Full Retirement Age

This is Stu Epperson from the Truth Talk Podcast, connecting current events, pop culture, and theology. And we're so grateful for you that you've chosen the Truth Podcast Network.

It's about to start in just a few seconds. Enjoy it, and please share it around with all your friends. Thanks for listening, and thanks for choosing the Truth Podcast Network.

This is the Truth Network. 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, IRAs, long-term care, life insurance, investments, and taxes. Now let's get started with Finishing Well.

Well, welcome to Finishing Well with certified financial planner, Hans Scheil. Today's show, really interesting topic. I think you're going to love this show.

I know I love it. It's 96 decisions. What? 96 decisions.

That's a lot of decisions for social security, and specifically for when you're going to start your social security payments, which is really a fun topic because I think we're all excited about getting money that we've been investing ever since we were little kids, or in some of our cases. But, you know, I was thinking about this biblically, Hans, that it kind of reminded me, you know, the sudden this number of 96 is that Abraham was a phenomenal negotiator. And if you think back to the story of, you know, in the three men showed up there, they're saying, should we destroy, should we destroy, you know, Sodom and Gomorrah? Or should we tell Abraham that this is what we're going to do?

And they decided to do that. And then Abraham, you know, kind of freaks out because his nephew, Lot, you know, that's where he hangs out. Rather than just saying, my Lord, would you save, you know, Sodom because Lot's there and his wife and he's got a couple daughters.

That is now it goes down. He negotiates with God, which is just beautiful. Like, that's just bold.

I love this. This is a Mike Zwick kind of thing. He would do that. He says, well, God, you wouldn't destroy Sodom for 96. No, he actually said 100, you know, people, righteous men lived there and God was no, nope, I wouldn't do that. And he just let these sit there. And Abraham was like, well, you know, not to offend you, God, but how about, you know, how about 75? And he works his way down like any good negotiator.

You know, to where he gets to 10 and, and, and, and you see how that works out. And when you look at this life skill from a car dealer's point of view, you know, I had a chance to negotiate with a lot of people over the years. Sure. And some of them had fun and some of them, oh, they hate that, you know, and I just thought, well, you know, what do you do with your little kids? Cause they, they are born to negotiate. If you don't think your kids are born to negotiate, just recall anytime that they wanted to stay up late and it was like five more minutes, you know, they would, they would come down 30 minutes, 20, how about 15? And all, you know, they're negotiating because, you know, they're trying to find out where's the common, where's the, where's the line.

Sure. And, and from the time they're born, they find your lines and they have ways of knowing how far they can push you. And then they all of a sudden they get the look or the voice, whatever that may be, what you'd love to know. I w I'm hoping heaven has instant replay so I can watch this interaction between Abraham and God.

I was like, could Abraham, since I was getting close to the line, you know, like, was he giving you the look, Abraham? And so as I thought about this 96 decisions, Hans, which I love this, there really are. And it was a huge misunderstanding on my part, but you are in a, in a way you're negotiating with the federal government legally on how you're going to work out your social security.

And, and it really is in fact, really fun. Cause I've been playing now since I was 62. Well, and so we've had difficulty getting some of these points like full retirement age, which we're going to really try to get to that today. So that my hope is that every listener that is not on social security yet, or they, even the ones that are, if they're giving advice to people that are younger than them, which people tend to do, that they would understand like, what is full retirement age for them?

What does that mean? And what are the different dates when they could start their social security and what all that means? And it just on the surface doesn't appear that complicated, but it was really the, the Mackenzie who, who, who works with me and she's behind the scenes on everything, does all my writing and she do our writing. And she also runs the Facebook thing and she reads all the comments on the website.

And she came up with a few suggestions for shows and she said, people just don't get this. They, they, they don't know what is their retirement age around social security. So trying to simplify this as much as I can. And if you use me for an example, I turned 62 in July, just this past summer. So I was eligible to start social security in July of 2020. I also could have waited one month and I could have started it in August and I could have started in September, October, every single month between July, 2020 and July, 2028, every single first of the month or whatever day of the month you're going to get your check, you have an opportunity to start your social security check. So in effect, you have 96 decisions between now and 70. And once you make the decision to start it, well then you don't have to worry about the rest of the decisions. But I just wanted to get this point across is you have the right as, and your spouse has the right, cause they're separate from you.

If you're married to start their own social security check, either on their record or on your record individually, each of you have the right 96 times to start your social security check. Yeah. And each one of those has all kinds of ramifications, right? As you begin to see that, that if you, you know, I assumed because I didn't, I was totally ignorant a couple of years ago that, you know, it was either you took it at 62 out of this little bitty amount and it ended up that way the rest of your life, or you took it at full retirement age fraud, I guess, FRA.

FRA. And, and okay, that was, so I, I really assumed there were three decisions. You could take it at 62. For retirement age. You could take it at FRA, which is 66 and two months for somebody more 1955 like me, or you could take it at 70. So there were three, but in fact, there's 96. And with each one of those months, it keeps going up.

I mean, that's the beautiful thing. I mean, if I remember from mine, had I started it last summer, when I was just exactly 62, it would have been just a little more than $2,000 a month. And then if I took it, then I'd get a check for 2000 plus a little bit, and then it would go up.

I think the raise this year is going to be 1% or this coming year. I mean, there's a little inflation in there, but ignoring inflation, it's 2000 a month for the rest of my life. So the one point that I want to make is if you wait till you're 70, well, you've missed out on all those $2,000 checks between 62 and 70 to get a larger check. But I could have started it at 62. If I wait till say 65, I think that number was like 3000 a month. If I wait till my full retirement age, which that's what a lot of the show's about today, my full retirement age being born in 1958 is 66 and eight months. How's that for confusing you?

Okay. I know yours born in 1955 is 66 and two months. So, and you can go up on our website and see a chart of all these, but you really don't need to dig that deep into this. Cause if you order your own social security statement, which I'm going to have you do or help you do it, if you come do some planning with me, we're going to plan this out for you. But if you just do it on your own, it says right on your social security statement, what is your full retirement? Mine says 66 and eight months. And as I recall, it gives you 96 different payouts.

It shows you what it's going to be. If you go this month that there's a great big, long column of numbers and it doesn't it show you. I think it just shows you 62. If it's in front of you, if you're, if you're now like I'm 62 in so many months, it'd show me if you started next week instead of 62, cause I've already passed that. And then it's going to show full retirement age and then it's going to show 70. So it gives you the three numbers. But in any case, we'll create all those other numbers for you. And you can, we can actually, if we have, if I have those three numbers, I can create the other 93 of them just because I know the factors off of that depending upon how many months you've either delayed.

But I don't want to confuse people with all of that. I just want you to be clear that you've got 96 different dates starting at age 62 and ending at age 70. And so where every month that you wait, you're going to get a little more. So those two dates matter, 62 and 70. And then full retirement age, what's that all about?

And it's really what the show, what's the show all about? Well, we have a lot of folks that mistakenly assume that full retirement age is still 65 and it was from 1933 up until a little past 1990. It was when you reach 65, you'd get your full amount of your social security check if you turn 65 during those years. But back in the eighties, they passed a social security reform deal where it delayed retirement or full retirement age changed slowly over a number of years from 65 to 67.

And it hasn't even gotten to 67 yet. Like I said, mine is 66 and eight months. Actually people born in 1960 and after it's 67. People born between 19, well, like I said, I'm 66 and eight months. You were born in 1955, you're 66 and two months. So depending on your year of birth, there's this midpoint, or it's not exactly the midpoint, but there's this date that's called full retirement age.

You need to know what that is for a number of reasons. So what I'd like people to get walking away from this is we can take it as early as 62. We can take it every month thereafter.

The longer we wait, the more it is. But we're still taking it early if we take it before, in my case, 66 and eight months, full retirement age. There's some ramifications of taking it early. Besides, you're getting less. Then you reach full retirement age, you can still not take it, and then you can delay it, and then you could take it any month after full retirement age, all the way up to 70.

Every month you wait, you're gonna get more. Now we're gonna talk on the other side of the show about what are the ramifications of taking it early, and what are the benefits of taking it later, past full retirement age, and really the benefit of taking it right at full retirement age. Right, and there's all sorts of ramifications that I think are really, really helpful to think through for not just you, but you've got your spouse. And all those things enter into the equation as we can learn more about the 96 Decisions Social Security course that's all described in Hans' book, The Complete Cardinal Guide to Planning for and Living in Retirement. And Hans kind of uses your Social Security payments as sort of a baseline to begin the plan of, you know, how to live and finish well.

And so this is kind of a critical thing, and there's lots of neat, fun things about it when you begin to research it and certainly print off that statement, which we'll talk about when we come back, so stay tuned. Hans and I would love to take our show on the road to your church, Sunday school, Christian, or civic group. Here's a chance for you to advance the kingdom through financial resources by leveraging Hans' expertise in qualified charitable contributions, veterans aid and attendance, IRAs, Social Security, Medicare, and long-term care. Just go to cardinalguide.com and contact Hans to schedule a live recording of Finishing Well at your church, Sunday school, Christian, or civic group. Contact Hans at cardinalguide.com.

That's cardinalguide.com. Welcome back to Finishing Well with certified financial planner, Hans Scheil. Today's show, 96 decisions on when to start your Social Security payments and really, really fun stuff from my perspective.

Like this is going to be a neat thing. You're going to have this extra income, but there's a lot of, you know, information that needs to go into the computer to figure out how to plan this. Well, not just for you, because actually in my case, a lot of the reason I'm going to start mine when I started Hans is because my wife is significantly younger than me and so this enters into the planning thing for me. Well, sure it does because we're going to assume that you make it to 70, you start your Social Security, and then she's going to start her spousal benefit, so you're going to be getting a pretty significant check every month going into your 70s, let's say around five grand a month or maybe a little bit more if all the projections are right. And you know, you take five grand a month, which would probably be 36, 37, 100 of that is going to be yours and the other 13, 1400, 1500 is going to be coming from her. And so what we've talked about, if you, when you pass away, assuming you pass away before she does, what's going to happen is her check is going to go away because it's a smaller check and then she's going to get your check for the rest of her life. And by waiting until 70, that's a big deal to her, so she's going to have a nice survivor pension essentially. Because you know, she's, she would say seven years younger than me. My kids say she's eight years younger than me and look at the birthdays. But you know, men don't tend to live as long, so when you add all that into the equation, you know, this could be significant.

I mean, you looked at it, you know, we looked at all the numbers. She could need it for a long time and you could go at 80 or something and she's still 70 something, 72. And then she lives into her mid 90s. She's getting 23 years of a very enhanced check.

And by the way, if you're gone, she's going to need it. And so by waiting until 70, we're just going to make these numbers up. Let's assume that your check was 3,700 a month by maximizing it and waiting until 70. Had you taken it at full retirement age, which for you is going to be about a year from now, let's just say it was 2,900 a month.

Okay. That's $800 a month that you've effectively given up for three years or four years, going on four years. But the, you know, so you lost those income checks, but what you did is you gained 800 a month for the rest of your life, which could be a long time. And then after you die, I can see she could live a lot longer. So you can just kind of do the math here.

And we have a computer that does all this. That would be the ideal thing for you to take, to take as, as, as your, as your social security is to delay till 70, you're going to work anyhow. Yeah. And that's another critical factor to when people decide, you know, to start it. Cause if you're working, you know, you're going to get taxed.

Right. I mean, no, no, she had the same kind of work history and income history as you do, then that really wouldn't be a factor, even if she was close because, you know, let's just say that you did take it at 66 and so many months. And, and, and then your, your social security was 2,900 a month, but then she waited till then and she got like 2,700 or whatever. Well, she isn't going to gain that much in social security payments by you predeceasing her.

So this is really effective. It's in my situation as well is that, you know, my wife lives many years beyond me. She's going to have the benefit of that enhanced social security check.

So I think we've made that point. And so full retirement age, like we said for you was 66 and two months for me at 66 and eight months. For some of you that are younger than Robbie and me, it's going to be 67. And for folks that are maybe a little bit older, it was probably 66 was your full retirement age. And that's a, so, so why does full retirement age matter?

Okay. And, and it matters for this show because a lot of people think that it's still 65 and it's not. What happens at 65 is Medicare eligibility.

And we're talking to a lot of people at Medicare eligibility to talk to them about Medicare consulting. And so consequently, they think that it's like time to start your social security. They've done all their planning in their head around all of that, thinking about retiring and we're dealing with a different date.

So that's one thing I want you to get out of this show. It's, it's a date different than 65, depending on your birth year. And you can go on the website, our website and look it up and find out exactly what your full retirement age. So why does it matter? Well, it matters for that as knowing when it is and when your full social security check will start. But it matters for a whole lot more than that. If you start your social security check, like we said, as early as 62, but let's just say you started at 64 or you started yours now, you're basically an early social security filer.

So you'd be collecting less than you normally would get probably about 2,500 bucks a month or something there about if I stay consistent with my example, which is $30,000 a year. That's no small amount of change. So there are people that say, I want it now.

I just don't think the government's going to be here or whatever they is. I want it now. I've paid in. So you start it. Well, you set a whole bunch of stuff in motion. Number one is you lock your social security in at a lower amount for the rest of your life. But the ramifications of starting it before full retirement age is now if you have service income or like income from a job and that service income is more than $18,000 a year and you are collecting social security before full retirement age, which is this example, then all your income above $18,000 a year, you're required to give some of your social security back. So it's like you've collected it, but you've got to give some of it back. And then the amount that you don't give back, you're going to have to pay taxes on it at pretty high rates because your other income that you're earning drives that. So there's really a couple of three negative ramifications. All that being said is if you need the money, you are retired, you're not going to make more than $18,000 a year, go take it.

I don't want to make it sound like that's a bad thing. There's plenty of people that started before full retirement age. I just want you to know the ramifications of doing that. So essentially, if I'm understanding what you're saying, if my full retirement age is 66 and two months and I'm working, then if I file for my social security at my full retirement age at 66 and two months, I still will have to pay tax, won't have to pay state tax.

We learned that in the last show. I'll have to pay federal income tax based on my tax rate on both my income and my social security. However, I won't have the payback feature.

Correct. There's plenty of people that are still working beyond full retirement age that then elect to collect their social security check. And my advice to them is to pay the taxes out of that and then save, you know, because you don't want to start this social security check and then just blow it or go out and borrow money on it or something. So if you're taking it short of 70 and you're still working, but you're past full retirement age and that's what you want to do, well, go ahead and take it, but then pay the taxes and then save the money. So then by the time you get to 70, when you could have delayed and gotten a bigger check, at least you'll have a savings account of some substance to then use for your retirement.

Okay. Because presumably you don't really need it then because you're still working. I mean, some people, if they start the income, they're just going to find a way to blow it.

So I'm going to say, if you do that, it's fine. Let's have a plan for what we're going to do with the money or just spend some of it. Yeah. If you just described me, I had the income, I'd figure out a way to blow it.

That's just me. But you know, and, and the beautiful thing that I would bring out on that issue, you know, if you're going to share your real financial information with somebody, you know, it's really nice to share it with somebody like Hans where you don't feel ashamed, you know, like, well, yeah, I mean, yeah, that's my habit. I, you know, I'm sure. And so if you go into that, talking with somebody that has wisdom, they see this and, and they're, and they're helping you without judgment.

You know what I'm saying? And so when you're picking a fiduciary or someone to help you with these, you know, you know, it's really, really good to have somebody that I believe is, is trusting God with your situation, with you in prayer. And also that you really sense that this person, you know, is just, he's, he's not here to, he's here to help you.

And he realizes that most people struggle right here. We've got flaws. I mean, we just, we all do.

Believe me, I do. And then when it comes to money, we, we just try to make good decisions and good preparation. There's even some ways to do that. You can do tax withholding from your social security and have them withhold more than the tax that you owe. And then you won't have the money in your checking account to spend, and then you'll get a big refund.

And then maybe you just save that cause it comes to you all at once. You just put that straight into the savings account. If you're still working, you make it past full retirement age and you want to start your social security check, then go ahead and do it. I just like to see you save some or all the money after tax. Now, the ideal situation would be to just delay your social security till you're done working and then get a larger check.

So it's not the same for everybody. And we do, that's a part of our financial plans is to sit down and somewhat not so much teach you all this like we're doing on the radio is teach it to you for you is just to listen to all your preferences, what your needs are and your financial plan, what's your tax situation and help you make a good decision of which of the 96 months are we going to start this thing for you and your spouse and then follow up and actually do that. And there's even an angle, if I recall correctly, to, you know, whether or not your spouse is on, you know, some type of insurance besides your insurance, health insurance. And now we're getting into Medicare. So we're going to put that off to the Medicare show, but it's hard to talk about Medicare without talking about social security. And it's hard to talk about social security without talking about Medicare because they're, they're run by the same people and they have. That's all part of the equation. And, and, and again, part of the reason why I think it's really good, you know, tax is one of the seven worries, which are there in Hans's book, The Complete Cardinal Guide to Planning for and Living in Retirement.

And as you can see, there's a synergy there's a synergy, right? To all these long-term care taxes, you know, all these things fit together in a pretty sweet little package if you're doing the plan. And so he put those all together in his book, which again, the whole section on taxes is there, but you can get the whole book. All you have to do is go to cardinalguide.com and, and email Hans and, and he'll send you the book or you can find it in the Amazon.

It isn't what? It's even in a lot of libraries. You can find it on loan from the library.

So easy. It's cardinalguide.com. Of course, all sorts of information, there are ways to contact and have them come and do something custom made for your situation with you and your spouse, you know, and, and the physical situation, all that stuff figures into the plan. And as you can tell, if you didn't know this, I'm just saying Hans loves this. I mean, he will have a good time working with you to figure out the best way to maximize your resources so you can finish well. So thanks. Thank you. 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 Hans' 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 Hans' 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. Once again, that's cardinalguide.com. Cardinalguide.com.