Social Security Timing

great information about Coss Financial. Learn about their separate divisions. You can learn about the team at Costs Financial. You can also sign up right online for the weekly Market Pulse newsletter. Again, that available to you at Cossfinancial dot com. Their telephone number six oh eight four four two five six three seven. No charge for that initial get to know your appointment at Costs Financial. It will be complementary for you again their telephone number six oh eight four

four two five six three seven. And you get on the air and join the program this morning, give us call six oh eight three two one thirteen ten. That's six oh eight three two one thirteen ten. Joined this week by CJ Closs and Eric Schwartz. CJI, how you doing this morning?

should be it should be a pretty good show ahead. Again, we'll be talking about navigating that social security maze and certain terms and things that you hear when it comes to social security and why they matter and how they matter as well as mentioned of course, oftentimes get questions about social security and whether it's on the exact topic we're talking about, or if you just have a question

about retirement planning in general. We'd love to have you join us helpful number here at station six eight three two one thirteen ten. That's six oh eight three two one thirteen ten. Before we start this week's conversation though about so scarity, let's actually take a look back at last week's program. Of course, each and every week we do the Class Quiz Question week. This week will be no exception, chance to win a great prize from our friends at class Financial, chance to win a twenty five

dollars gift card to Sephora. Typically the question and answer come up during the program, so listen closely for the question and answer for the Class Quiz Question week. We'll get you more details on how you can win it later on in the program. But again, before we get rolling on this week's topic, let's actually look back at last week's program and talk about the click Closs Quiz question week. Get the question and the answer there as well.

subscribe there as well. Congratulations. As Eric points out to Penny, you two can be like Penny, listen close to the program because again typically the question answer to class quiz question we come up during the show, and of course we're diving into social security and kind of that maze this week and full retirement age of course starts sixty two. What's kind of the real deal and let's kind of get that get that low down CJ. Nope, did we lose CJ? Oh No, Eric, are you able to.

of this as your Social Security sweet spot. Okay. It is the first age at which you can receive your full Social Security benefit without a reduction for claiming early. So full retirement age it does vary a little bit. It's somewhere between sixty six and sixty seven. For folks who are born between nineteen forty three and nineteen fifty four,

your full retirement age is sixty six. And then those folks born between fifty five nineteen fifty five and nineteen fifty nine, you will have your Social Security full retirement age be sixty six and some number of months it varies. And then finally for people born after nineteen sixty, it's pretty simple. Sixty seven is your full retirement age. And again this is where you're gonna get one hundred percent

of your benefit. Now, you can start receiving benefits before your full retirement age, okay, So you can start as early as sixty two. Now there's a trade off. You're gonna get less each month, right, but you are collecting for potentially more years. And the other thing is you can start as early as sixty two, but you can start on any month between sixty two and seventy. Okay, So sometimes people think, gosh, I can only collect at

sixty two, sixty five, and sixty seven. No Social Security will will pro rate your benefit down to the month, so you can start anytime between between sixty two and seventy. How much will you get? When we get this question on the best place to get that information is to get a personalized number is to go to SSA dot gov make an account, and historically we away to wait for things to be mailed to us and they would come,

you know, maybe once a year, sometimes not. And SSA doc gov has a ton of great tools just to understand what your benefits going to look like, how much you can get, and what your options are. So I really really encourage people go to SSA doc gov and find out more about your Social Security benefit and when is the best time to collect? Oh, this one is another good one. It depends, you know. We love to say that, but waiting until you're full of retirement age

usually means you'll get bigger checks. The reason we always say it depends is we can't really answer this question perfectly unless we know exactly how long everybody's going to live. Right If we know that, I mean, it's really easy to determine, you know what, when is the most opportune time to start. So where we tend to start with folks, is say, okay, well, based on the other income sources you have in retirement, based on how much you've saved,

how much you want spend. That's how we can help you figure out when you need to draw your Social Security to kind of accomplish your goals of having retirement income. And you know, maybe you have some legacy goals, so we can use Social Security as a tool to kind of help you those hit those targets. Now, if you wait past your full retirement age, so remember that's between sixty six and sixty seven, you do get an increase

each year until you get to age seventy. So you are actually going to have an eight percent increase to your monthly benefit every year until you turn seventy. Now that is a pretty good deal. We at Class Financial, we obviously have an investment management team here and they would tell you eight percent guaranteed is a pretty good deal. When you get to seventy though, that is pretty much that is go time. There are very few reasons to wait past age seventy to actually start your benefits.

eight three two one thirteen ten. You can learn more about Class Financial on their website COSS Financial dot com. That's Coss k l Aasfinancial dot com Telpha number six oh eight four four two five six three seven. No charge for that initial gets to know your appointment at loss financial it will be complementary to you again their number six oh eight four four two five, six three seven. So Eric, let's break down that that math when it comes to those numbers and kind of calculations when it

comes to your your Social Security benefit. And I think a lot of folks wonder is will I ever get a boost?

That's ten years of work history. That is the goal to qualify for Social Security benefits. Now, if you don't have forty but you are, Let's say you work for maybe five years and then something takes you out of the workforce. If you return later, you can keep adding to your total and and get get up to that forty credits. They don't need to be consecutive.

not true. So Social Security is going to use your thirty five highest earning years to calculate your your benefit. And that is adjusted for inflation. So when you look at your Social Security statement, you may look back and see, you know, twenty five years ago, maybe you earned less money. But when we adjust it for inflation, it, you know, it brings the dollars back up to today's time value of money, and it it provides you with a larger

larger benefit than it looks like. But if we think about this thirty five year average of working work history, we all start with thirty five zeros right, if we've never worked before, we have zero's for thirty five years. So every year that you work, regardless of how much you're earning, you are increasing your Social Security benefit because you are taking away one of those years of zero earnings. Okay, So no matter how much you're earning, you are you

are improving your benefit by working. Now, you'd asked about will you ever get a boost on your Social Security benefit? So that is what we would call a cost of living adjustment or a COLA. And you do get cola's starting at age sixty two, even if you wait to get your benefit. And twenty twenty five that was two and a half percent, and then the year before last year was three point two percent. Okay, So definitely we'll be seeing those cost of living adjustments over time.

have a government pension. So the Social Security Fairness Act ends what's called the Windfall Elimination Provision or WEB and the Government Pension Offset GPO. So these are these two provisions. They've essentially reduced or eliminated the Social Security benefits of over three point two million people. And those were folks who received a pension based on work that was not covered by Social Security, so they had a non covered pension. Okay, so this is probably strange to hear for a lot

of folks, especially in Wisconsin. We don't have very many positions in our state government that don't pay into that don't pay into Social Security, but our neighbors to the south. In Illinois, there are a number of positions working for the state government where actually instead of paying into Social Security, employees actually pay into all of their retirement contributions into

the state pension. So the Social Security Fairness Act it increases social secure benefits for certain types of workers, including teachers, firefighters, police officers in some states, federal employees who are are covered by the Civil Service Retirement system, and people whose work had been covered by like a foreign social security system for example. So complicated topic, but it is a

big change. So if you are one of those workers who has a government pension and maybe have been impacted by this, go to SSA dot gov and get up to date information on how this might affect you.

provide at COSS Financial. I'll send up for the weekly Market Pulse newsletter that at the website COSS Financial dot com. Tell for number six oh eight four four two five six three seven. No charge for that initial get to know your appointment tech loss financial. It will be complementary to you again. Their number six oh eight four four two five six three seven. Talk about you hear that term break even. We'll find out from c Jan Eric what that is and is it possible to figure that out?

What We'll get all those details and so much more as we continue our conversation Money in Motion here at Costs Financial on thirteen ten. Wuib I walking this week with our retirement planning professionals CJ. Closs and Eric Schwartz. Of course they come to us from Class Financial the website colss financial dot com. That's coss k l aa as Financial dot com at telephon number six O eight

four four two five six three seven. No charge for that initial gets to know your appointment tech loss Financial. It will be complementary to you again. Their number six oh eight four four two five six three seven talking this week about social security and h CJ one of the things you often hear folks wondering about is picking that right age, and what exactly and where exactly is that break even point? What do people need to know there?

the state of Illinois and now there's a change. I mean, these are complicated things with significant impacts over the remainder of your retirement years. So this is often how and when and where we get involved. But when you're thinking about your future retirement income streams, including social Security, consider all of those income sources. What we would do is we would sit down and say, hey, what investments do you have, what pensions do you have, what Social Security

income will you have? Anybody working? When do you want to retire? When can you afford to retire? And then based upon all that data, we will say you should draw from here first Now for the somebody who's not in the industry, that might sound like, oh my goodness, I have no idea how to do that analysis. But it's not actually that complicated once you're on our side of the fence and understand kind of the tax impacts

of each of these income streams. Social Security, this is not right within my topic right now, but social Security is a little bit unique. Social Security can be legitimately in the state of Illinois or a state of Wisconsin at least completely tax free. If your income is low enough on a provisional basis, you will have no tax federal or state on sociecurity. Now, if your total income or was known as your modified adjusted gross income gets

high enough, then they start taxing your Social Security. And then if your income is much much, much higher, you cap out at eighty five percent of your Social Security being income taxable. So you get the idea. It's important to know these things because it has an impact on when you draw in where you draw in all these things. Now, longevity is another important question because some people like us will say, hey, you should wait to draw later, which

we'll talk about here in a moment. But then if you're very unhealthy, and you're retired at sixty two, you probably just want to draw it as early as you can to try to get as much benefit out as you can. Because here's the kicker with social Security. If you don't have a spouse or somebody who's going to be claiming on your record after you die somehow, then there's really not a lot of benefit of waiting if you are sick or ill, or if you expect to

die at an earlier or earlier than average age. Now, with all of this being said, you asked the question of what is this break even thing? Well, listen, break even is actually not that complicated of a concept. Imagine you have an Excel spreadsheet or even just a piece of paper in front of you, and you know that if you draw at age sixty two, which is the earliest that you can draw, that your benefit's going to

be lower. As a matter of fact, it's about for somebody who's full retirement age is, you know, sixty six. In some number of months, if you draw aus early sixty two, you're only getting about seventy four percent of your full retirement age benefit. So if I draw sixty two, it's a lower amount, but I'm money ahead, right, that's the key. I'm money ahead of the other version of myself that would have waited to full retirement age. And I'm way money ahead of the other version of myself

that would have waited to seventy Everybody gets this. But if you kind of put those that Excel spreadsheet down and you say, but if I had waited to seventy, the benefit is larger, and therefore I start catching up on the former version that drew earlier. So this is just a simple, you know, nominal math equation. We're ignoring expected returns and inflation right now. We're just basically looking at at the nominal dollar amount, and at some point

in the future those numbers break even. Well, here's the kicker, everybody. For most Americans under most situations, that break even a hers somewhere between seventy eight and eighty. Okay, So meaning if I draw at sixty two, sixty three, sixty four, sixty fivety six, sixty seven, sixty eight, sixty nine, or seventy they all break even somewhere between seventy eight and eighty. Now why does this matter, Because that's about that's about

life expectancy. So listen, If you think that the Social Security Administration cares when you draw, social Security, you clearly don't understand how they built the math. They just don't care when you draw because on average, it's irrelevant. Now, notice what I just said there, On average, here's the key. If everybody in your family live to ninety or older, you could actually game it a little bit. You could say, hmmm,

well social Security doesn't care, but I care. And I know that if I wait and get a larger benefit and I live to age ninety, I'm money way ahead. So you get the idea social Security Administration could care less. Do we as financial planners as we work with our clients, do we care about your family medical history and your personal medical history and expectations of you know, when you'll pass away?

like ten years. CJ. That's right. If you have about ten years of working history, then you will be eligible for your own benefit. Some people don't have that. I'll take my spouse as an example of this. She has worked outside of the home, but not for accumulative ten years, and therefore, on her own record, she would get nothing. But let's just pause for those of you who have listened to us talk on the air. Enough about this, you go, But but but wait a minute. If CJ

were to die, wouldn't his wife be eligible for his benefit? Yes?

And then also if even if I'm alive and I draw, she's eligible for half of mine, even though she may not qualify on her own record. And then there's other things like well what if a divorce happens, So what if I'm not eligible on my own record, but I was married to somebody for ten years who was eligible. Well, yeah, that may apply, but here's a key. Generally you had to have been married for ten years, and generally you can't have remarried before I think it's sixty or sixty two.

So you get the idea. There are a lot of kind of quirks and things to be aware of relative to Social Security. If you have an odd situation where you don't know how it'll work. So think of a divorce from many years ago, or if you were recently a widow or widow where we would just highly suggest schedule an appointment at the Social Security Administration Office, explain your situation and get a summary of what your benefits might be.

Of course they come to us from Class Financial, the website coss financial dot com. That's coss k l a A S Financial dot com. Telephone number six oh eight four four two five six three seven. Don't forget no charge for that initial get to know your appointment tech Loss Financial. It will be complementary to you again their number six oh eight four four two five six three seven.

Talking with Cjen Eric this week about Social Security. And you know we've talked about taking social social Security early, but what about folks that are still working? Are their income limits orre some restrictions that folks there need to know about.

temporarily as well. Okay. The earnings test applies again only if you're collecting prior to full retirement age. So if you hit full retirement age, you can work to your heart's content. Social Security administration does not care. But in twenty twenty five, if you are under full retirement age for the entire year, Social Security will deduct one dollar from your benefits for every two dollars that you earn

above twenty three thousand, four hundred dollars. Okay, so essentially you're gonna have to pay back one dollar for every two that you earn over twenty three four hundred dollars. Now, in the year that you reach full retirement age, the rules are a little bit different. So in twenty twenty five, social Security will deduct one dollar for every three dollars that you learn that you earn above sixty two and sixty dollars. So this only applies to earnings before the

month that you reach your full retirement age. But if you are still working, you really want to think twice about taking benefits before full retirement age. Once you get to your full retirement age, there is no earnings test, and you can earn as much as you want now mention, I remember earlier I said to hang on to that temporarily reduced comment. So these deductions are not lost forever.

When you reach your full retirement age, social Security will actually recalculate your benefits and you'll receive a higher monthly amount to account for the benefits that were withheld. So the earnings, the earnings test, It can be a nuisance, but theoretically you should receive those benefits later. And again it only applies to working income, not your pension or other retirement income.

to know you appointment at Loss Financial. It will be complementary to you again their number six oh eight four four two five six three seven. Want to hold on to that telephone number because time now for the class quiz question the week. It works like this, In just a moment, I'll ask you the class quiz question the week. You will then have thirty minutes from the in today's program to call the Class Financial office right here in Madison at six oh eight four four two five six

three seven. If you are the first caller, you win this week's prize, which is say twenty five dollars gift card to Sephora. This week's class quiz question week is this. According to Social Security, if you were born after nineteen sixty, your full retirement age FRARA is considered. What age is it sixty five or sixty seven? Telphia number six oh

eight four four two five six three seven. First call, correct answer when the twenty five dollars gift cartoof Sephora and again that's Class Financials Office right here in Madison, Telpha number six oh eight four four two five six three seven CJ. Eric. It's always fantastic chatting with both of you guys. You enjoy this beautiful day.