Social Security Increase For 2024

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Now, let's get started with Finishing Well. Well, welcome to Finishing Well with certified financial planner, Hans Scheil. And today's show, very exciting, the Social Security increase for 2024. It's that time of the year where the government announces all these new things coming out.

And of course a lot of folks are very interested in what the Social Security increase is for 2024. And as I was thinking about this, Hans, and what the biblical understanding might be that would be helpful, I love the chosen series, and I hope everybody goes out and looks at that. It's a TV series on the life of Jesus that just depicts things beautifully. And one of the things that depicts beautifully, in my opinion, is when Jesus fed the 5,000 on the Decapolis. And up on the hill, there was quite a conflict prior to Jesus feeding, in the chosen series anyway, in season three, there was quite a conflict. And everybody was focusing on what they didn't have.

Like, we don't have any food for these people, and they were all freaking out. But what Jesus clearly taught so wonderfully is that if you'll focus on what you do have, which was the young man, obviously, that had the fish and the bread, then you're open to the multiplication factor that God built into our economy. He built it into essentially the earth itself that if you sow a little, you're gonna reap a little. If you sow a lot, you're gonna reap a lot. And so it is with Social Security in so many different ways. But it also has to do with focusing on what you do have, not on what you don't have. Like, oh, I didn't get a big enough increase, or oh, I didn't, you know, I need to take it now so I don't lose out on this increase. And again, as Hans taught me, you know, one of the beautiful things that's out there is that you can print your Social Security statement and find out that these things are right there for you.

But it's really important to start out with just, you know, doing an inventory. What do I really have and, you know, what has God given me, right Hans? Well, it is. And it is Social Security and getting a pension check for life from the government based upon your contributions, our contributions, is a real blessing. I mean, there's, you know, there's $3 trillion in the Social Security Trust Fund, or pretty close to it. Maybe it's just a touch shorter there, but I can't even fathom a trillion dollars. It's so much money. But, you know, and of course, they, the press keeps saying, you know, we're going to run out of money in the Social Security Trust Fund in 10 years, 11 years, 12 years, that kind of thing. And that's if we do nothing. So we're not going to, that's another show. We're not going to talk about that too much today, other than I'd like to depoliticize Social Security, just for the purposes of working with me.

Okay. When we're doing retirement planning, we're going to take a look at your Social Security and we're going to work with what we got. And it's, like I said, this increase, it may look small to you, but 3.2% is pretty significant.

And it goes on every year. And what I'm wanting to do is just give you, if you haven't taken Social Security yet, you haven't started it, then this show is really for you, because we're going to walk through some of the basics of making that decision. And if you have taken Social Security and you're already collecting it, then at the very sense, we're going to give you an expectation of, you know, so what you can expect in the future from it.

So the first point, well, why don't you just bring out, Robbie Wood, the first thing you brought up to me about what you got out of the video, and I can react to it. Yeah, so I guess my first thing was that, oh, how wonderful. I mean, we got 3.2% was, to me, is a great increase since I'm on Social Security. It's like, wow, that's absolutely wonderful.

And, you know, that was actually my first comment. But as I was looking at the video over the right-hand side, you know, I was freaked out by the, you know, the craziness that I saw over on, you know, somebody telling somebody to take their Social Security early and all this based on that, knowing that that was a flat-out lie. And so that's what my reaction was, is like, how did these people go on YouTube and talk about taking your Social Security early when that clearly does not work into the multiplication factor, the whole idea of God giving you what you have, especially if you're still working? Oh, yeah, because you're getting about an 8% increase in your Social Security check by waiting every year from 62 to 70. Okay, is it, you know, your check goes up by 8% a year. Now, it's going to be one less year that you're going to collect it because you don't know how long you're going to live. But you put all the math on that. And then, in addition to the 8% a year for waiting, you get this 3.2% built on top of that. And what was 8.7 last year, so this whole thing of waiting to collect, if it's right for you, so we're not preaching that for everybody. I'm not going to say go in and just say everybody waits. That's one of the reasons you talk to us, we got to look at your other resources and your spending habits.

And whether you're getting two Social Security checks, if you're in them, what Social Security is going to look for you, like for you after the first one of a couple dies. I mean, there's a whole bunch of factors. So what we're doing today, and what I was referring to, when I asked you to set it up a bit was, you said that people tend to focus on what they're not getting instead of what they're getting. And that's, that's real clear.

Could you go over that for a sec, and then I'll respond to it. Yeah, I mean, obviously, the reaction that most people have is 3.2% doesn't sound like all that much of an increase when you're thinking about inflation and all that kind of stuff. But, you know, my reaction to that, like, oh my goodness, I got 3.2% more than I was getting last year. You know, that's significant. It's, you know, in my case, over $100 a month. And, you know, who couldn't use it? I mean, and use it for a lot of good things.

Well, sure. So let's just look at this historically, is that I averaged the last 10 years inclusive of the 3.2% that's going to be for 2024. And 2023 was 8.7%. 2022 is 5.9%.

And that's, of course, because of the high inflation that we've had, that's starting to taper off a bit. But if you look at a 10-year average, it's 3.1%, is what the 10 years have averaged. And this year, it's 3.2%. So it's just, it's come back down to about an average amount, which is, which is good for the retirees, they're getting 3.2%.

It's in line with inflation. And yet, it's good for the Social Security Trust Fund, if we had to raise this thing 8.7% a year, I think that that Social Security Trust Fund would be in more difficulty than, than people are talking about it is right now is that this is more in line with being able to pay our bills down the road. So we could talk all day 3.2% is what you're going to get. And you're going to get that whether you take your social security or not, we have a lot of people come into us and they say, Oh, I'm taking my social security now because I want to get that 3.2%. And they were especially saying that a year ago when it was going up 8.7%. And I got to tell you, you don't have to file for social security if you're like 63, 64, 65 to get the 3.2%. Because if you wait, that increase the 3.2% is built into the waiting numbers. So your future check is 3.2% bigger.

Yeah, it's a beautiful thing. I, if you print your social security statement, as Hans recommends all the time, and you keep those, and you look at it a year later, you go, wow, ka-ching! You know, because you'll see the increase both the 3.2 or 8.7, whatever the increase is over the year, plus, you know, what you already added, and a lot of folks, because they take your last 35, your best 35 years of employment. And so if you're making good money, that that continues to raise that thing as well. So when you really are looking at what you do have, it's pretty impressive, right Hans?

Well, it is. And the time to do that, and we'll be doing a show sometime in February or March about social security. And the beginning of February, if you run your social security statement, again, it'll have the updated numbers in there, it'll have the inflation, it'll have the fact that you waited another year, if you haven't taken it yet. We'll have a 3.2%, it'll have the 8% increase, if you look at it from a year ago, just built in, and it'll have one of your 35 highest years, if you actually had one of those last year.

So it's kind of fun, and we'll be pulling mine, pulling yours, and doing a radio show next year. Let's just talk about the increases for 2024, which they do pretty much every year. So everybody's check and future checks up 3.2%. And then the way this is paid for is the maximum taxable earnings at 6.2% is that number has gone up to $168,600. So a simple way to look at that, if you made $100,000 last year, all of it got taxed at 6.2% that you paid into social security, and as well, your employer paid 6.2%. Now, if you made $200,000 last year, you only paid the 6.2% on $160,200. And that $160,200 number is raised for 2024 to $168,600. So that's how they calculate.

So people that make very high incomes only pay social security to a certain point. Darrell Bock Unfortunately, we got to go to a break. That came quick, didn't it? So I want to remind you that this show is brought to you by Cardinal Guide.com. And there you're going to find a whole video on this that Tom and Hans did. It's called The Social Security Increase for 2024. And there in the show notes gives you all the details on all these numbers, as well as a board that you can look at to get some more clear definition on what these numbers are, etc. And that's all in the show notes, which you're going to find that video in the Seven Worries tab, this one being social security. So you go to social security at cardinalguide.com, and you click on that, and you're going to find the video, you're going to find the show notes, all that information right there at cardinalguide.com, as well as we always talk about the contact information for Hans, for Tom, and of course, Hans' book, The Complete Cardinal Guide for Planning for and Living in Retirement. And so how fun. We get to talk more about this social security increase for 2024.

When we come back, we'll be right back. Tom Scott 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, we are talking about a social security increase for 2024. How exciting is that? And as we talked about in the first segment, it's 3.2%, right Hans?

Hans Scheil That's right. And so a lot of folks, you know, they get bummed out where they, you know, they just, they read too much in the press, and they listen to too much and people telling them how to react. And, you know, 3.2%, you know, if you had a check at 2,000 a month, you know, it's 60 some bucks a month, and then some of that gets eaten up with the increase in the Part B.

And there's all kinds of ways to get negative about this. And, you know, I just, I want to look at it from the positive is we've got this retirement check that comes from the government that we paid into the government. So it's not like it's welfare or anything else. But it's nice to have and a lot of retirees, you know, count on it, and it's getting increased by inflation. So what I want to shift to talking about is that every year they, they make increases in numbers as they relate to Social Security. And I want to talk about the Social Security earnings test.

And so what in the world is that? Well, it's, it's if you take your Social Security before full retirement age, which is 67, for people born in 1960 or after, and it's a little short of 67. Like for me, I was born in 1958. So my full retirement age would be 66 and eight months, pretty close to 70. And so if I take my Social Security anytime before that, there is a limit to how much I can earn from work. Okay.

Am I making sense to you? Yeah, absolutely. It was, that's a big deal, right? And a lot of people do not understand is that if they are still working and they take their Social Security, there's all sorts of implications. So this test is a really huge and a wonderful thing that I loved about the video that I thought, you know, is a, is a is a great test that everybody ought to take before they ever begin to think about taking their Social Security early.

Well, it is. And so in 2023, you could make, you could take Social Security early, be collecting your check at any point before 67. And you could earn from a job $21,240 a year.

So if you make no more than that, and your earnings from a job, you can just collect your full Social Security check, and then you get your earnings from the job. But if you make more than that, which, you know, we both know of some examples of some people who have done this, where they, they just, it was too tempting and too much needed to just take that money at 62 that they went for it. And then they make 30 or 40,000 or 50,000 or 60,000 a year. And, you know, it's more than the 21 to 40. And so they end up having to give some of the Social Security back.

Okay. And that's a real penalty that if you, you took a lower amount, and now, because you're making too much from a job, you got to give some of it back. Now, this number does not include investment earnings.

So, you know, or pensions. So if you retire early, take your Social Security, and then you've got investment money, IRA money, and you're making distributions from that, or you have a pension, none of that counts for this earnings from work number. It really has to be on a W-2.

It's a, you know, it's job earnings, or it has to be on a 1099 where you're self-employed, and the net amount. So they let you make a little bit, but you can't make a lot. And that number increased from 21,240 in 2023 to next year in 2024, it's going to be 22,320.

So it went up by about 1100 bucks, which isn't much. And so, you know, I just want you to think about that, that that's out there. If you're thinking about taking your Social Security early, and certainly get in touch with us, if we want to run some numbers by before you take your Social Security.

I can tell you another place that this, go ahead. No, I was just going to say, you know, a lot of people think, well, if I, you know, take it when I'm 62, you know, that's going to be another, you know, in the case of most people, another five years that I'm going to have those checks. And that's going to add up, you know, to a lot of money that I'm going to miss out on that if I don't take it. And, you know, again, I think they're missing out on the multiplication factor, right?

Right. I love the way you put it about annuities, which Social Security in its own way is kind of an annuity, that when that money is sitting in there, it's baking, and it's baking, it's still your money. And it's getting more interest in it. And it's increasing the value, which will increase the payout substantially. And so it, you know, it really breaks my heart, some of the people I know that took theirs early. And because that it's going to be that lower check for the rest of their life, and not only for the rest of their life, but in the case where they're married, like I am, and married to somebody that's significantly younger than them, then they would be getting my large, my wife would be getting my larger check for a long, long time, probably after I'm gone. And now she won't if I've limited it by taking it early, right? Oh, yeah.

Big, big factor. And then there is a little bit of a break that if you in the if you retire and start collecting your Social Security check in the year you reach full retirement age. So you know, like if you're 65 or 66 now, or maybe you're going to be 65.

Or you're actually going to be 66 in 2024. And you're within a year of your full retirement age, then you have a higher threshold, you could, you can make next year up to $59,250 in your earnings from work, and still take your Social Security. So we know and you need to memorize all these numbers if you're listening on the radio, but I, I, you know, I'm just trying to give it to you that there's a there's a Social Security earnings test if you take it really anytime before 67. And to calculate that you're only dealing with earnings from work. It's not pensions, it's not extra, it's not IRA distributions, it's not investment earnings.

It's only work earnings. So that will discourage some people hopefully, and it'll force them to delay their Social Security. I want to bring up another point is that I've had several clients, a lot of school teachers will retire in their early 60s, mid 60s, but they're before full retirement age. They have a pension and they've figured it out and they just want out of there. They've, they've had it, you know, and they want to get on with their life and retire. And so they'll take their Social Security at 62 or 63 right when they retire. And then they want to go back to work after a while of sitting home, then they start thinking, well, teaching wasn't so bad. I get the summers off and, you know, maybe the school calls them back as they need them. And then they go back to work and they get in this situation. And if all of that happens within a year of when your Social Security started, you can do a do over.

So we've got another episode on that. But you can, you can always redo your Social Security decision if it's within a year. Yeah. And you don't have to pay the money you got back, but I can help you with that.

Right. And interestingly, the more I guess my ear is tuned to these kinds of things I hear more and more, it's unbelievable to me how many people retire, like you talked about, 62, 63, and then somebody calls them for whatever reason, they come back and, oh my goodness, the ramifications of all that when it comes to your Social Security and the give back, and then you've limited your check for all these things. So, you know, that's a really prayer issue to me. It's like, God, what is the vision for my life?

Where do we go from here? Because retirement, when people just sit around and they do nothing, isn't what all is cracked up to be, right Hans? Well, yeah.

A lot of people miss work. And, you know, I'm retirement age and I love what I do. So are you. And I don't even really have a timeline on my thing.

God does, but I don't. And I'm going to just keep on trucking as long as I'm relevant. Now, I want to, I want to, I want everybody to think about this a little bit is if you want to retire early, you know, go for it. But generally people that are retiring early, unless they get laid off or that kind of thing, they generally have some 401k IRA money of which they don't want to withdraw anything. I mean, a lot of these people are like, man, I don't want to touch that because I'll have to pay taxes. And yet they take their social security early.

And then once that's gone by a year, there's no undoing that. And what we do for a lot of these people when they come in to see us is we just take a smaller, smallish piece of their IRA 401k. And we put it in this annuity that creates something just for five years or six years or seven years. We could make it for life, but it typically keeps the cost down to just buy a five year check. And when they do that with an immediate annuity, they're going to be lowering the value in their IRA 401k. And then creating a check for themselves that is going to stop right at the point they're going to start taking social security, what's the five years out, seven years out or whatever it is. And this accomplishes a number of things that we want to start lowering those IRA balances because we don't want to just build them and build them and build them till we're 73. And then we got a tax bomb problem. So it accomplishes a number of things.

And look upon look at that IRA money if you have it in a 401k as a source to pay yourself a check and it is going to give you the choice to delay social security. Critical advice for people that are in that situation, I would say. Yeah. And I want to encourage people that listen to us on the radio to go over to our YouTube channel, which is Cardinal Advisors, and it's O-R-S, A-D-V-I-S O-R-S. Or you could just type into the YouTube search Hans Schile, and it's just going to come right up. And we've got videos for every radio show we have, there's a corresponding video.

Yeah, that's awesome. And we always want to remind you that the show itself is brought to you by cardinalguide.com. And there at Cardinal Guide are all sorts of resources, including the Seven Worries tabs, which today's show, Social Security is right there with all that information as Hans just described, as well as the Contact Hans or Tom page, which is huge. And again, it's cardinalguide.com with Hans's book, The Complete Cardinal Guide to Planning for and Living in Retirement. Great show, Hans.

Thank you. The opinions expressed by Hans Schile 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 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 Whale is designed to provide accurate and authoritative information with regard to the subject covered. 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. We hope you enjoyed Finishing Whale, 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 Whale radio show on the website and send us a word. Once again, that's cardinalguide.com. Cardinalguide.com. This is the Truth Network.