Are you ready to uncover the all of the details you need to know about Social Security and optimize your benefits? Join Johnathan Rankin, founder of Theorem, as he reveals 10 crucial facts that could add thousands of extra dollars to your retirement income. In this eye-opening video, Johnathan shares surprising strategies for maximizing your Social Security benefits and dispels common myths that might be costing you big time.
Dive into topics like:
- The diverse group of people that Social Security serves (hint: it's not just retirees)
- When and how to start collecting benefits, including the magic age for full retirement
- How to apply for different types of benefits, such as spousal or disability benefits
- The ins and outs of working while collecting benefits, and how to avoid reductions
- Maximizing spousal and survivor benefits for you and your loved ones
- How to strategically "undo" your claiming decision and start over for a higher payout
- Understanding the taxes on Social Security benefits, and which states don't tax them
- The break-even points for claiming benefits and how to make the best decision for your unique situation
Don't miss this essential guide to Social Security! Watch the video now and unlock your path to a comfortable retirement. And if you need personalized help, use the link below to get personalized help with your retirement.
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Hey there, welcome back to our channel! Are you ready to unlock the secrets of Social Security and make the most of your benefits? You've come to the right place! In today's video, we're breaking down the top 10 must-know Social Security facts that could put thousands of extra dollars in your pocket. Stick around to learn surprising strategies for maximizing your benefits and debunk common misconceptions that might be costing you big time. Trust me, you don't want to miss this!
Hey everybody I’m Johnathan Rankin, the founder of Theorem Wealth Management. If you're new here, make sure you subscribe to our channel so you don't miss any of our retirement planning videos. And if you've been following us for a while, welcome back! Today we are talking about Social Security and the 10 Things You Must Know. So let’s get started
0.35 - Social Security: It's Not Just for Retirees
"Did you know that Social Security isn't only for retired workers? As of February 2023, about 74% of beneficiaries were retirees. But that leaves a whopping 26% who were spouses, ex-spouses, and children of retirees or disabled workers and their families So, remember, Social Security serves a diverse group of people, not just retirees!"
0.58 - When Can You Start Collecting?
"So, when can you start receiving these benefits? The earliest age is 62, but waiting until your full retirement age (between 66 and 67, depending on your birth year) means bigger payments. And if you're eligible for survivor benefits or Social Security Disability Insurance (SSDI), you can start collecting even earlier. But when is the best time to start? Stay tuned – we'll reveal the answer soon!"
1:24 - No Automatic Payments
"Just because you become eligible for Social Security, your Social Security payments won't start automatically. You'll need to apply for retirement, spousal, or disability benefits online, by phone, or in person at your local Social Security office. For survivor benefits, you can apply by phone or in person."
1:49 - Working and Collecting Benefits
"Can you have your cake and eat it too? With Social Security, you can! Yes, you can receive benefits while working. But be careful – if you're below full retirement age and earn more than a certain amount ($21,240 in 2023), your monthly benefits will be temporarily reduced. For every $2 you make over the earnings limit, you'll forfeit $1 in benefits. Once you reach full retirement age, the reduction is eliminated, and your benefits will be increased to make up for what was lost over time."
2:25 - Spousal Benefits 101
"You know, they say marriage is all about love, commitment, and... Social Security benefits? That's right! Did you know marriage comes with Social Security perks? Spousal benefits allow one spouse to receive up to 50% of the other spouse's Social Security benefit! For example, if your monthly benefit is $2,000, but your spouse's is only $500, your spouse can collect a spousal benefit worth $1,000 – bringing in $500 more in income per month. Just keep in mind, claiming spousal benefits early will reduce the amount you receive."
3:07 Survivor Benefits for Spouses and Children
"Sadly, if your spouse passes away, you'll have to choose between your own benefit and a survivor benefit. However, you might have some strategic options to maximize your income. A widow or widower can start taking a survivor benefit at age 60, but the payment will be reduced because it's taken before full retirement age. Eligible children under age 18 (up to 19 if attending high school full time) or disabled before age 22 can also receive a Social Security survivor benefit worth up to 75% of the deceased's benefit."
3:50 Claiming Decision Do-Over
"Did you notice how happy iphone users were when Apple released the unsend text feature? That’s because sometimes people do things they wish they could take back. The good thing about Social security is that it too offers a one-time chance to withdraw your application within the first 12 months and start over. You'll have to repay the benefits received, along with any spousal benefits, but when you reapply later, your new benefit amount will be based on your older age, potentially resulting in a higher monthly payment. This strategy can be particularly beneficial if you initially claimed benefits early and later realize you could have waited for a larger payout."
4:45 Taxes on Social Security Benefits
"Unfortunately, Uncle Sam might take a bite out of your Social Security benefits. Depending on your income, up to 85% of your benefits could be subject to federal income tax. For individual filers, if your combined income (adjusted gross income + nontaxable interest + half of your Social Security benefits) is between $25,000 and $34,000, up to 50% of your benefits may be taxed. If your combined income exceeds $34,000, up to 85% of your benefits may be taxable. For joint filers, the income thresholds are $32,000 to $44,000 (up to 50% taxable) and over $44,000 (up to 85% taxable). However, 37 states don't tax Social Security benefits, so be sure to check your state's policy."
5:39 Understanding Break-Even Points
"Curious about the break-even point for claiming Social Security benefits? This is the age at which the total benefits you'd receive from claiming early (e.g., at age 62) equal the total benefits you'd receive if you waited until your full retirement age or age 70. Generally, the break-even age is around 81. If you believe you'll live beyond 81 and can afford to delay claiming, it might make sense to wait for a larger monthly benefit. However, if you need the income earlier or have concerns about your life expectancy, claiming earlier could be a better choice. Remember, your individual circumstances should guide your decision."
6:30 When to Start Claiming Social Security Benefits
"Deciding when to start claiming your Social Security benefits can significantly impact your finances for the rest of your life. This decision often leaves people wondering what the right choice is, but the truth is that there isn't a one-size-fits-all answer because it would require knowing your lifespan. The decision generally comes down to two factors: maintaining peace of mind or trying to maximize the total dollar amount you receive.
As mentioned earlier, the breakeven age is 81 years old. If you aim to maximize your benefits and believe you're in good health to live past age 81, then delaying your benefits will give you the best chance to maximize your total payout. If you delay claiming until age 70. For every year you wait beyond your full retirement age, your benefits will increase by 8% – up to a maximum of 24-32% (depending on your birth year) at age 70. Social Security is the only time I have seen people tell me that a guaranteed 8% growth rate isn’t good enough.
However, if postponing your Social Security benefits leads to drawing more from your savings and increasing stress, you may choose to start your benefits earlier for the peace of mind that comes with guaranteed income.
It's crucial to remember that if your long-term retirement plan hinges solely on claiming benefits at age 70, you might want to reconsider retiring before 70 or reevaluate your retirement plan altogether. Social Security decisions should be made after careful planning and should reflect your unique circumstances and individual needs.
"Finally, you might have heard that Social Security is going bankrupt. While the Social Security trust fund is projected to be depleted by 2034, it doesn't mean the program will disappear. Even without the trust fund, ongoing payroll taxes would still cover about 76% of scheduled benefits. There are politicians that are exploring various solutions, such as raising the payroll tax rate, increasing the taxable wage base, or changing the benefit formula, to ensure the long-term solvency of the program.
There are so many nuances with Social Security we can’t dig into all of them in one video that’s applicable to everybody. So if you need help, please use the link in the description below and we would be happy to help you with your specific retirement.
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