Principal Financial Group Inc · NASDAQ:PFG
Principal Financial — Investor Presentation
30 slides from Principal Financial's investor presentation
Slide 1: Social Security planning
Social Security planning A way to build your practice
Slide 2: Important disclosures
Investing involves risk including possible loss of principal. Information is current as of the date of this material. Any opinions expressed herein are from a third party and are given in good faith, are subject to change without notice, and are considered correct as of the stated date of their issu
Slide 3: Topics we'll cover
1 Quick overview of Social Security 2 Spousal and survivor benefits Topics we’ll cover 3 Advanced issues 4 Building your practice with Social Security planning The content of this presentation is based upon reliable source material and is believed to be correct as of the time of creation; however, i
Slide 4: Quick overview of Social Security
Quick overview of Social Security 4
Slide 5: How Social Security has evolved
How Social Security has evolved 1935 1940 1965 2009 2021 Social Security Regular Medicare FRA increased FRA gradually Act signed into ongoing monthly signed into law to 66 increased law; Full payments begin to strengthen to 67 Retirement Age the social safety (FRA) = 65 net 5
Slide 6: Key things to know about eligibility
At least age 62 to Accrued 40 credits of collect benefit coverage via payroll FICA taxes Key things to know about eligibility Benefit based on May be eligible based highest 35 years of on spouse’s (or ex- indexed earnings spouse’s) work history 6
Slide 7: Full Retirement Age (FRA): How it affects collecting benefits while working
Full Retirement Age (FRA): How it affects collecting benefits while working Year of FRA FRA Under FRA Over FRA $23,400 $62,160 No limits on For every $2 over this For every $3 over earnings* employment income employment income limit, $1 is withheld limit, $1 is withheld from benefits from benefits *
Slide 8: Tax and Social Security
Tax and Social Security Filing single Married filing jointly Benefits and Benefits and Provisional income Provisional income subject to tax subject to tax Under $25,000 0% Under $32,000 0% $25,000–$34,000 Up to 50% $32,000–$44,000 Up to 50% Over $34,000 Up to 85% Over $44,000 Up to 85% Married coupl
Slide 9: How is provisional income determined?
How is provisional income determined? THE FORMULA: Your modified adjusted gross income (AGI) + 50% of total annual Social Security benefit + 100% of tax-exempt interest generated by your investments = provisional income Tax-exempt interest for the purpose of this formula is generally limited to muni
Slide 10: Spousal and survivor benefits
Spousal and survivor benefits 10
Slide 11: Spousal benefits: who's eligible?
WHO’S ELIGIBLE? Age 62 or older Married for at least one year Spousal benefits Spouse has filed for, and is receiving, their own benefits Under age 62 and caring for a child younger than age 16 11
Slide 12: Spousal benefits: what's the impact?
W H AT ’ S T H E I M P A C T ? Eligible to receive ½ of spouse’s Primary Insurance Amount (PIA) if greater than their own benefit Spousal benefits Reduced if under FRA If they claim and spouse has not, they may be able to receive a benefit increase later (when their spouse files) 12
Slide 13: Survivor benefits: who's eligible?
WHO’S ELIGIBLE? Surviving spouse 60 years or older (50 if disabled), or with children under age 16 Survivor benefits Dependent children under age 18 Individuals remarried at age 60 or older 13
Slide 14: Survivor benefits: what's the impact?
W H AT ’ S T H E I M P A C T ? 100% of survivor benefit at FRA, reduced to 71.5% of full amount if claimed at age 60 Survivor benefits Child receives up to 75% of survivor benefit Can choose own or survivor benefits and later change 14
Slide 15: Divorced spousal and survivor benefits
Divorced spousal and survivor benefits DIVORCED SPOUSAL BENEFITS DIVORCED SURVIVOR BENEFITS Previously married at least 10 years Previously married at least 10 years Not re-married Those remarried at age 60 or older won’t lose divorced survivor benefits Divorced for 2 years and ex-spouse is eligible
Slide 16: Social Security case study
Social Security case study FRA is 67 EXAMPLE: Age 62 Age 67 (FRA) Age 70 Sam and Ann benefit amount benefit amount benefit amount Sam $700 $1,000 $1,240 Ann $1,680 $2,400 $2,976 Spousal benefit* $840 $1,200 $1,200 Source: Social Security COLA Factsheet 2024. *Changes have occurred due to the Biparti
Slide 17: Social Security advanced issues
Social Security advanced issues 17
Slide 18: Social Security strategies
Social Security strategies Social Security strategy1 Definition Benefit May revoke earlier claiming decision Provides flexibility to cease receiving Do-over if made within 12 months of filing benefit if life situation changes May suspend own benefit at FRA; also Suspending benefit impacts spousal an
Slide 19: Windfall Elimination Provision (WEP)
W H O ’ S I M PA C T E D? • Individuals receiving pensions where FICA taxes were not paid • Commonly applies to school teachers, law enforcement, and government employees Windfall • Varies by state and public entity Elimination Provision (WEP) W H AT ’ S T H E I M PA C T ? • A modified formula is ap
Slide 20: Government Pension Offset (GPO)
WHO’S ELLIGIBLE? Government Government pension recipients who are also eligible for Pension Offset Spousal or Survivor Social Security benefits (GPO) W H AT ’ S T H E I M PA C T ? Results in Social Security benefits being reduced by 2/3 of the government pension amount 20
Slide 21: U.S. citizens living abroad
U.S. citizens eligible for Social Security may receive payments The Social Security Administration can’t send payments to some countries U.S. citizens living abroad Non-U.S. citizens may have to meet other eligibility requirements for benefits if they are “outside the U.S.” for more than 30 days To
Slide 22: Dependent benefits
Available once the worker (spouse or parent) files Up to ½ of worker’s PIA Dependent Maximum family benefits = 150% to 180% of PIA benefits Earnings limit applies WHO’S ELIGIBLE? • Unmarried dependent children under age 18 • Spouse caring for children under age 16 22
Slide 23: The Social Security opportunity for financial professionals
The Social Security opportunity for financial professionals 23
Slide 24: Target campaign to clients and prospects age 55+
4 STEPS TO BUILDING YOUR BUSINESS WITH SOCIAL SECURITY 1 Target campaign to • Do a Social Security review—ask to reach out to family members of current clients clients and • Host a webinar/client event—encourage prospects age 55+ people to bring a friend 24
Slide 25: Reach out to high-net worth clients
4 STEPS TO BUILDING YOUR BUSINESS WITH SOCIAL SECURITY Ask “What are you going to do with the extra money?” 2 Reach out to high-net • 529s for grandchildren worth clients • Gifting • IRA contributions • Donor-advised funds • Strategic spending 25
Slide 26: Target clients ages 66 to 70
4 STEPS TO BUILDING YOUR BUSINESS WITH SOCIAL SECURITY • Potential Restricted Application option if client hasn’t taken Social Security yet 3 Target clients • Potential Suspension of Benefits (and they’ll ages 66 to 70 earn 8% a year) if they’re receiving a large inheritance or retirement payout 26
Slide 27: Incorporate Social Security into client retirement income plans
4 STEPS TO BUILDING YOUR BUSINESS WITH SOCIAL SECURITY • Evaluate income and expenses 4 Incorporate Social • Consider longevity Security into client • Aim to max out benefit retirement income plans • Be flexible 27
Slide 28: Resources: Socialsecurity.gov
RESOURCES Socialsecurity.gov 28
Slide 29: Questions?
Questions? 29
Slide 30: The content of this presentation is based upon reliable source material and is believed
The content of this presentation is based upon reliable source material and is believed to be correct as of the time of creation; however, it is subject to change at any time without warning. Investors should consider consulting with their tax professionals prior to making decisions due to their uni