AD09216 (rev 6/10) Cat# 143917

Social Security Getting the Most Out of Your Benefits

Name: Mike Agan, CFP®, ChFC, CRC, CRA

Location: Newark, DE

Date: 10/06/10

Variable Annuities: Are Not Deposits of Any Bank Are Not FDIC Insured Are Not Insured by Any Federal Government Agency Are Not Bank Guaranteed May Go Down in Value.

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Social Security

Understanding the Value

Solvency

When to Begin Taking Benefits

Working and Receiving Benefits

Maximizing Benefits

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Social Security: Understanding the Value

Social Security Value:Provides income you can’t outlive.Provides income that is inflation adjusted.Provides survivorship benefits.Provides more income than you may think:

2009 Max Monthly Benefit: $2,323

10 Years: $319,561*

20 Years: $749,026*

30 Years: $1,326,186*

*Assumes an average 2.8% increase each year for inflation.

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Social Security: How It Works

Formula based on highest 35 years

Earnings indexed to inflation

Average Indexed Monthly Earnings (AIME)

Source: Social Security Administration

$4,483

Example:

AIME = $5,420

90% ($744) = $669.60

32% ($3,739) = $1,196.48

15% ($937) = $140.55

$2,006.63 Primary Insurance Amount (PIA)

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Social Security: Estimating Benefits

Estimate Social Security Benefits with: Annual Social Security Statement

www.socialsecurity.gov

www.ssa.gov Click on Estimate Your Retirement

Benefits for online calculators

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Social Security: Estimating Benefits

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Social Security: Estimating Benefits

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Social Security: Spousal Benefits

A spouse can get 50% of primary worker’s benefits

A spouse will get the higher of their own benefit or the spousal benefit

Former spouses may be entitled to spousal benefits, but they must have been married for at least 10 years

Example: Bob and Sally Bob’s Benefit: $2,200

Sally’s Benefit: $700

Sally’s Spousal Benefit: $1,100

Sally will get $1,100

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Social Security: Survivor Benefits

A surviving spouse will receive the higher of either their own benefit or their deceased spouse’s benefitExample: Bob and Sally

Bob’s Benefit: $2,200 Sally’s Benefit: $1,400 Bob passes away Sally’s benefit will increase to $2,200

Requirements:The surviving spouse must be at least 60 years old

The surviving spouse must be at least 50 years old if disabledYou must be married for at least 9 months prior to your spouse’s

death There are exceptions for accidents

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Social Security: Solvency

2010: SSA pays more than it collects

2025: SSA taps principal

2037: Trust fund exhausted Collections continue

Projected 25% decrease in benefits after 2037

Payments

Collections

2010 2025 2037

SSA

Collection and Payment Comparison

Source: Social Security Report to Congress, 2010

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Social Security: Solvency

Fixing Social SecurityRaise the retirement age

Increase the cap on taxable earnings

Lower benefit payments for future retirees

Reduce Cost of Living Adjustments (COLAs) for all retirees

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Social Security: When to Start

Rethink conventional wisdom: Age 62

Permanent reduction of nearly 25%

Increased longevity

Normal retirement age = 100% of your benefit

Age 70: nearly 130%

Determine your break even age

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Social Security: When to Start

What if you have already started taking benefits?SSA Form 521: “Request for Withdrawal of Application”

Interest free repayment

Possible Strategy:

– Elect to take your benefits at age 62

– Invest those benefits

– Repay the benefits at age 70

Possible Risks:

– Dying early

– Money invested is not available

– Possible changes in the law

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Social Security: Working While Receiving Benefits

Before Normal Retirement Age2010 Limit: $14,160

Loss of $1 in benefits for every $2 over the limit

Triggered only by earned income

62Normal

Retirement Age

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Social Security: Working While Receiving Benefits

Before Normal Retirement Age

Bob is 63 and will semi-retire in 2009

His normal retirement age (NRA) is 66

He elects to receive benefits immediately

His monthly benefit is $1,600 or $19,200 annually

He will earn $25,000 in wages during 2009 and will have $10,000 in investment income

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Social Security: Working While Receiving Benefits

Before Normal Retirement Age

________ $25,000-$14,160$10,840

$10,840 ÷2

$5,420

Earned IncomeEarnings LimitAmount Over Limit

Amount Over Limit$1 Benefit Reduction for Each $2 Over Limit Reduction in annual benefit

________

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Social Security: Working While Receiving Benefits

Before Normal Retirement Age The Good News!

Benefits are not lost, only deferred. At normal retirement age, Bob’s benefits will be recalculated to recoup lost benefits prior to age 66.

Bottom Line: If you want or need income,

early benefits = OK!

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Social Security: Increasing Benefits

Maximizing Benefits for Clients and Spouse The Challenge:

Women live 5 to 6 years longer than men1

The majority of men are two or more years older than their wives1

The majority of women ages 75-84 are widows2

¹ Source: US Bureau of Census, 2000

² Source: American Community Survey, 2006

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What Is a Variable Annuity?

A variable deferred annuity is a long-term financial product designed for retirement. Simply stated, an annuity is a contract between you and an insurance company that lets you pursue the accumulation of assets through asset allocation and customized investment portfolios, and an optional guarantee, available for an additional fee. Asset allocation helps spread your investment dollars across different asset classes, to help manage risk and enhance returns. Asset allocation does not guarantee a profit or protect against a loss. Through customization you choose according to your risk tolerance. The goal is to select a mix of asset classes that will help you meet your long-term investment goals. Your portfolio is professional managed and closely monitored, including your portfolio’s performance and remains consistent with your investment goals. Ultimately, you pay an insurance company and in turn, the company agrees to provide lifetime income or a lump sum from your accumulated assets.

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What You Should Know About Variable Annuities

There are fees and charges associated with variable annuities, which include mortality and expense risk charges, administrative fees, investment management fees, withdrawal charges, and charges for optional benefits. In addition, annuity contracts have exclusions and limitations.

Withdrawals are subject to normal income tax treatment. Early withdrawals may be subject to withdrawal charges, and, if taken prior to age 59½, a 10% federal income tax penalty may apply.

Withdrawals will reduce the death benefit, living benefits and cash surrender value. Withdrawals will come from any gain in the contract first for federal income tax purposes.

Variable annuities are subject to investment risks, including the possible loss of principal invested.

Guarantees described herein are subject to the claims-paying ability of the insurance company and do not include the variable investment options.

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Social Security: Increasing Benefits

Leveraging A Wrinkle: Maximizing income and survivorship benefits when both spouses are covered under Social Security.

A husband, at normal retirement age, can elect to receive 50% of his wife’s benefit and defer taking his own – he gets higher income benefit and wife gets higher survivorship benefit.

Maximizing Benefits for Client and Spouse

Example: Sally, 62 gets a reduced benefit of $1,200

Bob, 66, gets $2,000 if starts now

Bob elects 50% of Sally’s & gets $750 (he gets 50% of her NRA benefit)

Bob is “short” $1,250 a month

$300,000 in VA @ 5% = $1,250 a month

Bob @ 70 gets approx $2,600

Bob’s break-even age is 79-80

Sally’s survivorship benefit based on Bob’shigher benefit from waiting

Bob's Approximate Break-Even Age

$0

$100,000

$200,000

$300,000

$400,000

$500,000

66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82Age

Cum

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1/2 Sally's Social Security benefit until age 70, then Bob's increased SocialSecurity benefit of $2,600

Bob's Social Security benefit at age 66 = $2,000

Approximate Break Age

Note: this does not factor in cost of living adjustment.

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Social Security:

Working With Your Financial Advisor

You can’t look at Social Security in a vacuum

You need a comprehensive retirement income plan

You need to coordinate and integrate:Social Security

Pensions

Personal Savings

Investments

Taxes

Succession and Estate Planning

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Social Security: Summary

Understanding Value

Solvency

When to Begin Taking Benefits

Working and Receiving Benefits

Maximizing Benefits

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Important Information

A deferred variable annuity is a long-term financial product designed for retirement purposes. In essence an annuity is a contractual agreement in which payment(s) are made to an insurance company, which agrees to pay out an income or a lump sum amount at a later date. Typically, variable annuities have mortality and expense charges, account fees, investment management fees, administrative fees and charges for special contract features. In addition, annuity contracts have exclusions and limitations. Early withdrawals may be subject to surrender charges.

All guarantees are based on the claims-paying ability of the issuing insurance company and do not apply to the subaccount investment options.

Variable annuities are sold by prospectus only which contains more complete information, including investment objectives, risks, charges and expenses. Investors should read the prospectus carefully before investing or sending money.

Amounts in the annuity’s variable investment options are subject to fluctuation in value and market risk, including loss of principal. Withdrawals may be taxable as ordinary income and, if taken prior to age 59½, an additional 10% federal income tax penalty may apply. Withdrawals reduce annuity contract benefits and values.

If you are purchasing an annuity contract as an Individual Retirement Annuity (IRA) or Tax Sheltered Annuity (TSA), or to fund an employer retirement plan (QP or Qualified Plan), you should be aware that such annuities do not provide tax deferral benefits beyond those already provided by the Internal Revenue Code. Before purchasing one of these annuities, you should consider whether its features and benefits beyond tax deferral meet your needs and goals. You may also want to consider the relative features, benefits and costs of these annuities with any other investment that you may use in connection with your retirement plan or arrangement.

Please be advised that this presentation is not intended as legal or tax advice. Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed, and clients should seek advice based on their particular circumstances from an independent tax advisor.

Representatives of AXA Distributors, LLC do not act as investment advisors to your variable annuity under the terms of your contract, unless there is a separate client agreement between you specifically assuming that role. These representatives are not responsible for giving ongoing investment advice, including but not limited to reallocation and rebalancing, in the absence of a separate agreement.

Variable annuity products are issued by AXA Equitable Life Insurance Company, and are co-distributed by AXA Advisors, LLC and AXA Distributors, LLC, located at 1290 Avenue of the Americas, New York, NY, 10104.

Variable Annuities: Are Not Deposits of Any Bank Are Not FDIC Insured Are Not Insured by Any Federal Government Agency Are Not Bank Guaranteed May Go Down in Value.

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