Social Security for the New Year

Hi, this is Roy Jones with ManTalk Radio Podcast. Our mission is to break down the walls of 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. Welcome to today's Finishing Well with certified financial planner, Han Shai. I know you're going to be excited about this title. I know I am. The name of this show is Social Security Increase.

So how fun we're going to be able to talk about that. But as always, this is the first show of 2020, so it's pretty good 2021, excuse me, because it in and of itself is the law of sowing and reaping. There's this idea of the kingdom mentality being that there's an abundance, and so things keep growing.

And so we went from 2020 to 2021, that just everything grows. If you see how God works that, you might have seen in Hosea 8, which is the bad side of this, that if you sow the wind, you're going to reap a whirlwind. In other words, those of us who sometimes fall to sin, i.e. me, and scream and yell at the driver that was just pulled in front of me. Not that the Christian car guy would ever have road rage, except most days. But what I don't realize is that my kids were sitting in those seats in the back, and they were hearing all that wind that was coming out of their father.

And now sometimes I ride with my granddaughter, and she tells me about what her parents do when they drive. And so apparently the law of increase is certainly affecting my family when it comes to sin. But the better part and the great part is God provided this blood of Jesus Christ. And so the good news is if I tell one person about Jesus, that person is going to go tell somebody about Jesus, go tell somebody about Jesus, or even witness to something that he's done in my life. And those are seeds.

And you plant an apple seed, and you get a whole apple tree with millions of apple seeds that come in over the lifetime of the tree, and that's the way God does it. And so the good news is the government apparently planned years ago that there would be a cost of living increase, and they call this fancy name. Cola. Cost of living adjustment. So this is like, you know, sugar-free cola. Well, you know, it's 1.3 percent this year. And, you know, I want to state this is that my job, as I view it, is not to try to make you like things that the government does or like Social Security or any of these other programs that we work with.

It's really to just help you to understand it and help you to make good decisions. If you haven't started your Social Security yet, you've got a lot of decisions, and you're going to need to do a lot of praying and a lot of thinking and get a lot of advice over that right time to start your Social Security and your spouse's Social Security. Yeah, I know for me, you know, that's right on the place where I'm right at right now. So I think you have 96 months that you could... 96 different dates that you could decide to go on your Social Security if you've got... And you're already through about, I don't know, 36 of them. They're already come and gone.

Right. But every month from now until you're 70, you could start your Social Security. And every month you wait, it's going to be a little bit more. And every month that you wait until you're 66 and like two months, which is going to be next year about this time, if you started it before then, you would be starting it before full retirement. And if you start it before full retirement, and then you have a job, which you do, and you earn above $19,000 a year, which you do, you are going to have to give it back.

So under any circumstances, you personally, Robbie, you're not going to want to start your Social... The earliest you would want to start it would be 66 and two months, which is maybe about a year from now. Then every month you got the option of delaying it another month, all the way up to 70. I think you've already made some of these decisions and they're not cast in stone because something in your situation could change. God could have something planned for you different than we've planned out here on earth. But if things stay pretty much the same and you stay employed and you stay doing what you're doing, you're probably going to start yours at 70.

Yeah. And especially that has to do with the fact that my wife is seven years younger than me, and she would say eight, depending on... And if I wait till I'm 70, she gets that increase when it goes down to one sole security check after I pass away, that would be for the remainder of her life. So I not only get the money in the remainder of my life, but more significantly being concerned about her, because she's going to lose one sole security check, that she'll get that bigger check for as long as she lives. But there's also... You mentioned that if you make this decision to wait, even now at 65, that it would be a lot lower than if I don't wait. But then there's also the other side of that equation, that if I decide not to wait, then I'm leaving a year's 12 payments of that amount on the table that it never will see. So this isn't like a no completely no brainer.

There's a lot of math, and that's why you've got software to help people with this particular... We run scenarios. And then where this is further important is... You talked about it a little bit earlier, is when you have a married couple, then they're going to start their social security checks probably on different dates. But once they get both of them going, they're going to have two incomes or two checks. And then there's going to be a point where one of them is going to die the other one. I mean, one of them is going to live on as a single person. Unless it's like the notebook where they die in each other's arms. And my wife tells me all the time that's what's supposed to happen.

Okay. Well, if that happens, then I guess we're planning for nothing. And if that happens and it's a short period of time, then it's not that important to plan for. But in many cases, you have one person die in their 70s or early 80s, and you have the other person live on up into their 90s.

And then in your case, your spouse is seven years younger than you, so the odds of something like that and the ramifications. So that's all the more reason to delay if you can afford to do it, and it works with the rest of your plan. So that's one decision that all of you listening are going to need to make.

Now, if you've already made that decision, so we're not leaving you out, but really the topic of today's show is your check in January is going to be 1.3% higher than it was in December. Okay. And then there's plenty of complaining that goes on that say, well, that eats up most of my Medicare increase.

Okay. Or my Medicare Part B, because most people have that taken out of their Social Security check, and that's 144.60 this year in 2020, and it's going to be like 148.90 or 50 or something. It's 148 something. So it's going to be about a $4 a month increase.

It's 144, 148.50. It's going to be like about a $4 a month increase, and that's not going to eat up your whole Social Security check. Not to mention, if you have group health insurance, or if you have health insurance almost anywhere, you know, if you could get a deal or your health insurance only went up 2 or 3% a year, you're like going ka-ching, I'll take that. How many times have we seen that go up 20, 40, 60% in a year? Well, this is real political, especially the Medicare increases, but the Social Security increase is not so much because, you know, that's not really the government giving you money or not giving you money if you thought it should have been 3 or 4%.

I mean, that's really simply the whole Social Security system. It's based upon inflation. So when they plug in the inflation, and then they plug it in, and that's what they came up with is 1.3%, and then they make sure that we can afford it, which we can. There's over $3 trillion in the trust fund, and every year that we've been watching this stuff, the trust fund's gone up by a little bit. Now, it might be different this year with all the people out of work and that type of thing, so we'll manage it year by year, but in any case, for you, your check is going to go up 1.3%, and Medicare is going to go up a little bit, not really a significant thing. It's other than the fact that it's significant that this is one of the lower years of an increase. They haven't been much for the last few years because inflation's been so low. So I'm not so sure that a lot of retirees want inflation to go up so that their Social Security check can go up. I don't know.

You tell me. Well, I personally don't want inflation to go up because there are so many things that that affects on top of your income, because obviously, if it went up, then you're getting less bang for your buck, however that works. Well, and theoretically, your check that is now 101.3%, or it's 1.3% higher, buys you the same things or the same amount of things in goods and services as your check at 100% did last year. But the other beautiful thing, when you think about it, when I was a kid, realistically, gasoline, you could get it 26, 7 cents a gallon. You know, and so, you know, it's really nice to know that this thing now that gasoline is, you know, up at $2 a gallon, and that's even pretty much a deal to what it was four or five years ago.

But it's keeping up, and it is increasing, right? Because you look at what their Social Security checks were 30 years ago. Well, my dad's check, I mean, I know in the, you know, mid-'80s, and my dad was a highly paid executive. His Social Security check was like 1,300 bucks a month or something like that. And, you know, mine is going to be a lot more than 1,300 a month.

That freaks me out, actually. And I'm 30 years younger than him or 31 years younger than him. Mine is going to be substantially really almost triple that. So that's all because of this inflation. The earnings are higher, and it's just over 30 years, it's, you know, it tripled based upon all the increases. Right. Same thing with my dad, who I can't imagine a year he didn't pay the max mensos maybe when he was in his 20s or something, but he was highly compensated his entire life.

But, you know, it was like $2,700, as I recall, you know. And so I'm thinking, wow, how could I end up with a bigger Social Security check than my dad based on, you know, the way he was? But it just goes to show you that the government in their own way is clearly seeing the increase, and so they're passing that along. Sure. And so we just need to understand this and try to make good decisions within Social Security and then furthermore on your other money.

Right. Other financial decisions as we talk about the plan. So we got to go to a break again. I hate we're run out of time for this part. We're going to be right back. And in the meantime, go to cardinalguide.com, and, you know, today's topic is going to be on Social Security, which, if I'm not mistaken, isn't that chapter one?

It is. It is chapter one. Hey, I'm starting to learn this stuff. Which is in Hans' book, The Complete Cardinal Guide to Planning for and Living in Retirement. You can get the whole book or just download this particular section right there at cardinalguide.com or you can just email Hans there and get you one. So we're going to be right back. Stay tuned. That's cardinalguide.com.

It's under Finishing Well. So there's a tab. That's the name of the podcast. And all hundred and something of them are up there.

And I just talked to a lady out in Iowa who Googled it, just retirement planning. And she's a very sweet Christian woman. And she just saw now there's a Christian financial podcast. And I don't think we're alone.

I think there's a few more. Anyhow, she's listened to just about every show backwards over the last couple of three months. And now she called us during open enrollment and bought a Medicare supplement. And now she's talking to us about long-term care insurance, talking specifically about a hybrid. But it's just as soon as I got on the phone, because one of my other people has been serving her, and then she wanted to get me on the phone to talk about long-term care. And as soon as I opened my mouth, oh, I recognize your voice. It was just cool to think about that.

And she's put a number of her relatives up in Minnesota and different parts of the country. So if you want to get a hold of the podcast, and it's just not convenient to tune into the radio at eight o'clock on Saturday morning, you can find it first of all at our website at cardinalguide.com. But it's on Spotify and Apple, iTunes, and about Alexa just play the Finishing Well podcast, and it'll pick it up, play it in order.

I mean, that's, that's what they're designed to do. Of course, we would appreciate it if you would subscribe so you can just get it in your podcast, you know, portfolio every single week when they come out, you won't even have to worry about downloading it. And then if you have time, we would really appreciate it. If you would rate the podcast, you can do that, give us however many stars you think or any comments of something that you want us to talk about some week, that would be delightful. So again, Finishing Well is the name of the podcast, and we really, really appreciate you listening and a chance to share that. So let me tell you something funny is she so she told me that she listened to the podcast several months ago, and she's listened to most of them.

I never got a number out of her. But she's listened backwards, which makes sense. Because if you write, you know, if you listen to, you know, number 106, then you went number 105. And so I was sitting there thinking about that. So she's listening to our podcast backwards. And I thought, well, which one did you listen to first? And she said, Oh, I couldn't remember that. I said, Okay, I said, Why don't you try? You know, were we talking about this or that?

She couldn't come up with I said, the reason I want to know that is I put these in order where I started with Social Security. And then I've got them all in order. And that's how I think about them. And now that you've gotten them all backwards several times over. I've got to rethink everything. Well, it's nice to know what happens is funny on demand content, which is really handy.

I mean, it is if you get to miss that. So getting back to our increase, you know, this is a pretty exciting topic. You know, where your money is growing? Well, it is and it just just the fact that Social Security number one, you can count on it. So we've done other shows, and we'll do more shows, we do it about every April, where we talk about the financial footing of Social Security. And there's a lot of noise out there that and you're probably going to hear more of it with the new administration coming in, you know, everybody's saying, Oh, well, you know, Social Security's going to run out of money, and they're going to do this. And now that it's a new administration's responsibility, whether they're going to be suggesting changes, I mean, we'll see. And it, that's, we'll see, because we're not even sure we got a new administration coming in. You know, at this point in time, it seems like it's, you know, up in the air. So it's even makes it more important that you pray about these things, because, you know, who knows what in the world's coming at us? Sure.

And they had talk. I mean, I mean, there's some things that I really, really like that I hear out of the Trump administration. And then there's other things that I don't like, like he was suggesting, just eliminating the Social Security tax for several years or several months, during the Coronavirus relief, this was floated out there. And then that would save the employers paying in their matching share. And then somehow you'd have to pay it back, almost like it was a loan.

I didn't like that at all. Okay, and that was just floated in it, you know, it was dead on arrival. Now, there has been talk of, of charging people that make more than the maximum of $138,000, just charging them Social Security taxes, and their employer taxes, all the way up to, you know, millions of dollars or whatever. And, you know, I'd have to look at that a little more. But if, I mean, somehow if they're going to manage this over time, I mean, to me, when I'm logically looking through this, anything's on the table.

For them, it's a big political game. And then the news people start spitting out articles, and they got everybody in the country believing that Social Security is running out of money, and something drastic is going to happen. And a lot of that stuff is just nonsense.

And that's really where I want to state my position. I really would more focus on that there's $3 trillion there. There's about a trillion dollars of income coming in from taxes. And then there's about a trillion dollars of benefits going out right now, in 2020.

And I don't know what it'll be for 21. So it's pretty much a balanced budget with a little bit of a surplus. And that's one of the reasons they only want to raise it 1.3%. Because if they just would respond to political pressure and raise it substantially, that's going to hit that whole funding thing.

That's pretty sound. Yeah, it's not to mention that, you know, if you had $3 trillion in the bank, you'd probably make a little bit of interest. Well, that's included in the revenue is that that money is in bonds. And it's earning interest.

And that's included along with the taxes, and along with the taxes that the wealthy people pay on their social security that shows as revenue to that goes back into the Social Security Trust Fund. So there's a lot of sources of revenue. And this this thing is, is actually very well managed. It maybe isn't as well planned out for the future. So the managers of the fund, if you call them that, the managers are hampered by whatever the politicians promise and set up. But they do a pretty good job of this.

Yeah, they do. Because obviously, you can see the increase. And that translates into them in being able to increase the fund, you know, by 1.3% this year, or whatever, you know, they would deem appropriate this as those things go on. But again, this, from a standpoint of planning, you you consider this to be the bedrock, right?

It absolutely is. This is your check that you're going to have for you and your spouse for the rest of your life. And there's some scenarios where you don't pay any taxes on this.

Okay. Now, some of those scenarios may not be very good to you, because you've got to have a low other income. When I say low, another 10,000, 15,000 a year, that you can make maybe as much as 20. And you don't pay much of any taxes on that other income.

And nor would you pay taxes on your social security. But you start looking at social security, and some other income from an after tax spendable income. This gets real important in a financial plan. As is the decisions of when you're going to start it.

And, you know, the longer you wait, the more it is. And then, if you meet an early death, sure, you left money on the table, like 70, and then you die at 75. The great part about that is you're really not going to know it. I doubt you're going to be sitting up there in heaven saying, why, I really made a mistake here. I should have taken that social security check at 66.

I would have had all those extra checks. Now, if you leave your spouse back here, and then they're on a smaller check, well, maybe there'd be some regrets. But I'm all for in financial planning is we're going to make some decisions. Some of those decisions are about what we're going to do in the future. So we're prepared.

But they're not cast in stone yet. Some of them are right now decisions. And we're going to make those with the best information we have. And then we're going to go on without any of that. But we're going to make those with the best information we have.

We're going to go on without regret. Yeah, that's part of my job, too, is to get people in just a good place where all this stuff's interrelated. Social Security, retirement income planning, IRAs, your estate, and we got a bunch of decisions to make. But we need a plan. And a big part of this when it comes to social security, from my perspective, is I'm now thinking about it on a level I never really had to before is the tax ramifications of, okay, even my check's bigger at 70 than it would be at 65. But then I'm still planning on working. But for some people that were going on their 401k or the IRA, all the tax ramifications of social security become a huge part of the planning.

Well, sure they do. I mean, I think my social security check at 70 is projected to be over $4,000. And my spouse's is going to be $2,000. And so we're going to have six grand a month if everything works out and we actually delay to that point.

And the good Lord leaves us here that long and well beyond that. We're going to have six grand a month coming in from Social Security for however many years. And if we plan our other money right through the use of Roth IRAs and life insurance, I intend to pay zero taxes on that $72,000 a year.

And that'll go up by 1.3% or whatever, you know, so that'll be more by then. And, you know, they tax your social security. Your social security is taxed based upon your other income. And if your other income is coming out of a Roth IRA or it's coming out of life insurance, cash withdrawals or cash loans that are tax-free, my other income is going to be either zero or very low. And my plan is not to pay a lot of taxes in retirement and specifically on that social security check. Right. So one of the cool ideas we talk about social security increase is to increase our income without increasing taxes. I mean, those are part of the reason that it really makes all kinds of sense to prepare, to plan for what you really want that to look like, because there's different, you know, somebody's moved your cheese.

You're not playing in the same game at all that you were playing in, you know, prying to go. Absolutely. And it just, that's why you need a plan. I mean, that's what we do is we take these seven subjects that we do the radio show and in our financial plans, we cover every one of them, but we apply them. So instead of giving you all this general population data, we take all that and we apply and your needs and wants, and then they're all interrelated. So we put together a plan like this is what we're planning to do. This is how much income you can count on. That's another thing and nice about social security. We can count on it.

It's not going to lose 20% in a stock market downturn. I mean, it's just, it's there and it's guaranteed by the government. So the stuff's all interrelated and you need a plan and then we're going to adjust the plan as we go along. You're not bound to whatever we decide on.

It's just, you're going to have a plan in place so that you know what to do when certain things happen. Well, once again, out of time, it's been a blast. We're really praying for you to have a delightful new year.

I usually don't date these, but I will tell you that the original show played the first Saturday in 2021, but you can find out all this information. It's cardinalguide.com. Of course, the radio show is finishing well, but you can go to get his book, The Complete Cardinal Guide to Planning for and Living in Retirement with, again, those seven chapters that cover all this information. Just email Hans and ask for your copy. So thank you for listening.

Yeah, 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. This is the Truth Network.