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Retirement Income and Estate Planning

Retirement Income and Estate Planning. Social Security. A public pension plan established by the US government in 1935 – defined benefit plan Recipients Retirees Survivors Disabled. Social Security. Benefits received are based on earnings Factors When you retire

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Retirement Income and Estate Planning

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  1. Retirement Income and Estate Planning

  2. Social Security A public pension plan established by the US government in 1935 – defined benefit plan Recipients • Retirees • Survivors • Disabled

  3. Social Security Benefits received are based on earnings Factors • When you retire • How long you worked - number of quarters worked vs. year of birth (40 quarters for full benefits) • Earned income

  4. Social Security Start of benefits – age 62 – 67 • Yearly amount of benefit increases as delay start Social Security Taxes (4.2% /6.2% of income) • Called FICA taxes (Federal Insurance Contributions Act) • Taken out of paycheck along with other income taxes • Medicare taxes (1.45%) also taken out Maximum Taxable Yearly Earnings (MTYE) • Currently $113,700 (for 2013) • No cap for Medicare

  5. Estate Planning Estate • All property and assets owned by an individual Estate Planning • Creating a detailed plan for managing your estate according to your wishes after your death • An essential part of financial and retirement planning

  6. Estate Planning Will • Legal declaration of a person’s wishes regarding the distribution of his or her estate after death • Many different types • If you die without one, you are “intestate” • Key issues • Executor • Guardian • Joint ownership • Trustee

  7. Estate Planning Trust • A legal arrangement in which a designated person (trustee) manages the assets of the estate for the benefit of someone else Probate • Legal procedure of proving that a will is valid • Probate court validates the will and oversees the distribution of your assets

  8. Key Terms – Estate Planning Beneficiary Will Defined Benefit Plan Probate Defined Contribution Plan Estate Trust FICA Trustee Intestate Vesting Guardian Executor

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