When To Take Social Security With Eddie Holland

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That's faithfi.com slash give. Now let's dive into the podcast. Whether to buy a house or go to college are major financial decisions, but so is deciding when to take social security. Hi, I'm Rob West.

It's true. Tens of thousands of dollars, if not more, are on the line when deciding when to start taking social security benefits. Eddie Holland joins us today to help you make that decision. Then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is faith and finance, biblical wisdom for your financial journey. Well, we're excited to have Eddie Holland with us today. Eddie's a senior private wealth advisor and partner of Blue Trust in Greenville, South Carolina. He's also a CPA, a certified financial planner, and a certified kingdom advisor.

So a triple threat, so to speak. Eddie, great to have you on the program. Rob, thank you so much.

I'm honored to be your guest. Eddie, this is a topic we get so often related to when to take social security benefits. Now, we usually advise folks to put off taking social security benefits at least until full retirement age, which is now 66 or 67. But we realize that isn't always the best for everyone. So I'd love for you to weigh in on what folks should consider when making this decision.

Sure. And I'll start out by prefacing that this is not an exhaustive list, just some things to consider. I think the first thing people need to consider, Rob, is understanding that if they take social security before full retirement age, they will be subject to a reduction. However, delaying past their full retirement age, they will receive an annual increase that equals 8%.

That's what social security calls a delayed retirement credit. So those are very important things to consider. Another consideration is cash flow needs. If someone retires, then there's obviously going to be potentially cash needs that arise.

So they may start taking social security earlier than full retirement age because there's cash needs, income needs that they need to replace. We have some clients that we've advised that needed to pay down debt. And so if you have debt payment that you need to consider, that's another factor.

We've had clients that have said, I just want to increase my charitable giving. And so I want to draw social security, start giving more even in retirement or potentially as a legacy gift. So that's another consideration. One other factor to consider, and I don't mean to be morbid, but health is obviously a consideration. People that don't have longevity in their family line, they may start taking social security benefits a little earlier. Others that plan to live a long time or feel like they're very healthy. Generally speaking, the longer you live, the more you benefit by delaying social security, at least until full retirement age and possibly even later until age 70.

Another factor, Rob, that I'll mention, I'll mention a couple more and then one that maybe is a little more nuanced, legacy goals and inheritance. Most of the time you can't pass social security benefits on to kids or charity, but you can your portfolio. So some clients have said, I want to earmark my portfolio for giving or for inheritance reasons, and I want to start drawing social security now. Everybody loves to talk about taxes, but income tax is a component to consider.

Federal income tax guidelines state that social security could be subject to tax. So we've had some clients delay social security until a year where they're going to be in a lower tax bracket. And then one of the more nuanced strategies that really came up a couple of years ago, Rob, was when the market was down significantly. We had had clients that had retired prior to full retirement age. They were starting to draw from their portfolio. They wanted to delay social security.

Well, the market did not cooperate, had significant market drop. What the client then at that point decided was, can I stop or pause my social security benefit? If you are younger than full retirement age and you have started drawing social security within the first 12 months, you can do what social security calls a withdrawal. So you can withdraw your application, but a withdrawal application simply means I had a 12 month free look period. I don't want to draw it.

I want to have what in golfing terms is a mulligan. Yeah, I don't want to start drawing it. I want to pay it back. And it's as if you never drew it. The benefit of that is that you can turn it back on at a later point and you're able to potentially act as if you never drew it.

Now, that's a very nuanced strategy, something to consider before actually making that decision. That was so helpful. We're obviously going to have to have you back, but you gave us some really important things to think about as you consider the right age to start taking social security benefits. Eddie, we appreciate you stopping by today, my friend. Rob, thanks for having me. That was Eddie Holland of Blue Trust in Greenville, South Carolina, back with your calls and questions on the other side of this break. The number to call is 800-525-7000. Call right now, 800-525-7000. By the way, you don't have to call, just send an email. Ask Rob at FAITH, the letters F-I dot com.

We'll be back after this. Are you looking for a financial professional who aligns with your biblical values? Certified Kingdom Advisors are trusted financial, legal or accounting professionals who have completed a rigorous certification program to ensure they provide biblically wise financial advice as part of their practice. You can find a local C.K.A.

professional in your area by going to faithbuy.com and clicking find a C.K.A. Welcome back to Faith and Finance. I'm Rob West. All right, it's time to take your calls and questions today. We're ready to hear from you on any financial topic. Whatever you're wrestling with in your financial life, let's tackle it together. We've got some lines open. 800-525-7000, that's 800-525-7000. Whether it's living, giving, owing or growing God's money, we can talk about it together.

Again, 800-525-7000. Before we head to the phones, in the news today, a report from the New York Federal Reserve says total credit card debt grew by $50 billion between October and December of 2023. That's the, of course, the holiday season, and it's now at a total of, as of the end of December, $1.13 trillion with a T. That's the ninth consecutive annual increase. More borrowers are struggling with credit card student and auto loan payments, too. In December, roughly 3% of outstanding debt was in some stage of delinquency, and that was up a bit from the previous quarter. That's lower, though, than the 4.7% rate that we saw before the COVID-19 pandemic began. The rise in credit card debt is especially interesting because interest rates are at such incredible highs right now. The average credit card APR hit a new record of 20.72% last week, and that's just the average.

The previous record was 19% in July of 1991, so we're talking 30 or so years ago before we were at this kind of level. So, obviously, the average American under quite a bit of pressure right now, and if we do hit a recession and we see unemployment go up, that's only going to get worse. But these high interest rates cause us to really want to double down on debt reduction. Listen, folks, if you have credit card debt, you need to get out from under it, get a plan, don't run from it, run to it, and our friends at ChristianCreditCounselors.org can help. But just some interesting but also tough information coming from the Federal Reserve today on credit card debt. All right, let's take your phone calls today.

Perhaps you have something a little more lighthearted to talk about. 800-525-7000 is the number to call. Again, that's 800-525-7000. Also, let me mention that if you haven't checked out the Faithfi app, this would be a great time to do it. If you're going to get out of debt once and for all, you're never going to be able to do it without a spending plan, and here's why. Your ability to live below your means and create some margin or some cushion in your financial life is critical to accomplishing your goals. Whether that goal be giving more, saving more, or perhaps, as we talked about a moment ago, paying off debt, you can't do it without margin.

And so the best way to do that is to put that spending plan together so that you have the ability now to make sure you're giving every dollar a job, you know where it's going, and you have that cushion that you can then direct toward principal reduction. So check out the Faithfi app if you haven't already. It's on our website, faithfi.com.

Just click app or you'll find it in your app store. Alright, we're ready to go. Let's begin today in Wellington, Ohio. Martha, thank you for calling.

Go ahead. Hi, thank you so much for taking my call. I have a question about insurance. I have insurance on myself and I had two riders from my children, and I was just informed that when my son turns 25, I will no longer have a rider for him. And the reason I had it is for possible funeral expenses because I don't have the money saved. And I was just wondering, I only need funeral expenses, so I was wondering what the best way to go about getting that would be.

Yeah, yeah, that's a great question. You know, you can get a small burial policy specifically for this purpose. And, you know, I don't think that's a bad idea, especially if you don't have the funds saved. I would probably start at NerdWallet. It's kind of a silly name, but has become quite a reputable site just for honest reviews of everything from, you know, apps to banking institutions to insurance providers. And I'm looking at, you know, their latest article on the five best burial insurance companies of February 2024. So they update this literally every month and they rate these companies. And the key is, I think, you know, you need to look at the eligibility in terms of age and find out which company is going to be the best for you just based on your health status and so forth, because one company might be better for one person, you know, versus another.

Also, you'll be able to see, you know, how they were rated in terms of customer satisfaction, number of consumer complaints, you know, best for instant coverage, accessibility, I mean, all of these different factors that go in to ultimately finding the company that's best for you. Now, if you have your insurance with somebody else, your property and casualty, you could look at bundling this and you may be able to save some money just by adding it on to an existing, you know, bundle of policies that you already have. But if you're just looking for that straight burial insurance, you know, I would probably start with NerdWallet and look at some of their reviews. Oh, thank you so much and I just, is that word you're saying burial or I wasn't sure what that word is? Burial insurance. Yeah. Is that what you were talking about?

Funeral expenses? Yeah. How do you spell that? B-U-R-I-A-L. Yeah. Burial as in, you know, being buried after death.

Oh, burial. Okay. I'm sorry. Yes, ma'am.

No, you're fine. No problem. Yep. Thank you for calling. If we can help further, Martha, any time, don't hesitate to reach out. All right.

We're going to go to Zealand, Michigan. Hi, Julie. Go ahead.

Hello. Thank you so much for taking my call. I sure appreciate it. This is something I've been wrestling with for months. Oh, okay. Well, let's try to solve it.

Yeah. Let's try to solve it. So we moved into this condo that we're in right now and we got a very, very good deal on it. It was before everything exploded, but we still have $33,000 yet to pay on it, and the interest rate is 3.125. I have $44,000 in savings. That's including the emergency fund. This is our only debt. Our cars are paid off. We don't have credit cards and all that. We've done the Dave Ramsey thing for many years. But our income, because I quit my job, I retired, but our income went from $110,000 to $80,000 this year. We have a pension from my husband's first job, and he's also working right now earning about $2,400 a month, not including summer.

Summer's off because he's a teacher. We want to get a trailer slash camper to start tooling the world. Everyone is saying, no, no, just keep your money in your mortgage. It's very low interest rate. It's cheap money. But inside, I'm like, oh, I want to pay it off. But what would be the smart thing? Okay.

So let me make sure I understand. So you've got $44,000 in savings, including your emergency. You mentioned that your income dropped, but you do have the pension and your husband's income. What's the balance on the mortgage? 33,000. Okay. And then what are you looking to spend on the camper?

Probably 20 to 25. Okay, good. So let's do this. We've got to take a quick break. But when we come back, let's talk about this and see if we can at least get you pointed in the right direction.

Give you maybe some things to think about as you and your husband pray through this. You stay right there, Julie, and we'll come back to you after the break. Folks, we've got some lines open today. We'll be taking more of your calls just around the corner as well. We'll go to Kendra in Indianapolis and Walters in North Port, Florida. Stay with us. Get started today by enrolling in the CKA educational program at kingdomadvisors.com slash get certified.

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Just before the break, we were talking to Julie in Michigan. She just retired. Her husband's about a year away from retirement. They have some pension income. Plus, he's working, bringing in about thirty thousand a year. Well, not quite that much.

Maybe about a little less than thirty thousand working as a teacher. And they've got forty four thousand in savings. That includes their emergency savings, about a hundred thousand in investments. And she's wondering with their mortgage that they have, which is about thirty three thousand, should they pay that off?

And then on top of that, they have a desire to have a camper to do some traveling. And, you know, Julie, as I look at this, I think the first question is we need to solve for. OK, let's say your husband does in fact retire a year from now. So at that point, you know, he's let's call it sixty one.

You're sixty one. Then, you know, you're you're not eligible for early Social Security. And I'd rather you not take early Social Security anyway, because you're going to drop that retirement benefit by maybe 30 percent or so, eight percent a year. For every year you take it before full retirement age.

And so that's going to permanently lock in that reduction. And I guess the question is, you know, if he's getting twenty four hundred or twenty four thousand a year, twenty four hundred a month for 10 months and we take that off of the eighty thousand and you guys aren't collecting Social Security. Now you're down at fifty six thousand, which in a sense cuts in half what you had been living on before you retired.

You know, how do you balance the budget at that point? Yeah, we the thing is, we are both go getters. He just finished his master's degree at almost 60 years of age. He is very good at communicating. So we plan on going on the road and doing some consulting.

We both consult a little bit here and there, but we plan on doing that. Yeah. OK, good. So you're not concerned about your ability to generate income.

You guys know, you know, they've demonstrated that in the past. So you're going to be resourceful. I guess my only concern is, is the just the limited savings that we have. I mean, I'd love for you guys to build up a bit more cushion, because if we look at right now, you're living on sixty five hundred a month. And if we were to take that out for six months, which is what I'd love for you to keep in liquid savings, you know, that's forty thousand.

And we're right there because you've got forty four. So if you deplete, you know, all but ten thousand of the savings, I just don't feel like especially given all the transition that's coming up, despite your ability to earn income. You know, I just feel like that doesn't need to leave enough liquid, just given a lot of the changes that are coming. And I realize that kind of puts you in a quandary because now you've got the mortgage payment and potentially you'd have the, you know, a loan on top of that for the camper. So I think if anything, I might let's put those skills to work and start to generate over the next year or two as much income as you can and try to pay off the mortgage out of current cash flow, preserving as much of that savings as possible. And then, you know, once you demonstrate that, OK, we've got enough savings now, the mortgage is gone.

All right, let's go and buy the camper and get out on the road. I just don't want you to shortcut any of those processes or steps and get too lean on just your your liquid reserves, if that makes sense. It really does.

Wow, that that helps a lot. I appreciate that. OK. Yeah, absolutely.

So I'm not saying you're in bad shape. I'm just saying, listen, we're not sitting on a, you know, five hundred thousand dollars in retirement assets or, you know, we're not sitting at a place where we can, you know, take Social Security and I'd rather push that off as long as we can. So I think anything you all can do to say, hey, we've got big plans for what we want to do in this next season. But the longer we can push that back, continue to work, pay off all our debt, build up some more savings, build up some more retirement assets, then we'll be in a stronger position to head out on the road for whatever God has for us next.

So anyway, take that, think it and pray it through and see what God does next. But I appreciate your call today very much. Let's go to Indianapolis. Hi, Kendra. Go ahead. Hi. Hi there. Hello? Yes, ma'am. Go ahead.

Yes, I was just calling about an idea. I heard your home versus rent earlier. And it made me think of, you know, I'm glad I sold my condo.

I have no more condo fee because the condo fee was just going higher and higher. I lost out on a super low interest rate, but I'm renting now and looking to potentially buy like a duplex. I thought that would be a great idea if I could rent one side, live in the other, you know, and then eventually, you know, I'm thinking since I have family overseas, maybe even living overseas, then I could rent both sides.

Yeah, I like that a lot. I think the only question would just be, you know, in this high interest rate environment, I mean, the 30-year mortgage just ticked back up above 7%. You know, you're just going to have to be careful on buying something in terms of the affordability and your ability to service the debt with that rental or the two rentals on the duplex, especially with you being an absentee landlord. I want to make sure you have plenty of reserves to, you know, keep it rented and market, you know, market it sufficiently, keep it, you know, up to date and repaired if there's repairs needed. And obviously, just these higher home prices on top of high interest rates just are going to squeeze you a little bit there if you have a big mortgage on it. So just be careful on that.

I'm not saying you shouldn't do it. But, you know, just go into that with some caution. And perhaps if you were to wait a year, you know, you may be in a much better position because I think we're going to continue to see housing inventories build.

And I think we're probably, at least most economists think we'll probably be at interest rates in the fives, you know, early next year, if that makes sense. Yeah, that makes sense. Thank you. Okay.

Yeah, very good. But I think it's a great plan. And I think I can certainly understand with those rising condo fees how you could be frustrated and say, you know what, enough is enough. I'm going to go rent for a while and maybe do something different. So, Kendra, thanks for being on the program today.

We appreciate you calling in. Helena, I see your question, but let me just say, you know, when your credit score, it sounds like your credit score went down and you said I'm using the credit card within the limit. And, you know, there's so many factors there when it comes to using credit cards that move our credit score. Credit utilization, which you're referring to, is a big one. So when you use that card and you go above with a balance 30% of the limit, that's going to pull it down quicker than anything else. But there's a whole host of factors. If you paid something off, it changes your credit history. If you get an inquiry, you know, that's going to impact you.

So there's a variety of factors. I would encourage you to pull your credit report and see if anything jumps out at you there. Thanks for your call. Well, that does it for us today. I'm Rob West. Thanks to our amazing production team and to you for listening. I hope you'll join us again next time right here on Faith and Finance. Faith and Finance is provided by Faithfi and listeners like you. Thank you.