Maximizing Social Security: Strategic Decisions for a Secure Retirement

Curious about when to claim Social Security to maximize your financial future? Join me, Stacey Hyde, as I tackle the complexities surrounding Social Security decisions that could significantly impact your retirement plans. From uncovering the myths of taking Social Security at 62 to understanding the intricacies of earnings tests if you're still working, this episode promises to equip you with the knowledge to make informed decisions. We'll also delve into the critical role your income—including investment income—plays in determining your eligibility for health insurance subsidies on the exchange.

Ever wonder how timing your Social Security benefits can affect you and your spouse differently? Discover the strategic importance of maximizing the higher earner's Social Security benefits, especially for married couples, to ensure long-term security. I'll break down how inflation adjustments can benefit you over time and why having funds in Roth IRAs and bank accounts can offer significant advantages. Whether you're planning ahead in your 20s or approaching retirement, this episode provides essential insights to help you navigate the crucial aspects of your Social Security planning. Don't miss out on the advice that could shape your financial future!

Envision Financial Planning. 5100 Poplar Avenue, Suite 2428, Memphis TN 38137. (901) 422-7526, This communication is strictly intended for individuals residing in the United States. Advisory Services offered through Envision Financial Planning, a Registered Investment Adviser.

Transcript

Speaker 1: 0:00

Hi, this is Stacey Hyde and I'm back for another episode of Better Financial Health in 15 minutes or less, and today I want to talk about Social Security. There are lots of opinions around Social Security. One that I often hear is that, oh, you should take it at 62 because the Social Security system is going broke and you should get all your money while you can. While that's somewhat true as far as the Social Security trust system running out of assets you know it is a sort of pay-as-you-go system the thing to keep in mind is that if you're still working, that benefit is going to be pretty dramatically reduced or maybe even completely eliminated. If you're making more than about $25,000 a year, you're going to be subject to an earnings test because you're not at full Social Security retirement age. So it really doesn't make any sense at that point to start Social Security. But, assuming that you are retired and you don't have earned income, you can have investment income and still collect Social Security. But if you're retired but you're not fortunate enough to have some retiree health insurance, or you served our country and so you're getting VA benefits as far as health care, it's called TRICARE for life if you're not in a position where that is available to you and you're looking at getting health insurance on the exchange. Your earnings, your total earnings, impact how much you're eligible for for subsidies on the exchange to offset some of your health insurance premiums. They don't look at your total assets, they look at your income. So, having money in Roth IRAs, having money in bank accounts that can reduce what your total earnings are and maximize your credits that you get. So if you started your social security it would be reduced, but it would also reduce your credits that you get. So you kind of get in the spot where it doesn't make sense before 65.

Speaker 1: 2:17

The other thing to keep in mind is that if you are married, the way the social security system works is the higher earner. Social Security payout goes to whoever lives the longest of the couple. So if you've got a husband and wife and the husband earned more maybe the wife was a teacher and the husband was in business, and so he always earned $150,000. His wife earned around $50,000. Well, his Social Security is going to be higher and while they're both alive, he'll get his, she'll get hers. If it's not at least half of what he's getting, she'd get a spousal benefit as well, and that continues as long as they're both alive. Should the wife pre-decease the husband, her Social Security goes away, he continues to get his. But if you know, demographics say that the spouse is the woman is supposed to live longer than her husband and if that's the case, then her social security will go away when he passes but she continues to get his higher social security. Which is why I think it's important, particularly for a higher earning spouse and really especially if you've got a big age gap between the couple, to maximize the higher earner Social Security because it's going to continue for the longer of each of them to live and it's going to continue to get those inflation adjustments as they're awarded each year. So that can be a real important piece for retirement security longer term. So I think it's important to do that Now.

Speaker 1: 4:11

If you're 25 years old, I think you might want to sort of plan for less Social Security when you're doing your retirement projections. But if you're, you know, in your middle, late 50s, early 60s, I think, the current situation, you can kind of go ahead and plan based on that. I think they've made some changes about potentially pushing out Social Security further. I think they may start taxing more of it Right now, only 85% of Social Security benefits are taxable. It's possible if you're very low income that even less would be taxable, but for most people that are retired, 85% of the benefits are taxable, and the reason for that is you and your employer have paid in 7.65% each, so that gets you 15.3%. So that's, that's really how much has been paid. So it's kind of like a tax free return of basis, if you want to think about it that way. So that's why it's 85% taxable, not 100% taxable.

Speaker 1: 5:24

The key thing is I think it's important every few years, even if you are younger, to create your Social Security login. They have moved it to logingov. So if you had previously set up a login just with Social Security, they've actually moved that to logingov. You need to go ahead and re-establish your account there and you want to make sure that all your earnings are reflected on your Social Security statement. If you're a W-2 employee, pretty much it always is. But if you've been self-employed or you've worked a lot of different jobs, you want to make sure that all that information each year is showing up on your earnings statement, because that's how they calculate your benefits, and by having that logingov. Don't use your work email to set that up, because if you lose access to that email, then you're going gonna have to go through a pretty unpleasant process to get access back.

Speaker 1: 6:29

And you also wanna make sure that you set up multi-factor authentication. We've talked about this before. That's getting a text to your cell phone that's using an authenticator app, something along those lines. You will also get some codes that are one-time use that will also allow you back into your account. So be careful where you put those. Don't keep them with your username and password, because if somebody found those they could get into your account. You want to be careful with that as well.

Speaker 1: 7:00

So I think Social Security is worth planning for. I think the younger you are, you may want to discount the value of it going forward, but I think if you're already on Social Security or Social Security eligible, I think that those benefits will be pretty much what they currently are, maybe with just some increased taxation what they currently are, maybe with just some increased taxation. But don't, particularly if you're married be careful and really look at and remember that Social Security does pay out for the longer of the person to live and if you were previously married married longer than 10 years you did not remarry before age 60, then you are eligible to claim on your ex-spouse's earnings record. Whether they're still alive, whether they've remarried, whether they've passed away, you are eligible for that. So you definitely particularly if your ex-spouse earns significantly more dollars than you you definitely want to look at that and make an appointment with social security to check and see if that would qualify you for additional benefits.

Speaker 1: 8:23

So there's a lot of moving parts. The first step is to gain access to your account, look at it, logingov and then don't just make a knee-jerk reaction on how to claim benefits. Really look at the numbers. Look at your personal situation. Really look at the numbers. Look at your personal situation. You know if you're single, then you're only worried about yourself, but you do want to make sure that you have not reduced you know potential health care subsidies or increased taxes if you're still working. So there's a lot of moving pieces there. Getting help from an advisor that's actually going to run numbers, maybe has software to look at it for you, can really be helpful. So thanks for tuning in. I'm Stacey Hyde and this has been another episode of Better Financial Health in 15 Minutes or Less, and we'd love it if you'd leave us a review.