What They Don't Tell You About Social Security

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. Welcome to Finishing Well with Certified Financial Planner Hans Scheil. And today's show is what they don't tell you about social security or what does the 2025 Social Security Trust Fund report really mean. And so, man, I got to tell you, this show is so helpful to me. what seems like such a mystery, what seems like, oh no, they're going to spend all their Social Security money, or you know, some of the things that you hear, the urban legends, this show is going to be unbelievably helpful as we're going to go through the 2025 Social Security report.

But when you really think about what the Bible might have to say about this, if you look at Proverbs 11:1, it says, A false balance is an abomination to the Lord, but a just weight is his delight. And so when you hear somebody say, you know, they've got to quit spending our money on something else other than Social Security, you know. What you're hearing there is a false statement. It's an abomination. Those things aren't.

And so I think this show will help you see what. what really is going on with Social Security and to me the original setup was genius. And the way it was shored up. By Ronald Reagan and Tip O'Neill, you know, 40 some odd years ago. It was also genius.

And I think you're going to feel a lot better about the system. But yes, it's got some stuff we need to work on. And yes, these are hard decisions. But, you know, this is so helpful, Hans. I'm so glad we're doing it.

Well, I am too. And I look forward to this every year. Um The um Before five years ago, I was a bit Naïve. Myself, even though with all the training I have and all the work I do with Social Security. I never paid that much at tension to the trust fund Until it started.

getting called into question and they had all this news media Stuff. And so then I decided I'm going to start learning about it five years, five, six years ago. And so every year when this comes out about this time of year, in May or June. Um the The president It is required by law to make a report to the Congress on the status of the Social Security Trust Fund and the Social Security system. Once a year.

Yeah. You know, he obviously doesn't show up at the Congress. It's that Scott percent. is the Treasury Secretary. And then Kennedy, who's the Health and Human Services Secretary.

I don't know if they really go somewhere or whatever they do, but their signature is on the report. Yeah. The report is prepared by financial people inside of the government. Yeah. you know, when you read the report is two hundred and seventy pages long.

So it's attached in the show notes. of the video So, and I don't think there's anybody going to be running to read a 270-page report. about Social Security, but I I bring it up because It was about three or four weeks ago, five weeks ago, that this was all in the news for about a week. Every news media, they'd have several articles about this. And they basically said that Social Security is going broke.

The Social Security Trustees report They're going to cut your Social Security benefits. And you know, people were writing articles Reporters reporting on this. And they it was real obvious to me, and it is every year, That nobody ever read the report. They're not using real numbers in their report, they're just picking little things out of there. that are incite you know, it's almost like they're inciting a riot.

Yeah. Yeah, and it it and that's exactly w you know, what sells newspapers, I guess, or what sells, you know, ads. But You know, it's a critical situation for a lot of us that are currently on Social Security. And getting the real story, it really made me feel great and does every single year. Yeah.

So I'm going to give you twenty twenty five I'm going to give you a quick summary. Ove twenty twenty five and the accounting behind us. Is that We finished. twenty twenty five on twelve thirty one twenty twenty five This is how much money was left in the trust fund. Two trillion.

five hundred sixty one billion dollars.

Now just for comparison, the national debt is not at forty trillion yet. It's in the thirties.

So this is about Mm, I don't know. Four percent. Oh. The national debt.

Now, but this is not a debt, this is to the good. This is how much money Social Security has in the bank.

Okay.

So that should give you some sense of security Um that The system has a lot of money in the bank.

Now We're going to start there. And then what I'm going to tell you is we began twenty twenty five With two trillion. seven hundred twenty one billion.

So in other words, we use one hundred sixty billion dollars of the trust fund. to pay Social Security benefits. during 2025. And that's a problem.

Okay.

Um That we need to fix and we need to address But it's not a problem. As big as you would think looking at reading all these articles, it's not like they're shutting down Social Security next week.

Okay.

Exactly. And again, when you when you use those words, when you don't see them on a board. A trillion is this gigantic number. And so. When you look at that two point something trillion dollars and it's still two point something trillion dollars that we still have in the trust fund Is telling us that You know, we've got to be, like they say, at least eight, nine, ten years if we went the exact same way of spending overspending what what what it is that we have in the trust fund to to get this right.

But obviously the sooner the better.

Well, yeah, I mean, we do, you know, as I said in the beginning, we've got a problem. And we need to address it. But what I'm doing right now is I'm just going through this thing by the numbers.

So we got a good bed in reserve. And the reserve is there.

so that we have a year And we spend more. or we send out more in Social Security checks, than we collect in tax revenues And we we have a deficit. We got a fun to go to to get it. And that fund needs to be building and going up It doesn't need to be going down.

Now let's talk about the expenses During 2025 for Social Security.

Okay.

There were seventy million people that got Social Security checks In twenty twenty five.

Okay, about seventy million people. And those seventy million people got one trillion five hundred and ninety seven billion dollars In Social Security checks.

So everybody that gets paid in the system. About 1.6. Trillion.

Okay.

So that's a lot of money to pay everybody.

Now that was the main expense of the Social Security system. But let me tell you about a couple of other expenses. There was seven billion dollars spent on administration of the social security system.

So that Social Security pays its own bills. They got an operating budget. And the actual cost of running all the Social Security, all those people, all the buildings. all the computer systems. All that kind of stuff.

seven billion dollars. And then In addition, there was an expense of six billion dollars paid out to railroad retirees. That's just kind of a point, these systems were all mixed many, many years ago.

So For the most part, It's the Social Security checks. are the expenses of the system. And I don't see a line item in here. to send Social Security money to anybody other than Social Security check recipients. I'm making a little joke here because there's just a lot of people.

When you start talking about Social Security and the financing, They pipe up and they say, oh, they sent that money, they spent it on other stuff. Yeah, and I'm just telling you, they didn't. That's against the law.

Okay, and I'm reading the accounting. I've read it every year for five or six years. And the only place Social Security money is going is to Social Security recipients. Have you got that, Robbie? Yeah, absolutely.

Yeah, you realize that, yeah, there's nothing in there for the money to go anywhere else, and it never has, and it never will.

Okay.

So let's talk about during 2025. where did they get the money to pay all these Social Security checks?

Well, we're going to start out The biggest source of funds is the payroll tax. Every time you get a paycheck, if you're working, They take six point two percent of your paycheck and send it into Social Security. And then your employer matches that. another 6.2%.

So it's a total of 12. Four percent. of your paycheck and everybody's paycheck across America. goes into the Social Security Fun.

Okay.

And the way you look at that is for your future check. I mean, the way the way people I know I did while I'm working. I mean, so I don't like that money coming out of there, and I don't like all of that, but at least I know that it's being paid in.

so that they're going to send me a check one day. The end. there's an intent to build a reserve, and there is a reserve there. But Really where that money goes is if that was one trillion 323 billion.

So most of the money to pay the Social Security checks last year In 2025, just came directly from the payroll taxes, not federal income taxes, but the payroll tax.

Okay, so we've got one point three trillion from taxes, we paid out one point six billion So it wasn't quite enough to cover all the costs.

Now There's two other sources of revenue for Social Security.

So they got the payroll tax. The next one is the income tax on Social Security benefits.

So and I know you have a comment to make on this, Ravi. fifty eight billion dollars was the income taxes that high income Social Security Percipients They paid fifty eight billion dollars of income taxes. And those income taxes, that fifty eight billion, did not go into the general federal treasury. It went to the Social Security Trust Fund.

Okay.

And you probably didn't know that before you started listening to the show, probably, huh? Oh no, before I started listening to the show, I wasn't on social security. But You know, to me, when I think about that, or when I do my taxes, it just thrills me to think. Wow. I mean, it is a closed system.

This is a perfect time to pause and remind you that this show is brought to you by Cardinal Guide, CardinalGuide.com. And if you go to CardinalGuide.com, you're going to see the seven worries tabs. And the very first of those is Social Security. And there's a wonderful video, shows a board with all these numbers, really help you understand the system, which I think is critical to keeping us from that worry of seeing. you know, that God is going to continue to provide and certainly has provided for so many through Social Security.

Again, there's all at cardinalguide.com as well as Hans's book, The Complete Cardinal Guide to Planning for and Living in Retirement. And of course, the ever-famous contact Hans, Tom. or Drew. All there if CardinalGuide.com. We're going to be right back with a whole lot more about what they don't tell you about 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 Hans Scheil, and today's show. What they don't tell you about Social Security and we were getting Going through the line items of where the income comes into the Social Security that we pay out every year without having to dip into the trust fund. And so we had covered. You know, the payroll taxes and the income tax that comes from people paying Social Security like myself and you now, Hans, too, right?

Okay.

Yeah. My search this month.

So One point three. Trillion.

About The payroll tax is collected. Which is About eighty percent of the Outsource. cost of Social Security for one year. in 2025. And then 58 billion came from the income tax that is redirected Uh for the the the people high income people paid on their Social Security.

Income. They pay an income tax and that money gets directed into the trust fund. And then there is interest on the trust fund itself.

So since there was an average of about two point six trillion dollars in the trust fund, that's all in special government bonds. they collected interest of sixty nine billion On the trust fund, and that money gets directed right into pay Social Security benefits.

So you add all that up, we had income Last year in twenty twenty five, Oh. one trillion four hundred forty nine billion. or about a About a trillion and a half. If you want to make it. kind of round numbers.

Uh of income And we paid expenses One trillion six hundred and nine Billion mostly Social Security checks.

So there was a shortfall of one hundred sixty billion.

So and that came right out of the trust fund. That's why the trust fund went down from two point seven trillion to two point five trillion using round numbers. And that's a problem.

And the trust fund at this point needs to be going up. But it's a very much it's Don't need to be going down.

So when you hear him sounding sirens like we got a problem. and they're saying we're going to run out of money in twenty thirty four. That's all the axuro configurations. If you just let things. Go on like they're going.

We don't make any changes to anything. This trust fund. is projected to be dry in twenty thirty four, which is eight years from now.

So Um My suggestion is that we take this seriously. And we stop. coming up with all sorts of simple solutions or pointing fingers that the government's spending the money on the wrong stuff. and we just get proactive. and we we reach out and we hold our political people accountable.

to fix this problem. Yeah, and I'm going to tell you in nineteen eighty three, We were two to three months. away from the Social Security Trust Fund being empty. It was that close. Yeah.

The political parties were as separated as they had ever been. And they both had they weren't doing anything on this, and Ronald Reagan. and Tip O'Neill made a deal and started this bipartisan commission and then they enacted through the Congress You know, I think everything they recommended, and they just And it is short up to Social Security. trust fund that was nineteen eighty three And we're here in 2026. and we're not running out of money in two to three months.

We're running out of money in eight years. But my suggestion would be that we would get working on this like immediately. And so I have some suggestions. Um that you know, for anybody that's listening or any of you political people that want to Want to listen to me. Um I'm going to just give you some simple arithmetic.

Okay.

One thing that we're going to need to do in this solution is to increase the payroll tax. And the payroll tax percentage hasn't changed Since nineteen nine.

So It's held level for thirty six years. and it's currently at six point two percent. From you. The worker. and then six point two percent for the employer match or a total of twelve point four percent.

And I did some simple arithmetic. And I said, how much additional tax would we have need to collect Two. not have this hundred and sixty billion dollar deficit spending in twenty twenty five, and it worked out an increase of about 0.6%.

So in other words, if the 6.2 went to six point eight And then it got matched with 6.8, that would have generated an additional 160 billion. in revenues. To make us have no deficit or no reduction in the trust fund.

Now, I'm not suggesting that as an amount or a tax increase. I'm just trying to give. the public some simple arithmetic where I'm saying that if we increase the payroll tax by about eight percent. Um you know, another zero point six and plus point six That would have eliminated the deficit in 2025.

So that would have been a wonderful start. You agree, Robbie? No, absolutely. Absolutely. And again, if it's done now instead of two months before the go pro two months before it starts to be cleared out, then you have a huge problem where right now it's not near that big because what, it was only three years ago that we took any money out of the trust fund.

The second Area of suggestion After we increase the payroll to tax or we figure out a system, I'll let the accountants figure that out. is we delay full retirement age From sixty-seven to seven.

Now, before everybody starts screaming, I'm not recommending that we impose that Tomorrow.

Okay, is nineteen eighty three, they delayed the retirement age from sixty five to sixty seven but they implemented it over fifty years.

So so so it's still not sixty seven yet. It's almost full retirement age is sixty seven, the people turning that.

Now so so it's taken that long since nineteen eighty three to implement The last one, and I would suggest that they do some kind of the same thing where they would say the full retirement age fifty years from now is going to be seventy. And 25 years from now, it's going to be like 68.5. And next year, it's still going to be sixty seven. And have some type of an implementation, and that does a lot of the drain. of the future years And frankly, people are working a lot longer.

than fifty years ago I mean, everybody thought retirement at 65. That sounds like a long time. I want to retire at 58 or 60. And now people are working like I'm still working, you're still working, I'm 68 years old. And I think that's a lot of people.

So It doesn't really matter whether you like it or not. That's going to be part of the solution is a stretched-out delay of. the the claiming edge. Right. It only makes it makes perfect sense because Lifespans, you know, when Ronald Reagan did their thing, you know, 40 years ago.

Life spans that increased a great deal from the thirties and forties and fifties when they originally sent up Social Security. And here we are forty years later. And guess what? Life spans are it you know, My parents died a lot older than their parents, and people today are living a lot longer. And yeah, I'm 70 and working, and have no intention in the near future of stopping working.

And so it you know, to think that You know, again, if it was enacted to where this went fifty years from now, it becomes seventy.

Well, do you really not think that fifty years from now that people are going to be working clear into their you know, again, if the Lord doesn't come tomorrow, which would be great and it's going to totally solve the problem. But when you you know, just think about thirty, forty years from now, you don't think people are going to be working up into their eighties? I mean it's just So we're on to the solutions. The third one. Here's the payroll tax beyond the cap, which in twenty twenty Six is one hundred eighty four thousand five hundred.

And so What that means is if you're paying the payroll tax, they're going to take that six point two percent out of your check. Every month Until you reach $184,500 in compensation. And when you get over that amount, There's no payroll tax. and there's no corresponding Social Security benefit.

So What they've talked about and that I think makes sense is to tax beyond the one hundred eighty four thousand five hundred but not credit the additional earnings. I mean, I've been at maximum earnings for pretty much my whole career. And so I benefited from this is that You know, somewhere throughout the year, I've paid in my $184.5%. It used to be much smaller than that, but somewhere during the year, and then I don't pay payroll taxes. The other I mean, personally, I'm not in favor of them taxing income over one hundred eighty four.

five when I just look selfishly at my own situation. But I considering the whole system, I think it's something they need to do.

So how far they go with that and how they do it, I'll leave that up to the accountants. But those three things are just some suggestions. That a phase-in could be created. And we could just fix this whole problem and quit talking about it. Right.

And so, again, one of the real advantages to me to getting on the air and talk about this, Hans, is that people. really grasp this. And make a call to their congressman, to their senator, to somebody that they know along those lines to say, hey, if we do something now and clearly something has to be done, Um Right. They're actually serving the the the common good, serving the public, which is what they signed on to do. I know it may s not be the most popular thing ever to raise taxes or extend retirement age, but it's gonna happen.

And the the sooner the better from a standpoint of impact on everybody, right? Yeah. Again, we want to remind you that this show is brought to you by Cardinal Guide, CardinalGuide.com. And if you go to CardinalGuide.com, you're going to see the Seven Worries tab. The first one, Social Security, there is a wonderful video where you can see these things, you know, all on a board if you're a visual learner, really help you understand the system and I think gives you some peace of mind you wouldn't have had otherwise.

And actually, some joy at how God is taking care of his people. It's all there at cardinalguide.com, as well as Hans's book, The Complete Cardinal Guide to Planning for and Living in Retirement. And the workbook that goes with that, and of course, the contact Hans or Tom page if you want to make that phone call. Again, CardinalGuide.com. Great show, Hans.

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.

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