Understanding Social Security Retirement Benefits - BlackRock

unders ta nding s o ci a l securi t y re t iremen t benefi t s Popular wisdom suggests jumping at the opportunity to collect c o n t e n ts Social Security retirement benefits as soon as possible, which Individual Collection Decision..... 3 Qualifying For Benefits............... 3 currently is age 62. While this strategy may have been prudent for Collecting Benefits...................3-5 millions of Americans in the past, longer life expectancies have } At Full Retirement Age changed the face of retirement planning. Waiting to collect Social } Earlier } Earlier While Working Security benefits may well be a more advantageous option. While } Waiting there is no one-size-fits-all approach, this much is universally clear: } Changing

your Mind Deciding when to begin taking Social Security benefits Taxation of Benefits.................... 5 Family Collection Decision........6 is an important and multifaceted consideration that } Beneficiaries should be factored into each individual’s broader retirement plan. } Maximum Benefits } Spousal In the following pages, we review key details to consider in your } Filing and Suspending } Survivor Social Security decision-making. We encourage you to consult } Choosing Between Benefits with your financial and tax professionals to ensure your Social } Benefits After Divorce Impacts of Government Security strategy complements your overall retirement plan. Pensions....................................... 7 This summary of Social Security retirement benefits is designed to assist you in creating an effective strategy for collecting your benefits. Work with your financial professional to ensure your decisions complement your overall retirement plan. Not FDIC Insured • May Lose Value • No Bank Guarantee [ 2 ] u n d e r s t a n d i n g s o c i a l s e c u r i t y r e t i r e m e n t b e n e f i t s Individual Collection Decision Qualif ying for Benefits When you work and pay taxes as mandated by the Federal Insurance Contributions You must be fully insured Act (FICA), you earn “credits” toward Social Security retirement benefits. The credits are based on your annual earnings, with a maximum accrual of four credits per (40 credits) to be eligible year. Once you have acquired 40 credits (approximately 10 years of employment), to receive benefits. you are fully insured and eligible to receive retirement benefits. FICA tax (of ten displayed on pay statements as OASDI, for old-age, sur vivors and disability insurance, tax) is withheld from each paycheck until you have earned up to the taxable earnings base for the year. 2013 FICA Amounts $113,700 $1,160 $4,640 ($1,160 x 4) Taxable Earnings Base Earnings Required Earnings Required for for One Credit Max (4) Credits per year collecting benefits at full re tirement age Your primary insurance amount (PIA) is the monthly benefit for which you are eligible at your full retirement age (FRA). FRA varies based on year of birth. Originally age 65, the federal government has increased FRA for anyone born after 1937 in recognition of longer life expectancies. Full Re tirement age Year Born FRA 1937 or earlier 65 1938–1942 65 +...

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