This is the Truth Network. Um Welcome to Finishing Well, brought to you by CardinalGuide.com with certified financial planner Hans Scheil, best-selling author and financial planner, helping families finish well for over 40 years. On Finishing Well, we'll examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Social Security, Medicare, IRAID, long-term care, life insurance, investments, and taxes.
Now, let's get started with Finishing Well.
Okay, we're in Our second of the Eight-part episodes of the Retirement Financial Plan series.
So fun. As we today really launch into the first. Of the seven that are going to be isolated to bring the whole plan together. And as we talked about in the first video, Social Security being one of the huge. building blocks to that.
And so, you know, it's amazing how God provides for us. And when you really think about it biblically, Um, you know. When the Israelites were in the desert, you know. God provided something that we know of as manna or bread that they collected every morning, and they were allowed to collect it for one day. It's a fascinating thing, but if you ever go to Israel and you actually see the wilderness, what they call wilderness, And you see how dry and how parched it is.
Oh my word, like God bringing down something to eat in the middle of this man, there is nothing there. It is baked, it's cooked, it's dry. I've been to the Mojave Desert, I've seen a lot of things, but there is nothing like the wilderness in Israel. And so, when I think of those people, they saw that mana come down, like, oh my gosh.
Well, I can assure you that there's a lot of folks right now that when they go to their mailbox and there's that social security check, you know, and they're on a single income. I mean, they're saying the same thing, like, oh my gosh, God provided, or like Elijah in the desert, you know, ravens came, like he was hungry, he'd been running for a day or whatever, and he's by the way in the same area, dry. And here come these ravens with food.
Well, oh. Can we really not only Partner with God and realize He is providing for us in this time. It's a different time than Israel, it's a different time than Elijah, but in this time he's providing, but He's providing through a system through our government. And can we partner with Him? In stewarding that, To really maximize what that would be for our families and providing the wisdom as we go along.
And I really know myself. The wisdom of studying this that we're going to talk about today. And I think you're going to be happy you listened, as there's so much to be gleaned here. From studying this particular number one worry of the seven worries at cardinalguy.com.
So, Hans? Yeah, so this is the first one. I mean, just to quote the seven, so in Tom and Susan's. Financial plan. We're going over their Social Security, their Medicare, their long-term care.
their IRA 401k planning their income planning and investment planning. their estate planning. which includes planning for the surviving spouse. like one of them dying before the other and then the other one living a long time And then income taxes, their income taxes.
So you take all seven of those. And we talk all the time about all seven of them individually. And today we're talking about Social Security individually, so this show will stand by itself. But it is number two. Of eight, and it's really about how does social security, their social security benefit, how can we engineer it to be the best.
For them. And then, once we do that, how does that income? plan fit in their whole financial plan. and last the rest of their life, that kind of thing. The beautiful thing about this, and I know because there's a video along the same series that I saw.
is that if you fall Like I probably did. Like people with this kind of income and these kind of resources, it's a no-brainer. He needs to wait till he's 70 and she needs to file it. I thought if there was ever a cookie-cutter deal, when you saw these people's income and their assets, like this is just a no-brainer. Wrong.
It definitely was not a no-brainer. It went, once he got the new information from us, it went from. Do it wait until 70 was a no-brainer. It went from a no-brainer to one of two options. Yeah there's also some Things that look pretty good on the other side.
And so let's just walk through that.
So Tom is an MD. He's retiring. He's turning 68 in July. He met us three years ago. at Medicare.
Yeah. Uh Susan was 64 then. And they were covered under group insurance at his practice, but they only had five or six employees.
So that group insurance. was real expensive. Uh it was like $1,300, $140, $1,500 a month each. for for Tom and Susan. And then it was like 400 a month to cover their office staff.
Um So The reason I'm bringing that up is he didn't have the option of staying on the group. For Hat time past 65. That's when he ran out of us. We advised him of that. He signed up for Medicare, but we talked to him about Social Security then and all these other retirement subjects.
He kind of put us at bay. And then he around Social Security, he says, oh, I'm waiting until 70. And I kind of nodded my head. I thought, well that that that sounds good.
Well, it was three years later.
Now we're doing the financial plan. He's hired us to look at all seven of these things. We've already got the Medicare. We'll talk about that next week. That's already done.
So we're putting it in the financial plan. But we're revisiting the Social Security. And now Tom is going to be sixty eight, so he's two years away from his age seventy filing. And by the way, his benefit at age seventy was like fifty one hundred, fifty two hundred a month. Kind of worth waiting for.
Okay, and then But here's the deal is bring Susan into the equation. Her benefit at full retirement, which is in October here. Actually, it's in August. Um Eight hundred and seventy. four dollars a month.
So that's what she's entitled to. And she's going to file at full retirement. Why not? I mean, how much is 874 going to go up?
So let's start collecting the checks. And furthermore, her smaller benefit is going to stop when the first one of them dies.
Okay. But now we start running all the numbers, and I'm talking to him, and I say, you know, that she's eligible. Citizen airs. or $2,000 a month instead of $874. if she files as your spouse.
Okay. But there's a catch. The only way she can get the 2000 instead of the 874. For another $1,100 a month plus. is Tom has to file now at 68.
So you're going to have to let go what you Been planning on doing it all along. And you're going to have to file instead of a $50,100 check. you're going to get a 42.98 check or 4300.
So you're giving up 800 bucks a month. starting in two years, but What I pointed out to him. He's actually, if he waits till 70, he's given up. $4,300 a month. for two years.
It's almost $100,000. Because if he takes it now, he's going to get $4,300 a month for 24 months before he'd have got nothing.
So we've got $100,000 in the bank. And then He's also going to get for two years But they're going to get 1,100 more a month on Susan.
So now we've got another. $25,000.
So we've got like $125,000. more on the table in the next two years. by Tom filing at 68 and then Susan Coming in at sixty-six in ten months. And the beautiful part of the story from my perspective, which I know is a little different, was I listened to that She wasn't happy. Like, what does this mean?
I get A74. And, you know, she like, oh. You know. Every human being wants to be a big part of the equation, and she didn't feel like a big part of the equation, and she. Became a big part of the equation because she made it known.
Like, and that's the beautiful part of that: this is no cookie cutter, is that you're actually a couple and you're sitting down together. And so, Because of her. angst with the situation like I don't like the way this is looking She told him what to do, and he did the smart thing.
Okay. Happy wife, happy life. Right. Yeah. Yeah.
How many I've been to that movie a bunch of times. Yes. Sh she has never liked this Little old social security check because when we're looking at it, because they can get their statements like everyone else, we've got to look at his big, gigantic benefit, and then she's got this little. benefit. And then she has her friends that are about her age.
that worked a long time and they got Social Security checks of $2,000, $3,000 a month. And hers is 874. Yeah, you're absolutely right. And I'm showing her a way that hers could be 2,000. And it's going to be 2000 anyhow, two years from now.
She wasn't willing to wait.
So anyhow. Yeah, and I think to speak to that a little bit more, I know how my own wife feels. She was a stay-at-home mom. And not only. You know, they gave up their career and all this in order to do this.
And that's why I love the spousal benefit to begin with. I think that whoever came up with that was really honoring to some extent, not as much as I think they possibly could have, but they're really honoring the fact that this was a gigantic, important job that our wives held raising these children. And they do need to feel important, and they do need to feel significant. And You know, what the planning aspect of this is. And I, again, I think that's the beautiful part of, you know, sitting down together and working these things out, not just say, oh, you know, financially, this just makes sense like this.
No, it's a lot more important than that.
So what we've done is we've added $125,000 to their equation Right. They're gross. They got to pay some tax. But even as we rework things, you're not going to pay a lot of tax.
So that's $125,000. Of additional money they're getting by time filing two years early. This would be a good point to. Pause and remind you that this show is brought to you by Cardinal Guide, CardinalGuide.com. And as you go to CardinalGuide.com, you're going to see.
These seven worries tabs that we talk about every week. And the really cool thing is that you're going to see a video. Along the very lines of what we're talking about, episode one of the financial planning series. Excuse me, this is episode two because of Social Security. And so both episode one and episode two are going to be at that place.
But when you see this episode two, if you watch the video, you're going to see something absolutely miraculous that I think. you know looked Is a big part of this equation that you can't hear from us explaining it, but Tom brings up a graph. And he shows them. you know at what age do these two ideas Converge. In other words, they were planning originally for age 95.
And at age 95, it's a no-brainer. You wait till 70. But at age 84, the picture changes, right? And they showed where on this graph where the two ideas came together. Again, that's part of the reason that you can go get this amazing information by going to the Seven of Warriors tabs at CardinalGuy.com.
Of course, Hans' book's there, the complete cardinal guide to planning for living in retirement. And again, our all-time favorite. Again, because it's an idea of getting your whole family involved because it's not just actually, it's just not you and your spouse. It's you and your kids and other people involved with the planning that's going to go into all this with Hans and Tom. Again, it's all there at cardinalguide.com.
The contact ons and Tom page especially. We're going to be right back with a whole lot more of the Retirement Financial Plan Series, episode two, Social Security. Investment Advisory Services offered through Brookstone Capital Management LLC, abbreviated BCM. a registered investment advisor. BCM and Cardinal Advisors are independent of each other.
Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency. Welcome back to Finishing Well with certified financial planner Han Scheil and today's show is the retirement financial plan series episode two, which is Social Security. And this is a beautiful thing, I think, really, that here you got a family that has had this remarkable income compared to most people. Um you know and you know they look like they have financial assets that are amazing like what difference would social security make to these people like Oh, you know, when I heard the stories of the two, you know, talking about all this, it was quite obvious that the social security makes a big difference.
And it's a big reason why this is the first of the seven episodes about the. overall financial plan.
Well, let's talk about what other worries.
So we've got seven worries on the board. We've been talking about Social Security and we're talking about Social Security planning for Tom and Susan.
Now So we've arrived at the fact that he's filing, she's filing. They're going to have 4,300 a month. coming in that'll get adjusted for inflation that's plugged into the financial plan. But what other sections of the plan Does this affect? And let's just go over to income.
So when you get to series six of eight, in the series. Episode six of eight. We're going to be constructing their income plan and their investment plan, or we've already constructed it, we're going to be showing it to you, the elements that went into it. Yeah, right there. is sixty three hundred bucks.
Every month For the rest of their life.
Now When When the first one dies, as we talked about, And we can show you different points, but we've taken that into account, they're going to have an income. Reduction of $2,000 a month, and that'll all be adjusted for inflation, but the survivor is going to be short $2,000 a month, and we account for that somewhere else.
So the Social Security income is right there. Yeah. They're spendable. income or that the That in the plan that we arrived at through them is they want to spend $10,500 a month. And that's after taxes.
So, you know, we had to build in taxes. But about half their income is coming from Social Security. I mean that's of people of some pretty pretty large wealth. That just shows you how important it is.
Okay. Yeah. I already talked about how it affects estate planning. I kind of did the one before the other. Here's is that Our big focus in estate planning is planning for that surviving spouse.
I mean it's just Because you don't know which one of you. You can guess. You can say, oh, it'll probably be me. She'll be the one. But it might be her and you might be the one.
that that lives on As a single tax filer and all that kind of stuff.
Well, I can assure you that, you know, just to jump in here. If I ever saw a case of that, it was my dad. I mean, I think he was. maybe 18 years younger than his i mean older he was 18 years older than his wife and his entire estate Everybody's plan. that was ever formulated was formulated with him dying first, because nobody would have ever guessed, but.
You know, tragically, she got brain cancer. And talk about messing with his estate. Like, it was nothing set up for that to ever take place. And that's the beauty of of what you're talking about right there.
Well, it is. What we want to do is, we want to look at it either way. I mean, had we been around with your dad and met him or whatever. We would have been there. Stranger things have happened.
The end. But either way, we got a plan for a survivor of somebody being alone. Um And f a single tax filer. and collected one Social Security check. That's really the point is the smaller check stops.
And she wasn't even old enough for Social Security, so there was no check to stop when she died. Right. In any case. That's estate planning. And then we want to talk about taxes.
So So the way you pay taxes on Social Security. is if these people had no other money. didn't have any savings, didn't have any IRA. And they were going to purely live off that 63 Hundred a month? Which most people could probably squeak it out, but $6,300 a month.
They're not going to pay any taxes. They're just not going to pay any income taxes because Social Security by itself. The taxes are driven by the amount of your other taxable income.
So The way they're going to pay taxes on this 6300 is by the fact that they gotta take another 6,000 a month. out of their IRA to live every month. And that's 72,000 a year. But there's not a lot of tax due on $72,000. I mean, it just.
I mean, there's you could say not a lot, but it's very low tax rates is my point. Yeah, that drives. Only a small percentage of the Social Security counting in their taxable income. And so, I don't want to get everybody lost in a formula. But the net effect, these couples, they're not going to pay a lot of.
income tax in retirement. Um just because such a large portion of their income. Is actually from Social Security. And even though it looks like they're spending a lot of money. They could spend more.
And and people of their kind of other doctors and they spend way more. And they pay a lot of taxes on their Social Security because If you have this high other income, it creates. more tax on the Social Security.
So When we do a financial plan, we scenario all of it. Yeah. You know, when we're plugging in, that's what's unique about this video series. And in the show notes of the video, Go ahead and watch any of the videos. The actual financial plan is in the show notes and the appendices there.
So if you want to read, The whole sample plan of everything that goes into it for these couples. But this couple You can just go find it. Yeah, those that And this one is a well, they're all definitely worth watching, and but this one is. was fascinating to me because again, I just never would have seen. A lot of things coming that happened when everybody sat down and began to really chew on.
you know, what this was going to look like in that overall financial plan. Because it does. It affects. You know, Irma, it affects all these different things that you're talking about. We're all affected.
Oh. you know, buy this simple decision that was. You know. Number one on the hip rate.
Okay. You know, Robbie, just before we were doing the show, You made a comment to me that somebody had said to you, What are you doing to show on Social Security? That's all going to be gone in a couple of years.
Okay, yeah. Yeah. You know It it's kind of interesting because Tom actually said something like that to me. When We were first getting together about this financial company.
Okay, and a lot of people like him to do a lot of research. They throw that in there. Um you know, the Social Security is not going to be around. I mean, you just reading that stuff in the news. And the way I tested it, I said, well, if it's not going to be around, why are you waiting till 70 to take it?
Uh maybe. No, sure. Yeah. He's kind of like, well, well, um You know Almost kind of said, Oh, I didn't really mean that. I said, now.
Let me just tell you how much. There could be some credibility in what you're saying. I mean, I think you're pretty extreme, but the Social Security Trust Fund. does have some issues. that need to be addressed.
So a little piece of, there's a little piece of truth in everything. And you're just reading that, but you're using it to your own definite price.
Now, because what w what a statement like that is going to do is just discount the whole section of Social Security planning. And so let me just kind of give you my take on that since we've got enough time here. Yes. the the Social Security Trust Fund show or actually that The presentation from the government is due out any day. I mean 'Cause it's early May is usually when we get that thing.
And then as soon as we get it, I'm going to read it and dissect it. And then you can guess about seven weeks from now. There's going to be a show. About the Social Security Trust Fund, just what we're talking about. Yeah.
What I'm just going to say is a couple of things is that last year when we did it, there was like $2.8 trillion. Still in the trust.
Okay. And they had only drained it by about Seventy billion. It had only gone down by about seventy billion. in 2024.
So it's going to be interesting. to wait and hear all that.
Soon. I mean, that's coming out, and I'm going to read it. And then when you're actually listening to this show. It's going to be a couple of weeks from now.
So in any case, Um That thing may be out by then, and you may have already read that. And you're gonna, then, when you read what the people are saying about it, Because most of them have no idea what they're talking about. I mean, it's a. 300 page or four. It's a bunch of accounting figures, and they're just going through there and pulling up the inflammatory stuff.
that's going to get clicks on the internet. is wh is what it amounts to. I'm just telling you, I expect that we used up a little more of the trust fund. But it's still. north of two point five trillion.
And so we got a lot of money to run through. Before Social Security runs out of money. I guess that's that what yeah, exactly.
Okay. And a lot of Social Security is funded by current payroll tax.
So Know that. And then also know that when they say in there what's going to happen if that does happen in like twenty thirty four.
Okay, Then what you got is They're still going to have all the money coming in from taxes.
So You know, you're just going to get a smaller percentage of your social security budget, but it's going to be most of it. Again, that's assuming they don't do anything about it in the next eight years. Absolutely, absolutely well. Once again, we've Run out of time before we ran out of show, and I couldn't encourage you enough to go to cardinalguide.com. CardinalGuide.com, of course, brings you this entire show.
But when you go there, there's the seven worries tabs. And the first one of those is Social Security, what we've been talking about all day, which there are plenty of those shows on the whole Social Security statement. But also the one today in the financial planning series, where you'll see these charts and how they came upon exactly the right calculation to figure out. For Tom and Susan, how to fit this into their financial plan. It's right there under the Social Security Worries tab at cardinalguide.com.
And of course, Hans's book. The complete cardinal guide to planning for and living in retirement, and the wonderful workbook that goes along with that, which again, the first. Worry in that book is also Social Security is right there. And then, you know, for all of us, and I hope you'll see through what we talked about today. And if you go watch the video.
How important it is that you don't take a cookie-cutter approach to this because it's all part of your. Your financial plan is how you decide to do your social security. And a plan, you know, together with your whole family makes so much sense. And you do that by going to the contact Hans or Tom page at cardinalguide.com and getting them involved, like I said, with your whole family, because this is a big thing for everybody and will continue to be that way in my lifetime. That's for sure.
Thanks, Hans. Great show. Thank you and God bless you. The opinions expressed by Hans Scheil and guests on this show are their own and do not reflect the opinions of this radio station. All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such.
Any statements or opinions are subject to change without notice. Investments involve risk and, unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results. Any strategies mentioned may not be suitable for everyone. Information expressed does not take into account account your specific situation or objectives and is not intended as recommendations appropriate for you.
Before acting on any information mentioned, please consult with a qualified tax or investment advisor to determine if it's suitable for your specific situation. Finishing Well is designed to provide accurate and authoritative information with regard to the subject covered. Investment advisory services offered through Brookstrone Capital Management LLC, abbreviated BCM, a registered investment advisor. BCM and Cardinal Advisors are independent Of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents.
Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency. We hope you enjoyed Finishing Well, brought to you by CardinalGuide.com. Visit CardinalGuide.com for free downloads of this show or previous shows on topics such as Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes, as well as Han's best-selling book, The Complete Cardinal Guide to Planning for and Living in Retirement and the Workbook. Once again, for dozens of free resources, past shows, or to get Han's book, go to CardinalGuide.com. If you have a question, comment, or suggestion for future shows, click on the Finishing Well radio show on the website and send us a word.
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