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Don’t File for Social Security Until You Hear This! · Retire and Thrive

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What is the number one thing that you would want people to
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remember if they're thinking about social?
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Security When it comes to retirement, it's not always
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about how much money you have. It's the income that you live
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on, not the asset. Do we see a lot of people
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collecting at 6263? I would say good majority people
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take it. Welcome back to another edition
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of Retire and Thrive, where we help you live your life with
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purpose, wealth, and confidence. Yes, thanks so much for joining
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us. This is episode 18 for us, which
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is an accomplishment for us. That's a lot.
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Yeah, yeah. It's been so fun to help you
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along your way with your finances and your retirement and
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if you're younger, just educating you on a few things
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maybe you didn't know about. I'm Cammy.
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This is Dan, and fall is upon us.
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We are excited about that. Perfect time to golf.
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Fall courses are in pristine shape.
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I love it. Have you been playing or you
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just been travelling the world? I have been travelling a lot.
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I don't, I don't want to sound like that's a bad thing, but
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probably half work, half, half pleasure.
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Yeah. Weddings to go to, I've got
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yeah, that's great. Nieces getting married.
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Fall weddings are fun. Fall weddings are very, very fun
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and I look at you are very festive.
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I will say today with the orange, I love it.
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Yeah, it looks great. Yes, it's that time of year.
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Fall. Winter is just around the
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corner. I know it's, it's all the leaves
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are falling. And I said this a couple weeks
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ago that I love fall, absolutely love it.
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It's beautiful. I know you get a little
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frustrated with your golf game because you can't find your golf
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balls under the leaves. But that's they're pesky, but
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that's OK, yeah. It either seems like a lot of
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our conversations outside of the finances center around golf or
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the twins. Yeah, our baseball, we're based
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out of Minnesota. So if you're joining us from
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anywhere else, thank you so much for checking in and joining us.
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Yes, we're in Minnesota, but we love everyone all over because
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all this information can help you no matter where you are.
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And we've been touching on Social Security.
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If you've been hanging along with us, the last two episodes
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have really been focused heavily on Social Security.
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When you reach that retirement age.
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We've touched about along the way, you know, reaching that
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retirement age, some different things, helping people if
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they're younger and still accumulating and putting money
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into your Social Security. But let's touch on Social
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Security one final time here, Dan.
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What is the number one thing that you would want people to
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remember if they're thinking about Social Security and what
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they've taken away from everything we've discussed?
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Yeah, you're right. We've we've this is our third
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episode specifically around Social Security.
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A lot. We've talked a lot about it, but
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it's so important. Yeah, it is very, very
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important. And I think as I've shared with
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you on the first episode, which was episode 16, first episode as
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it pertains to Social Security, it is the number one question we
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get asked. And I, I think rightfully so
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because it is very critical, which again, I think I want to
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just touch on here in just a minute.
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It is very critical on making that decision, but it's also
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overwhelming. It's a very complicated, it's
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not just one-size-fits-all. So you asked me the question,
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what's the number one take away? It's a big decision and you
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should go into it knowing that and take your time and do the
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math and analyze. And one size definitely does not
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fit all. And so if you're talking to
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someone at the Social Security Administration, not, not saying
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they don't aren't familiar with Social Security, but they're not
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familiar with your situation. In other words, they don't know
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what your incomes of other sources are.
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They don't know necessarily what your spouse's income.
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They don't know if your intention is to leave your kids
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money or if it's not to leave your kids money.
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And those are all things that factor into Social Security.
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And so your question is what's one thing?
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What's what's 1 advice? Just take it serious.
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Yeah. And knowing that age that you
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would like to start collecting, that Social Security is
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important. You might not know these
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percentages off top of your head, I'm sure you don't.
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But do we see a lot of people collecting at 6263?
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Yeah, you're right. I don't know the percentages,
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but if I go on based on people that have come to us without an
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analysis, maybe they come to us and they're already retired or
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they might be 70 or whatever it is, I would say good majority
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people take it early. They.
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Do. And you know, I, I, I, I want to
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say one thing. This is kind of going off off
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track here a little bit, but we have spent the last two episodes
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and I say we, I, I really mean me talking and centering around
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specifically when should you take a Social Security?
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Because don't mess it up. It's irrevocable.
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You can't change it. But here's something I want to
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just say is if we see a good majority of people take it right
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away at 62 and then they come to us and they're 65 or 66 and they
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say, did I really mess it up? Remember when we talked on on
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that first episode on 16 that I said your break even typically
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is somewhere between 81 and 83. The one thing I haven't
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mentioned, and I say this all the time to people when they're
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trying to make this decision is we can do the full on analysis,
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but at the end of the day, your lifestyle at 62 is a lot
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different than it is at 81 and 82.
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So for some people, it's like, you know, there's a scare
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factor. I mean, we talked about that,
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that I want to get it before it's gone.
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And I kind of demystified that, that that probably is not an
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issue you should be worried about.
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But there's also the other factor that when you're 62, two
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things. One is your health and vitality
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to enjoy. It is a lot greater at 62 than
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it would be at 82, right? And then the other factor is for
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some people, they take it early Cammy, because they just don't
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know what their future holds. I mean, they don't know either
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their longevity or life expectancy or just as important,
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they don't know what their health is going to be.
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I mean, you know, we, we always say to people when we do this
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full on analysis and we get into cash flow and projections and
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all of this stuff, we, we get into that.
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And I always tell people our number one goal that we try to
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do with every client that's approaching retirement is to run
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the deepest analysis to project all kinds of scenarios.
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So we do everything we can so you don't run out of money.
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And people are usually like, Yep, I get it, I get it.
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I mean, that's what we're here for.
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We want to make sure we don't run out of money.
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And obviously there's a lot of factors that go into there and
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there's assumptions, but I always tell people our number
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two goal right behind a very close second is to do the things
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that you want to do while you're still healthy enough to do them,
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and that matters. Do some people come in with the
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mentality say at age 62 of get it or I'm could potentially lose
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it And is that an accurate statement get my Social Security
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now or I I'm at risk of losing it and.
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What do you mean by losing it? Losing it if perhaps an
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unfortunate incident occurs and you pass away.
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Oh yeah, so due due to health conditions, Yeah, absolutely.
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And I'm not a medical expert, so I'm not going to really even
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comment too much on this. But one of the things that I
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hear often is, you know, my dad passed away when he was 70 and I
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had an uncle that passed away at 72.
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And the research I've done or the papers I've read is that 2/3
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of your life expectancy is based on lifestyle, not genetics.
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So again, I'm not, I'm not publicly stating that genetics
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don't matter. But I am saying, you know what?
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If your lifestyle was healthy, your probability of living
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longer is probably going to move the needle more than saying, you
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know, I had family members that lasted until 105 or whatever.
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Sure. Sure.
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As we wrap up our discussion on Social Security, anything in
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particular that sticks out that we haven't touched on that you
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really want to kind of pound in, make sure people remember?
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There's a lot of things that we have touched on and I want to
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continue to reiterate some of the more important things.
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I would say the the number one thing is factor in if you are
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married, what your spouse's Social Security is relative to
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what your Social Security is because that's a big deal.
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The other thing that we factor in when we're running the
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numbers is we look at all sources of income and then we
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look at the potential we talked about at last last episode, the
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taxability of that Social Security.
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So if people are in a position to start drawing down maybe some
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of their retirement assets and holding off on their Social
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Security and taking that guaranteed 7% increase every
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year or even if they wait until after full retirement until age
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70 and getting an 8% increase, that often times can make a big,
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big difference in their retirement plan.
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And that's where I had mentioned early on that some of the
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viewers might say, well, what does it have to do with me
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leaving money to my kids? Because I thought you said
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Social Security, you wouldn't leave money to your kids.
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Well, if the strategy is to draw down your portfolio and delay
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Social Security, that will have an impact on leaving money to
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the next generation as opposed to taking Social Security
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earlier, not touching your 4O1K or 4O3B or IRA and then having
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that continue to grow and leaving that is somewhat of a
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legacy. So that does factor into it.
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And again, I feel like we've talked on like tons and tons of
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different scenarios. And I think the biggest message
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I would convey is it is complicated and it's easy to
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look back once you've made that decision and say we should have
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done this or maybe it would. It doesn't matter.
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Once you've made the decision, now you can only look forward.
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For me with Social Security, I look at it as an income
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replacement. So what I mean by that is I'm
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going to just take a basic a scenario.
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So let's just say, and I like to use this number because it's
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easy in my head, but if you got $1,000,000 portfolio, we talked
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several episodes ago about something called the sustainable
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withdrawal rate. We were talking about this in
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the cash flow episode. So sustainable withdrawal rate
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is how much can I pull out of My Portfolio and never run out of
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money or historically wouldn't have run out of money.
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And there's been a lot of different studies, four and a
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half, 4%, whatever that number is.
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So if I use that scenario of a 4% withdrawal rate and I've got
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$1,000,000 portfolio, that's $40,000 a year, I'm pulling out
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of My Portfolio. And the research that's been
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done is in that 4 to 4 1/2%. That also factors in a 3%
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increase for inflation every year.
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So now we talk about Social Security.
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If I'm getting 3030 two $100 per month in Social Security, guess
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what, that's $1,000,000 four O 1K or IRA that I don't have to
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have because I'm getting that consistent income.
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So in other words, sometimes we get people to come into us and
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they feel like, you know what? I really didn't do a great job
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at saving. I'm really struggling.
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I'm afraid we're not going to live the dream.
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And we start doing the math and it's like, no, no, you guys were
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high income. And I'm not here to judge you
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and say you should have put more, more money in your
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retirement or shouldn't have. But between you and your spouse,
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you guys have over $5000 a year coming in consistently.
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And if you do the math, you know if you've got $5000 a month,
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that's $60,000 a year. And again, kind of back into
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that 4%, that would be $1.2 million or $1,250,000 at 4%,
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generating the same $60,000 a year.
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So in other words, if between spouses you've got 5000 bucks a
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month coming in, that's 1.2 million.
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You don't have to have a four O 1K to generate that income.
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So when it comes to retirement, it's not always, and we often
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think of this, it's always, it's not always about how much money
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you have. And we touched on this in the
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cash flow section. It's the income that you live
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on, not the asset. And Social Security is a
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repeatable, consistent income that hit your bank account every
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single month as long as you're alive.
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Yeah, and this might be a simpleton question, but is that
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your only option? Monthly payments?
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There's no lump sum option when it comes to Social Security.
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No, it is monthly. And that isn't necessarily a
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simple question because sometimes that is confusing.
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For example, with pensions, they can take a lump sum or they can
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take monthly income. Right, this is different.
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This is totally different. This is monthly.
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And it's one payment a month. One payment a month, yeah, OK.
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With Social Security, we've discussed so many topics.
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As Dan mentioned, he's my myth Buster over here.
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Is there any myth that you really want to reiterate that we
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busted throughout this conversation?
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Or at least we hope that we have for folks at home.
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Yeah, I think, I think 1 myth that I touched on before and
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I'll just touch on again that I'm going to grab it as soon as
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I can because it's going to go away a lot of debate on, you
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know, the, the funding of Social Security and will it be around.
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I touched last time and said, you know, every time in 35 years
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that I've seen major changes and it may be in tax rates or you
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know, we have a lot of discussions on Roth and can they
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ever go back and grab it and make me pay tax twice on it.
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Every experience I've been involved in, it's always
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grandfathered in. So I think one of the probably
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the biggest myths, and when I say myths and I say biggest
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myth, it's what I'm asked the most.
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Oh yeah. Will it be around?
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Number one response. When there's folks talking about
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Social Security who maybe aren't fully educated on it, that's
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typically the conversation. And you may not believe this,
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but there was a time in my life when I was similar in age to
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you. It was a long time ago, but I
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remember doing numbers. We didn't have the sophisticated
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technology that we have today, but I remember doing numbers for
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people that were in their early 60s and we were doing social
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securities. And it was more of just kind of
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a, you know, calculator and, and writing stuff down on paper.
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And I said to them, they're like, well, do you think there's
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any concerns with Social Security?
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So again, we're, we're going back to the 2000s now.
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And my response was, no, as long as, you know, but for me, this
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is back, you know, 20 some years ago.
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I, I used to say, for me, I don't know if it'll be around.
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And so again, for the younger audience, I can't necessarily
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say with absolute certainty, but there is some uncertainty for
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the younger generation of what their Social Security will look
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like. Let me finish because I don't
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want you to get excited on me saying I'm paying in 6.2% and
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I'm going to get nothing. What what what I have seen
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happen over the years is they make it less attractive.
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In other words, we talked initially about Social Security
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when it first started the monthly payments in 1940, the
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employer was putting in, or excuse me, the employee was
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putting in 2%. Now we're putting in 6.2%.
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It used to never be taxable, now up to 85% of it is taxable.
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So you know you've got a long way before you're eligible for
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Social Security. And what I've witnessed and
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again on this, a very broad statement as a pertains to the
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government is when they take something away, they typically
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give you something on the other end.
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So it might be, you know, when you go to take Social Security,
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it might be it's all taxable. And oh, by the way, you're not
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in the 22% tax bracket anymore. Tax rates have gone up and now
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you're in the 44% tax bracket. So I, I think at this point,
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there's no reason to have a deep discussion about what Social
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Security may look like in 20 years or 30 years.
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All I can tell you is it will probably look a lot different.
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But I do feel like in the political arena, when we've had
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administrations try to mess with Social Security, it's usually a
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losing battle because the lobbyists and and, you know,
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you're representing such a large demographic of people that it's
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just something that generally doesn't get messed with too
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much. Sure.
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All right. Anything else you'd like to
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touch on? I think we've, we've wrapped up
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a lot of information on the Social Security and I think
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we're going to move on next week.
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We're going to talk a little bit on taxes.
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But but you've been very patient.
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You've been very patient these last three episodes because I
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mean, honestly, I, I, I look at you and I think about, you know,
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this is a topic that, you know, it's hard enough to talk about
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retirement when you're in your 30s, let alone Social Security.
16:30
That's going to, you know, I just hey, man.
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It's in my paycheck. I appreciate everything that
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you've you've taught us, though. I mean, you see that in your
16:37
paycheck every month. It's like or every two weeks,
16:40
whatever. And it's like, OK, where is this
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going? When am I going to get it?
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How can I make sure that there aren't any mistakes, right?
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And you can check that. I mean, you can double check to
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make sure there weren't any mistakes with your Social
16:50
Security. And then learning more about,
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OK, when do I get it? When should I take it?
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I think it's interesting. And I think this is, you know,
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again, we're on episode 18 here, which time has just flown.
17:03
Yeah. And I think about us, and I
17:05
think it works well with us because you are very inquisitive
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and you do want to know things. And this is.
17:11
This has worked well for for me. Too.
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Yeah. And sometimes I'm like, well,
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this is probably a silly question, but I'm going to ask
17:16
it anyway because I don't know. I think a lot of people probably
17:19
have those questions because not everyone is that educated when
17:22
it comes to their finances. But great, great questions.
17:24
And I and I, I, I do enjoy this because I think obviously we're
17:28
at different stages in our life, but you come at things with a
17:31
perspective of I'm younger, but I'm curious.
17:36
And so you ask questions that I think are relevant because, you
17:40
know, 75% of our clients are either retired or within a year
17:42
or two of retirement. So that's kind of where my
17:44
mindset usually goes is how do we distribute some of this?
17:48
And then you come at it from a different perspective of I'm
17:50
younger, I've got a lot of friends, we've got questions
17:53
what makes sense. So I think it's, it's worked
17:55
well that way. Cammy it's.
17:55
Been great. It's been great OK, we're
17:57
touching on taxes next week. Oh my goodness, looking forward
18:00
to that. I'm sure it's going to be a lot,
18:03
but we will get through it and we will simplify it as much as
18:05
we can for you. Thanks so much for following
18:07
along with us. We drop a new podcast every week
18:09
and you you can get this podcast wherever you get your podcasts.
18:13
Thanks again, Hope you have a great week.
18:15
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