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There are many small nuances to social security; because of this, we get a lot of questions regarding SS. Today we hope to answer some of the more common questions we get, covering topics like spousal benefits, survivor benefits, and if social security will go bankrupt.
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- Johnathan Rankin CRPC® CEPA®, Founder & CEO
- Melissa Rankin - Wealth Management Advisor
- Theorem Wealth Management, Financial Advisor Dallas Texas
- Retire Once Show - 2022 Retirement Podcast Series
0:00 - Introduction
1:13 - Social Security -FAQ
6:50 - Social Security - Spousal Benefits
11:33 - Social Security Survivor Benefits
13:54 - Social Security - Will It Go Bankrupt?
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Disclaimer: Johnathan Rankin is a Registered Representative of Sanctuary Securities Inc. and an Investment Advisor Representative of Sanctuary Advisors, LLC. Securities offered through Sanctuary Securities, Inc., Member FINRA, SIPC. Advisory services offered through Sanctuary Advisors, LLC., an SEC Registered Investment Advisor. Theorem Wealth Management is a DBA of Sanctuary Securities, Inc. and Sanctuary Advisors, LLC.
Song: Can't Get Over
Artist: Ballpoint/Epidemic Sound
Hello, and welcome to the retire. Want show the show designed to help you get to retirement, but most importantly, stay retired as always. I'm your host, Jonathan Rankin. And I am joined by my lovely co-host. Hi, I'm Melissa Rankin. Thank you for joining us. We're so happy for you to be here. As we all know crazy world out there, crazy markets.
And just like we said, last week, we can't control the markets, but we can control. All the retirement planning and financial planning decisions around retirement. So kind of leads us into what we're gonna be talking about today. So today we're talking all things, social security last week, we kind of talked about how money is the, the number one issue amongst couples, except for in our house.
It's the air conditioner, which consequently went out last week, but that was fun. You know, I finally felt comfortable in my house when it was in the 80 degree temperature range. So. Yeah, I thought she was gonna move out in all honesty. I, I thought she was gonna start packing some bags for her and the kids, but she stayed in the home.
We got it fixed. And, uh, thankfully we'll, we're still here today. So we're still here today to bring you all the information as it pertains to social security. Yeah. So these are gonna be the, uh, we're not gonna go fully into detail on social security, but we're gonna talk about the most commonly asked questions regarding social.
And so that kind of leads us to, uh, to the beginning there, one of the most common questions that we get all the time and, you know, social security is just one of those things that it seems like everybody we talk to around retirement always has some question on, so that's why we want to touch on that.
So they always have some questions, but the number one question that we get all the time, when should I take social? Yeah, this is, I've always found that this is almost a polarizing, um, question just, or a polarizing answer, because there are some people who say I've paid into it my entire life. I want it as soon as I can get it, I want it.
Now remind as be the old, what are those J Wentworth commercials? It's my money. And I want it now. Or, uh, you know, the, the girl with a golden egg and Willy Wonka, you know how much I love that movie. I was gonna say, you know, that movie far better than I do. Yeah. So, uh, there are a couple different strategies for taking social security, but when you should take it really depends on a couple factors.
One, if you're married and we'll get into that in a bit with, uh, with spousal benefits and survivor benefits. Um, but you also wanna factor in your health, your family medical. because the reality is when it comes to social security, it all is based on how long you're gonna live. Now. I don't have that crystal ball.
Um, sure. Wish I did. We did talk about before in a previous episode that, uh, what was that? That life expectancy calculator. Oh, right. I think I was supposed to live into my nineties. I thought you were gonna be a hundred. Yeah, I was. You got a long time to deal with me. Yeah. Whew. I keep a daily calculator of how long we've actually been together.
And it's now it's true. Story's 4,000 and I think 708 days or something like that. He's just trying to age us folks. I am trying to age us. Uh it's you know, they always say you want to have that gray hair. That's what you're looking for in, uh, you know, to, to have. I don't know the look of expertise. So I've been, well, I don't know about that.
I mean, I, I'm a natural blonde, so I, I don't know. Yeah. Just, you know, that's where our son gets it from so, um, we digress, however, so back to social security. So if you're single, you know, our suggestions always try to take it at full retirement age just because that's where you get a hundred percent of your benefit.
Your benefit gets reduced. If you take it before, then you never wanna leave any money on the table, especially if it's something like most people feel like, like we've said, you already paid into it. It's your money. Don't leave any of it out there. Yeah. So, uh, you can wait until age 70 at age 70. That's when you can get your maximum benefit.
And the years like we talked about before on, you know, when we talked about social security, The years that you delay from full retirement age to age 70 is an 8% guaranteed growth rate in that benefit. So it's the only place where you can get a guaranteed 8%. So it's worth it to hang on if you can. And the only time I've ever seen 8% guaranteed be a nominal amount to most people like, oh, that that's, they're really not that much for me.
So, um, you know, if you can hold off to 70, I would say try to hold off as long as you can. If reality sets in and you go, well, my health isn't that great family, medical history, isn't that great. You know, maybe it might make sense to take it, uh, take it earlier. It really is based on an individual's circumstances.
There's not a one size fits all. A lot of financial advisors will say, well, you gotta take it at 70. A lot of things you're out there just delayed as long as possible. Yeah, that makes sense. But if you're just not in the greatest of health, Then the reality is maybe it might make sense to take it earlier.
I know that's grim I was like, we're turning into a different show here. but let's just face. I mean, it's, it's a part of reality that, you know, there are people who just have medical history. That's not great. And unfortunately that's a, that's something to factor in and we try to be as realistic as possible with people.
So, uh, now if you're married, that is a, that is a kind of creates a different circumstance there of when you should take social security. So, what are some of the requirements, if you wanna receive? I don't know. Spousal benefits, things like that. Like what changes if you're married first single. Okay. So yeah, let's go.
We'll go into spousal benefits first and we'll talk about survivor benefits. So spousal benefits are where let's just say that, uh, you don't work, you know, you don't work, but your spouse does well. You still are eligible for benefits based on your spouse's work history. But they have to be taking retirement or disability and you have to be at least age 62.
So even if you've never worked a day in your life, you still get some social security. It's gonna be based on your spouse's work history. And you have to have been married for at least 12 or more years. So. We've been together for that long, but we have not been married that long. So I don't qualify for social security benefits on Melissa yet.
So we're not that old, just, uh, I feel like , don't I look like a distinguished 62 over here talking about gray hairs. I feel like I need to throw that out there for everybody just listening to us. Yeah. Well, if they're listening, maybe you should head to YouTube and watch us. I mean, we didn't even get in there so you can see that we're not 62.
That's right. And you know that actually I've gotta stop everything. Stop the. Before we continue. Make sure you hit the subscribe button. So that way you're notified. Every time we roll out some of these episodes, you don't wanna miss 'em no, you don't. They're amazing. They're so much fun. We're building this community here.
I mean, we're just seeing the engagement with the show. Just continued increase and we are so thankful for everybody who's taking the time to listen. So hit the subscribe button, make sure you send it to your friends and family because they might like it too. Um, you know, hopeful. Everybody enjoys what we're doing here, but okay.
Back to, back to what we were talking about here, spousal benefits. So spousal benefits, you have to take them. You could take 'em as early as 62, but just like every other benefit it is reduced. It could be reduced up to 35%. If you start taking that spousal benefit at 62. It is going to be based. The amount you receive is based on the person receiving spousal benefits.
So it is, uh, you know, we get the common question, you know? Okay, well, what happens if I'm taking social security on my spouse, is their benefit impacted somehow. it's not, but I mean, I feel like we're giving it a lot of hypotheticals here. Maybe if we put names to it, it'll make it a little bit easier to understand because we're throwing a lot of information at you.
That that is, that is a good idea. So let's talk about a little Diddy about Jack and Diane. . How about that? Two American kids. Yeah. So they grew up in the Heartland. Uh, Jack, he was, he wanted to be a football star, blew out his knee and unfortunately he just didn't make it in sports. For any of you who are not familiar.
That's a John Cougar Mellon cap classic right there, Jack and Diane. Okay. Look, first of all, w. We are a retirement show. My guess is that the people watching us are listening to us. They know who that is. It's the, it's their grandkids who don't, it's their kids who maybe do well, that song's a classic, the song is classic.
And that's why, that's why we resonate so well with those that are Jack and Diane. Well, and the baby boomer camp, you know, are, are, you know, the clients that we work with the retirees. Oh, right. Because you know, we love songs like that. So yes. Back to our little Diddy about, uh, Jack and iion. So let's look at Jack.
His full retirement age is 67 now. And you know, we're, we've got a graphic that we've got here on the screen. So if you're listening to us, you know, try to fall along, but we've got it here on the screen. So Jack, if he claimed at 67, he would get a thousand dollars, but if he claimed at 62, he would only get $700 because that reduction for taking it early.
And if he waited until age 70, he would. $1,240. The maximum, the maximum. Now the maximum spousal benefit that Diane can get on Jack is $500 because she can get half of his full retirement benefit, which is the thousand dollars. So if she claimed that spousal benefit at 62, she would only receive at that point $325.
Because it's decreased by because it's decreased. Now, this is where a lot of people get confused. Well, what if she waits to 70? And doesn't she get the increase? No, no, you don't get the increase by delaying spousal benefits. If she took it at 70, then she's gonna go, well, I should have taken that at 67 because it caps out at that $500 or half.
So in her case, there would be no reason to delay it. Nope. No reason to delay the spousal benefit at. But this also gets into, when we start talking about survivor benefits, why it would make sense for Jack to wait until age 70, but we'll get that in just a few minutes. Okay. So again, it kind of comes down to when your spouse wants to take it.
Mm-hmm . And how much the actual benefit is. And a few things to keep in mind are that if he waits till 70 and gets that 8% increase, regardless, the spouse will not correct. Okay. Yep. Now they, and, and it does impact survivor benefits, but not the spousal benefit. Okay. So before we move on from spousal benefits, there's a few other questions that we get that are pretty common.
Um, can I start my spousal benefit and then switch to my retirement benefit? Well in that case, no. So the, uh, unless you were born before January 1st, 1954, where you can file or qualify for what's called a restricted application, uh, the social security is going to give you whatever's greater either your benefit or your spousal benefit.
So, and they decide and they decide. Yep. So it's, whatever's whatever's higher. Okay. So then the next question, can I. With one benefit and then switch. Most people can't choose it's. It is really the social security is going to give you whatever's higher. So if your spouse is already receiving benefits, then the social security administration, they're gonna check your benefit versus your spousal benefit and give you the higher of the two.
So if your spouse is not receiving benefits, so let's just go back to Jack and Diane, you know, Jack's not receiving any sort of benefits yet. Diane wants to take spousal because that might be higher, but because he's not taking benefits at that time, she can take her own benefit. Assuming she worked assume, assuming she worked, even if it's small, she could take her benefit.
And then when Jack starts taking his, the social security will give her a step up to the higher amount. Okay. So that's the only scenario in which you can switch, correct. Okay. So now that we've covered everything, spousal benefits related, let's talk about the, the darker side of it. If you will. There's survivor benefits.
Yes. Sorry to be a grim reaper here, but, uh, survivor benefits are a, you know, they're an important part of social security and a lot of people have questions on how they work. So benefits for survivors are based on really two factors. So. Death. And , that's not one of the factors that we're gonna mention here, but it is a factor.
So, uh, the other two benefits are, so the amount that you get is going to be based on what your deceased spouse had at the time when they passed, but their benefit, you mean their benefit. Okay. But the percentage of that benefit that you get is based on when you start to take it. So there's two different things that, uh, that you've got a factor in now.
Things all get thrown outta, outta whack. When there are minor children involved, there are different, uh, benefits with that, and we'd be happy to work with you or help you understand those benefits a little bit more if you have questions, but just for the sake of keeping everything kind of clear. Yep. And easier to understand.
So the way that survivor benefits work is that. when your spouse passes. So we'll go back to Jack and I, Jack let's say he waited until age 70 to take benefits. So the benefit amount would be that $1,240. That's the total amount that if Diane was at full retirement age, she would qualify for a hundred percent of that amount.
However, if she was 60, when she started claiming that survivor benefit, she would only get about 70%, a little bit more than 70% of that benefit based on when her full retirement age. So you really, there's two factors that it's based on. Um, but this is why it usually would make sense for the higher earning spouse to delay as long as possible, because you know, the best case scenario is that the surviving spouse steps up to the much higher benefit, uh, for the rest of their life.
Okay. So again, it kind of goes into that's where you wanna think about health and things like that. I mean, nobody. Plans on passing away, however, yeah. If he waited until he got the full benefit, that would be more beneficial for Diane. It would E especially if she's over full retirement age, cuz then she gets a hundred percent of that benefit when claiming that survivor benefit.
Okay. I think that makes sense. One more question that we get. All the time we get all the time is social security going bankrupt. So I know we talked about this in a previous episode, but because this episode's all about social security, we would be, uh, remiss if we didn't talk about this again. So there was a study that was done earlier this year that showed the social security trust fund will be depleted by 2034, which is actually one year later than what it was before.
So it's making progress. Progress is something, but that doesn't mean. In 2034, that all benefits are going away. What that means is that at that time, about 78% of scheduled payments will be covered, will be payable. So this is a political decision and we, as we know, this is not a political show. I don't care.
We're just here to bring you the facts. Yep. We're here to talk about retirement in a bipartisan way. So it is a political decision and I don't know which. You know, which party's ever going to want to touch this and, and really make that reform. But there are social security reform bills that are actually going through the system right now, who knows if they'll they'll pass.
But some of the things that are being discussed are either raising taxes, cutting benefits, or some sort of combination of both. Uh, a lot of the options that have been discussed are increasing the payroll tax, uh, increasing the retirement age. Because when you think about when social security started.
You know, you, I believe at the time you were getting benefits and the life expectancy that time was like three years later than when you can start, when you, when you can start getting benefits. So now that we've got people living off social security for 30, if not 40 years, it's a long period of time that these benefits weren't supposed to be meant for.
So increasing that retirement age, just like they've done with the required minimum distribution. is, uh, is something that they're discussing as well as increasing the tax on social security benefits in general. So try to put some more money back in that little nest egg, if you will. Well, what really, what it shows is that if you've got a higher income in retirement, you know, their thought is okay, well, Don't need all of the social security benefits.
So we're gonna tax you on it now, whether that's right or wrong. Like I said, not a, not a political show. This is just one of the options on the table. Talk to your Congressman if you don't like that option. Um, but these are things where, oh, and while you have their ear, um, could you talk about the daylight savings time thing that apparently is going through?
Yeah. The motions of being taken away, we need that to go away because with young kids, when it gets dark in the eight o'clock eight 30 hour, But bright in the five o'clock hour. Yeah. And, and not only that. In our kids' room, it's really bright and they don't want to sleep. Even when it's eight 30 at night, someone place help talk to your Congressman.
We'd be happy just while we're on the subject. And you know, you're talking to 'em anyway, if you've got their ear, just one more thing, just social security form, daylight savings, ending, getting away with it. Yeah. I mean, We lived in Arizona, she was born and raised in Arizona. We lived in, met in Arizona for, uh, we lived there for what, 12 years together.
Yeah. So I never knew anything about this daylight savings situation. Never had a problem, um, with, you know, followed the, the time pretty easily. So yeah, the, the best part, you know, when we moved to Texas about four years ago, And, uh, I had to teach her what daylight savings was. I'm thoroughly confused.
Yeah. I, I fully admit that. Had to tell her, okay, we're actually, we're, we're losing an hour, the time falls back because the first one was in the fall and she like, so they just take it away. Actual conversation we had. Yeah, we had, we had to go through and I never thought I would have to teach someone that wasn't my child, what daylight savings was, but that's why I have my lovely wife.
So, um, again, we digress. Yeah. So this is, as we know, social security can be a very straightforward conversation, but it can also be very complex depending on your certain situation, whether you. Married divorced, whether you are looking at spousal or survivor benefits, there's so many different nuances with it that if you need help, we would be more than happy to go through your specific social security situation in full detail with you.
Or you can always go to the social security administration website. They do a good job, although that might be, they do a good job, but that might be a little bit more, I don't know, information than you need. If you just wanna talk to somebody about it, get some idea. We're happy to help. Yeah. So you here, I think are your options.
You can call and wait on hold for a couple hours to the social security website or administration. You could schedule some time with us. We've got a pretty good response time. I think that one might be a little bit less of a, uh, a hold time in case they have really good hold music of the social security administration you wanna listen to.
So, um, with that, make sure you head to retire once show.com. You know, that way you can ask any questions for the. You can also schedule some time to connect with us. We'd be happy to go through our free retirement analysis for you. Social security, you know, analysis. So you name it. We'd be happy to talk to you about it.
Uh, that's retire once show.com. But with that, I am Jonathan Rankin. I'm Melissa Rankin. Thank you so much for joining us.
talk to you about it.
Uh, that's retire once show.com. But with that, I am Jonathan Rankin. I'm Melissa Rankin. Thank you so much for joining us.
Registered Representative of Sanctuary Securities Inc. and Investment Advisor Representative of Sanctuary Advisors, LLC.– Securities offered through Sanctuary Securities, Inc., Member FINRA, SIPC. – Advisory services offered through Sanctuary Advisors, LLC., an SEC Registered Investment Advisor. – Theorem Wealth Management is a DBA of Sanctuary Securities, Inc. and Sanctuary Advisors, LLC. This communication has not been reviewed for completeness or accuracy, does not necessarily reflect the views of Sanctuary Securities, Inc. or Sanctuary Advisors, LLC., and is not a recommendation or endorsement of any product, service, or issuer. Third party posts do not reflect the views of Theorem Wealth Management or Sanctuary Securities, Inc. or Sanctuary Advisors, LLC., and have not been reviewed for completeness and accuracy. All further communications from this representative must be sent from and received by email@example.com. For additional information, please refer to one of the following consumer websites: www.FINRA.org, www.SIPC.org.
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