0:00:00 - Speaker 1

Discussions in this show should not be construed as specific recommendations or investment advice. Always consult with your investment professional before making important investment decisions. Securities offered through registered representatives of Cambridge Investment Research Inc. A broker-dealer member, finra, sipc Advisory Services through Cambridge Investment Research Advisors Inc. A registered investment advisor Cambridge and Greenway Wealth Advisory are not affiliated.

0:00:20 - Speaker 2

It's time to dive into some insider secrets of investing and retirement planning. To make your retirement as smart and as elegant as possible. This is Money Chic with Sherry Rash.

0:00:31 - Speaker 3

Hey everybody, welcome under the podcast Time for another edition of Money Chic Women in Retirement, with Sherry Rash and myself here to talk about social security. We've got a few social security myths we're going to go through this week on the podcast and this is episode number 49, sherry. So we're almost I don't know, it's almost getting ready to start thinking about retirement.

0:00:52 - Speaker 4

Our podcast is as far as podcast age goes, we're like 100, right. How many actually make it to 50 episodes? I'm not sure. I don't know.

0:01:00 - Speaker 3

But we're. It's getting ready to turn 50 here soon, which means it needs to start thinking about its own retirement, and even though it's a ways away from social security, there's some myths out there, A couple biggies that make the rounds on the regular on social media or news outlets or whatever. So I thought we'd be good to tackle a couple of big dogs and just kind of see if we can dispel some of those myths. Sounds good yeah, can you shine some light for us? I think you can.

0:01:26 - Speaker 4

I think I think I got a handle on this one.

0:01:28 - Speaker 3

Yeah, all right, I used to do a lot of social security presentations too, so this should be right up your alley.

0:01:34 - Speaker 4

When I was pregnant with my oldest daughter, I did quite a few social security seminars and I would joke that she would become, she would enter the world, being able to talk about, file and suspend and restricted application, which I don't even think really exists anymore, but 12 years ago they were. They were big, big topics to talk about with social security. Yeah.

0:01:54 - Speaker 3

That's for sure. And it's like, again, I think these things just kind of always circle back around. It always seems to be the same ones too, right, the social security topics, so anyway. So let's dive in and talk about a couple. I want to start, actually, with a big one that makes the rounds, especially since our show is called Monday Chic Women in Retirement, and that is for the stay at home mom. It's the myth that you won't get any social security if you know you just stay at home mom and just like. It's not like the most important job, right. But I think this one gets confused, jerry, because there are work requirements to be eligible for your own benefit, but you still could be eligible for a different benefit. So can you walk us through that?

0:02:31 - Speaker 4

Right. So your social security benefits based off of your earned income, your past 30 years of earned income. But if, for the majority of your highest 30 working years, you do not have an earned income, you can actually still be eligible for social security by taking a spousal benefit off of your spouse's work record and their 30 highest working years. So even though you are not contributing to the social security system, you still are absolutely eligible for a benefit.

0:03:02 - Speaker 3

Yeah, and so you've got your own personal is what? 40 quarters, 10 years, something like that? But you can certainly claim against your working spouse.

0:03:11 - Speaker 4

Exactly so. The same rules apply as far as you have to be of social security age to start receiving and then, once you apply, they then would calculate what your benefit would be based on the age you file and then your spouse's work record.

0:03:27 - Speaker 3

Yeah, yeah, exactly, and you have to be of that age. They do not, but they do have to have. They have to have the requirements to right. So same kind of thing. There's still those basic requirements that you have to jump through. But I think the myth in general of well, I never had a job, so I can't get anything, is definitely false, because as long as you've you know, with with someone who has that work history, you're good. That's the whole point.

0:03:51 - Speaker 4

Exactly and force if. Stay at home moms. If you are a stay at home mom or you know, have a friend, family member, that's a stay at home mom. I have a three part blog series on my website, greenwaywealthadvisorycom. Backslash blog all about financial issues, questions, topics for stay at home mom. So take a look at that. If, if, if, you're interested.

0:04:15 - Speaker 3

Yeah, perfect. So stop by the website greenwaywealthadvisorycom slash blog. You can just drop down menu and it's also, while you're there, hit the podcast one and don't forget to subscribe to the podcast as well. All right, so that was myth number one on Social Security for stay at home moms, let's go with the. I probably should have let off with the big dog, but I thought, well, we'll just go with that one.

That's the mystery that well, it's going to be gone, right? So the big myth that number two is that there won't be any social security by the time you know you're left to retire, and often that gets people fired up and they feel like they need to run down and turn it on as soon as they're eligible, which may be the right decision if you truly need the money, but it may also be costing you a lot and provide some other complications if you don't need it. So let's just talk about, first of all, the myth that it's going away. I don't think there's a politician alive that's going to allow that to happen now unless they want their career to end immediately.

0:05:11 - Speaker 4

Right.

0:05:12 - Speaker 3

But by the same token, they also will not touch it until they are absolutely forced to. As a matter of fact, in the mid-80s that's exactly what happened. Many people don't realize that. In the mid-80s it almost ran into a huge problem and they made a few changes, one of them being the taxation right. They changed the taxation rate and that's kind of allowed it to continue to fund itself for a number of years as well. That's up to 85% right of our social security could be taxed. We've talked about that before. That actually was introduced in the 90s. The 50% version was introduced in the 80s. So they do make changes to this thing, but they just wait till the last minute.

0:05:49 - Speaker 4

Right. I mean, is it going anywhere? No, it's not. Could it look different as the years go on? Yeah, absolutely. I mean when Social Security was first created, there was a very healthy handful of workers contributing to the system for every one person taking a benefit. Today, I think it's two people contribute for every one person taking a benefit.

So that in itself right. That is a little concerning. It can't be sustainable. But there are different ways to change it. So right now you don't pay Social Security tax on 100% of your income if you make above a certain threshold, which is like in the $120,000 range. If you make more than that, you do not pay Social Security taxes on any amount above it. They could lift that and just say you're paying Social Security tax on every dollar, that's one way that it could change.

0:06:39 - Speaker 3

I think that's the means testing conversation. Yeah, we've heard a little bit about that, the news where, okay, well, means, test it for those that are making a lot of money, because there's like a donut hole, I believe as well, where at a certain amount, they might kick it back in. So there's lots of conversation. Look what's happening in France, right, they talk about the pension program back from 62 to 64, and all the young people are freaking out, right, and they're writing in the streets and so on and so forth. Well, they could easily do the same thing here. They could take the 62 early range and just push it back to 64. But I don't think, sherry, for people over 50, like our podcast has soon to be, I don't think it's going to. They're probably got a grandfather or something in, right. So it's like, if you're on, if you're on retirements door, I don't think we have to worry as much as maybe, like our kids do, sherry, like yours, mine and your kids, they may see changes to social security, but we may not.

0:07:31 - Speaker 4

I agree. I agree I do not depend on social security as far as income goes in retirement because I have confidence it's going to look a lot different when I retire. Right, definitely for our children, absolutely so. But like you said, if you're close to retirement, odds are they're not going to pull the rug out from underneath you. You're not going to have a major. There's not, there shouldn't be a major change to it, but that's. I think that also enforces what we talk about all the time is creating a strategy for your retirement and finding out how to pay yourself in retirement versus utilizing just the government program of social security.

0:08:09 - Speaker 3

Yeah, I mean, let's get what is coming to us by all means, but let's also make sure we're doing it efficiently. And again, that doesn't mean running down and turning it on at 62, just because you think it's going to go completely. You know, bust, it may not be the best decision and just remember, folks, it's always been a pay as you go system. It's always required workers to fund it, right, the trust fund is the conversation that we hear about running out of money and that dropping down to that 75% or 77% payout or whatever by 2033.

And again, little tweaks will probably happen somewhere around 2030, right, they'll wait till the last minute and they'll start to. That's when they'll probably start to announce some changes, and age changes could be one of them. I mean, we're living longer, so it's very possible they say, hey, born on a certain day, maybe people that are under the age of 40 or 45, they may. They move, may move retirement, full retirement age from 66, 67, which it is now, to maybe 70, right, so who knows? Tons of options on the table there, but I think the idea of it just going by by is probably not going to happen.

0:09:10 - Speaker 4

Not going to happen.

0:09:11 - Speaker 3

Yeah, Okay, all right, that was our second one, let's go to. Let's go to the next myth here on my list, number three, and that's that you can't work and receive social security benefits at the same time, and I think sharing again, all myths probably start with a nugget of information that's factual and then they get kind of spun out. This is probably based on the early retirement, because there's income limits. Should you choose to go on social security early, you can. You can only make a certain amount, but then at some point the reins come off.

0:09:41 - Speaker 4

Right. So when I'm working with my clients and I'm having them paint a picture of their retirement for me what it's going to look like, I ask you know, when do you think you're going to retire and what does that look like? Working part-time, consulting in retirement, is a very realistic idea today for many retirees. So am I going to, you know, have a job on the side? And if they plan on starting that second phase of their career or their first phase of retirement by consulting part-time or working part-time, were they anticipating on taking Social Security prior to full retirement age?

So if they want to retire from their full-time job younger than their full retirement age, I explained to them that if they do that and plan on taking Social Security, their Social Security can potentially be reduced. So if it is, it's about $21,000. If you were to make this year, you would have your Social Security reduced $1 for every $2 above that limit. So the exact number $21,240. So if you are younger than full retirement age and you're taking Social Security and you earn more than $21,240, yes, your Social Security will be reduced $1 for every $2 you earn over that limit. So if there's, but as soon as you hit full retirement age, you can earn as much as you want. Your Social Security's not going to be reduced.

0:11:12 - Speaker 3

You can make a million dollars a year after once you're over it. Yeah, exactly. Now there is that one weird the actual year that you're turning full retirement, right, they bump it up to like 50 something, I think.

0:11:22 - Speaker 4

Yeah, that's wacky, it's $56,520. $56,520.

0:11:28 - Speaker 3

What a weird number too.

0:11:30 - Speaker 4

Until the month you reach full retirement age, and then it's if you're above that, it's $1 deducted for every $3 above the benefit. Yeah, they give you a little break.

0:11:41 - Speaker 3

They take a little less back, right, but ideally, again, this is where strategy comes into play. So because, hey, maybe you do want to retire from the big job, the corporate job you've had for a year, sherry or whatever, a little early. And the plan says, yes, let's go ahead and pull that trigger at 62 or 63, right, whatever it is before full retirement age. But you want to work and make a few extra dollars because you just want to have something to do, right, it's not really about necessarily making the money or trying to pad Social Security, it's really more about the activity and getting out. So then just bear that in mind and look at that as a part-time gig, right, something that pays you less than that $21,000 threshold.

Exactly, yeah, I mean all strategy, right, it's all about what do you want to do with your retirement, how do you want to work it out, and playing within the parameters of the rules that they have in place. So, again, that was myth number three. All right, let's do number four here. I think we're going to do five. I got five of them. I got a couple on the list actually, but I think we're going to try to stick with the five biggies and it kind of tied into the one we talked about with it going, you know, bye-bye. Basically right With it going away, or even talking about the income limits of retiring early. And that's right back to that myth of you should claim it as soon as possible. And again, we mentioned that earlier. This may not be the right strategy for you to do that, because you could be costing yourself a lot of money.

0:12:56 - Speaker 4

It's funny when talking with clients or potential clients about social security. It does get emotional. Folks tend to view social security as their money, which it is. You contributed to the system and then you're receiving a benefit back. So the thinking is kind of well, I want to get my money as quickly as possible, so I'm going to claim it as soon as I turn 62. And it's like well, does that make the most sense? We just talked about you can't work and receive social security benefits at the same time myth. Where you can, your social security is just potentially reduced. But are you actually cutting off your nose, despite your face? If you take social security as soon as you're eligible, it may not be the best decision. You could miss out on growth. You could lock yourself into a lower benefit than you necessarily would have.

0:13:46 - Speaker 3

What 30% share? Is it like 30% or?

0:13:48 - Speaker 4

something 38%, I mean it's significant.

0:13:53 - Speaker 3

It's hefty.

0:13:53 - Speaker 4

Yeah, yeah, it's a significant decrease if you were to start earlier. So, unless you really truly need it, you probably don't need to start as soon as you're eligible, because take advantage of that growth that you can receive of 7% 8% a year each year that you delay.

0:14:09 - Speaker 3

Yeah, so again, and it could be costing yourself I mean sometimes big dollars, I mean talking could be potentially hundreds of thousands over the course of the thing. So it's really important to make sure that you have the right strategy in place and that you are absolutely talking about when's the best time to do it, not just while the government owes me.

0:14:26 - Speaker 1

So I'm turning it on kind of thing All right.

0:14:29 - Speaker 3

So let's finish off with myth number 10. And I think this one's kind of tied Maybe it gets linked to people confusing it with someone who might have a pension and it's the myth that it's based on your last job's salary. So your social security is going to be based on the income that you made at your last job, and some pensions do kind of average theirs out over like maybe like a three year window, the last three years or something like that. So maybe that's where this myth comes from. But social security doesn't work that way. This thing is averaged out over like a 35, I think your top 35 earning years, isn't it?

0:15:00 - Speaker 4

Yeah, 35 highest earning years. So it's not even your last 35 years, it's your top yeah.

Highest earning years. They add up all of your salaries and then divide it really to get your average earning and then index it for for change in wages and all of that. So it's your highest 35 years. So if you sometimes, if you're unsure, if you want to retire and you're at year 34, maybe just wait one extra year, your social security could be that much bigger, which, instead of factoring in a zero for year 35. So again, it's just having a strategy around it and not just starting it. Because I can starting social security, because I can retiring without necessarily a plan. It's working with people that can educate you on the best strategy that best fits your retirement situation.

0:15:54 - Speaker 3

Yeah, and it's interesting because you could have some zeros right. So you want to go to ssagov make sure that your salaries have been being reported correctly and check the center then later, because I mean, if you're talking about something a job you had 30 years ago it may be harder to track down right and there's yeah creating a profile on ssagov because we don't get statements in the mail anymore.

0:16:15 - Speaker 4

It probably feels like you. Oh, I just got one a year ago.

0:16:20 - Speaker 3

No, you didn't.

0:16:22 - Speaker 4

It's been quite sometimes and they stop sending out those statements. So definitely a best practice for anyone is just go on, log on, see your your earning, make sure everything looks right, and now you have that info saved.

0:16:34 - Speaker 3

Think about, through COVID too, how many people might have been changing jobs right. So you may have some different numbers in there, and I think that's good to really take a look at that as well, sherry, because you know the job that you had like the $6,000 a year job you had when you were, you know, 18, right is going to hopefully get bumped off through your higher earning years. But if you are self-employed, or even if you don't have, if you don't have 35 working years in there guess what? They put those down as zeros. They still divide it by 35 or whatever the math formula is, but it's still 35 is the number they use. So important to look at, because that can certainly make an interesting change in your benefit.

0:17:10 - Speaker 4

Yeah, I mean, that might be just enough of a reason If you're waffling on. Should I retire? Should I not?

0:17:17 - Speaker 1

Maybe, it's worth waiting an extra year.

0:17:19 - Speaker 4

Great point. Yeah, so to get rid of those zeros Great point.

0:17:22 - Speaker 3

Especially if you're making high dollars, like, let's say, you're in that I want to retire early, camp that's 62, right, I'm turning it on, you know, like we just talked about, and you go looking and you realize, oh wait a minute, you know what? Maybe we should go ahead and work till 65, right. Or let's just tough it out for the full retirement age of 66 or 67, because those three or last three or four years of high dollars, may, you know, shore up some of the gaps in the 35. So lots, again, lots of strategy to social security. It's not just turn it on because you know. Again, like we said, the big takeaway is don't just turn it on because it's yours. They owe it to you. Make sure you're being as efficient with it as possible.

0:17:59 - Speaker 4

That's right. I mean, I get as much as you can out of it, right, Squeeze as much juice out of that orange as possible but, having a strategy around it.

0:18:08 - Speaker 3

Yeah, absolutely so. Great stuff. Good conversation with Sherry this week here on the podcast. So don't forget to subscribe to us at Apple, google, spotify, just type in money, chic, women and retirement, or just stop by our website at Greenway Wealth advisory dot com, at screenway wealth advisory dot com, to schedule some time to talk with Sherry, especially about things like social security, as that can be a big deal. So, sherry, thanks for hanging out and breaking these down.

0:18:34 - Speaker 4

Thank you, I hope we dispelled some myths. I hope so.

0:18:37 - Speaker 3

We little myth buster action on the podcast this week. Don't forget to tune in, subscribe for future episodes and Sherry and I will be back with number 50 here very soon as we enter into May. So have a have a great spring and we'll talk to you next time here. On money, chic women and retirement "

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