Latest / Money In Motion with Klaas Financial / Demystifying Social Security

Transcript

Demystifying Social Security · Money In Motion with Klaas Financial

• 0:00
  Speaker 1: At our phone lines. They are open for you right now.
• 0:02
  Speaker 1: If you have questions for our retirement planning professionals from
• 0:05
  Speaker 1: Class Financial, all I gotta do is pick up the
• 0:07
  Speaker 1: phone dial on in. We'll get you on the air.
• 0:09
  Speaker 1: Six oh eight three two one thirteen ten. That's six
• 0:12
  Speaker 1: soh eight three two one thirteen ten. Joined this week
• 0:15
  Speaker 1: by CJ. Closs and Eric Schwartz. Of course they both
• 0:18
  Speaker 1: come to us from Class Financial. You can learn more
• 0:20
  Speaker 1: about CJ. Eric the whole team at COSS Financially. You
• 0:23
  Speaker 1: can learn about their separate divisions. You can learn about
• 0:26
  Speaker 1: different ways they can help you or, if you're an employer,
• 0:29
  Speaker 1: the different different things they've got offered there. You can
• 0:31
  Speaker 1: also submit a question to be answered right online on
• 0:34
  Speaker 1: the website, and if that wasn't enough, you can also
• 0:36
  Speaker 1: schedule a complementary conversation right from the website Class financial
• 0:41
  Speaker 1: dot com. That's Class klaas Financial dot com and their
• 0:45
  Speaker 1: telephone number six oh eight four four two five six
• 0:48
  Speaker 1: three seven. No charge for that initial gets to know
• 0:51
  Speaker 1: you Appoinment Tech Loss Financial, It will be complimentary to
• 0:53
  Speaker 1: you again their number six oh eight four four two
• 0:56
  Speaker 1: five six three seven, as mentioned Joined this morning by CJ.
• 0:59
  Speaker 1: Claw said Eric Schwartz, CJ. How you doing this week?
• 1:03
  Speaker 2: I'm doing great. Sean, how are you?
• 1:04
  Speaker 3: I'm doing fantastic. Great to chat with you this morning. Eric,
• 1:07
  Speaker 3: Where the heck have you been?
• 1:09
  Speaker 4: You know, Sean, I took I took a week off
• 1:11
  Speaker 4: and it was it was really nice. I was in
• 1:13
  Speaker 4: the warm sunshine and hey, the sun's coming out here
• 1:16
  Speaker 4: now too.
• 1:17
  Speaker 3: You brought it with you. We'll take it.
• 1:18
  Speaker 1: Great to have you back, Eric, Great to have you
• 1:20
  Speaker 1: both long and we've got quite possibly and I will
• 1:24
  Speaker 1: I'll leave the the actual judgment to you guys. But
• 1:27
  Speaker 1: it does seem like the topic this week is one
• 1:30
  Speaker 1: of the most popular conversations we have on the program,
• 1:33
  Speaker 1: which is social security. And we're gonna be talking about
• 1:35
  Speaker 1: demystifying social security. Don't forget, as we talked with CJ
• 1:39
  Speaker 1: and Eric from Class Financial, if you ever have questions,
• 1:41
  Speaker 1: whether it's about the topic at hand or anything retirement related,
• 1:44
  Speaker 1: they are our retirement planning professionals. They are here to
• 1:47
  Speaker 1: answer your question. All I can do is dial in
• 1:49
  Speaker 1: six oh eight three two one thirteen ten. That's six
• 1:52
  Speaker 1: oh eight three two one thirteen ten. We'll get you
• 1:54
  Speaker 1: right out on the air cool. Feature two of the
• 1:56
  Speaker 1: show is the Class Quiz Question a week your chance
• 1:58
  Speaker 1: to win a fantastic pro This week, our friends from
• 2:01
  Speaker 1: Class Financial have provided a twenty five dollars gift card
• 2:04
  Speaker 1: to Best Buy. Tell you a little bit later on
• 2:06
  Speaker 1: in the half hour how you can win that prize.
• 2:08
  Speaker 3: Little tip.
• 2:09
  Speaker 1: Listen closely because it's just about every show question and
• 2:11
  Speaker 1: answer to the Class Quiz question ly come up during
• 2:14
  Speaker 1: the program, so it's definitely beneficial to pay close attention.
• 2:17
  Speaker 1: And before we start talking social Security, Eric, let's look
• 2:20
  Speaker 1: back at last week's show and get our class quiz
• 2:22
  Speaker 1: question and answer there as well.
• 2:25
  Speaker 4: Yeah, last week Kyle and CJ were talking about IRA
• 2:30
  Speaker 4: contributions and the question was for the twenty twenty five
• 2:33
  Speaker 4: tax here, how much can you contribute to a traditional
• 2:36
  Speaker 4: IRA if you are over the age of fifty? And
• 2:39
  Speaker 4: the correct answer to that is eight thousand dollars for
• 2:42
  Speaker 4: twenty twenty five.
• 2:43
  Speaker 1: That was a fantastic showed over again. Always listen back,
• 2:45
  Speaker 1: subscribe to the podcast as well at classfinancial dot com.
• 2:48
  Speaker 1: That's Class klaas financial dot com and today has mentioned
• 2:53
  Speaker 1: we'd be talking about social security, something that impacts everyone,
• 2:56
  Speaker 1: whether you're in a retiree or a pre retiree, and
• 3:00
  Speaker 1: of course how common. Even though it's obviously very common,
• 3:03
  Speaker 1: social Security has a lot of misunderstandings. And we're going
• 3:06
  Speaker 1: to break down retirement ages, how those benefits are calculated,
• 3:10
  Speaker 1: what happens if you're working while collecting benefits, and CJ,
• 3:14
  Speaker 1: let's kind of start with a basic overview and get
• 3:16
  Speaker 1: some of the basics of the program.
• 3:19
  Speaker 2: Yeah, as longtime listeners of the show will know, Social
• 3:23
  Speaker 2: Security is a government program that provides income benefits to
• 3:27
  Speaker 2: individuals who qualify. Today, we're going to focus specifically on
• 3:31
  Speaker 2: the retirement benefits portion of Social Security because there are
• 3:34
  Speaker 2: different portions. There's a disability benefits and there are survivor
• 3:39
  Speaker 2: benefits and all kinds of different benefits. But we're going
• 3:41
  Speaker 2: to focus on the retirement benefits portion. And the program
• 3:45
  Speaker 2: is funded through payroll taxes under FIKA, where workers and
• 3:49
  Speaker 2: employers each contribute a portion of wages to the program. Now,
• 3:53
  Speaker 2: the amount you receive depends on your lifetime earnings, how
• 3:56
  Speaker 2: much you paid into the system, and the age you
• 3:59
  Speaker 2: choose to start to making benefits.
• 4:02
  Speaker 1: Talking this morning with CJ. Closs and Eric Schwartz, our
• 4:04
  Speaker 1: retirement playing professionals from class. Financial ful lines are open
• 4:07
  Speaker 1: six h eight three two one thirteen ten. That's six
• 4:10
  Speaker 1: h eight three two one thirteen ten gets you right
• 4:11
  Speaker 1: on the air with CJ and Eric and so so CJ.
• 4:14
  Speaker 1: When can somebody then start taking those Social Security benefits?
• 4:18
  Speaker 2: Yeah, good question, Sean. So the earliest you can start
• 4:21
  Speaker 2: drawing Social Security retirement benefits is at age sixty two. Now,
• 4:25
  Speaker 2: with that said, starting early comes with a permanent reduction
• 4:29
  Speaker 2: in your benefits. So Social Security retirement benefits are based
• 4:32
  Speaker 2: on a worker's full retirement age, also known as FRA,
• 4:36
  Speaker 2: and FRA depends on your birth year, but for most
• 4:39
  Speaker 2: people today it falls somewhere between age sixty six and
• 4:43
  Speaker 2: sixty seven. Every month you claim before your full retirement age,
• 4:48
  Speaker 2: again that FRGE FRA reduces your monthly benefit amount. The
• 4:52
  Speaker 2: percentage reduction is five ninths of one percent per month
• 4:59
  Speaker 2: for the first thirty six months and five twelfths of
• 5:03
  Speaker 2: one percent for each additional month. Yes, welcome to the
• 5:07
  Speaker 2: complexity of the calculations that we have to do.
• 5:11
  Speaker 3: Now.
• 5:11
  Speaker 2: On the other hand, every year you wait beyond your
• 5:13
  Speaker 2: full retirement age increases your benefit about two thirds of
• 5:18
  Speaker 2: one percent or about eight percent per year. Let me
• 5:21
  Speaker 2: put this in a little bit more layman's turn. Okay,
• 5:24
  Speaker 2: so listen, if you draw before your FRA, which for
• 5:27
  Speaker 2: most people listening, as we said, is going to be
• 5:29
  Speaker 2: between sixty six and sixty seven, So if you draw
• 5:31
  Speaker 2: anywhere before your FRA as early a day sixty two,
• 5:34
  Speaker 2: think of it as about a seven percent per year
• 5:37
  Speaker 2: reduction from your FRA amount for every year before you
• 5:42
  Speaker 2: draw before your full retirement age. If you wait, if
• 5:47
  Speaker 2: you wait until after your full retirement age from say
• 5:50
  Speaker 2: sixty seven to sixty eight to sixty nine to seventy,
• 5:53
  Speaker 2: for every year you wait after, the benefit grows by
• 5:57
  Speaker 2: about eight percent per year.
• 5:59
  Speaker 1: Great stuff this morning, and really interesting as we talk
• 6:01
  Speaker 1: about this stuff. Obviously, as we started this conversation off
• 6:04
  Speaker 1: pointing out that this is something that just about everybody
• 6:07
  Speaker 1: is affected by in really important nuances and understanding of
• 6:11
  Speaker 1: how exactly it worked, and as we talk with CJ
• 6:14
  Speaker 1: and Eric this morning, these thinks can have profound impacts
• 6:17
  Speaker 1: on your retirement and really something you want to get right,
• 6:20
  Speaker 1: don't forget. If you ever have questions, Love to get
• 6:21
  Speaker 1: you on the air six O eight three two one
• 6:23
  Speaker 1: thirteen ten you can also learn more about Class Financial
• 6:25
  Speaker 1: on their website. It's COSS Financial dot com. That's Coss
• 6:28
  Speaker 1: k l Aasfinancial dot com. Great website and resource to
• 6:32
  Speaker 1: learn more about Class Financially. You can also schedule a
• 6:34
  Speaker 1: conversation that chat right online colssfinancial dot com or give
• 6:38
  Speaker 1: them a call six oh eight four four two five
• 6:40
  Speaker 1: six three seven. No charge for that initial chat, that
• 6:43
  Speaker 1: initial conversation. It's going to be complementary to you. Again,
• 6:45
  Speaker 1: their numbers six oh eight four four two five six
• 6:48
  Speaker 1: three seven. So, Eric, we've talked about how clear the
• 6:51
  Speaker 1: age that you claim impacts your retirement benefits, but how
• 6:54
  Speaker 1: does the Social Security Administration determine then the amount of
• 6:58
  Speaker 1: an individual's benefit in the first place?
• 7:00
  Speaker 4: To begin with, Yeah, that's a great question, and this
• 7:04
  Speaker 4: is something that we see people get confused about a lot.
• 7:07
  Speaker 4: Social Security benefits are calculated using your highest thirty five
• 7:11
  Speaker 4: years of earnings, okay, and the index these for inflation,
• 7:14
  Speaker 4: because I'm sure you can imagine looking back thirty five
• 7:17
  Speaker 4: years money money was not quite what it's worth today.
• 7:22
  Speaker 4: And so what they do is they initially adjust each
• 7:24
  Speaker 4: year's earnings using the National wage Index, so that your
• 7:29
  Speaker 4: income from earlier years reflects its value in today's dollars.
• 7:32
  Speaker 3: Okay, so we were.
• 7:35
  Speaker 4: Taking an average of thirty five years. If you don't
• 7:37
  Speaker 4: have at least thirty five years of covered employment, those
• 7:40
  Speaker 4: missing years are treated as zero's in the calculation, which
• 7:44
  Speaker 4: can significantly reduce your average and as a result, your
• 7:48
  Speaker 4: benefit amount. So once all of these years are indexed,
• 7:50
  Speaker 4: they're going to choose the highest thirty five years and
• 7:54
  Speaker 4: they're going to average those out to determine your average
• 7:58
  Speaker 4: indexed monthly earning or your a I M e U.
• 8:02
  Speaker 4: The A I ME is essentially the foundation of the
• 8:05
  Speaker 4: of the benefit calculation here. So moving forward and bear
• 8:09
  Speaker 4: with me. I know we're we're digging into the details here,
• 8:11
  Speaker 4: but it's we're gonna we're gonna go. We're gonna go
• 8:14
  Speaker 4: slowly here. The formula that we're using here with with
• 8:18
  Speaker 4: Social Security is what's called progressive, which means that it's
• 8:21
  Speaker 4: designed to replace a greater portion of income for lower
• 8:25
  Speaker 4: earners compared to compared to higher earners. The benefit formula
• 8:29
  Speaker 4: applies what three what are called bend points to your
• 8:32
  Speaker 4: a I M E again, your average indexed monthly earnings.
• 8:36
  Speaker 4: These are thresholds at which the percentage of earnings that
• 8:39
  Speaker 4: get that get replaced changes. So for example, the first
• 8:44
  Speaker 4: segment of your average index monthly earnings is multiplied by
• 8:47
  Speaker 4: a higher percentage, while the subsequent segments are multiplied by
• 8:51
  Speaker 4: lower percentages. Now, the final Social Security benefit that is
• 8:56
  Speaker 4: calculated here is known as your primary insurance amount your
• 8:59
  Speaker 4: p I, and this is what you would receive at
• 9:02
  Speaker 4: your full retirement age. The PIA is calculated by applying
• 9:06
  Speaker 4: the progressive formula to your average indexed monthly earnings. Timing
• 9:11
  Speaker 4: is also playing a critical role here, as CJ was
• 9:14
  Speaker 4: just mentioning, claiming benefits before your full retirement age permanently
• 9:18
  Speaker 4: reduces your monthly payment, while waiting until after FRA increases
• 9:22
  Speaker 4: your benefit due to those delayed retirement credits that eight
• 9:25
  Speaker 4: percent a year that CJ was referencing. So this is
• 9:28
  Speaker 4: why both your work history and the agent which you
• 9:30
  Speaker 4: claim benefits are crucial for maximizing that lifetime benefit that
• 9:34
  Speaker 4: you get.
• 9:34
  Speaker 1: As they're talking this morning with Eric Schwartz and CJ.
• 9:37
  Speaker 1: Closs of COSS Financial, hearing about you know a lot
• 9:40
  Speaker 1: of the you know the the timing, and you know
• 9:42
  Speaker 1: some of these really really important things about delayed retirement
• 9:46
  Speaker 1: credits and other things and CJ. A lot of moving
• 9:48
  Speaker 1: pieces to this. This is probably literally it could be
• 9:52
  Speaker 1: the million dollar question here is how does someone decide
• 9:55
  Speaker 1: when to claim?
• 9:57
  Speaker 2: Yeah, exactly, Sean. I know for a lot of people
• 9:59
  Speaker 2: who are listening right now, they're going, wait, what what
• 10:03
  Speaker 2: what is an aim calculation? And what are these bend points.
• 10:06
  Speaker 2: It does alarm people the first time they recognize that, like, oh,
• 10:10
  Speaker 2: it is a social program. Now I'm kind of saying
• 10:14
  Speaker 2: this tongue in cheek. It's called social security. It is
• 10:20
  Speaker 2: very normal, it's natural once you understand these programs that
• 10:23
  Speaker 2: the higher income earners wouldn't get as large of a
• 10:27
  Speaker 2: return on their dollars that have a FICA withholding or
• 10:30
  Speaker 2: I should say an OASDI withholding as those with lower income.
• 10:35
  Speaker 2: But it comes as a shock to some when they go,
• 10:37
  Speaker 2: wait a minute, I'm paying, you know, social Security taxes
• 10:40
  Speaker 2: up to one hundred and eighty thousand of my income
• 10:42
  Speaker 2: and I'm not getting the same return as somebody who's
• 10:45
  Speaker 2: making forty thousand paying into social Security. In our comment
• 10:48
  Speaker 2: would be that's right, that's right, you're not it's a
• 10:51
  Speaker 2: social program. Now to your question, Sean, like, what's the
• 10:56
  Speaker 2: best age or when should somebody claim? And the answer is,
• 11:00
  Speaker 2: of course, it depends on a lot of different factors.
• 11:04
  Speaker 2: It depends upon your health, your life expectancy, your income needs,
• 11:08
  Speaker 2: your marital status, your former marital status, and whether someone
• 11:12
  Speaker 2: plans to keep working or not. So claiming early can
• 11:16
  Speaker 2: provide income sooner, of course, but waiting can significantly increase
• 11:20
  Speaker 2: your monthly benefits for the remainder of your life and
• 11:23
  Speaker 2: maybe your spouse's life. So we often hear clients reference
• 11:26
  Speaker 2: of Social Security break even age when talking to us
• 11:30
  Speaker 2: about when they expect to draw retirement benefits. So stick
• 11:34
  Speaker 2: with me here, everybody. The break even age is the
• 11:37
  Speaker 2: point where the total income you get from claiming benefits
• 11:41
  Speaker 2: later catches up to the amount of benefits that you
• 11:44
  Speaker 2: didn't receive beginning at age sixty two or by drawing earlier. Right, So,
• 11:50
  Speaker 2: if my full retirement age is age sixty seven and
• 11:53
  Speaker 2: I decide to draw two years before that at age
• 11:55
  Speaker 2: sixty five, well the version of me that drew at
• 11:58
  Speaker 2: sixty five is too years ahead of the version of
• 12:01
  Speaker 2: me the druid sixty seven.
• 12:02
  Speaker 4: Right.
• 12:02
  Speaker 2: That makes sense? Right, So, but the question is, well,
• 12:05
  Speaker 2: when does it break even? Because the version of me
• 12:09
  Speaker 2: that weighted to sixty seven has a higher benefit amount.
• 12:12
  Speaker 2: So these are called break even calculations. Simple concept, and
• 12:15
  Speaker 2: the break even is generally in a person's late seventies
• 12:19
  Speaker 2: to early eighties. I repeat that for most Americans, these
• 12:23
  Speaker 2: break even calculations are in your late seventies to early eighties. However,
• 12:27
  Speaker 2: this only takes into account the amount that an individual
• 12:30
  Speaker 2: receives from Social Security while ignoring other risk factors like health. Now,
• 12:38
  Speaker 2: for married couples, the decision becomes even more complicated because
• 12:41
  Speaker 2: social Security includes something called survivor benefits, so the claiming
• 12:44
  Speaker 2: choice of the higher earning spouse can have lasting impacts
• 12:48
  Speaker 2: for the surviving spouse later on. That's why we often
• 12:52
  Speaker 2: encourage people who are in a married, committed relationship not
• 12:57
  Speaker 2: to view social Security as a standalone decision, but as
• 12:59
  Speaker 2: part of an overall financial planning or retirement income strategy.
• 13:04
  Speaker 2: And at Class Financial we take the break even point
• 13:06
  Speaker 2: into account to some extent, but we focus more on
• 13:09
  Speaker 2: the holistic impact of your claiming age, including how it
• 13:12
  Speaker 2: impacts survivor income needs, how it impacts a client's tax situation,
• 13:16
  Speaker 2: and how it impacts a client's ability to securely fund
• 13:19
  Speaker 2: their retirement expenses. So listen, I'll say this a lot
• 13:23
  Speaker 2: of what I'm saying for some people. Your eyes are
• 13:25
  Speaker 2: rolling in the back of your head. You're going, well,
• 13:27
  Speaker 2: you're making this sound more complicated than it needs to be.
• 13:29
  Speaker 2: I want to encourage you. No, I mean, once you
• 13:32
  Speaker 2: understand it at the level that we do, it does
• 13:35
  Speaker 2: break down to a few key bullet points. But the
• 13:38
  Speaker 2: problem is that most Americans don't deal with this twenty
• 13:41
  Speaker 2: four to seven like we do. They get to deal
• 13:43
  Speaker 2: with it once in their life. And the problem can
• 13:46
  Speaker 2: be that if you make the wrong decision, it can
• 13:48
  Speaker 2: have lasting impacts on you and and your survivors later on.
• 13:53
  Speaker 1: Really important to look at that big picture as we
• 13:55
  Speaker 1: talk this morning with every tirement playing professionals from Class
• 13:58
  Speaker 1: Financial CG Clause and Eric's words, don't forget if you've
• 14:01
  Speaker 1: got a question, We've got a phone line open for
• 14:02
  Speaker 1: you right now. Love to hear from you. Six oh
• 14:04
  Speaker 1: eight three two one thirteen ten. That's six oh eight
• 14:07
  Speaker 1: three two one thirteen ten. Speaking of having a question,
• 14:09
  Speaker 1: you can always, of course head on over to Cossfinancial
• 14:12
  Speaker 1: dot com. That's cost Financial dot com. You can email
• 14:15
  Speaker 1: a question. You can also schedule a complimentary chat right
• 14:17
  Speaker 1: online at Cossfinancial dot com or call the office right
• 14:20
  Speaker 1: here in Madison at six oh eight four four two
• 14:23
  Speaker 1: five six three seven.
• 14:24
  Speaker 3: Don't forget.
• 14:25
  Speaker 1: No charge for that initial gets to know you appointment
• 14:27
  Speaker 1: at Coss Financial. It will be complementary to you again
• 14:29
  Speaker 1: their number six oh eight four four two five six
• 14:32
  Speaker 1: three seven looks into our conversation with CJ and Eric.
• 14:35
  Speaker 1: Next as money in Motion with Coss Financial continues right
• 14:38
  Speaker 1: here on thirteen ten. Double UiB I hanging out with
• 14:41
  Speaker 1: our retirement planning professionals from Coss Financial.
• 14:43
  Speaker 3: CJ.
• 14:44
  Speaker 1: Coss and Eric Schwartz've got a question, got a phone
• 14:46
  Speaker 1: line for you six oh eight three two one thirteen ten.
• 14:48
  Speaker 1: That's six oh eight three two one thirteen ten. Hope
• 14:51
  Speaker 1: you get a chance to visit the website Coss Financial
• 14:53
  Speaker 1: dot com. That's Coss Financial dot com. Don't forget if
• 14:56
  Speaker 1: you miss any part of the program, you can always
• 14:58
  Speaker 1: listen back to the show and subscribe right online at
• 15:00
  Speaker 1: Lossfinancial dot com. Telphon upper for the office here in
• 15:03
  Speaker 1: Madison six oh eight four four two five six three seven.
• 15:06
  Speaker 1: No charge for that initial get to know your appointment
• 15:08
  Speaker 1: ach Loss Financial. It will be complementary to you again
• 15:11
  Speaker 1: their number six oh eight four four two, five, six
• 15:13
  Speaker 1: three seven talking about social Security demystifying social Security this
• 15:17
  Speaker 1: week and Eric one of I think one of the
• 15:19
  Speaker 1: issues that causes a lot of confusion, and I even
• 15:21
  Speaker 1: hear from people about this very thing about working while
• 15:25
  Speaker 1: receiving social Security. As a matter of fact, I know
• 15:28
  Speaker 1: CJ mentioned it and referenced it in the last segment
• 15:31
  Speaker 1: as well. Can you kind of explain how those earning
• 15:34
  Speaker 1: limits work?
• 15:36
  Speaker 4: Absolutely so, this is something that people ask us questions
• 15:39
  Speaker 4: about a lot, and frankly something that we take into
• 15:41
  Speaker 4: account when we're when we're helping people decide when to
• 15:44
  Speaker 4: when to drop benefits. If you if you claim social
• 15:48
  Speaker 4: Security before again your full retirement age, that that magic
• 15:52
  Speaker 4: age that CJ was talking about earlier, and you continue
• 15:55
  Speaker 4: to work while receiving your benefits, your benefits can actually
• 16:00
  Speaker 4: be temporarily reduced if your earnings exceed the annual earnings limit.
• 16:04
  Speaker 4: So essentially, for every dollar that you earn in earned income,
• 16:09
  Speaker 4: right so you have to have working income. Every dollar
• 16:12
  Speaker 4: that you earn above the limit, social Security withholds a
• 16:16
  Speaker 4: portion of the benefits that you are receiving while doing
• 16:19
  Speaker 4: this work. So just to give people an idea, here,
• 16:22
  Speaker 4: in twenty twenty six, if you are not at your
• 16:25
  Speaker 4: full retirement age for the entire year, you can earn
• 16:28
  Speaker 4: up to twenty four four hundred and eighty dollars annually
• 16:32
  Speaker 4: without it affecting your Social Security benefits. But then any
• 16:36
  Speaker 4: earnings above that twenty four four hundred and eighty reduces
• 16:40
  Speaker 4: your benefits by one dollar for every two dollars over
• 16:44
  Speaker 4: that limit. Right, why could this why would this be
• 16:46
  Speaker 4: an easy, easy calculation? And if you do reach your
• 16:50
  Speaker 4: full retirement age during twenty twenty six, you can earn
• 16:53
  Speaker 4: up to sixty five and sixty dollars before the month
• 16:57
  Speaker 4: you reach full retirement age. Okay, So if you do
• 17:00
  Speaker 4: go over that, benefits are reduced by one dollar forever
• 17:03
  Speaker 4: every three dollars over that amount. Now, once you reach
• 17:07
  Speaker 4: that age or that full retirement age, the earnings limit
• 17:10
  Speaker 4: just disappears entirely. Social Security does not care how much
• 17:13
  Speaker 4: you earn working. Once you get to your full retirement age,
• 17:16
  Speaker 4: you can earn as much as you want without any
• 17:18
  Speaker 4: reduction in benefits. It's also done really important to understand,
• 17:23
  Speaker 4: and people miss this a lot. That benefits that are
• 17:25
  Speaker 4: withheld earlier. If you do exceed those those earnings limits,
• 17:30
  Speaker 4: they're not necessarily lost forever. Social Security recalculates your benefit
• 17:35
  Speaker 4: at full retirement age to give you to give you
• 17:38
  Speaker 4: credit for the benefits that were withheld in those earlier years.
• 17:42
  Speaker 4: So it's a really common misconception. People hear about the
• 17:45
  Speaker 4: earnings limit and they think that they're losing their benefits
• 17:48
  Speaker 4: entirely now, even though the benefits are not permanently lost.
• 17:52
  Speaker 4: If folks expect to work and earn more than the
• 17:55
  Speaker 4: annual earnings limit, we almost always advise them not to
• 17:58
  Speaker 4: claim their benefits before or full retirement age, because generally
• 18:04
  Speaker 4: there are there are other resources they can draw on
• 18:07
  Speaker 4: and not have to deal with the headache of having
• 18:10
  Speaker 4: to pay back some of their Social Security benefits that
• 18:12
  Speaker 4: they received.
• 18:12
  Speaker 1: Really good guidance this morning, as we talked with Eric
• 18:14
  Speaker 1: Schwartz and CJ. Closs, our retirement planning professionals from Class Financial.
• 18:18
  Speaker 1: Nothing more exciting than when math class meets biology and
• 18:21
  Speaker 1: these six are wondering why everything gets so complicated that
• 18:24
  Speaker 1: two are in their lifespans and all that other stuff.
• 18:27
  Speaker 1: So it's very fascinating stuff as well. Don't forget if
• 18:30
  Speaker 1: you missed any part of this program. A lot of
• 18:32
  Speaker 1: great useful information, you definitely want to listen back to it.
• 18:36
  Speaker 1: Head on over to classfinancial dot com and you can
• 18:38
  Speaker 1: subscribe and listen back to this in previous shows, podcasts
• 18:41
  Speaker 1: right from the website and CJ. We discussed a little
• 18:44
  Speaker 1: bit about the complexity related to social security and spousal
• 18:48
  Speaker 1: benefits early earlier on the program.
• 18:50
  Speaker 3: Get a little background on that.
• 18:53
  Speaker 2: Yeah, So, spousal benefits are designed to provide income to
• 18:57
  Speaker 2: a lower earning spouse or one who didn't work enough
• 19:00
  Speaker 2: to earn a substantial benefit themselves, and social curity. Spousal
• 19:04
  Speaker 2: benefits allow a spouse to receive up to fifty percent
• 19:07
  Speaker 2: of their partner's full retirement benefit if it's higher than
• 19:11
  Speaker 2: what they would get based on their own record. Now,
• 19:15
  Speaker 2: again I mentioned even if they didn't work at all.
• 19:17
  Speaker 2: So if you know, fifty percent of your spouses is
• 19:20
  Speaker 2: higher than zero, right, obviously, but fifty percent of your
• 19:24
  Speaker 2: spouses is also higher than forty percent of your spouses.
• 19:27
  Speaker 2: So you get the idea it's going to you're going
• 19:29
  Speaker 2: to get what we we often say, you're going to
• 19:31
  Speaker 2: get all of yours or half of your spouses, whichever
• 19:36
  Speaker 2: is greater. Now, there are some rules around this, by
• 19:38
  Speaker 2: the way, you have to been married for a long
• 19:40
  Speaker 2: enough period of time, so on and so forth. But
• 19:42
  Speaker 2: to qualify, both spouses must be at least sixty two
• 19:46
  Speaker 2: years old, and the primary earner must have already filed
• 19:49
  Speaker 2: for their own retirement benefits. It didn't used to be
• 19:53
  Speaker 2: that way, by the way, you because it used to
• 19:54
  Speaker 2: be able to do something called a file and suspend strategy,
• 19:56
  Speaker 2: and you can't do that anymore. If the spouse cl
• 20:00
  Speaker 2: aims before reaching full retirement age, then the benefit will
• 20:03
  Speaker 2: be reduced and permanently lowered. For example, claiming at sixty
• 20:07
  Speaker 2: two instead of full retirement age can mean a reduction
• 20:09
  Speaker 2: of about thirty percent, so spousal benefits here. Here's a key.
• 20:14
  Speaker 2: Spousal benefits do not increase if the spouse delays claiming
• 20:20
  Speaker 2: past full retirement age, So there's no benefit to delay
• 20:24
  Speaker 2: a sposal spousal benefit beyond your FRA. So listen, everybody,
• 20:29
  Speaker 2: if you are drawing off your own record, we will
• 20:32
  Speaker 2: often say, hey, maybe you should wait beyond your FRA,
• 20:36
  Speaker 2: especially if you're still working to get the highest possible benefit. However,
• 20:42
  Speaker 2: if you are going to be drawing a spousal benefit
• 20:46
  Speaker 2: because yours is not at least fifty percent of your spouses,
• 20:51
  Speaker 2: then there's no benefit in waiting beyond your full retirement age. Again,
• 20:56
  Speaker 2: I know some of you your eyes are rolling in
• 20:58
  Speaker 2: the back of your heads right now, but what we
• 21:00
  Speaker 2: would say to you is this is part of the
• 21:02
  Speaker 2: reason why you need to speak to a qualified advisor
• 21:05
  Speaker 2: before you just go and kind of you pull your
• 21:08
  Speaker 2: Social Security benefit. And final thought here, on a related note,
• 21:12
  Speaker 2: if if you're divorced, but you were married at least
• 21:15
  Speaker 2: ten years, you may still qualify for spousal benefits on
• 21:20
  Speaker 2: your former spouses record. Everybody who's listening pay close attention.
• 21:26
  Speaker 2: If you're married for at least ten years, you may
• 21:28
  Speaker 2: still qualify for a spousal benefit on your former spouse's record.
• 21:32
  Speaker 2: Whether they are drawing or whether they are alive doesn't matter.
• 21:38
  Speaker 1: So a lot of complexity here, a lot of layers,
• 21:40
  Speaker 1: a lot of complexity. It's always great to get the
• 21:42
  Speaker 1: breakdown from CJ. Class and Eric Schwartz our retirement planning
• 21:45
  Speaker 1: professionals from Clause financial.
• 21:47
  Speaker 3: Very important stuff this week. Don't forget.
• 21:49
  Speaker 1: It's always a great dat to start that conversation. All
• 21:51
  Speaker 1: you get to do is pick up phone gam a
• 21:53
  Speaker 1: call at Clause Financial six h eight four four two
• 21:55
  Speaker 1: five six three seven. That initial get to know the
• 21:57
  Speaker 1: appointment tech Claws Financial. It will be compliment to reach
• 22:00
  Speaker 1: you again their number six so eight four four two
• 22:02
  Speaker 1: five six three seven. The website Coss Financial dot com
• 22:05
  Speaker 1: that's class K l AA S financial dot com. May
• 22:09
  Speaker 1: have heard us reference survivor income benefits. We'll talk a
• 22:12
  Speaker 1: little bit about that next as Money and Motion with
• 22:14
  Speaker 1: Coss Financial continues right here on thirteen ten, WIBI talking
• 22:18
  Speaker 1: with our retirement planning professionals CJ.
• 22:20
  Speaker 3: Closs and Eric Schwartz.
• 22:22
  Speaker 1: Of course they come to us from Class Financial the
• 22:24
  Speaker 1: website Coss Financial dot com. That's class K l a
• 22:27
  Speaker 1: A S Financial dot com. Telp number four four two
• 22:30
  Speaker 1: five six three seven.
• 22:31
  Speaker 3: No charge for that.
• 22:32
  Speaker 1: Initial gets no you appoinment deck Loss Financial will be
• 22:34
  Speaker 1: complementary to you talking social security this week and before
• 22:38
  Speaker 1: the break mentioned uh the you know survivor income benefits
• 22:41
  Speaker 1: and Eric, what are we talking about there? And you
• 22:43
  Speaker 1: know how does the death of one spouse impact then
• 22:46
  Speaker 1: the surviving spouse?
• 22:48
  Speaker 4: Yeah, this can open a whole whole separate can of worms.
• 22:52
  Speaker 4: So without getting too far into the weeds on this,
• 22:54
  Speaker 4: I want to just kind of do a quick overview.
• 22:56
  Speaker 4: I feel like every time we do a show on
• 22:58
  Speaker 4: social security, I think, gosh, we could to sit here
• 23:00
  Speaker 4: for two hours and talk about all the ins and
• 23:03
  Speaker 4: outs of this. But just staying at a high level
• 23:06
  Speaker 4: here on survivor benefits. In the simplest form, if two
• 23:10
  Speaker 4: spouses are retired and collecting social Security retirement benefits and
• 23:15
  Speaker 4: one of them passes away, the surviving spouse is going
• 23:18
  Speaker 4: to continue to collect the larger of the two benefits. Okay,
• 23:23
  Speaker 4: So this is why we really say that spouses have
• 23:25
  Speaker 4: a little bit more of a complex decision to make
• 23:27
  Speaker 4: when it comes to claiming social security. As an example, here,
• 23:32
  Speaker 4: could they could consider having the spouse with the lower benefit,
• 23:36
  Speaker 4: the lower work or the lower earning history and thus
• 23:39
  Speaker 4: lower social Security benefit, have them claim earlier, for example,
• 23:44
  Speaker 4: and allow the higher earning spouse's benefit to continue to
• 23:47
  Speaker 4: grow through those delayed retirement credits. And then this can
• 23:50
  Speaker 4: act as a form of protection against excessive income loss
• 23:55
  Speaker 4: at the death of the first of the first spouse.
• 23:57
  Speaker 4: So that would be one example of how spouses may
• 24:00
  Speaker 4: approach social security benefits, and that would be for folks
• 24:07
  Speaker 4: who are retired and collecting benefits. In the event that
• 24:12
  Speaker 4: we are that people are not at retirement age and
• 24:17
  Speaker 4: not collecting benefits. The remaining kind of factors around spousal
• 24:22
  Speaker 4: benefits are that the surviving spouse can receive one hundred
• 24:25
  Speaker 4: percent of the deceased spouse's benefit once they have reached
• 24:29
  Speaker 4: full retirement age. Okay, the surviving spouse can start collecting
• 24:34
  Speaker 4: as early as age sixty, but if they claim before
• 24:38
  Speaker 4: full retirement age, just like with retirement benefits, the survivor
• 24:41
  Speaker 4: benefit is reduced. If the surviving spouse is caring for
• 24:47
  Speaker 4: the deceased child who is under the age of sixteen
• 24:50
  Speaker 4: or disabled, they can actually receive survivor benefits at any age.
• 24:56
  Speaker 4: And if a surviving spouse remarries, this also affects their eligibility.
• 25:01
  Speaker 4: So if a surviving spouse is remarried before age sixty,
• 25:04
  Speaker 4: the survivor cannot collect benefits on the deceased spouse's record. Okay,
• 25:09
  Speaker 4: but if you remarry after sixty, benefits benefits can continue,
• 25:14
  Speaker 4: and Sean, you would be surprised how often this last
• 25:18
  Speaker 4: factor comes into play when we're when we're talking with
• 25:22
  Speaker 4: widows or widowers and doing financial planning, so tons of
• 25:27
  Speaker 4: little details here and lots of different ins and outs.
• 25:30
  Speaker 4: Make sure you talk to somebody who knows what they're
• 25:32
  Speaker 4: talking about when it comes to these things.
• 25:33
  Speaker 1: Yeah, and that's interesting when you mentioned to somebody that
• 25:36
  Speaker 1: knows what they're talking about. I encounter and I know
• 25:39
  Speaker 1: you can't even imagine what you guys are experiencing. A
• 25:42
  Speaker 1: lot of really like and I hate to say it,
• 25:44
  Speaker 1: this way, really bad information out there. And we talk about,
• 25:48
  Speaker 1: you know, the importance of sitting down and having a
• 25:50
  Speaker 1: conversation with somebody who has that information, has this understanding.
• 25:54
  Speaker 1: As we've talked this week about social Security and we're
• 25:56
  Speaker 1: going to talk a little bit more about it is
• 25:59
  Speaker 1: as I hope people are hearing this.
• 26:01
  Speaker 3: It's it is very.
• 26:02
  Speaker 1: Complex for a reason, and it's really important to get
• 26:04
  Speaker 1: things right. And we talk with our friends from Class
• 26:07
  Speaker 1: Financial each week, and it's always a great opportunity you've
• 26:09
  Speaker 1: got those questions, this type of this type of conversation
• 26:12
  Speaker 1: you've been wondering about, it's always a good time to
• 26:14
  Speaker 1: call in during the show. You can also email Class
• 26:16
  Speaker 1: Financial from the website class financial dot com. Even better,
• 26:19
  Speaker 1: you can schedule a free complimentary conversation. I got to
• 26:22
  Speaker 1: pick up phone game a call six so eight four
• 26:24
  Speaker 1: four two five six three seven And yeah, we've covered
• 26:27
  Speaker 1: a lot today in CJ. Kind of a takeaway on
• 26:30
  Speaker 1: this week's program, let's talk a little bit about some
• 26:33
  Speaker 1: of the things. Is if there's a few things for
• 26:35
  Speaker 1: folks to really remember, what should those things be.
• 26:39
  Speaker 2: Yeah, Sean, you were mentioning that you've you've you know,
• 26:42
  Speaker 2: occasionally encounter some some bad information as it relates to this,
• 26:45
  Speaker 2: but you run in some pretty shady circles, so it
• 26:48
  Speaker 2: doesn't surprise me.
• 26:49
  Speaker 3: That's very much. So well, you know my co workers too,
• 26:55
  Speaker 3: Just kidding.
• 26:57
  Speaker 2: No, yeah, so good question. So some takeaways here. So
• 27:00
  Speaker 2: social security is more flexible and complex than most people realize.
• 27:04
  Speaker 2: It offers a lot of options that come with a
• 27:07
  Speaker 2: lot of different trade offs. So because these decisions are
• 27:10
  Speaker 2: often irreversible, it's important to carefully consider your choices. The
• 27:15
  Speaker 2: ideal age to claim social security benefits varies from person
• 27:18
  Speaker 2: to person. Therefore, if anybody comes to you and says
• 27:21
  Speaker 2: I figured it out, I know the best stage to draw,
• 27:24
  Speaker 2: you can just kind of roll your eyes and go, well,
• 27:26
  Speaker 2: it needs to be a personal decision, so factors such
• 27:29
  Speaker 2: as your health, income needs, marital status, and long term
• 27:32
  Speaker 2: goals all play a role in determining what's right for you.
• 27:35
  Speaker 2: There is no one size fits all answer when it
• 27:38
  Speaker 2: comes to when to draw, and social security works best
• 27:41
  Speaker 2: when it's integrated into your broader retirement plan. By taking
• 27:44
  Speaker 2: the time to understand how benefits are calculated and how
• 27:47
  Speaker 2: your earnings and timing influence payments, you can reduce uncertainty
• 27:52
  Speaker 2: and feel more confident about your retirement and retirement income sources.
• 27:57
  Speaker 2: Running the numbers in advance and seeing how your decision
• 28:00
  Speaker 2: fits into your overall financial strategy and our opinion is
• 28:03
  Speaker 2: essential for making these informed decisions, so as always, we
• 28:07
  Speaker 2: encourage listeners to seek out a trusted professional to assist
• 28:10
  Speaker 2: you with making these types of decisions so that you
• 28:13
  Speaker 2: know what is best for you and your loved ones.
• 28:16
  Speaker 1: Really important there and of course, if missing a part
• 28:18
  Speaker 1: of today's program speaking of you and your loved ones,
• 28:20
  Speaker 1: If you've missed any part of the show or you
• 28:22
  Speaker 1: want to share the program, don't think you can always
• 28:23
  Speaker 1: head on over to classfinancial dot com. That's coss klaasfinancial
• 28:28
  Speaker 1: dot com. You can listen back to this program in
• 28:31
  Speaker 1: previous shows. You can also share them as well from
• 28:33
  Speaker 1: class financial dot com. Time now for the closs Quiz
• 28:36
  Speaker 1: Question Week. It works like this, just a moment, I'll
• 28:38
  Speaker 1: ask you the class Quiz question leak. You will then
• 28:40
  Speaker 1: have thirty minutes from the interday's program called the Class
• 28:42
  Speaker 1: Financial Office right here in Madison at six oh eight
• 28:45
  Speaker 1: four four two five six three seven. If you are
• 28:48
  Speaker 1: the first caller with the correct answer, you'll win this
• 28:50
  Speaker 1: week's prize, which is a twenty five dollars gift card
• 28:53
  Speaker 1: to best Buy. This week's Class Quiz question week is
• 28:56
  Speaker 1: this do spousal Social Security benefits increase through delayed retirement
• 29:02
  Speaker 1: credits or dras after your FRA your full retirement age.
• 29:07
  Speaker 1: Telephone number six oh eight four four two five six
• 29:09
  Speaker 1: three seven. First call with correct answer won the twenty
• 29:12
  Speaker 1: five dollars gift card two best Buy Northfold as well.
• 29:14
  Speaker 1: That's Class Financials Office right here in Madison. No charge
• 29:17
  Speaker 1: for the initial get to know you appoyment dech costs Financial.
• 29:19
  Speaker 1: It will be complimentary to you again their number six
• 29:22
  Speaker 1: oh eight four four two five six three seven.
• 29:25
  Speaker 3: CJ. Eric.
• 29:26
  Speaker 1: It's always fantastic hanging out with both of you guys
• 29:28
  Speaker 1: enjoy this great day.
• 29:29
  Speaker 3: We'll talk soon.
• 29:31
  Speaker 4: Thanks av Sean.
• 29:32
  Speaker 3: News comes your way next year. On thirteen ten, w
• 29:34
  Speaker 3: u Ibi