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Diving Deeper into Social Security · Money In Motion with Klaas Financial

• 0:00
  Speaker 1: You can learn more about Class Financial on the website
• 0:02
  Speaker 1: class financial dot com. That's Coloss Klaas Financial dot Com.
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  Speaker 1: Telephon number for the office right here in Madison six
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  Speaker 1: oh eight four four two five six three seven. No
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  Speaker 1: charge for that initial it could get to know you
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  Speaker 1: appointment det Loss Financial. It will be complimentary to you
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  Speaker 1: again their number six oh eight four four two five
• 0:20
  Speaker 1: six three seven. And joining us this morning from Class
• 0:23
  Speaker 1: Financial are Eric Schwartz and Kyle Kite. Eric, how you
• 0:26
  Speaker 1: doing this week?
• 0:28
  Speaker 2: I am doing great? John? How about yourself?
• 0:29
  Speaker 1: It's fantastic. You gets go first this morning too, which
• 0:32
  Speaker 1: is I know, Hey, good to talk to you, my friend.
• 0:35
  Speaker 1: And of course we've got Kyle back. Kyle, how have
• 0:37
  Speaker 1: you bet? It's been a bit, It has been Sean.
• 0:40
  Speaker 3: I've been doing well. Glad to hear you are too.
• 0:42
  Speaker 1: Ed doing fantastic and it's great to have both of
• 0:45
  Speaker 1: you along this morning, and we are going to talk
• 0:47
  Speaker 1: about quite possibly the biggest topic we ever cover on
• 0:51
  Speaker 1: this program. Seems to get a lot of calls, a
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  Speaker 1: lot of a lot of questions, a lot of folks
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  Speaker 1: wanting to know more, and we're talking this week about
• 0:58
  Speaker 1: social security benefits. We had some great information from Kyle
• 1:01
  Speaker 1: and Eric this morning throughout the program, don't forget if
• 1:04
  Speaker 1: you ever want to join us, you can always get
• 1:06
  Speaker 1: on the air at six eight three two one thirteen ten.
• 1:08
  Speaker 1: That's six SOH eight three two one thirteen ten. You
• 1:11
  Speaker 1: can learn more about Class Financial on their website colss
• 1:13
  Speaker 1: financial dot com. That's class klaas financial dot com. Recently
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  Speaker 1: redesigned website as well. Make it really easy to email them.
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  Speaker 1: Also schedule a complimentary chat right on the website class
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  Speaker 1: financial dot com. You can also, of course call the
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  Speaker 1: office six SOH eight four four two five six three seven.
• 1:31
  Speaker 1: As mentioned, this week, we're going to be talking about
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  Speaker 1: social security. But before we get to this week's topic
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  Speaker 1: and conversation, let's take a look back at last week's
• 1:38
  Speaker 1: pro program. Of course, each and every week we do
• 1:39
  Speaker 1: the Class Quiz question the week your chance to win
• 1:41
  Speaker 1: a fantastic prize. This week, no exception, our friends from
• 1:45
  Speaker 1: Class Financial have provided a twenty five dollars gift card
• 1:47
  Speaker 1: to Cheesecake Factory. We'll tell you a little bit later
• 1:50
  Speaker 1: on the program how you can win that twenty five
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  Speaker 1: dollars gift card. Little tip Tayke close attention because just
• 1:55
  Speaker 1: about every show, the question and answer come up during
• 1:57
  Speaker 1: the program. Let's actually take a look back at last
• 2:00
  Speaker 1: week's Claws Quiz question week get the question an answer
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  Speaker 1: there as well.
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  Speaker 2: Yes, So thank you to everybody for listening. As always,
• 2:07
  Speaker 2: and last week we talked about charitable giving and specifically
• 2:11
  Speaker 2: how it impacts your tax return. So our question was
• 2:15
  Speaker 2: true or false. As of twenty twenty two, only about
• 2:18
  Speaker 2: ten percent of American taxpayers itemize their deductions. The answer
• 2:22
  Speaker 2: to that was true, and our winner was Melanie from
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  Speaker 2: lod Ice, So thank you for listening.
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  Speaker 1: Congratulations Melanie. And as Eric mentioned, great conversation last week
• 2:31
  Speaker 1: about charitable gifting and donations and other things and deductions.
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  Speaker 1: You listen back to that right at class financial dot Com.
• 2:38
  Speaker 1: That's Class k l aas financial dot com. Of course,
• 2:41
  Speaker 1: today we are going to be diving into the topic
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  Speaker 1: that pretty much affects every single person here in the
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  Speaker 1: United States at some point, and that's of course social
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  Speaker 1: Security benefits. And I've got to guess the biggest question
• 2:51
  Speaker 1: out there, Kyle is when should I start And I'm
• 2:55
  Speaker 1: going to get my pen out on this one. When
• 2:57
  Speaker 1: should I start taking my retirement benefit? Yes?
• 3:02
  Speaker 3: John, it definitely is the biggest question that we get.
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  Speaker 3: It's one that everybody asks all the time, and unfortunately,
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  Speaker 3: like a lot of answers in financial planning, is that
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  Speaker 3: there's no straight answer. It very varies dependent on each
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  Speaker 3: individual person and their individual situation. But we can at
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  Speaker 3: least break something some this down and give you some clarity.
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  Speaker 3: So let's start with the basics. So the earliest that
• 3:24
  Speaker 3: you can start collecting Social Security retirement benefits is age
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  Speaker 3: sixty two. But if you do that, your benefit's going
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  Speaker 3: to be reduced because you're starting before your full retirement age,
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  Speaker 3: which we also call your FRA. But on the flip side,
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  Speaker 3: if you wait until age seventy, you actually get the
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  Speaker 3: maximum ount of benefit. So between age sixty two and seventy,
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  Speaker 3: you can start your Social Security pretty much at any time,
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  Speaker 3: and it's all going to depend The amount you get
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  Speaker 3: is going to base be based on how old you
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  Speaker 3: are when you start claiming it to the month. It's
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  Speaker 3: not even like an annual thing. It's every month that changes.
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  Speaker 1: That's and that size. We talk about that stuff, you know,
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  Speaker 1: we think about kind of calculating that can you can
• 4:02
  Speaker 1: we kind of get some as we kind of break
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  Speaker 1: this stuff down with Eric and Eric and Kyle this morning.
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  Speaker 1: Let's then kind of get into what that full retirement
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  Speaker 1: is then, Kyle.
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  Speaker 3: Yeah, Sean for sure. Yeah. So the biggest one here
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  Speaker 3: is it's a good question, and it depends on the
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  Speaker 3: year that you were born, which again this is why
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  Speaker 3: this stuff is so so complex sometimes. So if you
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  Speaker 3: were born between nineteen forty three and nineteen fifty four,
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  Speaker 3: your full retirement age is sixty six. If you're born
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  Speaker 3: between nineteen fifty five and nineteen fifty nine, it's sixty
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  Speaker 3: six plus a few months, whether that's two, four, six, eight,
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  Speaker 3: ten months, whatever it is. And then if you were
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  Speaker 3: born in nineteen sixty or later, your full retirement age
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  Speaker 3: is age sixty seven. So here's an example. Let's say
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  Speaker 3: that your full retirement age is sixty six in two months,
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  Speaker 3: if you were to start collecting that benefit at sixty two,
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  Speaker 3: you would only get about seventy four point two percent
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  Speaker 3: of that full benefit excuse me. And then at sixty five,
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  Speaker 3: again we're not quite a full retirement, you would get
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  Speaker 3: ninety two point two percent. But if you wait all
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  Speaker 3: the way up until seventy you'll get that full retirement
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  Speaker 3: age amount plus delayed retirement credits which are eight percent
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  Speaker 3: per year every year from sixty six and two months
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  Speaker 3: up to seventy in this case. So that's a really
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  Speaker 3: good uh incentive to wait because there's no investments that
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  Speaker 3: we can guarantee in eight percent return every single year.
• 5:22
  Speaker 1: Talking this morning with Kyle Kiten Eric Schwartz, our retirement
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  Speaker 1: planning professionals from Class Financial Online, Class Financial dot com.
• 5:29
  Speaker 1: That's Class k Laasfinancial dot com. Talking this week about
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  Speaker 1: Social Security and of course when should you be taking
• 5:37
  Speaker 1: your Social Security benefits? All those questions around that stuff,
• 5:40
  Speaker 1: and so you know, I think a lot of folks
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  Speaker 1: also kind of wonder then as you as you lay
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  Speaker 1: that out, is what's that break even point when it
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  Speaker 1: comes to starting social Security? Kind of thinking about it,
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  Speaker 1: like kind of doing the math and trying to figure
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  Speaker 1: out is it better to start earlier or wait? Eric,
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  Speaker 1: what's kind of the guidance on that in that area.
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  Speaker 2: That's a really good point, Sean, and I think this
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  Speaker 2: is actually what people are asking us when they say
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  Speaker 2: when should I take my Social Security? Right? They were
• 6:07
  Speaker 2: paying into Social Security all the years that we work,
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  Speaker 2: and when people go to take their benefits, they want
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  Speaker 2: to make sure that they're they're maximizing the amount that
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  Speaker 2: they can get out of it, and we tend to
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  Speaker 2: look at it a little bit differently in terms of
• 6:20
  Speaker 2: how it fits into your greater retirement plan. But the
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  Speaker 2: break even point here is basically the age at which
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  Speaker 2: the total amount that you've collected from Social Security balances out,
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  Speaker 2: regardless of whether of when you started taking the benefit.
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  Speaker 2: And I know that sounds a little confusing, so let's
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  Speaker 2: do an example here. So let's say your full retirement
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  Speaker 2: age is sixty seven, and you're deciding between taking benefits
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  Speaker 2: at your earliest possible age, which is sixty two, or
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  Speaker 2: waiting until the latest possible age, which is seventy. So
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  Speaker 2: if you take your benefit at sixty two, you'll be
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  Speaker 2: getting a reduced monthly check, but you're going to be
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  Speaker 2: receiving it for more years. Okay, So if you wait
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  Speaker 2: till until seventy, you're going to get a much bigger benefit,
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  Speaker 2: but you'll get it for a fewer years. So think
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  Speaker 2: about it this way. If you start benefits at sixty two,
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  Speaker 2: you have eight years of collecting benefits before you would
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  Speaker 2: have even started if you waited until you were seventy, Right,
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  Speaker 2: so then basically what we're saying is when when we're
• 7:17
  Speaker 2: looking at your age seventy benefit and we're saying it's
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  Speaker 2: going to be so much larger, right, every month of
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  Speaker 2: that larger benefit is paying back those eight years of
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  Speaker 2: benefits that you did not collect. Right, You're paying yourself back.
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  Speaker 2: If we're looking at balancing this out and breaking even,
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  Speaker 2: So the break even point usually falls somewhere between ages
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  Speaker 2: seventy eight and eighty one, depending on your specific situation.
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  Speaker 2: So if you think you're going to live well into
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  Speaker 2: your eighties or nineties, delaying can really pay off, right,
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  Speaker 2: that that bigger monthly check can actually pay you back
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  Speaker 2: and then some if you live long enough. But if
• 7:52
  Speaker 2: you need the money earlier, or if your health or
• 7:54
  Speaker 2: your life expectancy is a concern, then taking it sooner
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  Speaker 2: might make sense, even if you get a smaller benefit.
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  Speaker 1: Uh, you know, and we're going to talk about this too,
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  Speaker 1: because it feels like it's it's a lot to it.
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  Speaker 1: I mean, nobody knows, you know, how long we're on
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  Speaker 1: this on this earth. Remember there was a movie Logan's
• 8:10
  Speaker 1: Run I think is what it was called, back in
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  Speaker 1: the seventies, where like like people have like a crystal
• 8:14
  Speaker 1: on their hand, and as their time was coming, that
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  Speaker 1: crystal would change colors and you knew.
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  Speaker 2: Unfortunately, I don't think I like that, Sean, No, I
• 8:21
  Speaker 2: don't think I like that.
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  Speaker 1: It's a great movie, but yeah, kind of a kind
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  Speaker 1: of a stark and terrifying premise there. But but there
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  Speaker 1: is more to this, right, It's it's it's not just
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  Speaker 1: a math problem, but also as we as we look
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  Speaker 1: to this, it's it's also kind of a lifestyle and
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  Speaker 1: health decision as well, isn't it, Eric.
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  Speaker 2: Yeah, it's part numbers, it's part strategy, and then there's
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  Speaker 2: always a little bit of personal preference or what I
• 8:46
  Speaker 2: call like the human element and sneaking in there. Remember,
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  Speaker 2: the break even point is just one factor. So we
• 8:51
  Speaker 2: also look at your other income sources, your your spouse's
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  Speaker 2: benefit taxes, and you know generally how social security fits
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  Speaker 2: into your overall retirement. The good news is, with some guidance,
• 9:03
  Speaker 2: you can make a smart decision. But you really need
• 9:07
  Speaker 2: to consider all three of those factors. And I'm going
• 9:09
  Speaker 2: to give one example here of what I call this
• 9:11
  Speaker 2: human factor. So for a lot of folks, they know
• 9:15
  Speaker 2: that putting off their social security will give them a
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  Speaker 2: larger benefit later and in many cases probably end up
• 9:21
  Speaker 2: giving them a larger benefit throughout their life. Right. But
• 9:26
  Speaker 2: for my younger retirees that I'm meeting with, and they're
• 9:29
  Speaker 2: in their early years of retirement and they're not taking
• 9:31
  Speaker 2: their social security right, they're drawing their monthly benefits from
• 9:34
  Speaker 2: their retirement plan right, They're watching them spend spend down
• 9:37
  Speaker 2: their retirement savings while putting off that social security. Well,
• 9:41
  Speaker 2: people can stomach this pretty well when the market is
• 9:43
  Speaker 2: doing well. But if the market pulls back and they say, Okay,
• 9:47
  Speaker 2: now I'm seeing a decline in my investment value and
• 9:50
  Speaker 2: I'm drawing money out and I got the Social Security
• 9:53
  Speaker 2: over here and I'm not touching that at all, that's
• 9:55
  Speaker 2: really really difficult for folks. And that's where I'll say,
• 9:58
  Speaker 2: like that human element comes in and we need to
• 10:01
  Speaker 2: maybe re reevaluate how we're approaching social security for folks.
• 10:05
  Speaker 1: Really good to considerations this morning as we talk with
• 10:07
  Speaker 1: Eric Schwartz and Kyle Kite, our retirement planning professionals from
• 10:10
  Speaker 1: Class Financially. If you've got a question for Eric and Kyle,
• 10:12
  Speaker 1: love to have you join us this Morntel for number
• 10:14
  Speaker 1: six so eight three two one thirteen ten. That's six
• 10:17
  Speaker 1: so eight three two one thirteen ten and Steve checks in. Steve,
• 10:20
  Speaker 1: welcome to the program. You're on the Earth with Eric
• 10:22
  Speaker 1: Schwartz and Kyle Kite of Class Financial.
• 10:25
  Speaker 4: Yeah, good morning, gentlemen. I heard or read about quite
• 10:31
  Speaker 4: a substantial tax deduction if you are sixty seven years
• 10:36
  Speaker 4: old or older and drawing Social Security, and I'm just
• 10:41
  Speaker 4: trying to substantiate this because it really available.
• 10:47
  Speaker 2: That's a that's a great question. I can take this one, Sean.
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  Speaker 2: I believe what you're referencing. I can't be sure, but
• 10:53
  Speaker 2: I believe what you're you're referencing is what's called the
• 10:56
  Speaker 2: Enhanced Senior Deduction, and it is a recent is part
• 11:01
  Speaker 2: of the recent tax and spending bill that went through
• 11:04
  Speaker 2: that gives folks sixty five and older a six thousand
• 11:09
  Speaker 2: dollars additional deduction on top of your standard or your
• 11:13
  Speaker 2: itemized deductions. So that is a six thousand dollars per
• 11:17
  Speaker 2: person additional additional deduction. So if that's what you're if
• 11:22
  Speaker 2: that's what we're referencing here, then then the short answer is, yes,
• 11:25
  Speaker 2: that is that is something that is taking effect this year.
• 11:29
  Speaker 4: And six thousands is still great. But I had at
• 11:32
  Speaker 4: least twenty four deduction really, so so yeah, it sounds good.
• 11:38
  Speaker 4: You don't have to itemize to get this correct.
• 11:42
  Speaker 1: That's a great question, Steven. And as we get into this,
• 11:45
  Speaker 1: I love the I love the questions, and and it's
• 11:48
  Speaker 1: funny because a lot of the stuff is is you know,
• 11:50
  Speaker 1: anytime we're dealing with with government, anything gets a little
• 11:54
  Speaker 1: a little complicated and nuanced. And and I love I
• 11:57
  Speaker 1: love hearing this stuff. And you know, sometimes you'll hear
• 12:00
  Speaker 1: things from you know, from your friends and others and
• 12:02
  Speaker 1: you're like, wait what and then you'll you'll look into
• 12:04
  Speaker 1: it like Okay, maybe there's a very special unique circumstance
• 12:07
  Speaker 1: or maybe there's those type of things. So really really
• 12:10
  Speaker 1: good stuff this morning. Great call, Steve, Thank you, and
• 12:13
  Speaker 1: of course if you've got a question, we've got a
• 12:14
  Speaker 1: phone line open for It's six oh eight three two
• 12:16
  Speaker 1: one thirteen ten. That's six o eight three two one
• 12:18
  Speaker 1: thirteen ten. We're going to talk about, uh, maybe a
• 12:21
  Speaker 1: little raise and social Security and their benefit. We're gonna
• 12:24
  Speaker 1: get to get to that, and we'll talk a little
• 12:25
  Speaker 1: bit as well about kind of how your Social Security
• 12:28
  Speaker 1: benefit is calculated in the first place. We'll do that
• 12:30
  Speaker 1: in just a moment. In the meantime, you haven't been
• 12:31
  Speaker 1: to the website yet. Cossfinancial dot Com that's Coss klaas
• 12:35
  Speaker 1: Financial dot com. Need to head on over there right
• 12:37
  Speaker 1: now or give them a call. Six oh eight four
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  Speaker 1: four two five six three seven. No charge for that
• 12:42
  Speaker 1: initial get to know your appointment at Costs Financial. It
• 12:44
  Speaker 1: will be complimentary to you again their number six oh
• 12:46
  Speaker 1: eight four four two five six three seven. More of
• 12:49
  Speaker 1: Money in Motion comes your way next right here on
• 12:51
  Speaker 1: thirteen ten. Wu Ibi.
• 12:54
  Speaker 5: This is Money in Motion with COSS Financial, a fun
• 12:58
  Speaker 5: and informative show designed to help you get answers to
• 13:01
  Speaker 5: all your retirement questions in one place.
• 13:03
  Speaker 1: Talking without retirement planic professionals Eric Schwartz and Kyle Kaite.
• 13:06
  Speaker 1: Of course, they come to us from Class Financial online,
• 13:09
  Speaker 1: Class Financial dot com. That's Class k l aas Financial
• 13:12
  Speaker 1: dot com. Delph number six eight four four two five
• 13:15
  Speaker 1: six three seven. No charge for that initial get to
• 13:18
  Speaker 1: no depoyment at Class Financial. It will indeed be complimentary
• 13:21
  Speaker 1: to you again their number six oh eight four four
• 13:23
  Speaker 1: two five six three seven. Talking this week about social
• 13:27
  Speaker 1: security and I've heard some folks, Kyle, uh, maybe getting
• 13:31
  Speaker 1: a large pay raise and their soci security benefit this year.
• 13:35
  Speaker 1: What's that all about?
• 13:37
  Speaker 3: Yeah, great question, Sean. This kind of ties back into
• 13:39
  Speaker 3: the question that we had from the listener just a
• 13:40
  Speaker 3: minute ago, because a lot of people hear about this
• 13:42
  Speaker 3: through their friends and things too. So well, I think
• 13:45
  Speaker 3: what you're what you're referencing here is the windfall elimination
• 13:48
  Speaker 3: provision and the government pension offset. So both of these
• 13:51
  Speaker 3: were basically things that were in law that would it
• 13:56
  Speaker 3: would reduce most people's social security if they had different
• 14:00
  Speaker 3: working like down here in Illinoi, it's very common for
• 14:02
  Speaker 3: teachers to not pay into social Security, so if you
• 14:05
  Speaker 3: were a teacher, you actually would get your social Security
• 14:07
  Speaker 3: benefit reduced and so on and so forth. But there
• 14:10
  Speaker 3: was a Social Security Fairness Act that was signed back
• 14:13
  Speaker 3: on January fifth of twenty twenty five here that basically
• 14:17
  Speaker 3: got rid of those offsets and win fall elimination period.
• 14:20
  Speaker 3: So this is a very big deal for people that
• 14:23
  Speaker 3: were affected by this because this means that individuals whose
• 14:26
  Speaker 3: social Security benefits were previously reduced by those provisions may
• 14:30
  Speaker 3: have received retroactive payments for twenty twenty four. So people
• 14:33
  Speaker 3: that this affected got a nice check in early twenty
• 14:36
  Speaker 3: twenty five. Then also their social Security actually went up
• 14:39
  Speaker 3: on a month to month basis, and that started back
• 14:42
  Speaker 3: in April of this year. So if you were especially,
• 14:45
  Speaker 3: like I said, a teacher down here in Illinois especially,
• 14:47
  Speaker 3: but if you're part of one of these offsets, it's
• 14:50
  Speaker 3: definitely something to look into.
• 14:52
  Speaker 1: Really great stuff. And then Kyle too, what's kind of
• 14:54
  Speaker 1: the best age as we're as we're kind of breaking
• 14:56
  Speaker 1: social Security down to start our benefit.
• 14:59
  Speaker 3: Yeah, this is a good question, Sean, And this we've
• 15:02
  Speaker 3: been talking about this a lot this morning, but this
• 15:03
  Speaker 3: is my joke. If you tell me today you're gonna die.
• 15:05
  Speaker 3: This all becomes a real simplemathic question, right, So it
• 15:10
  Speaker 3: truly depends as we've been talking about, and we really
• 15:12
  Speaker 3: need to look at your other income sources, what your
• 15:15
  Speaker 3: spouse's social Security record could look like, any debts that
• 15:18
  Speaker 3: anybody has. And then obviously health and longevity is a
• 15:21
  Speaker 3: big part of this. So sometimes it makes sense to
• 15:24
  Speaker 3: start early. Sometimes it's worth holding out, but it's almost
• 15:28
  Speaker 3: it's basically a non negotiable that once you hit seventy
• 15:31
  Speaker 3: there's no reason to wait any longer because you have
• 15:34
  Speaker 3: absolutely maxed out what your Social Security benefit would be
• 15:37
  Speaker 3: at that point. Very interesting.
• 15:39
  Speaker 1: So as we talked this morning with Kyle Kaiten Eric Schwartz,
• 15:42
  Speaker 1: our retirement planning professionals from COSS Financial. You can always
• 15:45
  Speaker 1: learn more online Cossfinancial dot com. That's Coss Klaas Financial
• 15:49
  Speaker 1: dot com and Eric. You know, as we break this
• 15:52
  Speaker 1: stuff down, let's talk numbers and like, how are these
• 15:57
  Speaker 1: payments calculated? How is it calculated in the first place.
• 16:01
  Speaker 2: It's a great question, and this is where it gets
• 16:02
  Speaker 2: pretty technical, but we'll try and keep it, try and
• 16:05
  Speaker 2: keep it simple for this Social Security show. First off,
• 16:10
  Speaker 2: to qualify for Social Security you need to earn credits.
• 16:13
  Speaker 2: So in twenty twenty five, you get one credit for
• 16:16
  Speaker 2: every one and ten dollars that you earn, and you
• 16:20
  Speaker 2: can get up to four credits per year. Okay, So
• 16:23
  Speaker 2: generally you need to have forty total credits, which works
• 16:26
  Speaker 2: out to about ten years of work history to be
• 16:29
  Speaker 2: eligible to get your own retirement benefit. So, assuming that
• 16:33
  Speaker 2: you've actually met that requirement, the Social Security Administration is
• 16:36
  Speaker 2: going to take your thirty five highest earning years adjusted
• 16:40
  Speaker 2: for inflation. Now this is not your last thirty five
• 16:43
  Speaker 2: years or anything like that. This is truly your highest
• 16:46
  Speaker 2: earning years. And they are taking your earnings from the
• 16:49
  Speaker 2: early part of your working years and adjusting them to
• 16:52
  Speaker 2: today's value for inflation, and they are taking the highest
• 16:56
  Speaker 2: thirty five years and using that to calculate your benefit.
• 17:01
  Speaker 2: If you didn't work for thirty five years, if you
• 17:03
  Speaker 2: don't have thirty five separate years where you have income,
• 17:06
  Speaker 2: those missing years are going to count as zeros in
• 17:08
  Speaker 2: the formula. So even if you have you know, low
• 17:12
  Speaker 2: income in years in certain years that you would use
• 17:16
  Speaker 2: to fill out that thirty five, it is still helpful
• 17:19
  Speaker 2: because you're getting rid of some of those zeros. Your
• 17:21
  Speaker 2: earnings are then averaged into something called your average indexed
• 17:25
  Speaker 2: monthly earnings or your AIM. Then they use that formula
• 17:30
  Speaker 2: to turn your AIME into what's called your primary insurance
• 17:34
  Speaker 2: amount your PIA. And this is the benefit that you
• 17:37
  Speaker 2: actually receive at full.
• 17:38
  Speaker 1: Retirement age real quick too, And I'm going to ask
• 17:40
  Speaker 1: you the complexity of this formula. I've heard from folks
• 17:44
  Speaker 1: too who are like, like near retirement and maybe they've
• 17:48
  Speaker 1: they've got some other income and they're just like saying saying, well,
• 17:51
  Speaker 1: I don't want to work I don't want to take
• 17:52
  Speaker 1: a job right now because I don't want to because
• 17:55
  Speaker 1: I won't be working full time or whatever. The reason is,
• 17:59
  Speaker 1: I don't want to lower my benefit, am I right? Like,
• 18:02
  Speaker 1: like once you kind of earn those credits at that
• 18:05
  Speaker 1: the only it can only go up, right, you're earning
• 18:08
  Speaker 1: your own the percentage that that number, you can't. You
• 18:11
  Speaker 1: can't if you take a lower paying job in yours
• 18:15
  Speaker 1: you near retirement, it's not going to pull your benefit down?
• 18:18
  Speaker 4: Right?
• 18:18
  Speaker 1: Am I making sense on that?
• 18:19
  Speaker 5: Eric?
• 18:19
  Speaker 2: Okay, Yeah, you're you're correct. You're correct. It's not going
• 18:22
  Speaker 2: to lower your benefits. It's those thirty five highest earning
• 18:25
  Speaker 2: years and not your last thirty five.
• 18:27
  Speaker 1: Well stated, well well put as always to talk this
• 18:30
  Speaker 1: morning with Eric Schwartz and Kyle Kaita, retirement planning professionals
• 18:33
  Speaker 1: FROs Financial. So I'm kind of guessing is as folks
• 18:36
  Speaker 1: are probably playing a long here at homegoing what the
• 18:40
  Speaker 1: this formula isn't super straightforward?
• 18:42
  Speaker 2: Is it?
• 18:43
  Speaker 5: No?
• 18:44
  Speaker 3: No?
• 18:44
  Speaker 2: And this is why we always tell people to create
• 18:47
  Speaker 2: an account on SSA dec of because it's a lot
• 18:49
  Speaker 2: easier if they just do the math for you. But
• 18:52
  Speaker 2: basically the way that it breaks down for the final benefit.
• 18:55
  Speaker 2: Is there going to take that average index monthly earnings. Okay,
• 18:59
  Speaker 2: so remember that comes from your thirty five highest earning years.
• 19:02
  Speaker 2: They're going to take that amount, and they are going
• 19:05
  Speaker 2: to look at the first one thousand, two hundred and
• 19:08
  Speaker 2: twenty six dollars of that amount, and they're going to
• 19:11
  Speaker 2: multiply that by ninety percent. They are going to then go, okay,
• 19:16
  Speaker 2: one two hundred and twenty six dollars up through seven thousand,
• 19:20
  Speaker 2: three hundred and ninety one, they're gonna multiply that by
• 19:23
  Speaker 2: thirty two percent. Then everything over seven thousand, three hundred
• 19:26
  Speaker 2: and ninety one, they're going to multiply by fifteen percent.
• 19:29
  Speaker 2: We add it all up, and there is your Social
• 19:31
  Speaker 2: Security benefit. So I think I think that is pretty straightforward,
• 19:35
  Speaker 2: and I'm sure everybody will leave today with a really
• 19:37
  Speaker 2: good understanding of how to calculate that for themselves.
• 19:42
  Speaker 1: I think this is like a conspiracy by Texas Instruments
• 19:45
  Speaker 1: to sell more calculators. I'm telling you, this.
• 19:50
  Speaker 2: Is, oh Man, of all the conspiracy theories. I don't
• 19:53
  Speaker 2: often worry about Texas Instruments.
• 19:55
  Speaker 1: Right, They're always lurking somewhere there is talking this morning
• 20:00
  Speaker 1: the retirement planning professionals Eric Schwartz and Kyle Kite. Of course,
• 20:03
  Speaker 1: they come to us from Class Financial online Klassfinancial dot com.
• 20:06
  Speaker 1: That's Closs k l aa s Financial dot com. We
• 20:09
  Speaker 1: talked Aim, we talked Pia, What about Cola. We'll get
• 20:13
  Speaker 1: the details from the guys next. As Money in Motion
• 20:16
  Speaker 1: with Class Financial continues here at thirteen ten, will you
• 20:18
  Speaker 1: I I?
• 20:20
  Speaker 5: This is Money in Motion with Class Financial, a fun
• 20:24
  Speaker 5: and informative show designed to help you get answers to
• 20:26
  Speaker 5: all your retirement questions in one place.
• 20:29
  Speaker 1: Just moments away from our Class Quiz flash week, your
• 20:31
  Speaker 1: chance to win a twenty five dollars gift cards at
• 20:34
  Speaker 1: Cheesecake Factory, talking with our retirement planning professionals from Class Financial,
• 20:37
  Speaker 1: Eric Schwartz and Kyle Kite talk in social security this
• 20:41
  Speaker 1: week and as we as we talk about this stuff
• 20:44
  Speaker 1: much more complicated, I think than folks realize our area.
• 20:49
  Speaker 1: Then I guess we've got to wonder about is does
• 20:51
  Speaker 1: that benefit stay the same once you start collecting? Kyle,
• 20:56
  Speaker 1: we'll throw this one your way.
• 20:58
  Speaker 3: Yeah, great question, Sean. And the good news is that
• 21:00
  Speaker 3: it does usually go up over time thanks to cost
• 21:03
  Speaker 3: of living adjustments. So Social Security looks at it's generally
• 21:06
  Speaker 3: tied to like what inflation's running, and that's how they
• 21:09
  Speaker 3: are partially what they take into consideration when they're looking
• 21:11
  Speaker 3: at these cost of living adjustments. So just over the
• 21:14
  Speaker 3: last few years to give people some numbers, so from
• 21:16
  Speaker 3: twenty three into twenty four, the cost of living adjustment
• 21:19
  Speaker 3: was three point two percent, and then last year twenty
• 21:22
  Speaker 3: four into twenty five here was two point five percent,
• 21:25
  Speaker 3: and they always announced this in October, so we just
• 21:28
  Speaker 3: got the number for twenty twenty six. So next year
• 21:30
  Speaker 3: it's going up by two point eight percent. And as
• 21:33
  Speaker 3: I mentioned, this is generally tied to what they're seeing
• 21:35
  Speaker 3: for inflation. And while we're talking about these calculations, don't
• 21:39
  Speaker 3: forget that Social Security is you've paid into these benefits
• 21:43
  Speaker 3: through payroll taxes as you were working. But many people
• 21:47
  Speaker 3: don't realize that you pay six point two percent out
• 21:49
  Speaker 3: of your check, but your employer also matches that. So
• 21:52
  Speaker 3: the total that's going in is about twelve point four percent.
• 21:56
  Speaker 3: But they do have a wage cap on it, and
• 21:57
  Speaker 3: for twenty twenty five that cap is one hundred and
• 22:00
  Speaker 3: seventy six thousand dollars one hundred. So what that means
• 22:03
  Speaker 3: is that if you earn more than that, you'll stop
• 22:05
  Speaker 3: paying into Social Security once you hit that max for
• 22:08
  Speaker 3: the year, So you'll feel like you're getting a little
• 22:10
  Speaker 3: bit of a raise because you're not paying in that
• 22:11
  Speaker 3: six point two percent. But then the new year rolls
• 22:14
  Speaker 3: around and it resets the clock, so you get to
• 22:16
  Speaker 3: start all over and start paying back into it.
• 22:19
  Speaker 1: Sorry, this morning with Kyle Kaite and Eric Schwartz or
• 22:21
  Speaker 1: retirement planning professionals from Class Financial. So you know, one
• 22:23
  Speaker 1: of those areas to Kyle that I don't think we
• 22:26
  Speaker 1: always think about, which is we think social Security. You
• 22:28
  Speaker 1: think retirement benefits. But there's other areas and other benefits
• 22:32
  Speaker 1: out there when it comes to Social Security, aren't there?
• 22:34
  Speaker 3: Yeah, one hundred percent, Sean, So social Security isn't just
• 22:37
  Speaker 3: about retirement, which that's pretty much what we've been focused
• 22:39
  Speaker 3: on today is the retirement benefits, but it touches a
• 22:42
  Speaker 3: lot of a lot more lives than people realize, whether
• 22:45
  Speaker 3: it's a disability, death in the family, supported and child
• 22:48
  Speaker 3: with special needs. There are a lot of ways that
• 22:50
  Speaker 3: Social Security can help people, and there's actually five types
• 22:53
  Speaker 3: of these benefits. So again, retirement benefits. That's pretty much
• 22:56
  Speaker 3: what we've been talking about today. You pay into Social
• 22:58
  Speaker 3: Security while you're working. When you retire, they start paying
• 23:00
  Speaker 3: you at check. Another one though, is disability insurance, so
• 23:04
  Speaker 3: if a medical condition prevents you from working, this is
• 23:07
  Speaker 3: called SSDI. There's also survivor benefits, so for eligible family
• 23:11
  Speaker 3: members after someone passes away, whether that be a spouse
• 23:14
  Speaker 3: or a minor child, there's some some Social Security benefits there,
• 23:18
  Speaker 3: and then there's something called Supplemental Security income and those
• 23:21
  Speaker 3: are that's for people that are disabled, they're over sixty
• 23:24
  Speaker 3: five with very limited income or resources.
• 23:27
  Speaker 1: Fascinating stuff for sure, and don't forget if you miss
• 23:30
  Speaker 1: any part today's program, you can always listen back to
• 23:32
  Speaker 1: this previous shows at costs Financial dot Com. That's coss
• 23:35
  Speaker 1: k l aas Financial dot Com. Always a lot of
• 23:38
  Speaker 1: great information, also a lot of fun as well listening
• 23:40
  Speaker 1: to the program, Josh, share this with your friends and family.
• 23:43
  Speaker 1: Also again, just head on over to class financial dot Com.
• 23:45
  Speaker 1: One final thing and speaking of websites, before we wrap
• 23:48
  Speaker 1: up and get to the Class Quiz question the week
• 23:50
  Speaker 1: this week, Eric, are there kind of places folks can
• 23:53
  Speaker 1: go or some resources folks can use when they're looking
• 23:56
  Speaker 1: to get serious about planning for Social Security, where's a
• 23:59
  Speaker 1: good start for that?
• 24:01
  Speaker 2: Absolutely, there are definitely good resources for this. I'm sure
• 24:05
  Speaker 2: that everyone enjoyed my breaking down of the formula in
• 24:08
  Speaker 2: the way that you can. You can do some long
• 24:10
  Speaker 2: division and figure it out yourself, but hands down, visit
• 24:14
  Speaker 2: SSA dot gov. That is the best place to get
• 24:16
  Speaker 2: information about Social Security and your specific Social Security benefits.
• 24:21
  Speaker 2: So you can create an account, see your work history,
• 24:23
  Speaker 2: estimate your benefit at different ages. Can you even see
• 24:26
  Speaker 2: if you're eligible for spousal or survivor benefits. So it's
• 24:29
  Speaker 2: a really, really useful tool. I really encourage folks to
• 24:32
  Speaker 2: go out there and use it.
• 24:33
  Speaker 1: In that website s SA dot gov. That's s SA
• 24:36
  Speaker 1: dot gov. Speaking of useful websites, class financial dot com
• 24:40
  Speaker 1: great site there as well, if you have been there recently.
• 24:43
  Speaker 1: Check them out online cossfinancial dot com. You can subscribe
• 24:45
  Speaker 1: and listen back to the podcast. You can sign up
• 24:47
  Speaker 1: for the weekly Market Pulse newsletter. You can build separate
• 24:50
  Speaker 1: divisions at costs financial how they can help you. Also,
• 24:52
  Speaker 1: if you're an employer, other areas they can help you
• 24:55
  Speaker 1: there as well. Again, that all available to you at
• 24:57
  Speaker 1: Cossfinancial dot com. They're twelphe number six so eight four
• 25:00
  Speaker 1: two five six three seven. No charge for that initial
• 25:03
  Speaker 1: get to know you appoyment at Lost Financial, it will
• 25:05
  Speaker 1: be complimentary to you again their number six oh eight
• 25:08
  Speaker 1: four four two five six three seven.
• 25:09
  Speaker 2: You're what.
• 25:10
  Speaker 1: I want to hold on to that telephon number because
• 25:12
  Speaker 1: it's time now for the COSS Quiz Question of the Week.
• 25:14
  Speaker 1: It works like this. In just a moment, I'll ask
• 25:15
  Speaker 1: you the class quiz question of the week. We'll then
• 25:17
  Speaker 1: have thirty minutes from the end of today's program to
• 25:19
  Speaker 1: call the Class Financial office right here in Madison at
• 25:21
  Speaker 1: six oh eight four four two five six three seven.
• 25:24
  Speaker 1: First cout correct answer win this week's prize, which is
• 25:26
  Speaker 1: a twenty five dollars gift card to cheesecake Factory. This
• 25:29
  Speaker 1: week's class Quiz question the week is this, what is
• 25:32
  Speaker 1: the earliest age that you can begin collecting traditional Social
• 25:36
  Speaker 1: Security retirement benefits? Is it age sixty two or age
• 25:40
  Speaker 1: sixty five? Telephone number six oh eight four four two
• 25:44
  Speaker 1: five six three seven. First coar with correct answer win
• 25:46
  Speaker 1: that twenty five dollars gift card to cheesecake Factory. Don't
• 25:48
  Speaker 1: forget as well as Colass Financial's office right here in
• 25:50
  Speaker 1: Madison again their number six oh eight four four two
• 25:54
  Speaker 1: five six three seven. Eric Kyle, great chatting with both
• 25:57
  Speaker 1: of you guys, have a fantastic day.
• 25:59
  Speaker 4: Thanks.
• 26:00
  Speaker 1: Thanks, take care guys. Doctor Marty Green from check out Vet.
• 26:03
  Speaker 1: We're gonna talk kitties. We're gonna talk cloning. We will
• 26:05
  Speaker 1: do that next. As Ask the Experts continues right here
• 26:08
  Speaker 1: on thirteen ten w I B A.