits if you continue to work after your full retirement age. If you do have benefits withheld, your benefit at Full Retirement Age will be adjusted to compensate for the reduction. [CLICK] After Full Retirement Age No limit on earnings None

20 How will taxes impact your Social Security benefits?How will taxes impact your Social Security benefits? Some people must pay taxes on their Social Security benefits, depending on their Provisional Income. Provisional Income is the sum of all your income – including tax-free municipal bond interest – plus half of your Social Security income. If you are single and your provisional income is between $25,000 and $34,000, your Social Security benefits are subject to up to 50% tax liability. If your provisional income exceeds $34,000, up to 85% of your benefits may be taxed! For married filers, the thresholds are $32,000 and $44,000. If Social Security was your only income, your benefits are probably not taxable. You also may not need to file a federal income tax return. If you received income from other sources, then you may have to pay taxes on your benefits. Because taxes vary based on your earnings and location, you will want to consult with a tax professional or advisor about your specific situation. [CLICK]

21 Reducing or eliminating tax on Social Security incomePostpone receiving your Social Security benefits, either by waiting to file or by suspending your claim, for later years in which your other incomes are lower Reduce your other sources of income calculated in Provisional Income: Wages, if employed Distributions from 401(k)s and IRAs Interest and dividend income Capital gains Pension payments Inheritance – including interest earned on “tax-free” munis Is there any way to reduce – or even eliminate – taxes on Social Security income? Possibly… if you are able to reduce your Provisional Income below the thresholds that affect the taxability of your Social Security benefits. This assumes that you have some flexibility in your retirement income and may not need all of the income you receive annually. You can [CLICK] Postpone receiving your Social Security benefits, either by waiting to file or by suspending your claim, for later years in which your other incomes are lower. Or, you can [CLICK] reduce your other sources of income calculated in Provisional Income. These include [CLICK] wages, if you are still working, as well as non-wage sources of income that include [CLICK] distributions from 401(k)s and IRAs, [CLICK] interest and dividend income, [CLICK] capital gains, [CLICK] pension payments, [CLICK] inheritance, etc. In fact, [CLICK] even interest earned on “tax-free” municipal bonds is included in Provisional Income. If you are able to, you might retire from or reduce your hours at work. If your vocation is important to you but you do not need the income, perhaps there is a volunteer opportunity that will provide you with the same experience. You might consider offsetting income with a tax-deductible contribution to a qualified retirement account, if you are eligible. Reallocating some of your appropriate non-wage income sources to an account that is not included in Provisional Income calculations would shelter those assets from inclusion. [CLICK]

22 Strategies That May Enhance Your BenefitSpousal Benefit “File and Suspend” “Do Over” or “Reset” “Start, Stop, Start Again” We’ve just looked at the effects of claiming benefits at different ages, working after claiming your benefits, and your potential tax liability. Now let’s look at some of the strategies that can help shape your Social Security puzzle piece to fit your retirement income plan as completely as possible. With the passage of the Bi-Partisan Budget Act of 2015, some of these options have been changed or are being phased out over time. These include: [CLICK] The spousal benefit – This strategy was changed in 2015 and still offers some benefit, but the changes that were made really affect those who were age 62 before Jan 1, 2016. [CLICK] The “file and suspend” – This strategy was the focal point of the changes made last year. This strategy was thought to be just for the “wealthy,” however most who knew about it used it very affectively – and most were not wealthy, they were just regular folks who planned their retirement and found a way to add “thousands” to their retirement income. This strategy is still available for couples that meet certain age requirements and one spouse has already filed for benefits. [CLICK] The “do over” or “reset” option And [CLICK] The “start, stop, start again” option. Let’s look at how married couples who coordinate their benefits may be able to get more from them. [CLICK]

23 Spousal Benefit OptionsOption 1: Individual Benefit Each spouse collects their individual benefit Option 2: Spousal Benefit Lower-earning spouse collects up to 50% of the higher-earner’s full benefit and possibly a “spousal boost” on top of that Option 3: Survivor Benefit Widowed spouse collects up to 100% of the deceased spouse’s benefit If you are married, age 62 or older, and are both eligible to collect Social Security benefits, it is important to assess your age and benefits together. A lower-earning spouse may be eligible for up to 50% of the higher-earning spouse’s benefit. Understanding your options can help you to maximize your household Social Security benefit. There are three options to consider: Option 1 [CLICK] Individual Benefit, where both spouses collect their own benefit, regardless of who earns more. Option 2 [CLICK] Spousal Benefit, where the lower-earning spouse can opt to collect a spousal benefit of up to 50% of the higher-earning spouse’s benefit, and possibly a “spousal boost”. The spousal boost comes into play when the lower earning spouse takes benefits early. Normally when you take benefits early you are locked into that amount. However when the lower earning spouse reaches FRA (Full Retirement Age) you do a little math see if there is a benefit available. By taking 50% of the higher earning spouses PIA and subtracting the lesser earning spouses PIA, whatever is left over is the amount of the boost for the lower earning spouse. Remember the SSA will not call you to tell you about these benefits you must do that on own. Option 3 [CLICK] Survivor Benefit, where a widowed spouse can collect survivor benefits up to 100% of their deceased spouse’s benefit. This benefit is one of the most important – and should play a part in the decisions you make on whatever claiming strategy you chose. Now with the changes that were made last year most of the math that was required is no longer needed for claiming a spousal benefits. Once you file you will be filing for your highest benefit available at that time. With the phase out of the restricted application you will receive the higher amount of your own PIA or your spousal benefit. [CLICK]

24 Some important aspects to know about Spousal Benefits…In order to claim a Spousal Benefit, you must be at least 62 years old and have been married for at least one year If you elect to receive a Spousal Benefit before you reach your full retirement age, your benefit will be permanently reduced Some important aspects to know about Spousal Benefits… [CLICK] In order to claim a Spousal Benefit, you must be at least 62 years old and have been married for at least one year. [CLICK] If you elect to receive a Spousal Benefit before you reach your full retirement age, your benefit will be permanently reduced unless you have a qualifying dependent child and are eligible for the spousal boost we just talked about. And this next aspect is VERY important for you to understand: [CLICK]

25 If you start your own regular benefit early and switch to a Spousal Benefit when you reach full retirement age, you may not receive the full spousal amount! Social Security will subtract your full benefit amount from the Spousal Benefit and add the difference to your reduced benefit amount… the result could be less than 50% of your Spouse’s benefit. [CLICK] If you start your own regular benefit early and switch to a Spousal Benefit when you reach full retirement age, you may not receive the full spousal amount! [CLICK] Social Security will subtract your full benefit amount from the Spousal Benefit and add the difference to your reduced benefit amount… the result could be less than 50% of your Spouse’s benefit. Also, please note that the SSA does not allow both spouses to file and suspend and then claim spousal benefits, which would, in theory, allow both of the individual benefits to grow until age 70. This is when the “deemed filing” rule comes into play, because the claimant is “entitled” – having filed and suspended. Only one spouse may claim spousal benefits, and it must be the one for who the spousal benefit is more advantageous than their own individual benefit. [CLICK]

26 In the Event of Divorce…If you are divorced, you may be entitled to Spousal Social Security benefits if: You are at least 62 years old You were married for at least ten years You are unmarried Your ex-spouse is entitled You may be “independently entitled” without your ex-spouse being entitled if: Your ex-spouse is 62 or older Your divorce has been final for at least two years Your own worker benefits would be less than 50% of your ex’s Primary Insurance Amount In the case of a divorce, the ex-spouse might be able to collect spousal benefits, whether the spouse is living or deceased, [CLICK] at the age of 62 [CLICK] if the marriage lasted at least ten years [CLICK] the claiming spouse has not remarried and [CLICK] the ex-spouse (the worker from whose record the benefit will be paid) is entitled. [CLICK] These benefits might be available even if the ex-spouse has not yet filed for benefits, if [CLICK] that spouse is 62 years or older and [CLICK] the divorce has been final for at least two years. Spousal benefits must be higher than the benefit that would be received based on their own work history. This does not affect the benefits the former spouse would receive, even if he or she has remarried. If the party claiming the benefit remarries before age 60, however, this benefit is no longer available to them unless that marriage ends in divorce or death. If your ex-spouse is living and all of these caveats are met, [CLICK] you may be eligible for up to 50% of your former spouse’s PIA – if you file your claim before your FRA, your benefit will be reduced. This will not affect your ex’s benefits, even if they have remarried. If your former spouse is eligible but has not yet applied for Social Security, you can still collect your spousal benefit if you have been divorced for two years or more. If your ex-spouse is deceased and you were married for ten or more years, and you have not remarried, you are eligible to receive survivor benefits starting at age 60 – but again, claims prior to your FRA will be reduced. Marrying after age 60 will not affect your survivor benefits if your ex-spouse is deceased. We’ll talk more about Survivor Benefits on the next slide. [CLICK]

27 Survivor Benefits If you are widowed or a widower, you are eligible to collect either your own benefits or 100% your deceased spouse’s benefits, whichever is greater. You are at least 60 years old You must have been married for at least nine months (or ten years, if divorced) You remain unmarried until after the age of 60 If your spouse has passed away, you are eligible for survivor benefits [CLICK] at the age of 6o [CLICK] if you were married at least 9 months (or ten years, if you are divorced,) and [CLICK] you have not remarried before age 60. This is true only if the survivor benefits in question are higher than the benefit that would be received based on your own work history. Claims prior to your FRA will be reduced; marrying after age 60 will not affect your survivor benefits. Earlier I mentioned how important this can be when planning out your Social Security claiming options. Remember that a some point one spouse will lose a portion of their income in retirement – the passing of the other spouse will cause that lose. When planning, we need to keep that in mind so to leave the highest level of income possible for the surviving spouse. The lose of your spouse is very difficult, losing a larger percentage of your income can only compound it. [CLICK]

28 Maximizing Lifetime and Survivor Benefits Is CriticalMen 54,956 American Centenarians (2011) Women Maximizing Lifetime and Survivor Benefits is critical. Lifestyle and medical advances have allowed us to live longer, healthier lives. In fact, according to the 2011 Census, there were [CLICK] 54,956 centenarians in the United States alone. [CLICK] 81.2% were women. While not all of us will celebrate our centennial birthday, statistically, women outlive men by five to ten years. How old is the oldest person you know? A man turning 65 today can expect to live to age 84. A woman turning 65 today can expect to live to age 86. And those are just averages. About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95. Unfortunately, women also still tend to earn less over their lifetime than their male counterparts. This means that a likely scenario for married Baby Boomers might involve the male high-earner passing away prior to the female low-earner. It is imperative that your strategy for claiming your benefits be coordinated with you spouse to ensure the best benefit to you both over your lifetimes. [CLICK] American Centenarians

29 Case Study: Mike and RebeccaPIA - $2,056 DOB: January 2, 1954 PIA $2,056 at 66 year & 0 months     Expected Death Age: 84.09 Rebecca PIA - $1,682 DOB: November 2, 1954 PIA $1,682 at 66 year & 0 months Expected Death Age: 87.01 Now lets take a look at a case study that will cover 9 different claiming options for an average couple. As we can see, Mike’s PIA (at FRA) is $2,056 and Rebecca's is $1,682. Mike and Rebecca visited and, as the old saying goes, she is expected to outlive Mike by about 3 years. That could cause a significant decrease in her income and could cause her some financial strain. [CLICK] Mike and Rebecca visited to find out their expected death age. This can be a helpful site in seeing statistically how long you will need to make your money last – keyword statistically!

30 Mike & Rebecca—Strategy 1Jan, 2024 Mike files for worker benefits ($2,713) at age 70 for % of PIA (48 Months Delayed Retirement Credit). Nov, 2024 Rebecca files for worker benefits ($2,220) at age 70 for % of PIA (48 Months Delayed Retirement Credit). Widows benefit $2,713 Mike & Rebecca—Strategy 2 Nov, 2020 Rebecca files for worker benefits ($1,682) at age 66 for % of PIA. Jan, 2024 Mike files for worker benefits ($2,713) at age 70 for % of PIA (48 Months Delayed Retirement Credit). Widows benefit $2,713 Strategy 1 is pretty simple. Mike and Rebecca both wait until they are 70 to claim benefits. They are maximizing the 8% a year credit. Their total benefits through their lifetime is $954,035 and, for the later years when Mike is no longer there, Rebecca will receive Mike’s benefit at $2,713 per month. That is $657 per month more than if Mike had taken benefits at his FRA. In Strategy 2, Rebecca claims her benefits at her FRA, while Mike waits until age 70, once again taking advantage of the 8% a year credit. By doing this, he is again leaving Rebecca with the highest possible widow benefit. Their total lifetime income from SS is $944,925. [CLICK]

31 Mike & Rebecca—Strategy 3Jan, 2020 Mike files for worker benefits ($2,056) at age 66 for % of PIA. Nov, 2024 Rebecca files for worker benefits ($2,220) at age 70 for % of PIA (48 Months Delayed Retirement Credit). Mike & Rebecca—Strategy 4 Nov, 2016 Rebecca files for worker benefits ($1,214) at age 62 for 75.00% of PIA (48 Months Reduction). Jan, 2024 Mike files for worker benefits ($2,713) at age 70 for % of PIA (48 Months Delayed Retirement Credit). Widows benefit $2,713 Strategy 3 for Mike and Rebecca is where Mike files for benefits at his FRA and Rebecca waits and files at age 70, taking advantage of the 8% a year credit. By Mike claiming early, Rebecca's widow benefit is actually lower than the current amount she is receiving, therefore her income would stay the same. Their total lifetime income from SS would be $917,700. Strategy 4 has Rebecca filing early and, at age 62, receiving just 75% of her PIA amount. and Mike waiting till age 70, once again collecting the credits and leaving Rebecca with the largest possible widow benefit. Total SS income over their lifetime is $902,577. Just within these four strategies, we have seen their lifetime income drop a total of $51,458. [CLICK]

32 Mike & Rebecca—Strategy 5Jan, 2020 Mike files for worker benefits ($2,056) at age 66 for % of PIA. Nov, 2020 Rebecca files for worker benefits ($1,682) at age 66 for % of PIA. Widows benefit $2,056 Mike & Rebecca—Strategy 6 Feb, 2016 Mike files for worker benefits ($1,550) at age 62, 1 month for 75.42% of PIA (47 Months Reduction). Nov, 2024 Rebecca files for worker benefits ($2,220) at age 70 for % of PIA (48 Months Delayed Retirement Credit). In Strategy 5, Mike and Rebecca both file for benefits at FRA and, in this scenario, Mike leaves Rebecca with a widows benefit of $2,056, adding $374 more to her benefit. That is an increase, but it is still $657 less than if Mike waited and collected at age 70 with the additional credits added. Strategy 6 has Mike taking benefits at age 62 and 1 month. By claiming this early, he is receiving a 47 month reduction in his PIA. Rebecca is waiting until age 70 to take her benefits, once again getting 132% of her PIA. Under this strategy, she will receive her benefit after Mike’s death because it is higher than Mike’s full PIA of $2,056. At this point in the case study, we can see the total amount received has been dropping consistently. The difference now in the best possible strategy #1 and then in strategy #6 is $77,335. If averaged that out over 20 years, that is a $3,866 difference in annual income, or $322 per month. [CLICK]

33 Mike & Rebecca—Strategy 7Nov, 2016 Rebecca files for worker benefits ($1,214) at age 62 for 75.00% of PIA (48 Months Reduction). Jan, 2020 Mike files for worker benefits ($2,056) at age 66 for % of PIA. Widows benefit $2,056 Mike & Rebecca—Strategy 8 Feb, 2016 Mike files for worker benefits ($1,550) at age 62, 1 month for 75.42% of PIA (47 Months Reduction). Nov, 2020 Rebecca files for worker benefits ($1,682) at age 66 for % of PIA. Mike & Rebecca—Strategy 9 Feb, 2016 Mike files for worker benefits ($1,550) at age 62, 1 month for 75.42% of PIA (47 Months Reduction). Nov, 2016 Rebecca files for worker benefits ($1,214) at age 62 for 75.00% of PIA (48 Months Reduction). Widows benefit $1,550 Strategy 7 is where Rebecca files early and Mike waits until FRA to claim benefits. This strategy gives Rebecca a boost in her widow’s benefit to Mike’s full PIA of $2,056 when he passes. Let’s think back to the spousal boost… would Rebecca qualify for an increase in her benefits? The answer is NO. 50% of Mike’s PIA would be $1,028 and her reduced benefit is $1,214 – that’s higher than her spousal benefit, so she would not be eligible for the boost. Their total benefit amount would be $860,010 over their lifetime. In Strategy 8, Mike once again files early at 62 year and 1 month for a reduced benefit of $1,550. Rebecca files at FRA and receives $1,682. Once again, Rebecca’s benefit is higher than Mike’s, therefore she would not see an increase in her benefit after his passing. Their total lifetime benefits are $799,782. In the last strategy, Strategy 9, both Mike and Rebecca claim early. Mike at 62 and 1 month and Rebecca at 62. This is just about the lowest benefit amount claiming strategy they could possibly take. Rebecca’s widow benefit would be $1,550 – Mike’s benefit, since her benefit is lower at $1,214. Their total lifetime benefits are $799,782. That is $154,253 less that the highest paying strategy we covered #1. What is important to remember in this case study is that we have no information on what other assets Mike and Rebecca have. Are they going to receive pensions? Do they have IRA’s and 401(k)’s? Being able to know what options are available to you is priceless when it comes time to make decisions. Your Social Security benefits should be the foundation of your retirement plan, and trying to make a decision on what strategy is best for you depends on many factors – your life expectancy, your budget, your other assets, and what type of legacy you may wish to leave. [CLICK]

34 Now what? “Will I outlive my money?”What Are Your Current Income Needs? What Do You Anticipate Your Retirement Income Needs Will Be? How Can You Close the Gap Between the Two? Which leads us back to the number one question retirees ask… [CLICK] “Will I outlive my money?” It’s a puzzle, and all of us have our own individual pieces to consider in putting together the complete picture. As I mentioned earlier, identifying and maximizing your Social Security benefits is just one piece of the retirement puzzle – and usually only 40% of the picture at that! 41% of Baby Boomers and GenXers are projected to lack adequate retirement income for their basic retirement expenses and uninsured health care costs – that’s a lot to worry about later in life. Does it have to be that way? Maybe not. Determining a strategy begins with asking, [CLICK] “What are my current income needs?” [CLICK] “What do I anticipate my income needs to be after I retire, realistically?” [CLICK] “How can I close the gap between the two, and is there any way I can make sure I don’t outlive my money?” [CLICK]

35 What Are Your Current Income Needs?What Do You Anticipate Your Retirement Income Needs Will Be? Most retirees require 80-90% of their pre-retirement income to maintain their lifestyle after they stop working Knowing the totality of your current expenses, and the income required to cover these expenses, starts with creating a Personal Cash Flow Statement. You’ll find a worksheet for you to complete at home in your workbook. [CLICK] Calculating all of your expenses will provide you with your current income need. [CLICK] Most retirees require anywhere from 80-90% of their pre-retirement income after they stop working. Your Social Security Benefit will provide some of this income. [CLICK]

36 How can you close the gap between the income you have and the income you need?\ What other sources of income do you have? What other sources of income do you have to make up the difference? [CLICK]

37 Retirement Accounts Roth IRA IRA 401(k) 403(b)Other income sources might include retirement account distributions from [CLICK] Roth IRAs, [CLICK] IRAs, [CLICK] 401(k)s, and [CLICK] 403(b)s Retirement accounts may offer tax advantages in contributing and/or withdrawing, depending on the type of account, and your age and circumstances. Some types of accounts limit the investment options available to you (this is particularly true of 401(k)s and 403(b)s,) and – other than Roth IRAs – require mandatory withdrawal at age 70½. The principal in these accounts is not protected and there is no guarantee of return or performance. [CLICK]

38 Defined Benefit Pension PlansFully funded by the employer, not the employee Simple Benefit is a known amount Only one plan No say in investment Most are not inflation-adjusted Fully taxable Other income sources might also include pensions, although they are becoming more and more a thing of the past. The percentage of private sector workers offered a defined benefit pension plan is now 10%, down from 60% just 30 years ago. [CLICK] One of the advantages of pensions is that it is fully funded by the employer, not the employee. They are simple, and require nothing on the part of the employee. The employee knows exactly what the benefit will be when they retire. DBPs have the disadvantage of limiting the employee to only one plan, and the employee has no say in how the money is invested. Many do not adjust future payouts to keep pace with inflation. Distributions are fully taxable. [CLICK]

39 Investments Dividend and interest income from stocks, bonds, mutual funds, and CDs Subject to reinvestment risk No guarantee of principle protection or growth Earnings are usually taxable Principal protection is limited Many people look to their investments to provide income in their retirement. [CLICK] This might be proceeds as CDs mature, as well as dividend and interest income from brokerage accounts and mutual funds. [CLICK] Some of these income streams may well be subject to market volatility and economic conditions, as well as re-investment risk. For instance, when your CD matures, will you be able to reinvest it at a comparable rate of return? Typically there is little or limited principal protection, and no guarantee of future returns; often the earnings are taxable. [CLICK]

40 Annuities – Deferred or Immediateprotection from lower interest rates tax-deferral on earnings no mandatory distributions guaranteed income for life Another vehicle used for retirement income is an annuity. There four basic types of annuities: Variable, Indexed, Fixed and Fixed Index Some features of annuities include: [CLICK] protection from lower interest rates; [CLICK] tax-deferral on earnings; [CLICK] no mandatory distributions; [CLICK] and guaranteed income for life. Annuities are NOT FDIC insured and include mortality and expense charges, account and management fees, and administrative fees; surrender charges may be incurred if the contract is surrendered earlier than contracted. A deferred annuity is a financial product sold by insurance companies that allows you to put aside money, have it increase each year without paying taxes, and then trigger a stream of future payments on a timetable you may control. Those payments are taxed as ordinary income. Unlike IRAs, there is no income limitation on how much you can place in an annuity. With an immediate annuity, your payment stream begins when you place your funds into the annuity. [CLICK]

41 Permanent Life Insuranceincome tax-free loans and withdrawals up to the cost basis no penalties for early access no required minimum distributions An interesting source of retirement income might even be permanent life insurance. This vehicle provides death benefit protection during your working years, with the cash values within the policy growing tax-deferred. At retirement, you may access these cash values within the policy to help provide supplemental income. [CLICK] Any accumulated cash values within a policy can be taken as generally income tax-free loans and withdrawals, as long as the policy is not a Modified Endowment Contract (MEC.) [CLICK] Withdrawals are income tax free up to the cost basis, there are no penalties for early access, [CLICK] and there is no required minimum distributions (RMDs.) [CLICK]

42 for Sufficient Retirement IncomeCreating a Plan for Sufficient Retirement Income Any or all of these financial instruments can be used to create the retirement income you will need. Structuring recurring monthly income sources to cover as much of your monthly necessities as possible will help ensure that your retirement is worry-free and enjoyable. The key to success is careful planning, and there are actions you can take now that will help you ensure that you maximize your Social Security benefit and fund your own retirement income effectively. I hope the information we have discussed here is helpful to you in starting this process. [CLICK]

43 …it has been our pleasure!Please give us feedback… We value your opinion, your trust, and your time! …it has been our pleasure! Please know that I am are committed to helping people understand their own personal financial situations, and giving them the tools they need to help them make informed decisions. As part of that commitment, I follow up this workshop with a consultation in my office. This is a complimentary consultation that I offer to everyone who attends this workshop. The initial consultation is at no cost to you, and there is no obligation on your part. During that meeting, we can discuss any questions or concerns you have as a result of today’s workshop, or, if you prefer, we can use that time to examine your specific situation and begin the process of helping you formulate a financial strategy that will suit your needs. We can help you crunch the numbers and calculate when and how your should claim your Social Security benefits to maximize your lifetime benefits and best suit your retirement income needs. You might recall what I shared with you earlier in the presentation: there are 7 strategies, 81 age combinations, and 567 sets of calculations to consider when determining how and when to apply for your Social Security benefits. By one estimate, the Social Security Handbook contains 2,728 rules regarding its benefits. Don’t go it alone and make a mistake that could cost you big! We’re here to help. In your workbook you’ll find a form on which you can provide us with feedback on tonight’s workshop, as well as let us know if you need further assistance with your own unique situation. (Pull out a feedback form for your workshop participants to see.) You may use this form to tell me whether you’re interested in taking advantage of the complimentary consultation. I promise you two things: if you check “Yes, I am interested in scheduling a complimentary consultation,” I’ll/we’ll call you in the next couple of days and set up an appointment. If, however, you check “No, I am not interested in scheduling an appointment at this time,” I won’t call you or contact you directly after the workshop. Please do fill out this form; we value your opinion, and your time. [CLICK]

44 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. In conclusion, I hope you have found the information your learned tonight helpful. Please note that 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. [CLICK]

45 800-000-0000 Joe Advisor ABC Financial Group, Inc. 123 Main StreetAnytown, US 01234 Leave this slide up. Congratulations! You’ve just completed presenting the Social Security Benefits: What? When? How? Program! Make sure you follow up with your attendees as soon as possible, set appointments, and turn those prospects into clients by providing solutions for their retirement income dilemmas!