Navigating Social Security: Listener Questions Answered

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Devin: The Big Picture
retirement show does not provide

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tax legal or financial advice,
listeners are encouraged to seek

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out their own advisors in these
areas. Hey, everyone, welcome to

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the Big Picture retirement Show.
I'm your host, Devin. And today,

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I'm back in the studio by
myself. That's okay, we've got a

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list of social security
questions to go through. I think

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John would be bored to tears if
he was here anyway. So we're

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gonna jump into these. But
first, before we get into these

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questions, those of you who
follow me on YouTube have likely

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already seen this video. But the
Social Security Administration

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is sending out emails to
everyone who has a my SSA

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account, that's the online
account that you can log into to

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do a benefits verification, you
can check your earnings history

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and a lot of other things there
as well. And I always recommend

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to people that they have an
account setup, you know, there's

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a few reasons Number one, you
need to be checking your

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earnings history every year to
make sure the right amount of

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earnings are being recorded. But
the second reason that you need

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to get in there is partially the
reason that the Social Security

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Administration is sending out
these emails as well. And that

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is to make sure that your
information stays safe. And

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every day that goes by that you
haven't gotten your own. My SSA

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account, frankly, is another day
that someone else can get that

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on your behalf and probably not
meant to be beneficial to you.

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So if you haven't gotten your my
SSA account, do that. But most

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of you probably already have
gotten that. And if you signed

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up a few years ago, you're
likely still signing in with

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your username and password.
While coming up at some point in

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the future. We don't know when
they are going to discontinue

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allowing you logging in with a
username and password. And

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instead, you're going to have to
migrate to the login dot geo V

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methodology for getting into
your account. Now, this only

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applies to people who are either
not already using login dot geo

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V, or the id.me service. And so
if you use either of those, you

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don't need to make any changes.
But if you're still just using

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the username and password, you
received an email, vast majority

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of people are seeing that email.
They're saying that, hey, I know

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that the number one scam out
there is the Social Security

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scam. So I'm just going to
ignore this email. And that's

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fine. Ignore the email, I never
recommend clicking on links

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about you know, things like that
out of an email anyway, but go

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over to your my SSA account and
make those changes. Because at

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some point in the future, you're
going to log in, or at least

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attempt to log in, and you're
not gonna be able to get into

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your account. And it's just
going to be a big hairy miss.

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Because it takes a little while
to get things set up with login

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dot geo V, you've got to show
them a picture ID things like

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that. There's a lot of extra
security precautions there as

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well. Now, many of you may
already use login dot geo V. For

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some of the other government
agencies. I know the Small

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Business Administration uses it,
I believe the Office of

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Personnel Management uses it.
There's a handful of others that

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already use this. And so you can
link these accounts together,

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where you have one set of login
credentials that will get you

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into all of these different
governmental accounts. Alright,

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so now that that's out of the
way, let's jump into some of

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these questions. The first one
comes from Lois. She said for a

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taxpayer who was born in 1955,
the full retirement age for

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survivor benefits is 66. But for
all other benefits, it is 66 and

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two months, which of these two
retirement ages is used to

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determine if a taxpayer who is
receiving survivor benefits will

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have the benefits reduced
because their income exceeded

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the earnings limit. All right.
Now, she went on to give me some

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more information, but I'll just
stop it right there. So we all

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know about what the full
retirement age is, right? So for

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anybody born in 1960 or later,
the full retirement age is 67.

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And if you were born before that
it's slightly younger, but most

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of the people listening to our
podcast or is that 1960 or

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later, we do have some in there
that are a little older than

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that. But if that's you, you
likely already know what your

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full retirement age is. The
interesting thing about this is

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when they made changes to the
full retirement age, they put

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the survivor benefits on a
different schedule. And really

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all it is is just everything is
pushed forward to yours. So for

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example, in 1960, the full
retirement age becomes 67 for

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retirement benefits, but for
survivor benefits That doesn't

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come into effect until 1962. So
just add two years on to the

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normal full retirement age for
Survivor Benefit or for

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retirement benefits. And then
you have the full retirement age

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for survivor benefits. Now,
she's asking a very astute

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question here. And that is,
which of those ages determines

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the earnings limit, because at
full retirement age, the

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earnings limit no longer
applies. And although she's only

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noting, it's a two month
difference between those, that

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could certainly make a
difference with the amount of

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earnings that she could have, in
those two months if she were to

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continue working. Now, that does
cause quite a bit of confusion

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for individuals who are
collecting survivors benefits,

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and I get it. But here's the
thing, the Social Security

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ministration does say very
clearly, although it's hidden,

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some that if you receive
survivor benefits, we use your

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full retirement age for
retirement benefits when

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applying the annual earnings
test for retirement or survivor

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benefits. Although the full
retirement age for survivor

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benefits may be earlier, for the
annual earnings test purposes,

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we use the full retirement age
for retirement benefits, this

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rule applies even if the
beneficiary is not entitled to

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retirement benefits. So there
you have it, they're going to

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use the normal schedule for for
retirement age to determine that

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earnings test and the
application of that. All right,

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Jane, Jane says thank you for
all the information you continue

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to provide to educate those
planning for retirement. And

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those of us already retired.
Well, thank you, Jane. She said,

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I have two questions. My husband
is 70 and just filed for Social

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Security benefits, I will be 65.
In February, my full retirement

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age is 66 and 10 months, if I
file for social security when I

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am 65. Would that lower my
survivors benefit if my husband

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were to pass, but I waited into
a full retirement age to file

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for survivor benefits. All
right. So let me address that

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question first. So what she's
asking effectively is, hey, if I

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file for my benefits, is that
going to decrease the amount of

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my future survivor benefits? The
answer is no, it will not. Those

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are two separate independent
benefits. So as noted in the

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last question, the Social
Security Administration makes a

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very clear distinction between
survivor benefits and retirement

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benefits. So if you file for
your retirement benefits, that

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does not automatically deem you
to have filed early for a

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survivor's benefit. And since
she's already told me that her

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husband filed at 70, than we
know that she's going to be able

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to file for benefits. Now, if
that's the way it should work

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out, you know, when you look at
it on paper, if that's the

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optimal strategy, and I'm not
convinced that it is. But again,

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I'd have to know a lot more
factors here. But her husband

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found at 70. And now she's 65.
And she's thinking about

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falling, would that reduce a
survivor's benefit? If he were

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to die before her? Jane, it
would not, you would collect

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your reduced retirement benefit.
And then if your husband were to

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die before you, your benefit
would step up to the benefit

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that he was collecting. At the
time of his death? Her second

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question says, Can I file for a
reduced spousal benefit at 65,

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which would be potentially
higher than my own benefit? So

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no, you cannot, prior to January
1 2016, I believe it was you

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could do that, you could
restrict the scope of your

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application to a spousal benefit
only, and let your benefit grow

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as long as you're at least full
retirement age. But in this

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case, you know, you wouldn't
have been able to do that

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anyway. But now the law has
changed. So it doesn't even

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matter. So if you file for, you
know, if you go in with the

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intention of filing for a
spousal benefit, only, they're

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just going to entitle you to all
of the benefits that you're

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entitled to. So that would be
your own benefit, plus a little

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bit for the spousal benefit,
which would be added to your own

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benefit. So both of those would
end up being reduced. But again,

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that would not change the fact
that if your husband were to pre

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decease, you, your benefit would
stop, if it's lower, and it

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sounds like it is, and your
husband's benefit would be your

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new benefit. All right. Perfect.
Thank you for the question,

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Jane. All right. The next
question is from Sheila. Sheila

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said, so you have a plan, plans
change life happen. Now, we

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could pause right there and have
a pretty in depth conversation,

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couldn't we? You know, speaking
of plans,

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when we do planning for clients,
they will often ask me, you

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know, before they engage us,
Devin, can we just take this

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plan and run with it? You know,
is this something that we can

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take an execute for the rest of
our retirement? And sometimes

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there will be some shock when
they hear us say, No, you won't

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be able to because the one thing
that we know about this plan is

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that it's wrong. You know, I
know that isn't a warm and fuzzy

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feeling for someone who's about
to pay A two grand for a

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retirement income plan. But it's
true, right? Because things

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evolve. What I can say is that
when we do planning, it's as

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accurate as it can be at that
moment in time. And I don't

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think we could get any higher
level of accuracy based on what

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we know. But as Sheila has
noted, here, you have a plan,

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plans change, life happens,
things evolve, tax law changes,

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the way that we view, money
changes, man, I can tell you,

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I'm 48 years old. And I can tell
you that the way I view money

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now is not the same as it was
when I was 40, maybe even, maybe

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even a little older than that,
right? Because as you age, your

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objectives start to change your
ideas about what's important

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starts to change. And so these
plans have to evolve right

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alongside your life. So if you
don't have a plan, if your

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advisor is not giving you a
plan, or if you're not going

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out, looking at new retirement,
and getting a plan and modifying

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that plan on an annual basis,
you need to because things

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change. All right. Let me get
back to her question. She said,

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rather than taking Social
Security before age 70, which is

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her current plan is drawing down
from my IRA a better approach,

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we have some cushion, but don't
want to outlive our savings.

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Having a higher social security
seems to be more important than

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using some of the IRA. Ooh,
Sheila, there's a lot to unpack

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in that question. You know, the
financial media is hyper focused

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on the idea of maximizing Social
Security. If you go out to your

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Investopedia, US News, all these
articles that have plenty of

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quotes from financial planners,
you're going to see that

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maximizing Social Security is a
big key word. Here's the deal,

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though, when you are retired,
let's say that you retire at 65.

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The income sources in front of
you at that point will be social

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security, and your retirement
savings. All right. Now, I know

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that's not the case for
everyone. Some people are still

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fortunate enough to have large
pensions, maybe rental income,

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other things like that. But for
the vast majority of people,

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when you retire, there are two
income sources, the income

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coming from your investments and
the income from Social Security.

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So you have to make a decision,
do you want to maximize Social

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Security. And the way to
maximize Social Security is to

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fall at 70? Or do you want to
maximize your retirement

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savings. So there is a trade
off. And there is an inverse

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relationship here, by making the
decision when you're retiring,

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say at 65, to maximize Social
Security and push that decision

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out, then you are also making a
decision to minimize your

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retirement savings, there's just
no way around it. It's a

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counterweight, because if you're
not filing for Social Security,

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you're going to be pulling
additional distributions out of

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your retirement savings. And
then if you file for Social

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Security, earlier, let's say
that you go ahead and file for

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Social Security. Well, now
you're not maximizing Social

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Security. In fact, we could say
that you may be minimizing it at

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that point, because you're
getting less than you could five

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years down the road. But you're
also not likely to be taking as

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much out of your retirement
savings. And thus now you're

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maximizing your retirement
savings. So the big question is

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always should you maximize
Social Security and thus

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minimize your retirement
savings? Or should you maximize

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your retirement savings and
thus, minimize your Social

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00:13:21,600 --> 00:13:25,410
Security? Here's the way to
know, lots of testing, you need

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to be able to get into either a
financial planning software, or

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00:13:29,790 --> 00:13:33,450
hire someone that can do this
for you. Or you can look at

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00:13:33,450 --> 00:13:36,750
multiple scenarios, you need to
be able to see this in a very

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00:13:36,780 --> 00:13:42,750
easy, logical, clear line graph
that makes it very transparent.

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what the end result is of all of
these different scenarios. And

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actually, I'll back up from that
not just the end result. But

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what is the cumulative result,
right. And we want to measure

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00:13:53,130 --> 00:13:55,440
this in two different ways. We
want to measure this in

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00:13:55,590 --> 00:14:00,000
cumulative tax liability and
portfolio balances. So how does

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00:14:00,000 --> 00:14:03,930
filing early impact your
cumulative tax liability? We

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00:14:03,930 --> 00:14:06,060
don't want to just go to the end
and measure it right? So if you

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put in age 90, as the end of
retirement plan, which is also

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you know, when you think you're
going to die? Well, we're not,

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we're not trying to run the race
to get to 90 and see who can

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00:14:16,440 --> 00:14:19,560
have the most money. We want to
have the best experience along

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the way. And so seeing all of
these different strategies, what

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00:14:22,530 --> 00:14:25,860
if you fall at 65? What about
67? What about 68? What about

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00:14:25,860 --> 00:14:29,820
70? And you're able to see how
that impacts your cumulative tax

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00:14:29,820 --> 00:14:33,300
liability. And your portfolio
balances over that time really

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00:14:33,300 --> 00:14:36,750
gives you that clarity that you
need to be able to make a very

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confident decision in
retirement. Now, I'll tell you,

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I've talked to a lot of people
who had the plan to file at 74

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00:14:45,990 --> 00:14:50,220
Social Security benefits. They
were retiring at 60 to 63, you

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00:14:50,220 --> 00:14:54,540
know, sometime in their earlier
60s, and they had already done

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00:14:54,540 --> 00:14:56,880
the math, you know, maybe they
used a financial planning

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00:14:56,880 --> 00:15:01,770
software that in most cases will
somewhat default to saying Do

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00:15:01,770 --> 00:15:04,290
you want to maximize Social
Security. And if you hit yes,

244
00:15:04,290 --> 00:15:07,440
it's just going to get you to
fall at 70. But what they

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couldn't see in all of those
pages that financial planning

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00:15:12,300 --> 00:15:17,490
software spits out is that in
the interim, between when they

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00:15:17,520 --> 00:15:22,440
retire, and file for social
security in that space, seeing

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00:15:22,440 --> 00:15:25,680
what happens to their portfolio
balances, because they're taking

249
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out larger distributions than
they normally would, when you

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00:15:29,160 --> 00:15:32,070
combine that with the
possibility of a negative

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00:15:32,070 --> 00:15:35,730
sequence of return, when you can
see that data clearly. And you

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00:15:35,730 --> 00:15:38,940
see that portfolio balance
declining in that period, there

253
00:15:38,940 --> 00:15:41,400
will be some people that look at
that and say, you know, what,

254
00:15:41,580 --> 00:15:45,420
I'm not comfortable with seeing
my portfolio balance go down

255
00:15:45,420 --> 00:15:48,330
like that, that early in
retirement, I want to find a way

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00:15:48,330 --> 00:15:52,020
to smooth the ride. So again,
it's all very subjective. You

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00:15:52,020 --> 00:15:58,050
know, we often tell people that
financial planning is really 50%

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00:15:58,050 --> 00:16:01,620
data. And that surprises some
people, you know, there are

259
00:16:01,650 --> 00:16:05,130
those out there, their job is
100% data, right. And decisions

260
00:16:05,130 --> 00:16:08,130
are made based on that data
alone. But retirement planning

261
00:16:08,130 --> 00:16:10,530
really isn't like that, because
we have the emotional factor

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that comes into it. And so I
often recommend that people look

263
00:16:14,580 --> 00:16:19,080
at multiple scenarios, as that
50% of the equation, the other

264
00:16:19,080 --> 00:16:24,210
50% is then determining how you
feel about that data. You know,

265
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an example of that, that I've
told fairly often on the

266
00:16:27,540 --> 00:16:30,930
podcast, I think, is paying my
house off early. It does not

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00:16:30,930 --> 00:16:33,600
make sense on paper to pay my
house off early. You know, it

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00:16:33,600 --> 00:16:38,010
was John, who years ago, called
me one day, and he said, Hey,

269
00:16:38,010 --> 00:16:43,170
Devin, so I'm refinancing this
house, and I got 1.9% on it. If

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00:16:43,170 --> 00:16:45,870
you want some of that, here's
how you need to call. And I

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00:16:45,870 --> 00:16:48,930
thought, Man, that's the that is
the lowest rate I've ever heard

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00:16:48,930 --> 00:16:53,160
of. That's ridiculous. And so I
called the same lady at the bank

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00:16:53,160 --> 00:16:56,460
that he had talked to, this was
probably a couple of days later,

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and rates had dropped even a
little bit more. And now I could

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get locked in at 1.85%. That's
an insane, low interest rate.

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00:17:07,110 --> 00:17:10,560
Interest rates shouldn't be that
low, right. And when I track

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00:17:10,560 --> 00:17:15,870
this out on paper, the data
tells me that I am by far better

278
00:17:15,870 --> 00:17:19,620
off to just put that amount of
cash that I could use to pay my

279
00:17:19,620 --> 00:17:23,340
house off in a money market
account, and earn a little over

280
00:17:23,340 --> 00:17:28,200
3% difference between what I'm
paying in interest for my house,

281
00:17:28,410 --> 00:17:32,520
and what I'm earning an interest
on that same amount of cash. But

282
00:17:32,640 --> 00:17:37,260
that's the 50% the other 50% of
how do I feel about that data is

283
00:17:37,260 --> 00:17:39,480
a little different. Now
personally, I don't want to pay

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00:17:39,480 --> 00:17:42,090
my house off early. I don't
think it makes sense. You know,

285
00:17:42,090 --> 00:17:45,360
I'm somewhat more driven by the
data. My wife, on the other

286
00:17:45,360 --> 00:17:49,680
hand, says Devin, I have always
wanted a paid off house and

287
00:17:49,680 --> 00:17:53,670
we're so close. I don't care
what that interest rate is, I

288
00:17:53,670 --> 00:17:56,490
want to pay this thing off. And
that's the part of the data then

289
00:17:56,490 --> 00:17:59,460
that you really have to wrestle
with and figure out how does

290
00:17:59,460 --> 00:18:03,030
this resonate with me. But
before you can get there, you've

291
00:18:03,030 --> 00:18:06,810
got to get data that's very
clear, that you can understand,

292
00:18:06,990 --> 00:18:10,200
and then you can move forward
with confidence and make a good

293
00:18:10,200 --> 00:18:13,350
decision. All right. Thank you,
Sheila for that question. Next

294
00:18:13,350 --> 00:18:17,520
question is BD BD said I retired
in 2022. Using Devon's

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00:18:17,520 --> 00:18:21,030
information regarding being the
primary earner, a spouse who

296
00:18:21,060 --> 00:18:24,570
stays home in quotes and a
disabled adult child, this

297
00:18:24,570 --> 00:18:27,150
situation alone seem to
challenge our local Social

298
00:18:27,150 --> 00:18:29,970
Security office and their
calculation of applicable Social

299
00:18:29,970 --> 00:18:33,420
Security benefits, then they
unexpectedly withheld payments

300
00:18:33,450 --> 00:18:38,610
against a 20 plus year old
overpayment that the local rep

301
00:18:38,730 --> 00:18:42,030
had said they probably wouldn't
apply to benefit. It was all

302
00:18:42,030 --> 00:18:45,510
rather bumpy. How can I
determine what's actually

303
00:18:45,600 --> 00:18:49,020
correct of BD, I'm gonna tell
you, I have seen so many

304
00:18:49,020 --> 00:18:54,660
mistakes made in cases where
individuals are receiving

305
00:18:55,380 --> 00:18:59,430
benefits from disabled adult
children. And really, it's so

306
00:18:59,430 --> 00:19:05,280
complicated that it doesn't make
sense for me to get involved in

307
00:19:05,280 --> 00:19:08,160
one of these cases. Because, you
know, with the hourly rate, I

308
00:19:08,160 --> 00:19:11,130
would have to charge to take
myself away from my business,

309
00:19:11,190 --> 00:19:15,330
the return on those dollar spent
may be somewhat low, but I'm

310
00:19:15,330 --> 00:19:19,140
going to tell you, I have a
fantastic resource for anyone

311
00:19:19,140 --> 00:19:22,980
that's dealing with benefits
from a disabled adult child and

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00:19:22,980 --> 00:19:27,330
figuring out you know, are we
getting the right benefits? And

313
00:19:27,420 --> 00:19:30,720
I don't know that I've ever
mentioned this guy on the

314
00:19:30,720 --> 00:19:36,750
podcast before, but he is really
good spent, I believe 12 years

315
00:19:36,780 --> 00:19:39,360
at the Social Security
ministration as a claims

316
00:19:39,360 --> 00:19:44,820
adjudicator, so looking at these
cases, and his specialty is in

317
00:19:45,000 --> 00:19:48,000
children's benefits and the
disabled adult child benefits

318
00:19:48,000 --> 00:19:51,210
area. His name is Joshua Maga.
The name of the company is

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00:19:51,210 --> 00:19:56,280
social benefit advisors.com You
can find them online and you can

320
00:19:56,280 --> 00:19:59,970
make an appointment with him and
he will go through all of it.

321
00:20:00,000 --> 00:20:03,090
and help you determine, are you
getting the right benefit

322
00:20:03,090 --> 00:20:08,880
amount? And in the past, I have
seen individuals use him and

323
00:20:08,880 --> 00:20:12,900
he's helped them to figure out
that they had 1000s of dollars

324
00:20:12,990 --> 00:20:16,380
in underpayments because the
benefit had not been calculated

325
00:20:16,380 --> 00:20:19,620
correctly. So instead of me
trying to go into a long in

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00:20:19,620 --> 00:20:23,070
depth discussion about disabled
adult children benefits, I would

327
00:20:23,070 --> 00:20:25,830
just say, get in touch with
Josh, he's going to be able to

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00:20:25,830 --> 00:20:27,960
get you squared away. All right,
next question comes from

329
00:20:27,960 --> 00:20:31,080
Carolyn. Carolyn said, my
husband retired, he was a

330
00:20:31,080 --> 00:20:34,440
policeman, and he drove a city
government pension, his social

331
00:20:34,440 --> 00:20:36,810
security falls under the
Windfall Elimination Provision,

332
00:20:37,110 --> 00:20:41,340
and is reduced. I'm now retired,
and I am drawing Social

333
00:20:41,340 --> 00:20:45,270
Security, can he draw a spousal
benefit off of my social

334
00:20:45,270 --> 00:20:49,470
security, which is significantly
more than his social security,

335
00:20:49,620 --> 00:20:53,550
but is less than one half of his
pension? All right. So Carolyn,

336
00:20:53,760 --> 00:20:57,210
it sounds like your husband has
what we call a noncovered

337
00:20:57,210 --> 00:21:01,320
pension. And that's simply a
pension that he earned while he

338
00:21:01,320 --> 00:21:06,150
was working at a job that he did
not pay into Social Security.

339
00:21:06,300 --> 00:21:09,210
And as such, you've already
noted, he is subject to the

340
00:21:09,210 --> 00:21:12,690
Windfall Elimination Provision,
which is effectively just a

341
00:21:12,720 --> 00:21:15,750
recalculation of Social
Security. It's an alternate

342
00:21:15,750 --> 00:21:19,530
formula that they use for people
with a non covered pension. But

343
00:21:19,530 --> 00:21:23,460
he is also covered by another
provision, called the Government

344
00:21:23,460 --> 00:21:27,150
Pension Offset, and the
Government Pension Offset

345
00:21:27,330 --> 00:21:31,530
applies not to your own
benefits, if you have that non

346
00:21:31,530 --> 00:21:35,580
covered pension. But it applies
to any spousal or survivor

347
00:21:35,580 --> 00:21:38,670
benefits that you could be
entitled to receive. And the

348
00:21:38,670 --> 00:21:43,140
amount of that Government
Pension Offset is equal to two

349
00:21:43,200 --> 00:21:47,580
thirds of your noncovered
pension. So for example, if your

350
00:21:47,610 --> 00:21:51,270
noncovered pension is $3,000 a
month, then before they will pay

351
00:21:51,270 --> 00:21:54,420
any spousal or survivor benefits
to you, they're going to

352
00:21:54,420 --> 00:21:59,100
subtract 2002 thirds of that non
covered pension. So with a

353
00:21:59,100 --> 00:22:02,760
spousal benefit, I don't think
it's even possible, depending on

354
00:22:02,760 --> 00:22:06,630
what that pension is. But if he
retired as a police officer, I

355
00:22:06,630 --> 00:22:09,900
would imagine that that pension
is going to be too high, where

356
00:22:09,900 --> 00:22:14,400
two thirds of that amount would
wipe out any spousal or survivor

357
00:22:14,400 --> 00:22:17,550
benefits. Maybe that'll change
one day, there's always

358
00:22:17,550 --> 00:22:21,000
legislation being proposed, most
of it is somewhat self serving

359
00:22:21,150 --> 00:22:24,960
for these politicians. But we'll
have to see. All right, next

360
00:22:24,960 --> 00:22:28,170
question comes from Don. Don
said, I'm currently collecting

361
00:22:28,170 --> 00:22:31,140
Social Security and working,
will my benefits ever be

362
00:22:31,140 --> 00:22:35,130
adjusted to account for the new
Social Security taxes? I'm

363
00:22:35,130 --> 00:22:39,210
paying? Well, yes, done. They
will, you know, on an annual

364
00:22:39,210 --> 00:22:42,990
basis, the Social Security
Administration performs this

365
00:22:43,050 --> 00:22:46,980
behind the curtain calculation,
they call it a ri computation.

366
00:22:47,040 --> 00:22:51,570
So effectively, what they do is,
they look at your highest 35

367
00:22:51,570 --> 00:22:54,390
years of index earnings. So
that's the years that have

368
00:22:54,420 --> 00:22:57,870
already been indexed for
inflation using their indexing

369
00:22:57,870 --> 00:23:00,540
factors, which you can find on
their website, if you want to

370
00:23:00,540 --> 00:23:04,020
run those out in a spreadsheet,
they take those highest 35

371
00:23:04,020 --> 00:23:08,550
years, and they run those
through a formula. And it has to

372
00:23:08,550 --> 00:23:12,450
be the formula that's in place
the year you turn 62. All right.

373
00:23:12,630 --> 00:23:15,780
So that's done that establishes
your pie. And from that point,

374
00:23:15,780 --> 00:23:18,870
you start getting the cost of
living adjustments, so on and so

375
00:23:18,870 --> 00:23:21,810
forth. Now, if you continue
working after that point, what

376
00:23:21,810 --> 00:23:26,610
they do then is they will look
at your new earnings, and

377
00:23:26,610 --> 00:23:30,120
compare those against the list
of how 35 And if your new

378
00:23:30,120 --> 00:23:34,470
earnings are greater than any of
the earnings and how 35, they

379
00:23:34,470 --> 00:23:37,950
will boot that number out and
put your new earnings in, which

380
00:23:37,950 --> 00:23:41,970
will result in a slightly higher
benefit. But if those new

381
00:23:41,970 --> 00:23:47,010
earnings are not greater than
one of those in that high 35,

382
00:23:47,160 --> 00:23:51,180
then your benefit will not be
recalculated. And so you know,

383
00:23:51,180 --> 00:23:53,430
sometimes I hear grumbling from
people that say, Look, I've

384
00:23:53,430 --> 00:23:56,670
retired as an engineer, or
whatever it is, you know, making

385
00:23:56,700 --> 00:24:00,270
fairly high income. And now I'm
doing this consulting gig on the

386
00:24:00,270 --> 00:24:02,970
job on the side. And those
earnings are never going to

387
00:24:02,970 --> 00:24:05,850
replace one of my hot 35. But
I've still got to pay Social

388
00:24:05,850 --> 00:24:09,450
Security taxes. So effectively,
I'm just paying these taxes in

389
00:24:09,450 --> 00:24:11,850
for nothing. Well, that's
absolutely right. There's not

390
00:24:11,850 --> 00:24:15,450
going to be any return on
investment for those taxes that

391
00:24:15,450 --> 00:24:19,800
you're paying in and less. They
outpace one of those years and

392
00:24:19,800 --> 00:24:24,240
how 35 Alright, let's move on to
Tom. Tom said, my wife took her

393
00:24:24,240 --> 00:24:28,170
Social Security at 65 and eight
months. I was born in 1958. My

394
00:24:28,170 --> 00:24:31,350
wife was two, and I'm trying to
decide when to take my Social

395
00:24:31,350 --> 00:24:35,040
Security to maximize both
benefits. Currently, my full

396
00:24:35,040 --> 00:24:39,000
retirement age benefit is 3400.
And I'm thinking about taking it

397
00:24:39,150 --> 00:24:43,860
either in 2024 or 2025. Do you
have any recommendations? You

398
00:24:43,860 --> 00:24:46,740
know, Tom, there's a lot more
that has to be considered here.

399
00:24:46,860 --> 00:24:50,610
And you know, we answered this
question just a moment ago with

400
00:24:50,610 --> 00:24:54,300
Sheila, where we were talking
about, you know, choosing the

401
00:24:54,300 --> 00:24:57,300
right age to file there's a lot
to consider here, you know,

402
00:24:57,300 --> 00:25:01,590
beyond just what are your other
assets to an income, then we

403
00:25:01,590 --> 00:25:04,440
have to look at, you know, age
differences, which here it

404
00:25:04,440 --> 00:25:07,110
doesn't seem like there's much
of an age difference, would want

405
00:25:07,110 --> 00:25:10,020
to look at some health
differences, there's quite a

406
00:25:10,020 --> 00:25:15,270
bit, that would go into the
decision about falling. Now, you

407
00:25:15,270 --> 00:25:18,450
did say, though, that you want
to maximize your benefit. Now,

408
00:25:18,450 --> 00:25:22,560
the obvious way to maximize your
benefit is to push it forward as

409
00:25:22,560 --> 00:25:25,860
long as you can, right? Because
it's growing by two thirds of

410
00:25:25,860 --> 00:25:29,850
1%. For every month you delay
it, which works out to about 8%

411
00:25:29,850 --> 00:25:34,470
per year. And so if you were
born in 1958, that means that

412
00:25:34,470 --> 00:25:38,250
your full retirement age is 66,
and eight months, so you're

413
00:25:38,250 --> 00:25:43,890
gonna get, you know, what is
that 26 720 8% added to your

414
00:25:43,890 --> 00:25:47,220
full retirement age, if you
delay, so that would be the path

415
00:25:47,220 --> 00:25:53,220
to maximization. But some of
that is also going to depend on

416
00:25:53,250 --> 00:25:58,260
how much your spouse's benefit
is. So for example, let's say

417
00:25:58,260 --> 00:26:01,620
that she didn't work a job that
paid into Social Security,

418
00:26:01,620 --> 00:26:05,250
instead, she ran the household,
raise the kids and did all of

419
00:26:05,250 --> 00:26:10,170
that work. In that case, if the
only benefit that she's entitled

420
00:26:10,170 --> 00:26:14,790
to is a spousal benefit, what
you've got to remember is that

421
00:26:14,910 --> 00:26:19,290
until you file for your benefit
being the higher earner, your

422
00:26:19,290 --> 00:26:22,890
spouse cannot receive that
spousal payment. So for you

423
00:26:22,920 --> 00:26:26,610
delaying your benefit, you're
not only pushing your benefit

424
00:26:26,610 --> 00:26:31,140
forward, but you're also missing
a few months where your spouse

425
00:26:31,320 --> 00:26:34,740
could collect a benefit. So
you've got to weigh all of that

426
00:26:34,740 --> 00:26:38,460
out. And again, much like ATO,
Sheila, the way to do that is

427
00:26:38,460 --> 00:26:41,670
through testing, you need to
look at multiple scenarios to

428
00:26:41,670 --> 00:26:44,430
see, you know, what kind of ride
does this give me in terms of,

429
00:26:44,550 --> 00:26:48,120
you know, cumulative taxes in
terms of portfolio balances. And

430
00:26:48,150 --> 00:26:51,660
you know, which of these gives
me the most confidence that I'm

431
00:26:51,660 --> 00:26:55,050
ready to retire. And to use
this, this withdrawal strategy

432
00:26:55,050 --> 00:26:57,150
to use this Social Security
following strategy, Roth

433
00:26:57,150 --> 00:27:00,060
conversion strategy, it all
comes back to the testing. All

434
00:27:00,060 --> 00:27:04,440
right, we are going to go to Bob
and Bob says, I'm planning to

435
00:27:04,440 --> 00:27:07,260
wait until 70 to draw Social
Security, because I want to

436
00:27:07,260 --> 00:27:10,950
maximize my benefits. And my
research led me to believe my

437
00:27:10,950 --> 00:27:15,450
wife was entitled to a benefit
of at least 50% of my total

438
00:27:15,450 --> 00:27:18,390
benefit, but I thought I read
somewhere that she is only

439
00:27:18,390 --> 00:27:22,290
entitled to 50% of my full
retirement age benefit amount.

440
00:27:22,410 --> 00:27:26,730
Is that correct? also wondering
if I die before her? Is she only

441
00:27:26,730 --> 00:27:29,910
entitled to my full retirement
age benefit? Or will she be able

442
00:27:29,910 --> 00:27:33,570
to claim the benefit? I would be
getting at 70? Assuming that's

443
00:27:33,600 --> 00:27:36,750
when I file? Alright, Bob, good
question. And it is one that

444
00:27:36,750 --> 00:27:40,110
causes confusion, we hear that
50% number thrown around quite

445
00:27:40,110 --> 00:27:43,500
often, where people are under
the assumption that a spousal

446
00:27:43,500 --> 00:27:48,450
benefit is 50% of the higher
earners benefit, but it is but

447
00:27:48,450 --> 00:27:53,910
it's also not, it is always key
to the primary insurance amount

448
00:27:54,120 --> 00:27:57,420
of the higher earner, which is
effectively the full retirement

449
00:27:57,420 --> 00:28:01,320
age benefit. So for example, if
your full retirement age benefit

450
00:28:01,320 --> 00:28:08,100
is $3,000. And you delay that to
say age 70. And now you're

451
00:28:08,100 --> 00:28:11,520
getting almost 4000, well, your
spouse is not going to get half

452
00:28:11,520 --> 00:28:15,840
of that 4000, she's going to get
half of the 3000. So it's always

453
00:28:15,840 --> 00:28:20,670
key to the primary insurance
amount. Now, with respect to

454
00:28:20,700 --> 00:28:24,600
survivors benefits, that's
different. That isn't

455
00:28:24,600 --> 00:28:28,410
necessarily key to that if you
have already filed or especially

456
00:28:28,410 --> 00:28:32,430
if you've already passed full
retirement age. So the key there

457
00:28:32,460 --> 00:28:37,890
is that the benefit that she
would take over if you were to

458
00:28:37,890 --> 00:28:41,940
Dhaba for her would be the
benefit that you're receiving as

459
00:28:41,940 --> 00:28:44,550
of your date of death, and that
subject to a couple of

460
00:28:44,550 --> 00:28:48,420
limitations as well. But at your
age, those won't have any impact

461
00:28:48,570 --> 00:28:52,170
or the benefit that you were
entitled to receive on your date

462
00:28:52,170 --> 00:28:55,710
of death. So in that case, if
you push that out till 70, that

463
00:28:55,710 --> 00:28:58,620
would be the benefit that she
would start receiving when you

464
00:28:58,620 --> 00:28:59,610
died. All right.

465
00:29:00,270 --> 00:29:03,750
Thank you, Bob. Let's move on to
Kevin. Kevin said you'll see a

466
00:29:03,750 --> 00:29:06,990
lot of discussion around when to
take your Social Security. Many

467
00:29:06,990 --> 00:29:09,660
take it as soon as they can. And
they have sound reasoning behind

468
00:29:09,660 --> 00:29:13,080
that. But most of the advice is
to wait until 70 to maximize

469
00:29:13,080 --> 00:29:15,930
your benefit. Those of us in the
middle are wondering well what

470
00:29:15,930 --> 00:29:19,770
about hedging and taking between
full retirement age and 70. But

471
00:29:19,770 --> 00:29:22,740
the model seems to indicate this
is the worst possible time to

472
00:29:22,740 --> 00:29:26,430
take the benefit. Can you shed
some light on why this may be

473
00:29:26,430 --> 00:29:30,120
so? Well? I don't know. I
haven't seen any research that

474
00:29:30,120 --> 00:29:33,720
suggested that between full
retirement age and 70 is the

475
00:29:33,750 --> 00:29:39,210
worst time to fall. You know, if
you look at reductions the first

476
00:29:39,210 --> 00:29:43,110
three years before full
retirement age, they're steeper

477
00:29:43,110 --> 00:29:47,250
reductions than there are in the
space after that, right. So if

478
00:29:47,250 --> 00:29:51,810
you're 62 or 63, the reductions
are a little lower than they are

479
00:29:51,840 --> 00:29:57,570
at 6465 and 66. But in terms of
falling between full retirement

480
00:29:57,570 --> 00:30:01,230
age and 70 I don't know that
that's the worst possible time.

481
00:30:01,440 --> 00:30:05,430
In fact, that's when we see a
lot of people falling. But like

482
00:30:05,430 --> 00:30:08,610
I'm beating the dead horse here.
But Kevin, it really is going to

483
00:30:08,610 --> 00:30:12,690
come back to making sure that
you've looked at all of the

484
00:30:12,690 --> 00:30:16,620
different following strategies,
and you understand how each of

485
00:30:16,620 --> 00:30:19,290
those is going to affect the big
picture. All right, let's go to

486
00:30:19,290 --> 00:30:22,590
how how said, my wife is
currently taking Social

487
00:30:22,590 --> 00:30:26,640
Security, I'm going to start my
Social Security at age 70. Next

488
00:30:26,640 --> 00:30:30,240
year, she will be entitled to
one half of what my full

489
00:30:30,240 --> 00:30:33,600
retirement age benefit would
have been. Does she have to

490
00:30:33,600 --> 00:30:35,820
apply to get that benefit? Or
will the Social Security

491
00:30:35,820 --> 00:30:39,720
ministration know when I file
that she is entitled to it? Keep

492
00:30:39,720 --> 00:30:42,600
up the great work, follow your
podcast, print that cheat sheets

493
00:30:42,630 --> 00:30:46,380
every year? Thanks, how thank
you for that those cheat sheets

494
00:30:46,440 --> 00:30:49,740
are a great resource. And
listeners, if you haven't

495
00:30:49,740 --> 00:30:54,210
downloaded yours yet, you need
to. And there's generally a link

496
00:30:54,390 --> 00:30:57,660
in the description of this
podcast where you can get your

497
00:30:57,660 --> 00:31:03,960
cheat sheet as well. So the
question is the spousal benefit

498
00:31:03,990 --> 00:31:07,890
filing? Is it an automated
process? Does the administration

499
00:31:07,890 --> 00:31:12,690
know about that? And the answer
is maybe they you know, it

500
00:31:12,690 --> 00:31:15,660
depends on the Claims
Representative when you're

501
00:31:15,660 --> 00:31:19,920
filing that benefit. You know,
if they ask you the question of,

502
00:31:19,980 --> 00:31:22,710
you know, do you have a spouse
who is entitled, then they could

503
00:31:22,710 --> 00:31:25,920
further develop that. But what I
have found in most cases is

504
00:31:25,920 --> 00:31:29,670
that, no, they won't do that.
And you do have to tell them,

505
00:31:29,790 --> 00:31:33,570
and that needs to be another
filing to get that spousal

506
00:31:33,570 --> 00:31:35,970
benefit. You know, and I'm
thinking of a case right now for

507
00:31:35,970 --> 00:31:39,240
some clients we have in
California, who they filed for

508
00:31:39,240 --> 00:31:43,950
benefits, and just kind of
assumed that the wife was

509
00:31:43,950 --> 00:31:46,980
getting the right benefit. While
she wasn't she was still getting

510
00:31:47,100 --> 00:31:50,610
her benefit from her work
record. And the spousal top off

511
00:31:50,610 --> 00:31:54,390
had not been added to that. And
it was a it was a few 100 bucks

512
00:31:54,390 --> 00:31:58,320
a month too. So we went back and
we were able to get that fixed.

513
00:31:58,320 --> 00:32:02,340
And they did pay her back a lump
sum on that. But, you know, like

514
00:32:02,340 --> 00:32:04,950
a lot of things, the process
that's supposed to be automated

515
00:32:05,160 --> 00:32:08,400
with not only government
agencies, but in anywhere else,

516
00:32:08,430 --> 00:32:11,610
sometimes that automation will
break down. All right, next

517
00:32:11,610 --> 00:32:15,450
question is Angela. Angela says
if your Social Security will be

518
00:32:15,450 --> 00:32:17,820
subject to the Windfall
Elimination Provision, What

519
00:32:17,820 --> 00:32:21,750
documents do you submit to show
your non Social Security income?

520
00:32:21,870 --> 00:32:23,970
Well, you know, here's the
thing, the Social Security

521
00:32:23,970 --> 00:32:28,590
ministration has some pretty
wide reaching authority to go

522
00:32:28,590 --> 00:32:33,450
out and get information on you,
they may not need you to provide

523
00:32:33,630 --> 00:32:39,060
anything, if they do, it's
likely going to be some prior w

524
00:32:39,060 --> 00:32:44,070
two forms, prior tax returns, it
could come down to letters from

525
00:32:44,070 --> 00:32:48,000
employers, but the Social
Security ministration, you know,

526
00:32:48,000 --> 00:32:52,110
is already receiving a lot of
that information through that

527
00:32:52,110 --> 00:32:55,680
form W two, you know, when it's
sent to the IRS, and the IRS

528
00:32:55,680 --> 00:32:57,870
shares that information with the
Social Security ministration,

529
00:32:58,020 --> 00:33:02,130
there's also pension records
that they can access to see what

530
00:33:02,130 --> 00:33:05,460
years you worked in noncovered
employment, they can also send

531
00:33:05,460 --> 00:33:08,160
out verification requests
directly to these employers or

532
00:33:08,160 --> 00:33:12,180
to these pension paying
agencies. And then to once they

533
00:33:12,330 --> 00:33:15,150
start that payment, they're
going to do some periodic

534
00:33:15,270 --> 00:33:20,370
audits. And, you know, make sure
that everything matches up. So I

535
00:33:20,370 --> 00:33:25,290
would say that, you know, file,
find out what it is they are

536
00:33:25,320 --> 00:33:29,310
needing, and if you can provide
it great, but otherwise, they

537
00:33:29,310 --> 00:33:32,640
may do it all. And then come
back to you say we have all the

538
00:33:32,640 --> 00:33:37,050
information we need. Who knows,
it's it's hard to tell from case

539
00:33:37,050 --> 00:33:41,280
to case, how they're going to
approach this, but just know,

540
00:33:41,310 --> 00:33:44,370
they do have some, some pretty
wide authority to go out and get

541
00:33:44,370 --> 00:33:47,940
this information on their own.
And they may ask for it as well.

542
00:33:48,030 --> 00:33:50,400
Here's the other thing, though,
after they go out and get this

543
00:33:50,400 --> 00:33:53,100
information on their own. If
you're subject to the Windfall

544
00:33:53,100 --> 00:33:58,230
Elimination Provision, and you
have another job, or you paid

545
00:33:58,230 --> 00:34:01,410
into Social Security, don't
expect them to necessarily get

546
00:34:01,410 --> 00:34:05,100
that right. This is where you
need to understand how the

547
00:34:05,100 --> 00:34:08,190
benefit is calculated, and how
those noncovered earnings and

548
00:34:08,190 --> 00:34:11,070
those covered earnings are going
to all integrate together.

549
00:34:11,190 --> 00:34:13,800
Angela, thank you for the
question. And that's going to

550
00:34:13,800 --> 00:34:17,310
wrap it up for all of our social
security questions. You know,

551
00:34:17,310 --> 00:34:19,770
guys, I do want to thank you so
much for the reviews that you

552
00:34:19,770 --> 00:34:23,670
leave on the podcast, those are
so meaningful for us, John, and

553
00:34:23,670 --> 00:34:27,690
I read each and every one of
those, and we love seeing that

554
00:34:27,690 --> 00:34:31,410
number get higher and higher and
higher. And thank you also for

555
00:34:31,440 --> 00:34:34,620
sharing this podcast with your
friends. You know, we talk to

556
00:34:34,620 --> 00:34:36,810
people occasionally and they say
we you know, I'd never heard of

557
00:34:36,810 --> 00:34:39,690
you guys, but my friend told me
about the podcast, I started

558
00:34:39,690 --> 00:34:42,540
listening. And then I went back
and I listened to every episode.

559
00:34:42,600 --> 00:34:45,390
Now. You don't have to listen to
every episode or encourage your

560
00:34:45,390 --> 00:34:48,240
friends to listen to every
episode, but sharing this

561
00:34:48,240 --> 00:34:51,360
podcast with him and just saying
hey, here's some guys that

562
00:34:51,390 --> 00:34:54,210
they're not overly scripted.
They're not overly salesy. They

563
00:34:54,210 --> 00:34:57,060
get on here and talk about good
solid retirement information.

564
00:34:57,270 --> 00:35:00,000
That is so helpful because the
more people that follow our show

565
00:35:00,000 --> 00:35:03,330
On iTunes especially, or Apple
podcast, as they call it now,

566
00:35:03,480 --> 00:35:07,020
the more they are going to
suggest that to other people. So

567
00:35:07,020 --> 00:35:11,610
again, thank you all so much for
your loyalty for listening in

568
00:35:11,670 --> 00:35:15,870
every week, or at least the
weeks we have episodes and, and

569
00:35:15,900 --> 00:35:18,390
putting up with our crazy
schedules in those weeks where

570
00:35:18,390 --> 00:35:21,780
we don't have episodes. All
right, well, that'll wrap it up

571
00:35:21,840 --> 00:35:25,290
for this episode. And until next
week, I'll be right here

572
00:35:25,290 --> 00:35:28,260
bringing you to and through your
very own big picture retirement.

573
00:35:28,320 --> 00:35:29,040
Thanks for listening