Take Social Security Early or Wait Until 70?

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Share it. But most of all, thank you for listening and for choosing the Truth Podcast Network. Medicare, IRAs, 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. Today's show is Delay Social Security?

Take it early or wait until you're 70. Well, as I was thinking about this, I couldn't help but think the whole idea of the best is yet to come. As you think of this, you know, and again, there's all sorts of scenarios we will talk about today on all those that we just talked about. But there is this beautiful thing about, you know, when you think about what Jesus said at the end of the Last Supper, it's actually in Matthew 26, 29, you know, he said, I won't drink of this cup again until I drink of it together with you in my kingdom. And what he was telling you there is about the fourth cup in the Last Supper that was a Passover Seder. And so that fourth cup is this idea of, he's going to take you with him and the best is yet to come, right?

We're going to get to be with Jesus. I used to hear it said that, you know, you want to save your fork, you know, because dessert's coming, right? And there is the idea. And so a lot of if you're possible, if it's possible to do that, if you can save your fork when it comes to Social Security, you know, it's a pretty good plan, right Hans? Oh, it is.

Yeah. You know, right off the bat here, I have some clients come to me say, I know you don't like this, but I've already taken my Social Security, but I want your help with everything else. And look, I'm not against taking your Social Security early.

I mean, I just and for those of you that did it, you know, you come to me and I'm just here to support you and to try to figure out and understand your reasons why you did it. But if it's already done, and then we're just going to put that on the sheet of income, and then we're going to look at how we can make the rest of your money work best for you throughout a retirement. Now, I'm just looking in this video, we decided to just give those of you that are number crunchers the video. And so for people born that are age 62, or they're born in 1960 and a half, and they wouldn't be 62 yet, but in any case, if they took their Social Security at 62, they get a 30% reduction, or they'd get 70% of what they otherwise would have gotten at full retirement. So that means if somebody had a Social Security check of $2,000 coming to them at full retirement, which is age 67, but they chose to take it at 62, they're going to get 1200 bucks a month for them the rest of their life. And granted, they're going to collect their Social Security for five extra years over the person that waited until full retirement at 67.

But there's a bunch of caveats in that. But nonetheless, it's a pretty big penalty for taking it early. Now, if you go to people born in 1954 and before, their full retirement age was 66. And they took a 25% hit, or in other words, they got 75% of their Social Security. So it's different the amount you give up for taking it at 62, depending on the year you were born. The younger you are, the more you give up by taking it at 62.

But that's just the beginning of it. That's the full retirement age benefit. So let's go back to the 1960 and after birthdays, is this person waits beyond 67, and they wait till age 70, they're getting 24% extra by waiting until 70. So if you look at a 30% reduction at 62 and compare it to a 24% bonus or extra amount for the rest of their life, it's huge, the numbers.

Now, your days and my days and everyone walking the earth, our days are numbered. And the Social Security administration knows that by being able to start somebody eight years later, they know that they're going to pay out for less years than they otherwise would have. But even with that, you start looking at the amount you gain, and the things you can do in those years before Social Security, I think you ought to at least take a look at it.

Yeah, I remember all too well. When I first started doing this show, one of the places I discovered that I was the most ignorant in on this whole idea of Social Security, I just figured that, oh, I don't guess I'll ever get much from that program, whatever it would be. And I never looked at my statement. I had no idea what it was.

And you had me go run my statement. And it just absolutely blew my mind. And I don't know what I was at that point. Maybe I was 63 or 64. I was over 62.

I know that. And when I ran that statement, I was like, oh, my goodness, look at all this money. That was my first shock. And that'll be coming for the rest of my life every single month, that kind of check.

And that check will not be taxed. Oh, my goodness, look at the size of this. And then if I wait, and I wait, it was like a kid in a candy store. Well, yeah, and you had me sitting right beside you, you know, egging you on because a lot of times people look at that. And then they have a bunch of questions. And, you know, you had questions at that point.

But you had the person that could answer them sitting right beside you. And so I'm going to put this in simpler terms is, first of all, you were impressed just by the flat amount. It was that you could get now that you could get at 66 and a half that you could get at 70.

So, yeah, some people are some people aren't. But then we start working off of that number and say by waiting, how much more am I going to get? Well, between 62 and 67, it has an effective interest rate built into the thing of 6%.

So now it would take me several shows to qualify that with numbers, but just you're going to have to trust me on that one. It has the same effect of getting 6% interest on your money. And then when you go from 67 to 70, it has the effect of 8% interest on your money.

Okay? That's a lot to be just guaranteed. And now, then some people are going to say, Well, what if I die? Well, we're all going to die. So what if I die young? Okay, we're not all going to die young.

What happens to that money? Well, if you're a single person, that's an excellent point is if you have a perception that you're not going to live a long life, you're fairly well convinced of it. Well, then I would say forgo those percentages, take the checks. If you think you're going to be gone in your 70s, especially your early 70s, go ahead and take the check now give up the extra to getting you know, the old bird in the hand is better than two in the bush.

But stranger things have happened to the people that were confirmed they were going to be dead in 10 years are still living 20 or 30 years later. The other issue is the spouse. If you're the higher earner, well, then, you know, if you pass away, before you reach, you know, 80 or so or in your 70s, but your spouse lives on for several years past there, your spouse is going to get your check after your death.

And theirs is going to go away. So you've got a life insurance factor in here. Yeah, and that was a big, big part for me, because my wife seven years younger than I am. So, you know, it becomes really likely that, you know, whatever it is, you know, at the point in time you start your social security, that's going to be what your social security, that's going to be what your wife will be using, you know, and as in my case, I was the higher earner. And so, you know, that's the long term plan of, you know, a part of what you exactly what you talked about it is life insurance.

Well, it is. And so, if there's two checks, we've got a couple, we're generally going to wait to take the higher earner, if it's possible. And then the lower earner, even if it's not that much lower, we're going to recommend they take it at full retirement age.

And there's a, there's some reasons behind that. And it really boils down to when the first one dies, the smaller check stops. So why wait to be getting checks for the lower check?

For the lower check? Why wait years? Exactly. Okay, now, you know, you can make an election to take your social security every month, starting at 62. So you can pick any month between 62 and 70. And so effectively, that's a decision that you could make every month, I mean, that's eight years, times 12 months, that's like 96 decisions, something like that. And I certainly hope everybody wouldn't evaluate this every month. But we have an oftentimes, we're sitting here looking at like for 1960 birthdays, 70% of your check at 62, 100% of your check at 67, and 124% of your check at age 70. And the reality is, every month in between all those dates, there's a little bit, there's a little reward for waiting every single month. And it, you know, it's interpolated over all those years.

Yeah, absolutely. Well, this'd be a good point to point out that this show is brought to you by Cardinal Guide, cardinalguide.com. And there you're going to find the seven worries tab in this particular worry would be social security.

And when you look at that, you're going to see a video. If you look at the seven worries tab at cardinalguide.com, you're going to see these videos as well as the radio shows that we're doing under the resources tab. And the same idea delay social security, take it early or wait until you're 70. With show notes, all sorts of examples, all sorts of stuff is there as well, under that whole idea of social security at cardinalguide.com. And of course, to, you know, contact us page for you can get ahold of Hans, or Tom, and Hans's book, The Complete Cardinal Guide to Planning for and Living in Retirement. And so we want to remind you of how easy it is to get all those resources. And we'll have so much more of when to take your social security now, or, you know, when you're 70.

We'll be right back. 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, should you delay your social security, take it early or wait until you're 70.

And so we talked a lot about the numbers in the first half of the show, but it's amazing how many stories there are that go along with it, Hans. Well, let's start with if you take it before full retirement age, which for people 1960 and after is 67, you know, 1959 birthdays is 66 and 10 months. So we'll just work with 67, or pretty close thereof is full retirement age. And so if you choose to take it early, you need to be really careful that you don't make more than 21,000 and change from a job.

Maybe it's gotten up to 22,000. Because if you do, you're going to have to give some of your social security back. And I've known several people that they get to be 62, they've had some unfortunate circumstances. Maybe their hours were cut back to their job. Maybe they lost their regular job. And they got to somewhere where they're making less income, but they have a job. And then they go ahead and start their social security, because they just need the money.

And then they try to put the two of those together. And it's disastrous, because if you're, you know, if you're 62, and you started what would have been a $3,000 a month social security check, but you started it, and you gave up 900 bucks a month of it, and you started at 2100 a month, and then you're collecting that. And then you have a job where you make $40,000 or $50,000 a year. It's just disastrous, because you've forever lowered your social security check. And now you're having to give some of it back, because you make too much money from a job. I mean, I don't know how much more direct I have to be about that, is if you take it early, you need to do a real clear assessment of what are of what are your job prospects between now and 67.

And if you think you might go back to work, it's just dangerous, because you're lowering your social security check for life. And yet, you may have a period when you're working extra, or you're working or you're back at work, you're actually given some of the fat. Right. That's it. I had a situation with a dear friend, and later on, you know, even a family member that did that very thing. And their reasoning, as I recall at the time, was that, you know, I'm going to go ahead and take it now, because who knows that there's going to be any money in the end of it.

We've had many, many shows on that. But, you know, I want to make sure I get mine. So they sign up. So while they're still at work, not realizing that, oh, my goodness, you know, not only did you like you said, it lowered the amount, but what really shocked them was then when all of a sudden they got the bill to give the money back, because they pay too much money.

And that's real. I mean, that happens. And it's like, man, you know, they messed themselves up two ways, not just obviously in clearly lowering their social security for the rest of their life, but also in counting on income that they never got. Well, yeah, this comes into play with widows as well. I mean, with new widows is that they'll get in touch with me and they want my advice and they've just lost their husband or they've just lost their wife. And they're under 67.

Perhaps they're just like 60 or 62 or 64. And their spouse, their husband, their wife had a larger income and a larger track record. So they're entitled to the social security, but yet they're still working themselves. And so they want to get their spouse's social security and collect their money from their job, which they kind of feel like they ought to do and they want to do. And that's disastrous, too, because you're essentially filing your spouse benefit early, because you're not 67 yet.

Then you're making the money from work and all the money you collect off of the spouse check, the spouse check, you got to give some of it back because of your work income. So that's not good. Yeah.

Go ahead. No, I was just recalling the time that, or in several cases, I've known of people that, you know, they wanted to retire nurses or teachers, somebody that, you know, they're like, man, I've done this all I wanted to do. They didn't think about, and they went ahead and filed for their social security. Well, about 18 months into it, this retirement, when I'm not doing nothing, that's nowhere near as fun as when I was doing something and they go back to doing it again.

And then how they have this problem. Absolutely. There is a way to spend your social security. And again, you want to get in touch with me.

So those of you, especially your regular listeners, I'll help you, you know, things happen to people. And so I'm not saying in any of these situations, you absolutely should do this. You shouldn't do everything situational, but you can suspend your social security, go back to work. And then it'll be more when you started up again, after you stopped working, or you can start it up again, when you reach full retirement age, there's all kinds of options. We, you know, we have widows that are still working that reach a point where they're at full retirement age. But they still they want to let their benefit grow all the way till 70. And they want to take their spouse's benefit. And that's a case where they've got a bigger benefit than their deceased spouse.

And it gets quite complicated. But you know, what you want to do is you want to delay as long as you possibly can. And you certainly want to try to make it to full retirement age if you're still working, because that's just a lethal combination.

Right. Now, there's such a thing as the give back or the payback. So if what you just described earlier, Robbie, where you have somebody who's age, you know, I don't 63, and they were a teacher, and they just had had it with teaching, they gave up, they started their social security, they start their retirement. And then within a year, they decided to go back to work. Because it's a 12, you can, you can go to social security, you can only do this once, it has to be 12 months or less. And you can do a do over. And you can file an application with social security, I can help you do it. And then you're going to have to pay back all the social security you collected. But then you get an opportunity to just file whenever you want at full retirement age or age 70. And so that's an option for people that go back to work, that took it early, if it happens within a year of the remorse thing, where they want to start over, they want to go back to work. Yeah, that's going to be, you know, again, something that I would get some help with.

I wouldn't try that one on your own at home. But it's really nice to know, because you may have that happen in your own life, or you could know somebody where it's facing that kind of situation to know, Oh, I heard on finishing well, well, that's a good time to get up with somebody at finishing. Because there's forms all sorts of interesting ways that these are things you don't want to mess up that that I can see. When it comes to social security, and Medicare and Medicaid, they got penalties and things that just seem to come from nowhere. Well, yeah, and so now we take somebody who is a widow, but they're not working. They're under full retirement age.

So maybe they're 63, 64, 62. They're entitled to a social security check from their deceased spouse. And yet they have a pretty substantial check coming to them on their own. And there's many times the Social Security Office will give you wrong information about this. They'll say no, if you start taking a check now, you got to take your check because it's bigger.

And you actually don't. So you can you can file for the deceased spouse check and collect that now and it'll get whacked a little bit because you're doing it before your full retirement age. And then you can allow your benefit to grow all the way to 70.

And then at age 70, you can flip them. Okay. And every time I talk about this, I have people correct me and they say, Oh, you used to be able to do that.

You can't do that anymore. I'd say, you know, I get straight on my facts before I start correct people, if I were you, because it actually, for there's an exception for widows and widowers to do that very thing. Yeah, because it's a it's a complicated thing. You know, for that, in any case of a widow, that all of a sudden has lost this income.

And, you know, if there's ever a point where that, you know, they needed help, because it's complicated, you know, right there it is. Well, and so I want to save my best point for last here is just to talk about, you know, if you need more convincing to try to delay your social security check, as long as you possibly can, at least, if you're in a couple, the larger the two, I'm just going to refer you to somebody that you know closely, that's in their 80s now, or even better, their 90s, and they still have their wits about, okay. And I want you to go sit down with them. And I want you to ask them how much their social security check is.

Okay. And see if they know. And I'm going to bet you that they don't know too many other financial numbers, but they know that. And they know when it goes into the bank, because it's really the only check that a lot of those people receive. And even if they have lots of other money, just go talk to them. Yeah, I'm suggesting you do that just to get a sense of how important your social security check is going to be to you when you're 85 or 90.

Okay. It just, it's a sense of security. You don't know what's going to happen with your investments and everything in between now and then.

And I hope they do very well. Yeah, a lot of those folks, if you sit down and talk to them, and maybe you've already done this, is that they have, they have a sense that they're about ready to run out of money, and they have their money's going to be gone, and it's going to be spent. And there is some confidence in just having that social security check.

And so you want to make that for your future self as big as you possibly can. The resources and all that easy enough to get, you go to my, excuse me, the Cardinal Guide, cardinalguide.com is Hans's website. And there you're going to see the seven worries tab, this one being social security, you talk about a place where there are resources like oh my goodness, right there, all the shows, videos, all on this subject, as well as Hans's book, The Complete Cardinal Guide to Planning, Foreign Living and Retirement. And again, how to contact Hans, Tom, it's right there at the contact page at cardinalguide.com. And so great show Hans, as always.

Well, thank you and God bless you. The opinions expressed by Hans Scheil and guests on this show are their own and do not reflect the opinions of this radio station. All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such.

Any statements or opinions are subject to change without notice. Investments involve risk and unless otherwise stated are not guaranteed. Past performance cannot be used as an indicator to determine future results. Any strategies mentioned may not be suitable for everyone. Information expressed does not take into account 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.