Social Security Puzzle

1About UsTri-Star Advisors is a Houston-based fixed income focused wealth manager dedicated to providing customized financial guidance.By contacting us you may be offered information regarding the purchase of various financial products or advisory services.

www.tristaradvisor.com5718 Westheimer Rd. Ste 950aHouston, TX 77057

2DisclosuresWilliam Payne & Jon Swanburg offer securities through Tri-Star Financial (TSF), a registered Broker Dealer, member FINRA & SIPC, and advisory services through Tri-Star Advisors, Inc. (TSA), an SEC registered investment advisor.. Neither TSA or TSF provide accounting, legal, or tax advice. Seek competent accounting, tax, and legal counsel for your specific needs, including guidance on which Social Security option makes sense for your situation. Not affiliated with the U.S. government or governmental agency.This program is for informational purposes only and does not consider your particular investment objectives or financial situation. All investments carry risk and may be subject to specific restrictions and limitations such as minimum holding periods and additional costs. Any underlying guarantees, principal protection, and rates are subject to the claims paying ability of the issuer. Any strategies contained in this presentation do not assure a profit.Please review the product specific disclosure, prospectus, Product Placement Memorandum (PPM), or Statement of Understanding (SOI) prior to purchase.By contacting us you may be offered information regarding the purchase of various financial products or advisory services.3Your PlanInflationPensionSocial Security`InvestmentsLegacyRate ofReturnMarketRiskLifestyleIRA/401(k)TaxesHealth Care

LTCRothSocialSecurity4Total Value of Your Social Security BenefitsSocialSecurityHypothetical illustrations are for informational purposes and are not indicative of your specific situation. Assumes $2,000 monthly Social Security benefit at full retirement age and average life expectancy of 82.5 for a man and 85.1 for a woman.5Advice on Social SecuritySocial Security representatives cant give guidance on your particular situation.Social Security main number: 1-800-772-1213

SocialSecuritySource: Social Security Administration http://www.ssa.gov/open/webinar-questions-and-answers.html 6

FR2013-0306-0346/E7Can You Repeat That?

8Social Security Reality74% of those collecting Social Security retirement benefits are receiving reduced amountsThey begin taking their benefits early (age 62)76% of all women71% of all men

Source: Social Security Administrations Annual Statistical Supplement, 2011.http://www.ssa.gov/policy/docs/statcomps/supplement/2011/supplement11.pdf SocialSecurity9Social Security Life ExpectancySSA assumes the following longevity for a 66 year old:Male: 82Female: 85SocialSecuritySource: Social Security Actuarial Life Table. http://www.ssa.gov/oact/STATS/table4c6.html 1092Male Healthy At Age 65 85Female Healthy At Age 65 88 Were Living LongerWharton Financial Institution Center, August 14, 2007

SocialSecurity979450%Chance of Living Beyond25%Chance of Living Beyond50%Chance of Living Beyond50%Chance of Living Beyond25%Chance of Living Beyond25%Chance of Living BeyondCouple Both Healthy At Age 65 9211

Source: Social Security Administration http://www.socialsecurity.gov/retire2/AnypiaApplet.html

Social SecurityCalculatorsSocialSecurity12Your PlanInflationPensionSocial Security`InvestmentsLegacyRate ofReturnMarketRiskLifestyleIRA/401(k)TaxesHealth Care

LTCRoth13Social Security BasicsPrimary Insurance Amount (PIA)Full Retirement Age (FRA)EligibilityEntitlementSpousal Benefits (and ex-spouse)Survivor BenefitsSocialSecurity14Primary Insurance AmountPrimary Insurance Amount (PIA) is the basis of most Social Security BenefitsPIA is derived from a workers lifetime earnings recordIt is the benefit a person would receive if he/she begins to elect receiving benefits at full retirement age

www.ssa.gov/mystatementSocialSecuritySource: Social Security Administrationhttp://www.ssa.gov/oact/cola/piaformula.html

15Full Retirement AgeSource: Social Security Administration: Full Retirement Agewww.ssa.gov/retire2/retirechart.htm (last modified or reviewed 10/18/2012)SocialSecuritySocial Security Full Retirement AgeBirth YearFull Retirement Age1943-195466195566 + 2 months195666 + 4 months195766 + 6 months195866 + 8 months195966 + 10 months1960 and later6716Eligible and EntitledTo be eligible for benefits a worker mustHave worked long enough (10 years) to earn the required creditsBe age 62 or overTo be entitled to benefits a worker mustHave met the eligibility requirements aboveHave filed a claim (established an account) or have filed and suspended the claimNote: think of entitled as the account being opened

SocialSecuritySource: Social Security Administration: http://www.ssa.gov/OP_Home/cfr20/404/404-0303.htm17Social Security Statement

www.socialsecurity.gov/mystatement18

This hypothetical example is for illustrative purposes only and is not a representation of your specific situation. 19

$321,38220The spousal benefit is based on 50% of the other spouses PIA (Primary Insurance Amount)As the spouse (or ex-spouse) of an insured worker, you are entitled to a spouse's benefits if you meet the conditions below: Your spouse is entitled to retirement or disability benefits.You are not entitled to a benefit based on your own wage history/PIA which equals or exceeds one-half your spouses PIA.You have filed an application for spousal benefits.You are age 62 or overSpousal BenefitsSocialSecuritySource: Social Security Administration http://www.ssa.gov/retire2/yourspouse.htm#a0=0

21If you are divorced, you can receive benefits based on your ex-spouses wage history (even if he/she has remarried)If collecting as an ex-spouse of an insured worker, you must meet the conditions below: The marriage must have lasted 10 years; and You must not currently be married.You are age 62 or older.You do not have to wait for your ex-spouse to file for benefits.Spousal Benefits DivorcedSocialSecuritySource: Social Security Administration http://www.ssa.gov/retire2/divspouse.htm

22When you die, members of your family could be eligible for benefits based on your earnings. Your unmarried children who are under 18 can be eligible to receive Social Security benefitsYour Widow or Widower can receive your benefits:If you have young children under 16 your spouse can receive a benefit.If neither of you have started social security, your spouse can receive reduced survivor benefits as early as age 60 and switch to their benefit at full retirement age or delay up to age 70.If you are both receiving benefits the surviving spouse will receive the larger benefit and forfeit the smaller.Survivor BenefitsSocialSecuritySource: Social Security Administration http://www.ssa.gov/survivorplan/index.htm

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SocialSecuritySurvivor BenefitsWomen Collecting BenefitsSource: Social Security Administrations Annual Statistical Supplement, 2011.http://www.ssa.gov/policy/docs/statcomps/supplement/2011/supplement11.pdf 24Maximize Your BenefitYear of birthFull retirement ageReduction at age 62Spouse reduction at age 621937 or earlier6520.00%25.00%193865 & 2 months20.83%25.83%193965 & 4 months21.67%26.67%194065 & 6 months22.50%27.50%194165 & 8 months23.33%28.33%194265 & 10 months24.17%29.17%1943-19546625.00%30.00%195566 & 2 months25.83%30.83%195666 & 4 months26.67%31.67%195766 & 6 months27.50%32.50%195866 & 8 months28.33%33.33%195966 & 10 months29.17%34.17%1960 and later6730.00%35.00%Early Retirement (Age 62) Reduction AmountsSocialSecuritySource: Social Security Administration http://www.ssa.gov/oact/quickcalc/earlyretire.html 25Total Value of Your Social Security BenefitsSocialSecurityHypothetical illustrations are for informational purposes and are not indicative of your specific situation. Assumes $2,000 monthly Social Security benefit at full retirement age and average life expectancy of 82.5 for a man and 85.1 for a woman.26Total Value of Your Social Security BenefitsSocialSecurityHypothetical illustrations are for informational purposes and are not indicative of your specific situation. Assumes $2,000 monthly Social Security benefit at full retirement age and average life expectancy of 82.5 for a man and 85.1 for a woman.27Year of BirthYearly Rate of Increase1933-19345.5%1935-19366.0%1937-19386.5%1939-19407.0%1941-19427.5%1943 or later8.0%Increase For Delayed RetirementSocialSecuritySource: Social Security Administration http://www.socialsecurity.gov/retire2/delayret.htm28Early vs. Late130%

120%

110%

90%

80%

70%

Early vs. Late Benefit ElectionAssuming Full Retirement Age at 66. Source: Social Security Administration. http://www.socialsecurity.gov/OACT/quickcalc/early_late.html100%

6263646567686970Take Benefits EarlierTake Benefits LaterRetire at age 66 withfull monthly benefitEarly vs. LateSocialSecurity-25%+32%$2,000$1,500$2,64029Working While CollectingAge2013 Earned Income* LimitsConsiderationsUnder Full Retirement Age$15,120 For every $2 over the limit, $1 is withheld from benefitsIn the year Full Retirement Age is reached$40,080For every $3 over the limit, $1 is withheld from benefits until the month in which full retirement age is reachedAt Full Retirement Age or older**No limits on earningsNone* Income from work, W-2, and self-employment income.** At FRA your benefit amount is adjusted to accommodate for the earlier reduction.Working While CollectingSocialSecuritySource: Social Security Administration http://www.socialsecurity.gov/retire2/whileworking.htm30Examining Your Tax SituationSingle FilingProvisional* IncomeBenefits Subject to TaxUnder $25,0000%$25,000 - $34,000Up to 50%Over $34,000Up to 85%Note: Converting a traditional IRA to a Roth IRA is a taxable event and could result in additional impacts to your personal tax situation, including the taxation of current Social Security benefit payments. Consult with a qualified tax advisor before making any decisions regarding your IRA. State and local taxes may differ.Married Filing JointlyProvisional* IncomeBenefits Subject to TaxUnder $32,0000%$32,000 - $44,000Up to 50%Over $44,000Up to 85%* Provisional Income is Adjusted Gross Income including any tax-exempt interest plus 50% of Social Security benefits.

Examining Your Tax SituationSocialSecuritySource: Social Security Administration http://www.ssa.gov/planners/taxes.htm 31Social Security StrategyDefinitionBenefitClaim and SuspendIndividuals at FRA or later who have claimed benefits then suspend the benefits. When benefits are reinstated down the road, they will receive a higher benefit amount.Allows spouse to claim spousal benefit, while the higher wage earner can continue to accrue benefits. Can increase the overall lifetime benefits.Claim Now, Claim More LaterA FRA individual may claim their spousal benefit, delay taking their own benefit.1Earn delayed credits and then claim their higher personal benefit at a later age or may help spouse to receive greater survivor benefit.Do-Over2Individuals are allowed to change their earlier claiming decision.Provides flexibility to cease taking benefits if life situation changes.1 Benefit will be reduced if not at Full Retirement Age. Both individuals must have filed for Social Security benefits.2 Effective December 2010, the Social Security Administration published new rules that recipients may only cancel once and can do so only within the fist 12 months of receiving benefits. Visit ssa.gov for the most current information. Social Security StrategiesSocialSecuritySource: Social Security Administration http://www.ssa.gov/retire2/suspend.htm; http://www.ssa.gov/pubs/10035.html 32Understanding Your OptionsSocial Security BenefitsNameAge 62Age 66Age 70Ann$675$900$1,180Sam$1,562$2,071$2,733Spousal Benefit$724$1,035$1,035Sam and Ann, both age 62

Full Retirement Age: 66Understanding Your OptionsSocialSecurity$2,286$3,106$3,251$3,913Survivor = $2,733Hypothetical illustrations are for informational purposes. Assumes full retirement age of 66; average life expectancy of 82.5 for a man and 85.1 for a woman; early/late benefit calculations found at: http://www.socialsecurity.gov/OACT/quickcalc/early_late.html33AgeSamAnnSpousal BenefitTotal MonthlyTotal AnnuallySurvivor MonthlyLifetime (to 82.5 & 85.1)

Both 62$1,562$675$724 $2,286 $27,432 $1,562 $611,090

Both 66$2,071$900$1,035 $3,106 $37,272 $2,071 $679,603

Sam 66 Ann 70$2,071$1,180$1,035 $3,251 $39,012 $2,071 $701,353

Ann 66 Sam 70$2,733$1,180$1,035 $3,913 $46,956 $2,733 $721,900

Comparing Benefits at Different AgesAnn 66 Sam 70$2,733$900$1,035 $3,633 $43,596 $2,733 $695,020

Hypothetical example is for illustrative purposes only. Assumes full retirement age of 66; average life expectancy of 82.5 for a man and 85.1 for a woman; early/late benefit calculations found at: http://www.socialsecurity.gov/OACT/quickcalc/early_late.html34Age636670

ScottEarned benefit$1,550$2,214$2,922Spousal benefit$613$1,252$1,252

JoanneEarned benefit$1,752$2,503$3,304Spousal benefit$542$1,107$1,107

Comparing Benefits at Different AgesHypothetical example is for illustrative purposes only and is not representative of your specific situation. Assumes full retirement age of 66; average life expectancy of 82.5 for a man and 85.1 for a woman; early/late benefit calculations found at: http://www.socialsecurity.gov/OACT/quickcalc/early_late.html35Age636670

ScottEarned benefit--$2,922Spousal benefit--$1,252

JoanneEarned benefit--$3,304Spousal benefit--Total$1,252$6,226

Survivor benefit$3,304

Comparing Benefits at Different AgesHypothetical example is for illustrative purposes only and is not representative of your specific situation. Assumes full retirement age of 66; average life expectancy of 82.5 for a man and 85.1 for a woman; early/late benefit calculations found at: http://www.socialsecurity.gov/OACT/quickcalc/early_late.html36Age66-7070-7980-84Total

Scott$60, 072$350,698--$410,770

Joanne--$396,475$198,238$594,713

Total$60,072$747,173$198,238$1,005,482

Comparing Benefits at Different AgesHypothetical example is for illustrative purposes only and is not representative of your specific situation. Assumes full retirement age of 66; average life expectancy of 82.5 for a man and 85.1 for a woman; early/late benefit calculations found at: http://www.socialsecurity.gov/OACT/quickcalc/early_late.html37Age636670

ScottEarned benefit$2,214$2,214Spousal benefit

JoanneEarned benefit$3,304Spousal benefit$1,107Total$3,321$5,518

Survivor benefit$3,304

Comparing Benefits at Different AgesHypothetical example is for illustrative purposes only and is not representative of your specific situation. Assumes full retirement age of 66; average life expectancy of 82.5 for a man and 85.1 for a woman; early/late benefit calculations found at: http://www.socialsecurity.gov/OACT/quickcalc/early_late.html38Age66-7070-7980-84Total

Scott$106,272$350,698--$410,770

Joanne53,136$396,475$198,238$594,713

Total$159,408$662,155$198,238$1,019,801

Comparing Benefits at Different AgesHypothetical example is for illustrative purposes only and is not representative of your specific situation. Assumes full retirement age of 66; average life expectancy of 82.5 for a man and 85.1 for a woman; early/late benefit calculations found at: http://www.socialsecurity.gov/OACT/quickcalc/early_late.html39InflationPensionSocial Security`InvestmentsLegacyRate ofReturnMarketRiskLifestyleIRA/401(k)TaxesHealth Care

LTCRoth40Thank You!

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