Social Security Fairness Act: How millions could see a boost in benefits webinar

Video Duration: 1 hour

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Hi and welcome. My name is Mary Stork, and I'm the senior vice president of retirement solutions here at USAA. I am really excited to welcome you all for an important topic this afternoon or evening, or wherever you may be watching this from. As I said, my name is Mary Stork. I'm the Senior Vice president of retirement solutions here at USAA.

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I'm also a military spouse, and I've been at USAA for about 20 years. I'm joined this evening with several of my colleagues, who I want to take a minute to allow them to introduce themselves to you, C.J., Mark, Thomas, and a special guest, Cheryl, who I'll introduce in just a little bit. C.J., would you like to introduce yourself?

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Thank you, Mary, and hello, everyone. My name is C.J. Sanchez. I'm a certified financial planner and manager for our retirement income team here in Tampa, Florida. I've been with USAA for the last 11 years, and over my tenure, I've had the privilege of serving our members directly, as well as leading various teams that are dedicated to facilitating our members’ financial security.

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Next up, Mark. Yes, thank you, C.J.. So, Mark Schultz, a senior specialist with our retirement income team, originally started in financial advice in 2008, been with USAA for over 13 years. It's an honor and a privilege to be serving our members in this capacity. Yes, and Thomas. Thank you. Mark. I've been with USAA for seven years and like my peers on the call, also a CFP in my role, I'm a product management director for our annuities, helping with our new product development and supporting our annuity offerings.

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But most importantly, I'm proud to say that both my father and my grandfather served in the Air Force and combine over a combine for over 100 years of USAA membership, and it's my honor to come and work at such a great organization. Mary, back over to you. Fantastic. Thanks, gentlemen. I work with some amazing people here at USAA.

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Okay, before we begin, let's cover some key housekeeping items. Just a few reminders for everyone who is listening in. We will email the link to the recording of this to everyone who registered afterwards. So if you'd like to watch it again at your leisure, you'll have the opportunity to do so. The plan for this time together is we're going to speak for about 25 minutes on the topic, and then we're going to move into our Q&A session.

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Please use the Q&A function in Zoom down at the bottom to submit your questions at any time during the webinar. We're going to have specialists that are monitoring the Q&A who are going to try to answer every single question. If our answer includes a message to call us, it's typically because the answer requires information that we can only deliver over the phone.

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So please don't include any personal or sensitive information in your questions. Okay, now let's get to the topic at hand. With the passage of the Social Security Fairness Act, Social security is changing. And in today's webinar, we're going to start by discussing who is impacted by this new legislation and what you need to do about it. We're also going to demo our Social Security calculator and make sure that everyone understands how you can maximize your benefits.

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And then finally, we're going to cover some different claiming strategies with a focus on how you also can maximize your Social Security benefits, but also retire when you want. Okay, so first, one of USAA’s most important traditions is something that we call our mission moment. We start every meeting, every critical meeting at USAA with a mission moment.

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And you can see our mission here. We are all very focused on achieving this mission on behalf of our members. And the reason that we start our meetings with this mission is to take a moment before we get into the business at hand to recenter ourselves on why we're here, why do we do what we do? Why did we come into work today or every day?

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And it's to serve our members. It's to fulfill this mission on behalf of our military community and their families. So today, I'd like to introduce Cheryl Wilson. Cheryl is an advice director at USAA. She's a certified financial planner, and she's also a military spouse. And Cheryl is going to share her “why”, in her mission moment. So, Cheryl, let me turn it over to you.

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Thank you so much, Mary. So my journey with USAA began through my husband, who's been a member for over 35 years. He joined as a young ROTC cadet. And over the years, I heard countless what I call USAA stories when we got together with his Army buddies. These weren't just stories about insurance, they were stories about unwavering support during often incredibly challenging times, feeling relief when that kind USAA voice helped navigate insurance needs during an unexpected deployment overseas.

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The peace of mind a young military spouse received after her husband suffered a career ending injury in Iraq, and USAA told her, don't worry, we got you. These stories and more represented USAA’s commitment to going above and beyond, offering more than just insurance,

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they offered genuine care and support to those who serve our country. So in 2009, when I had the opportunity to join USAA as an employee, I was eager to contribute to those incredible member stories that I'd heard.

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As a financial planner, I had the pleasure of helping hundreds, maybe even thousands of members navigate the complexities of retirement planning, particularly the crucial decision of when to claim Social Security. Tailoring strategies to individual circumstances, considering goals, expenses and income to maximize benefits. As my career has grown, I've had the privilege of helping our specialists facilitate even more USAA stories.

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by bringing in a nationally known Social Security expert for training sessions, contributing to webinars like this, and launching the Social Security calculator you'll see demoed in a few minutes. This work isn't just about numbers. It's about empowering members to achieve their dreams. When I think about the impact of Social Security strategies, one member story stands out in particular. Approaching 64.

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she wanted to retire early to travel the world with her already retired husband. She was worried about whether she could afford to and didn't want to reduce her Social Security benefits. Together, we developed a plan that allowed her to retire confidently and yet still receive her maximum benefit at age 70. More than six years after that conversation, she called me directly to confirm the filing process.

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She'd actually saved my contact info that entire time. So during our conversation, she shared stories of her travels and of her new grandchildren, a testament to the lasting impact of careful planning. I'm humbled and honored to be one small part of her USAA story. Mary, moments like these are why I love my work at USAA. We're not just providing financial services,

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we're building lasting peace of mind for our members.

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Fantastic, thank you so much. Such a wonderful mission moment. And thank you and your husband for your service. All right, C.J., I believe I'm handing it over to you. Yes. And first off, thank you for the powerful mention moment. Cheryl. This is such a great reminder of why we do what we do here at USAA. Okay, now let's jump into the Social Security Fairness Act to understand more about it.

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First, this new legislation was signed into law on January 5th, 2025, and it was the first major social security legislation in ten years. It eliminates both the windfall elimination provision, also known as WEP, and the Government Provision Offset, or GPO. Now, if you're not familiar with those terms or acronyms, that's okay. We're going to expand on them. Just know that they impact about 3 million people, including teachers, firefighters, hospital workers, police officers in many states, some federal employees and a few others.

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If you were subject to WEP or GPO, then with this new legislation, you may be eligible for an increased monthly Social Security benefit. And the amount you're eligible for depends on your unique situation. Also, this increase in benefits will be backdated to January 2024, and we are expecting that it will take a little while, potentially up to a year, for them to be paid out.

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Okay, so now the more important question is what do you need to do about the Social Security Fairness Act? And for most people you won't be impacted, so you don't need to do anything. You should still be on the lookout for scams, though, as scammers may try to take advantage of the new legislation. Just know the Social Security Administration won't proactively reach out to you, so make sure you never pay money to anyone offering assistance to start, increase or retroactively pay benefits.

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It is important to note, however, that the Social Security Administration is in the process of transitioning users from old Social Security usernames to new login.gov, or ID.me accounts in order to simplify, sign in and improve security. So those notifications may be legitimate. Now, if you are impacted by the Social Security Fairness Act, our first piece of advice is to be patient,

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you have time. Secondly, visit SSA.gov to learn more. One easy way to do this is to type Social Security Fairness Act in the bar at the top of the SSA.gov home page. Okay, Mark, would you mind setting up our first example to help those who are impacted better understand what they may need to do? Absolutely, yes. Thank you C.J..

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So as you can see here, this is our first scenario. We have Daniel. Daniel is a retired firefighter who spent 30 years working for a municipal fire department, and he also worked private sector jobs both before and after his firefighting career. Daniel worked in a state where firefighters did not pay into Social Security. So because his pension from his firefighting career came from non social security covered employment, the windfall elimination provision, otherwise known as WEP (W-E-P),

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had previously reduced his Social security benefit, even though he had other jobs where he did pay into social Security. So previously, before the repeal, Daniel's income from his private sector jobs earned enough Social Security credits to qualify for a benefit of $1,793.92. That's per month, as you can see here. However, because of his firefighting pension and WEP, his Social security check was reduced by $512, lowering his actual monthly benefit to $1,281.92.

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Poor Daniel right? Well, now, thanks to the Social Security Fairness Act and the repeal of WEP, Daniel will receive his full earned benefit of $1793.92 per month. That's an increase of $512 per month or $6,144 annually. And since Daniel was already receiving Social Security benefits, even though they were reduced, he will not need to take any action for this increase to happen.

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The Social Security Administration will automatically increase his monthly benefit, and he will automatically receive his back pay from January 2024 on.

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All right. Well, if we felt bad that Daniel didn't receive all of his earned Social Security previously, wait until we meet poor Maria. Maria is a retired state government worker. She never paid into social security. She now receives her pension of $2,200 a month from the state. Her husband, David, worked in the private sector for most of his career and paid into social security.

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Maria was entitled to a spousal benefit of $1,300 per month, based on David's Social Security earnings record. However, under the old rules, because she receives a state pension, the Government Pension Offset, otherwise known as GPO, applied a reduction of two thirds of her pension amount. So since her pension exceeded $1,950 per month, this wiped out her spousal benefit completely, leaving her with $0 in Social Security spousal benefits.

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Now, with the elimination of GPO, Maria is fully eligible to receive the $1,300 monthly spousal benefit. So over a year, that equates to an additional $15,600 in household income. This dramatically improves her and David's financial stability, giving them more flexibility in managing expenses. Now listen up. Because this part, this is important. Maria will need to file an application.

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This is necessary in order to receive her benefits. Since she was not receiving any of her spousal benefits previously, she will not automatically receive the increase. So if any of you are in Maria's shoes, beware, you must file in order to begin receiving those those benefits.

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All right. So now that we've heard how the new act will benefit people like Daniel and Maria, you may be wondering if social security will run out sooner due to the new legislation. So let's review some facts. So the SSFA will increase monthly benefits for up to 3.2 million people and pay retroactive benefits back to January 2024.

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So the impact of these increased payments is not yet incorporated into funding reports, but we expect that they will be starting next year. And remember, the status of Social Security funding is closely monitored and reported annually. Social security benefits are currently fully funded until 2035. So does that mean Social Security will end in 2035? The answer is no.

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Remember, payments come from two sources. The trust fund and current payroll taxes. And payroll taxes will continue. So even if nothing else is done, those taxes alone would support 83% of benefit payments. For example, if no changes were made, a $1,000 benefit would be reduced to $830. Yeah, well, so that may not be 100% A+, but at least 80% or excuse me, 83% is still a solid B, but 2035 is many years away and several proposals are out there to close the gap.

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These include removing the cap on income, that is taxed for Social Security, which is currently $176,100. Another option is increasing the payroll tax rate for Social Security, which is currently 6.2% for the employer and 6.2% for the employee. And a third consideration would be taxing Social Security benefits for the highest earners.

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Some of those options sound better than others, but the key takeaway here is that yes, there is a possibility that benefits may be reduced in the future. But even if no action is taken, the majority of benefits would continue. Therefore, USAA’s recommends you should have a plan that assumes Social Security will continue to be fully funded. But you should also have a backup plan for receiving 83% of your benefits.

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Now, as we mentioned earlier, the Social Security Fairness Act only impacts about 3 million people. But Social Security is an important source of retirement income for over 50 million Americans. So now, let's take some time to review key information that everyone needs to understand about Social Security as a whole. Yeah, absolutely, thanks CJ. So one of the most important points I discuss with members is that your Social Security annual benefits increase the longer you wait to claim.

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So the youngest age that you can claim Social Security is 62. That's fairly well known. However, your annual benefits will be permanently reduced if you claim them at this age. In fact, your annual benefit could be 30% lower than it would be at your full retirement age. And if you wait even longer until age 70, then you'll receive the maximum amount of annual benefits that you're entitled to.

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But once you're 70, don't delay claiming any longer, because then you're losing out on benefit payments that cannot be recouped.

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As you can see, it's important to understand how claiming Social Security at different ages impacts your overall lifetime benefit. The chart you see here comes from the Social Security Administration and shows different full retirement ages depending on the year you were born. We can credit the 1983 overhaul of Social Security for the gradual increase of the full retirement age from 67 to or from 65 to 67.

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Most people now are either already at full retirement age or have a full retirement age of 67. However, if you were born in the year 1959, your full retirement age is 66 and ten months.

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Clearly, the decision on when to claim Social Security is an important one. According to the Social Security Administration, a substantial portion of most people's retirement income comes from Social Security. 53% of married couples and 74% of unmarried people receive more than half of their income from Social Security. If you claim early, you could be leaving your hard-earned benefits on the table.

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Approximately one third of Americans claim benefits at their earliest eligible age, potentially losing out on a higher lifetime Social Security benefit. The decision on when to claim Social Security benefits is one of the most critical and potentially irrevocable choices that retirees will make. It's also very personal, and for some, can even be emotional. Our advice is to review many potential scenarios and seek out professional guidance to understand the best decision for you.

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All right. And that leads us into our first poll question.

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All right. Thank you. C.J. Okay. Our poll questions are a great way to get to know more about our webinar audience. So get ready to submit your answer. This first poll question. And I've already seen some dialogue in the Q&A about this from people at different ends of the spectrum. For our first poll question, we want to know when are you planning to file for Social Security?

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Your answers are: Already filed, 62, My full retirement age, 70, and Not sure. So we'll give you a few seconds to get your answer in.

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Okay. Thank you all for submitting your answer. We'll take a few seconds to show the results in this. Like I said, always helps us learn more about you and who we're speaking with today. No matter what you answer, we've got some great Social Security information and the rest of our webinar. And let's start by learning how to maximize your Social Security benefits with a demo of our social security calculator.

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Let's watch this demo, it's going to be presented by our mission moment speaker Cheryl.

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Absolutely, Mary. And before I get into that demo, I want to make sure that everyone understands the different definitions and terms. So when you look at the calculator, you'll see in that green box your total lifetime benefits. And that means based on the start date, your retirement date, claim age, and I’ll define all of those, what do we expect to have as your total lifetime benefit?

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The next piece that's really important to understand the definition of is retirement age. This means the age that you plan to stop working. And then we have the retirement planning age. That's kind of a nice way to say life expectancy. So that's the age that we're going to plan for that you'll need retirement income. And then finally you're claiming age.

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That's when you're actually going to begin your Social Security benefits. Sometime your retirement age and you're claiming age are going to be the same. But it's entirely possible to retire and claim Social Security later or conversely, to claim Social Security and then retire at a later age. So let's get into the demo. Our first example is going to be for a single individual, and on this first page of the calculator, you'll be entering your current annual employment income.

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Remember to only include income sources where Social Security was withheld. So in other words, your paycheck from your job. But don't include any income that does not have Social Security withheld. Maybe rental income, investment income, some pension income if you've retired from the military but are still working in a civilian role. Our calculator is going to assume that you had a relatively similar income throughout your work history.

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So the benefit estimate may not be as accurate if there was a period of time that you were not in the workforce, or you worked in a job that was not covered by Social Security, or if you had big changes in your income from year to year throughout your work history. So let's get started with Brian.

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He has an annual income of $80,000. And because he's already a USAA member for you, we know that he's 61. The calculator is going to use that income to estimate the Social Security benefit that you're entitled to over your lifetime. It's going to be really dependent on those two important pieces. So if we move back and forth, if Brian is retiring at age 62 and select 65 instead, we can see that that total lifetime benefit amount automatically changes.

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Next, you're going to need to enter your retirement planning age. That's how long you expect to live. You can see a little pointer that will indicate an average planning age or life expectancy based on your age and gender, but you can adjust that. And we can see if we move it to 87 or increase it to 97. That again, Brian’s, lifetime benefits are going to change.

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But he's got average health for his age and gender. So we're going to use the age provided by the calculator which gives him a lifetime benefit of $1,024,461. On the right hand side of the screen, you can see that if he were to claim Social Security benefits at age 70, which shows the maximum benefits that he would receive, along with the amount from both a monthly perspective and an annual perspective.

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In this case, we can see that Brian's monthly benefit would be about $3,700. So once you're satisfied with your retirement age and your planning age, we can go ahead and move forward. Click on Next to the next screen. And now we can start to play with some scenarios. On this screen, you see the slider that you can adjust when you are going to claim your benefit.

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It's going to start at 62, because that's the earliest that most people can begin claiming Social Security benefits. And it's going to increase all the way up to age 70. So we can adjust that slider back and forth to see how, if Brian selects Social Security at different ages, how would that impact his benefit. Since he's planning on retiring at age 62,

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if we move that slider bar all the way down to 62, it would reduce his benefits from over $1,000,000 to about $780,000. For Brian, his total income benefits would be about $250,000 less if he did not maximize the Social Security benefits, and his monthly benefit would drop from $3,700 to about $2,100. So while the natural tendency is often to begin replacing employment income with Social Security income, that moment that you retire it can leave a significant lifetime gap in overall retirement income.

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But you're probably thinking what a lot of our members think and what Brian is thinking is all right, but I want to retire at 60 and I'd like to get those maximum benefit. So how can I accomplish both of those objectives? Well, that's exactly what we're going to talk about later in our next section of the webinar. But before that, let's continue this demo with our second scenario.

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All right. So our second scenario includes a married couple. Married couples should focus on making a joint decision about Social Security as opposed to two separate individual decisions. So just like Brian, they'll need to enter the annual employment income for each person. In some cases, we may only have one spouse that's working. If that's the case, just go ahead and enter zero for the other spouse.

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You'll also need to indicate if both are eligible for Social Security benefits. When we think about eligibility, spousal benefits are an important component of eligibility. So even if one spouse is not working, if they're eligible to receive benefits from their spouse, we want to indicate that they're eligible. Not being eligible includes situations where you didn't pay into Social Security like some railroad employees, some school districts or hospitals, or other unique situations.

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For our married couple, David's income is $80,000 and Michelle's is $75,000. Since they are both USAA members, the calculator knows that David is 61 and Michelle is 57. We're going to click next to see David and Michelle's lifetime benefits. When we look at that total lifetime benefit, we're going to be adding the couple's benefits together. For David and Michelle,

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their combined total benefits are about $2.1 million. That's maybe much higher than you would expect. And you might be surprised at that $2.1 million. I have to tell you, you're not alone if you are surprised. That's one of the reasons why Social Security is so important in your retirement income plan. So again, each member needs to indicate their retirement age.

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And having different retirement ages is really common, especially if there's an age difference between the couple. In our scenario, David wants to retire at 65 and Michelle wants to retire at 63. Because average life expectancy is higher for women than men, you'll see that the pointer is on 94 for Michelle and 92 for David. And based on David's family history, he's going to change his retirement planning age to 87.

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As you can see, automatically, the total lifetime benefit updates, and it's about $1.9 million. The calculator will show the age that each person should begin their benefits in order to maximize that amount. For David its 70 and for Michelle its 69. Now that we're satisfied with those numbers, let's go to the next screen. And now we can begin our scenario planning.

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The rule of thumb for couples is that the higher earner should maximize his or her benefit by beginning those benefits at age 70, regardless of their own life expectancy. It may not always be possible, but it should at least be considered. But since David is the higher earner, we're going to follow that rule of thumb and leave his benefit at age 70.

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But let's see what happens once we move Michelle's benefit down from 69 to 63. It reduced their lifetime benefit, not by a great deal, but about $58,000. The reason for this rule of thumb is that couples also need to consider survivor benefits. When one spouse passes away, the other spouse is typically entitled to receive survivor benefits. So the higher of the two benefits gets paid out to the survivor.

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So even if the higher earner, in this case David, has a shorter life expectancy because of his own health and family history, he should consider delaying so that he can leave that legacy of a higher benefit for his wife. All right. So we're going to forget about that rule of thumb. David and Michelle are convinced that they want to take their benefits right when they retire.

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So let's see what happens. We've moved those sliders down. And what we can see now is that they're giving up about $290,000 by claiming at their retirement age. And another way to think about that is, do you have another way to add $290,000 to your retirement nest egg? Or might it make sense to follow the rule of thumb?

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Your Social Security benefits are heavily dependent on your retirement age, your life expectancy, and when you're planning to claim it. So we really encourage you to access the calculator, play around with those different scenarios and see what works best for you. So let's recap the maximum Social Security benefits that David and Michelle are entitled to is about $1.9 million.

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If they take their retirement benefits at their retirement ages, they'll be giving up about $290,000 claiming Social Security right when they plan to retire will not maximize their benefit. What can they do to retire when they want and still maximize Social Security?

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Okay, time for our next poll question. So, given everything that you've heard, would you like to receive a call from a USAA retirement income specialist to talk about your Social Security strategy? We’ll give you just a couple of minutes to hit that button if you would like to, you also can schedule a call. Or of course, we are available now until eight central.

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If you would like to talk to someone today.

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Okay. We hope to hear from a lot of you guys. Let's jump into our next topic. CJ, Mark? Yes. Thank you, Mary. So yeah, let's, let's kick off this final section of the webinar by talking about our approach to retirement. So USAA believes that members should use a balanced approach when it comes to planning for and living your best life in retirement.

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At USAA, we take a three pillar approach to achieve retirement success. The first pillar on the bottom, as you can see here, is called protection. At USAA, we believe you should protect yourself from common risks that may occur leading up to and during retirement. Common risks, including things like health concerns, the need for long term care, emergencies, possible death of a loved one.

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These can all have a catastrophic effect on retirement goals if left unprotected. So the second pillar, this is your investment portfolio. So at USAA, we believe in a broadly diversified, well-balanced portfolio that matches your risk tolerance today. So finally the third pillar: protected income. So at USAA we believe you should have enough guaranteed income at minimum to cover your essential expenses in retirement.

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So a balanced approach can help reduce retirement risks, keep your nest egg growing and provide guaranteed income. In addition to annuities, USAA can help you with Medicare, Life insurance, long term care, important services like estate planning, and will preparation.

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Thanks, Mark, for covering the three pillars that USAA believe builds a strong foundation for any retirement. Now focusing back on Social Security and that protected income pillar. Let's quickly highlight the four main Social Security claiming strategies. First, you can retire and claim early. What do you think, Mark? Yes, CJ. So this strategy it's not generally recommended by USAA because as we saw earlier, Social Security benefits could be reduced by up to 30% if claimed early.

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Okay. Fair enough. How about claiming early and continuing to work? Sure. Yeah. Again, not generally recommended by USAA. So if you don't need the income, don't take it. Before retirement age there are limits to how much you can earn before your benefit amount is impacted. However, it could be an option if you want to continue working on a limited or part time basis.

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All right, so the first two options aren't really recommended. So what about delaying claiming and continuing to work? Yeah, absolutely. So with this strategy, you would consider holding off until at least your full retirement age to claim. So the drawback though is that you're working longer and reducing the number of years you get to enjoy in retirement.

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In the final option, you delay claiming but still get to retire when you want. So this strategy works best for those with average to longer life expectancy. And for this strategy, you typically need to have retirement savings or pensions to fill in the gap. So the key takeaway here is that your claiming strategy is very dependent upon your unique circumstances and priorities.

00:36:44:22 - 00:37:11:20

Okay, so that last strategy delaying claiming Social security but still retiring when you want sounded like a great option. So let's dive a bit more into how that strategy works. Remember Brian, David and Michelle from our Social Security calculator? That's the option they wanted to explore. So let's review their scenarios. Yeah, of course. In our first scenario Brian wants to retire at 62.

00:37:11:22 - 00:37:43:21

So the calculator showed him that he would maximize his social Security benefits by claiming at age 70, if he decided to claim Social Security at his retirement age of 62, he would potentially give up nearly $245,000 in benefits. In our second scenario, David wants to retire at 65 and his wife Michelle wants to retire at 63. So David would maximize his benefits by claiming at age 70, of course, while Michelle maximizes hers at age 69.

00:37:43:23 - 00:37:57:23

So if both of them decided to claim Social Security at their retirement ages of 65 and 63, respectively, they would potentially collectively give up almost $290,000.

00:37:58:00 - 00:38:21:09

So in either scenario, claiming Social Security at 70 would maximize Social Security benefits. But does that mean Brian, David, and Michelle would have to keep working until they're 70? Good question. Yeah. Absolutely not. No. So let's let's walk you through a claiming strategy that may allow you to maximize your social Security benefits and still retire when you want.

00:38:23:22 - 00:38:52:15

Okay. So to begin, you'll need to capture some important information about your retirement income, expenses, and savings. So we're going to walk you through this step by step using page one of our retirement worksheet here. So this worksheet is available as a download by clicking on the resources tab of your zoom toolbar. So feel free to download it to follow along now or to use later.

00:38:52:17 - 00:39:23:15

Okay. Step one here. So this is to determine your retirement expenses using the retirement worksheet as a guide. Start with your essential expenses such as housing, food, utilities, transportation, all the other, you know, 21st century necessities such as phones, internet, insurance, everything we need there. Be sure to also consider the not so obvious expenses such as co-pays, HOA dues, travel, charitable contribution contributions, those are easily forgotten on.

00:39:23:17 - 00:39:32:20

So try to write these down as annual numbers or convert them from monthly to annual.

00:39:32:22 - 00:40:09:07

Okay, so next write down any secure or guaranteed income sources other than Social Security. So this could be civilian or military pensions, part-time employment, other income like rental property, disability income. So we're referring to income that's free from any market risk or volatility. So many employers have shifted from offering pensions in favor of 401(k)s. So it's not uncommon for Social Security to be the only source of guaranteed retirement income for many workers.

00:40:09:09 - 00:40:27:15

All right. And then add up any retirement savings. This can be in the form of cash, 401(k)s, IRAs, stocks, bonds, or anything else that you've earmarked specifically for retirement.

00:40:27:17 - 00:40:56:11

All right. And once you've filled out all this information on your worksheet, you can determine your retirement income gap. So compare your annual retirement expenses to your annual retirement income without social Security. That's your annual retirement income gap. So keep in mind that you'll need this amount of income every year until you decide to claim Social Security. So determine how many years between when you want to retire and when you want to claim Social Security.

00:40:56:11 - 00:41:23:03

For example, if you want to retire at 60 and claim Social Security at 70. You'll need to fill your annual retirement income gap for ten years. All right, so next, take a look at your retirement savings. Could you consider using those to close your retirement income gap. If so there are two approaches to consider. One: leave your retirement savings where they are and take withdrawals to provide yourself income.

00:41:23:05 - 00:41:49:10

This is typically done on an annual basis. So if you have stocks or 401(k)s or IRAs that are invested in the stock market, your retirement savings are still exposed to stock market volatility. So another solution this is to convert a portion of your retirement savings into guaranteed income with an annuity. So you can do this for a specified number of years until you claim Social Security.

00:41:49:12 - 00:41:58:14

Purchasing an annuity also removes any stock market risk for those funds.

00:41:58:16 - 00:42:21:10

To summarize, the key takeaway for us again, if you have enough retirement savings, it may make sense to use those savings to create your own retirement income so that you can maximize your Social Security benefits. That's perfect. Yes. Great summary, CJ. Thank you.

00:42:21:12 - 00:42:50:08

Okay. If you're interested in converting a portion of your retirement savings into guaranteed income that won't be impacted by market volatility, we offer annuities that can help. An income annuity, also called an immediate annuity, can provide income so that you can delay social security, in addition to reducing retirement risk and taking care of your loved ones. Let's take a look at our short educational video to learn more.

00:42:50:10 - 00:43:13:15

You did the smart thing by putting away money all your life. But now that you're nearing retirement, you may be wondering how to make the best use of your hard earned cash. Whether you're getting ready to retire or already enjoying retirement. A USAA Single Premium Immediate Annuity, or SPIA. may be the right choice for you. A USAA SPIA works like a paycheck.

00:43:13:17 - 00:43:40:04

You pay in a lump sum, and in return, you get a series of guaranteed payments for life, for a set period, or both. No matter how long you live, you can receive income to support you and your loved one. After you're gone, remaining payments, if any, will pass down to your beneficiary. A USAA SPIA can add to other retirement income, such as Social Security or pensions.

00:43:40:06 - 00:44:02:24

You can spend on what you want, when you want. It can be an efficient way to generate income, and with USAA’s competitive rates, you can make the most of your hard earned retirement savings. Since a USAA SPIA is an insurance product and not an investment, you don't have to worry about losing your money or taking portfolio withdrawals during market downturns.

00:44:03:01 - 00:44:21:12

Start living your best retirement with a USAA SPIA. To get advice you can count on, speak to a USAA retirement income specialist today.

00:44:21:14 - 00:44:46:05

All right. Now that we've covered Social Security and income annuities, let's briefly touch on another important part of retirement: Medicare. If you want to explore the idea of maximizing Social Security benefits by claiming at age 70 and still retiring at 62, what should you do about Medicare?

00:44:46:07 - 00:45:21:06

Yeah, absolutely. So we've consulted with our USAA health team to provide some general guidelines for you. So even if you delay Social Security, you should still consider enrolling in Medicare at age 65. So start by enrolling in Medicare Part A and B during your initial enrollment period, which this is a seven month window surrounding your birthday. So since there's a lot that Medicare doesn't cover, your initial enrollment period is also an opportunity to consider supplemental coverage, such as Medicare Advantage and Medicare supplements, otherwise known as Medigap policies.

00:45:21:08 - 00:45:47:05

So if dental and vision care are important, you'll also want to consider coverage for those as well. So if you're planning to work past age 65, then these things would be different. If you're covered by your employer's group health insurance we would recommend that you enroll in Medicare Part A when you turn 65. So generally you would delay part B with no penalty because you're covered under your employer's coverage.

00:45:47:07 - 00:46:23:23

You do this until you retire or lose your employer coverage. Okay. There are a lot of considerations for those working past 65, including tax penalties from HSAs, so it's best to check with your employer before turning 65. Yeah, you should also consult a licensed insurance agent that you trust to help provide guidance. Luckily, wink wink, we have plenty of those here at USAA that are ready to answer your questions so you can learn more about Medicare by watching our Medicare Basics webinar on our USAA YouTube channel.

00:46:24:00 - 00:46:38:24

You can click the link in the webinar slides or visit USAA.com/medicarewebinar.

00:46:39:01 - 00:47:08:00

Thank you, Mark. And with that, we are coming to the end of our webinar. Social Security is an important topic and one that we have our own point of view on here at USAA. First, many of your retirement planning decisions are predicated on your life expectancy. And if you're married or living in a long-term relationship, the joint life expectancy. We recommend planning for many different scenarios.

00:47:08:02 - 00:47:45:22

And as life expectancy is increasing, it's increasingly important to make sure that you do not outlive your retirement savings. Next, you should pick a claiming strategy that's right for you. Every person and situation is different, including your health and family history. You know yourself best, so make sure you are comfortable with your claiming strategy. As we've stated before, it's generally better for the higher earning spouse to delay receiving their benefit as long as possible to age 70.

00:47:45:24 - 00:48:00:11

Again, this is a rule of thumb, and it may not make sense for everyone. However, if maximizing your Social Security benefits is your objective then try to at least consider this option.

00:48:00:13 - 00:48:27:18

Deciding when to claim Social Security is an important and potentially complex decision. Therefore, it's important to seek out professional assistance to evaluate your options and see how they fit into your overall retirement strategy. Know that our Retirement Income Specialists at USAA are here to help you.

00:48:27:20 - 00:48:52:14

Fantastic. Thank you for that great information, C.J. and Mark. We recognize that everyone's situation is unique, so we want to equip you with the information and the tools to help you evaluate which Social Security claiming strategy works best for you. As mentioned just previously, our retirement income specialists can help you make the important decisions on when to claim Social Security and help you with scenario planning

00:48:52:14 - 00:49:15:08

if you're concerned about Social Security running out or being reduced. Most importantly, they know a lot about Social Security, as you can tell by our panelists today, so that you don't have to. If you'd like to receive a call from one of our specialists, you certainly can do so. There's a QR code right here that you can scan to schedule a call at a time that's convenient for you.

00:49:15:10 - 00:49:39:00

Or I mentioned they are available now until 8 p.m. central, Monday through Friday, 7:30 a.m. till 8 p.m. central. So they are available for you to talk to as well. And I know I saw several questions come through looking for that Social Security calculator. And here's the QR code to find that as well. So you can scan that and put your own information in.

00:49:39:02 - 00:50:08:05

Okay. So we encourage you to go around, play with our Social Security calculator and see what works for your situation. Certainly visit usaa.com/retirement. For more information there. But for now we're going to move into our Q&A section. And for that, I'm going to turn it over to Thomas who's going to facilitate. Thank you, Mary. All right CJ and Mark, let's hit some of our most frequently asked questions around Social Security.

00:50:08:07 - 00:50:35:24

So Mark, we'll start with you, sir. Can you receive your Social Security benefits and still be employed? Yes, a good one. So, yes. But depending on your age and how much you earn, your benefits could be reduced. So when you begin receiving Social Security retirement benefits, Social Security considers you retired. So you can get social Security, retirement or survivor's benefits and work at the same time,

00:50:36:01 - 00:51:02:18

however, there's a limit to how much you can earn and still receive benefits. So, if you're younger than full retirement age and earn more than the yearly earnings limit, your benefit amount may be reduced. So if you're under full retirement age for the entire year, Social Security will deduct $1 from your benefit payments for every $2 you earn above the annual limit for this year for 2025.

00:51:02:19 - 00:51:32:02

I believe that limit is $23,400. So in the year you reach full retirement age, Social Security will deduct $1 in benefits for every $3 you earn above a different limit in 2025. This limits on your earnings. It's $62,160. So Social Security only counts your earnings up to the month before you reach your full retirement age, not your earnings for the entire year.

00:51:32:03 - 00:51:58:23

So that's important. Thank you, Thomas. Great. Thank you, Mark. Very thorough answer there I appreciate it. All right C.J. We'll go over to you for the next one. How can I find out what my ex-spouse's Social Security benefit will be, so I can plan how much I will receive? Yes. So, if you are divorced, you can receive benefits on your ex-spouse's record

00:51:59:00 - 00:52:34:04

if your marriage lasted ten years or longer, you are unmarried and your ex-spouse is 62 or older. If your ex hasn't applied for retirement benefits but is eligible for them, you can receive benefits on their record if you've been divorced for at least two years. You do not need to know their earnings history or even where they are, but you will need to be able to present proof to the Social Security Administration that you were married to them and give enough identifying information such as name, date of birth, social security number If you have it, so that they're able to look up their records.

00:52:39:04 - 00:53:06:13

Perfect. Thank you for that. C.J. We get a lot of spousal questions, so we'll stay on that theme for another one. Mark, can my spouse claim the spousal benefit if they did not pay into Social Security? Oh, okay. Yes. Provided he or she is at least 62 and has a qualifying child in his or her care, so a spouse can choose to retire as early as age 62.

00:53:06:15 - 00:53:49:01

But doing so may result in a benefit as little as 32.5% of the worker's primary insurance amount. So a spousal benefit is reduced 25/36 of 1% for each month before normal retirement age up to 36 months. So if the number of months exceeds 36, then the benefit is further reduced 5/12 of 1% per month. So for a spouse who is not entitled to benefits on his or her own earnings record, this reduction factor is applied to the base spousal benefit, which is 50% of the worker's primary insurance amount.

00:53:49:03 - 00:54:15:16

So, for example, if the worker's primary insurance amount is, say, $1,600 and the worker's spouse chooses to begin receiving benefits 36 months before his or her normal retirement age, we first take 50% of the $1,600 to get an annual base amount, $800 and or excuse me, monthly. Then we compute the reduction. That would be that would be very small.

00:54:15:16 - 00:54:44:16

But then we compute the reduction factor, which is 36 times 25/36 of 1% or 25%. So applying a 25% reduction to the $800 amount gives a spousal benefit of $600. So thus in this case, the final spousal benefit, it's 37.5% of the primary insurance amount. Yeah. So a lot of math. Sorry about that. So thank you, Thomas. Very thorough as always, Mark. appreciate that.

00:54:44:18 - 00:55:19:03

All right, CJ, one more spousal one for you. I'm 18 months older than my wife, can she start taking benefits before I do? It’s a good one. Generally speaking, no, your wife cannot start taking spousal benefits before you since spousal benefits cannot be received until the worker has filed. However, if she has any benefits earned on her own record, she can apply for those and could still be eligible for spousal benefits if higher,

00:55:19:05 - 00:55:54:04

once you file. Makes sense. Perfect. Thank you, CJ. All right, Mark, let's shift gears a little bit and talk more about that income annuity. So can you explain more about how an income annuity helps with the Social Security income gap planning. Yeah of course. Yeah great. Great question. Yeah this is what we do. So if you recall earlier we covered USAA’s approach to retirement, where one pillar of that strategy is anchored on our belief that you should have enough guaranteed income, at minimum, to cover your essential expenses in retirement.

00:55:54:06 - 00:56:15:14

So if you have an income gap or in other words, a gap that is left when comparing expenses in retirement with what is provided by Social Security or other guaranteed lifetime income sources, like a pension. That is where income annuities come in. So income annuities are the only solution available in the marketplace that guarantee income payments for a lifetime.

00:56:15:16 - 00:56:42:01

So this makes them very uniquely positioned to help solve this, this income gap that we're facing. And withdrawal strategies from a 401(k), a bond ladder, or similar strategies can help fill that gap. But they're not guaranteed for a lifetime, and there's there's also other risks to consider. There. So therefore income annuities, they're a great option to consider when solving for your income gap in retirement.

00:56:42:03 - 00:57:06:02

Thank you, Mark. We'll stick with you for for one one more very close to our our membership base here. If I have a military retirement pension in addition to Social Security that is covering most of my retirement expenses, do I still need an annuity? Yes. Okay. Well, yes. At USAA, we hear this question a lot. You'll love to hear this:

00:57:06:02 - 00:57:27:07

It depends. So, it depends on your personal situation. But most importantly, you know, what are your goals? What are your needs, wants, wishes in retirement? So having a majority of your expenses covered by guaranteed income, it's a great situation that provides a lot of freedom, which is why it is one pillar of our USAA approach to retirement.

00:57:27:07 - 00:58:04:03

Of course, at this point, there are several strategies involving annuities that could be considered. So with an income annuity, you could add another source of guaranteed income to give yourself, we like to say, a raise and kind of leap yourself from just meeting your essential expenses to covering the nice to haves and wants. Right. So here you can consider activities that are still very important to you but aren't traditionally considered, you know, essential expenses, things like travel to explore somewhere new, to revisit your beloved vacation spots, or even to, you know, carve out dollars for traveling to visit family.

00:58:04:05 - 00:58:26:02

So how about activities or hobbies that you like? You know you want to, you know, ensure protected financially. Lastly a very common want or wish is gifting. So whether that is charitable or legacy gifting with an income annuity you can begin that gifting strategy right away instead of delaying for when you are not around to experience it when left at your passing.

00:58:26:04 - 00:58:50:05

Also something to consider with annuities are deferred annuities, which are guaranteed solutions that help you retirement savings continue to grow. If you're comfortable on the income side or deferred annuities are a great way to continue to grow your savings without risk of market exposure, but also realizing the powerful benefit of tax deferred growth.

00:58:50:07 - 00:59:16:12

Great. Thank you. Mark. All right. We have time for one last question. CJ, we'll go to you here. What inputs does the calculator take into account and can I use it from my phone? Yes. So the calculator uses your age and your current employment income to calculate an assume benefit. Based on the retirement and longevity ages you select

00:59:16:14 - 00:59:38:17

it will show you the annual benefit and total lifetime benefit for different claiming ages. And yes, the calculator is now available through the USAA mobile app. You can also still access it through your computer, laptop or tablet. Know that you do need to be logged in, though, to use it.

00:59:38:19 - 01:00:02:12

All right. That wraps up our Q&A. Over to you, Mary. Fantastic. Thank you both. Lots of questions on this topic. And we've covered a variety of resources today. And we've taken the time to consolidate them all for you in this one handy slide. So if you haven't done so already, you should download the webinar slides using the resources tab in your zoom toolbar.

01:00:02:18 - 01:00:28:24

Those slides are going to provide you with clickable links for all the resources listed here, including: You'll see a link to schedule a call with one of our retirement income specialists, a link to the USAA Social Security calculator, ssa.gov, and the retirement worksheet. Links to watch previously recorded webinars that you might find valuable, such as the one we mentioned on Medicare and others on Social Security.

01:00:29:01 - 01:00:46:15

And finally, we have links to two advice articles that will help reinforce some of the topics that we covered here today. And you can read each of them in 3 to 5 minutes. Well, thank you all for spending some time with us to learn more about Social Security. We hope you enjoyed this presentation. Thank you for trusting USAA.

This material is for informational purposes. Consider your own financial circumstances carefully before making a decision and consult with your tax, legal or estate planning professional.

Guarantees apply to certain insurance and annuity products and are subject to product terms, exclusions and limitations and the insurer's claims-paying ability and financial strength.

Money not previously taxed is taxed as income when paid. Withdrawals before age 59½ may be subject to a 10% federal tax penalty.

An annuity is a long-term insurance contract issued by an insurance company designed to provide a retirement income stream for life. Once the contract principal is converted into an income stream, you will no longer have access to your principal as a lump sum. Terms, conditions, limitations and surrender charges may apply.

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Guaranteed Retirement Income Plan (GRIP): Forms ASI94832ST 10-11, ASI97207AK 10-11, ASI94878AR 10-11, ASI97208AZ 10-11, ASI94875CA 10-11, ASI97165CT 10-11, ASI97123IA 10-11, ASI97032ID 10-11, ASI94876IL 10-11, ASI97195KS 10-11, ASI97170MA 10-11, ASI94940MD 10-11, ASI94879MN 10-11, ASI94921MT 10-11, ASI94920NJ 10-11, ASI97268OH 10-11, ASI94877OK 10-11, ASI94941OR 10-11, ASI94922PA 10-11, ASI94833TX 10-11, ASI97124VA 10-11, ASI94874OS 10-11, NSI94897NY 10-11, NSI97130NY 10-11

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