Maximize Social Security Benefits

You pay into the system your whole working life, but are you taking steps to maximize your Social Security benefits?

I am Rob West. Most people don't save enough to live on their retirement investments alone and depend heavily on Social Security. Many don't realize that the level of their benefits isn't set in stone. I'll give you some ways to maximize yours, then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is MoneyWise Live, biblical wisdom for your financial decisions. Well, there's no question that Social Security benefits have become far more important to the average retiree than was ever intended. But many workers fail to make the most of them. Retirees are far more dependent today on a system that was only designed to provide 40% of retirement income. One reason for that is due to the changing landscape of retirement over the years. In 1935, when the program was introduced, pensions were common and provided guaranteed retirement income for as long as you lived. One reason employers no longer provide pensions is because the average lifespan of Americans has increased considerably over the years. In 1935, it was around 60 years.

Today, it's more like 79 years. The result is Americans now need many more years of retirement income. And studies show that if workers were allowed to conservatively invest the same amount of money they contribute to Social Security, they'd be far ahead at retirement.

But that's not the case. Most workers are bound into the Social Security system. And that means you need to make the most of your potential Social Security benefits.

I say potential because decisions you make can raise or lower those benefits. There are actually many things you can do. Some of them are fairly complex and only apply to certain people.

But here are five that everyone should be able to do. First, make sure you work a full 35 years. That's because the Social Security Administration uses your highest 35 years of earnings to determine your level of benefits. Any years less than 35 count as zeros and lower your benefits. If you work more than 35 years, each additional year of higher earnings replaces one of lower earnings, and the net result is a higher monthly benefit. The second tip is to actually work more as you near retirement. After age 60, your earnings count more and they have a greater positive impact on your benefits. Sometimes people scale back work as they near retirement, but that can lower your benefits.

So if possible, work more hours after age 60 until you retire, not fewer. Number three, we talk about a lot, delay benefits until you reach at least your full retirement age, which for most people working today is 66 or 67. Every year that you delay benefits beyond your full retirement age increases your benefits by about 8%. And every year after age 62 that you elect to receive benefits, but before your full retirement age will cost you 8% in benefits. Let's say you're eligible to receive $2,000 a month at age 66. By waiting until age 70 to receive benefits, that monthly amount would increase to $2,640, a 32% gain.

Obviously you have to live long enough to get the increase, but remember people are living much longer these days. Number four is for married couples, delay your benefits while claiming those of your spouse. If you and your spouse both work and have reached full retirement age, claim spousal benefits, but let the benefits based on your own work record continue to grow until you reach age 70. And tip number five is watch out for taxes on your Social Security benefits.

If you continue to work after you begin receiving benefits, anywhere from 50 to 85% of those benefits could be counted as taxable income. The IRS uses a fairly complicated formula to determine what percentage of your Social Security income is taxable, but in simple terms, the more you can spread out income from other sources, the better off you'll be. It's also a good idea to consult with a financial advisor on the best ways to minimize your tax liability during retirement. A certified kingdom advisor can help you do that, and you can find one by going to moneywise.org and clicking find a CKA. So those are some things you can do to maximize your Social Security benefits.

But remember, Social Security is a very poor substitute for investing as much as you can in a qualified retirement plan like a 401K or IRA. All right, your calls are next. 800-525-7000. I'm Rob West, and we're just getting started on MoneyWise Live. Stick around. Great to have you with us today on MoneyWise Live. We're so glad you've tuned in. This is where we apply God's wisdom to your financial decisions and choices.

The lines are nearly full. We've got two open at 800-525-7000 for whatever is on your mind today. We'd love to hear from you. Let's dive in. We'll head to Florida first.

Ingrid, you're our first caller. Go right ahead. Hi, how are you? Very well, thanks.

Good, good. Yes, so I'm calling because I have a 401K, and it's just been growing over the years and fluctuate, but not too drastically. However, I dropped like 20 grand. So I had like a little over $60,000, and then when I checked again, it was a little over $40,000.

I'm like, oh my gosh. So I spoke to my friends, and then you can take it out or roll it over without penalty. But I just don't understand the whole rollover, and I guess put it in a Ross account, IRA. Yeah, I don't really have knowledge about these things, sadly. Sure, sure.

Well, there's two different pieces to this. There's the type of account you have and where it's housed, who is the custodian, and then there's the investments inside it. So currently, it's in a 401K with, I assume, a previous employer, is that right? Yes.

Okay, yeah. So you've moved on, separated from the company, and at that point, you have the opportunity to either leave it there or roll it out to an IRA, a traditional IRA, not a Roth. And essentially, what that does is it puts it in a like-titled account, similar. One's a 401K, one's an IRA, but they're both tax-deferred retirement accounts. So what that means is the contributions for both types of accounts go in pre-tax. So you had salary deferral prior to taxes being taken out, going into that 401K. That's the same way you contribute to an IRA. So you have the ability to move the money from the 401K to the IRA, and there's not any tax consequences there. The question is, what are the right investments for you, whether you stay in the 401K with your previous employer or move it to the IRA?

And that's going to be a function of the purpose of the money, which by virtue of it being in a tax-deferred account, it's for retirement. And then secondly, what is your age? That's going to tell us your time horizon, and then your risk tolerance and objectives.

What are you trying to accomplish and how much risk do you want to take to do that? What is your age, Ingrid, if you don't mind me asking? I just turned 50. Okay. Congratulations. That's great.

Happy birthday. And then are you still working? Did you just move to another employer? Well, the thing is, I've been with this employer for three years and we're like our own boss sort of, so I don't have that same employer. So this employer, he said, well, I'm not sure if I want to do that. So my 401K has just been sitting there and fluctuating and so forth without an employer.

All right. And how do you get paid? W-2 income or 1099? W-2.

W-2. Okay. But there is no retirement plan available to you at work? Not at this, no. Okay. All right.

Yeah. So if you had another 401K, you could roll this into that new 401K. But in this case, you'd likely want to just go ahead and roll it out to an IRA. And then the question is, how do you keep it invested in such a way that you have the ability to recoup your losses? It sounds like you're fairly aggressive in terms of this is probably all in stock, mutual funds, probably not a whole lot of bonds in there.

And that's okay. As you get closer and closer to retirement, you need to get more conservative. But I think given that you've got perhaps 15 years or more until you're thinking about what the next season of your life looks like, and perhaps at some point beyond that, you're no longer working for pay, maybe you redirect your time and energy to whatever God has for you next.

But that's a long runway. And so I think probably what's best is to leave this right here, leave it allocated in the current investments, and then allow it to come back, which could take a year or so. I mean, we're still wondering whether we're going to slip into a recession here in the US. But the reality is the stock market will recover before the economy.

And we had a 12 year raging bull market where certainly, we have some headwinds and some challenges going on right now. But if you go ahead and sell liquidate those investments, you're essentially locking in those losses without the opportunity to allow that to come back. And given your long time horizon here, even at age 50, you know, I'd love to see you kind of wait this out and let it come back and then ask the question, okay, what is the right investment allocation for me, let's say over the next 13 years, if it takes a couple of years to get back to where you were, you know, how can I best be positioned between now and 65, let's say, or 67, so that I can preserve what I have, take some risk to grow it, but perhaps not experience the full downside if we were to get into another really difficult economy, similar to what we are right now. The only other option would be you go ahead and roll it to the IRA, it would liquidate all those investments, so it would come over as cash, and then I would immediately redeploy it into an appropriate investment strategy, again, that gets you into the market, even if we've got some more downside from here, that gives you the opportunity to let it recover.

And I think that's really the most important thing. Then the question would just be, how do you select those investments? And you'd have really a couple of choices. One is, you could do it yourself, and I'd probably use some index funds where you capture maybe the broad market, so you're capturing the big moves of the market over time. Second is what's called a robo-advisor, you could use Betterment or the Schwab Intelligent Portfolios, it would create a low-cost, actively managed through index funds, investment strategy that could be very effective for you, fairly hands-off and automated. And then the third option is you find an advisor to work with you to actually make those investment decisions for you.

The only challenge there is you're a little bit below what a typical advisor's minimum would be at about $40,000. So, I think at this point I'd either stay with what you got and let it recover, or roll out to an IRA and probably look to a robo-advisor, like the two that I mentioned, to get you reinvested in a way that allows you to capture the recovery of the market whenever that occurs over the next year or so. Okay, I definitely feel comfortable with waiting, so I'll just watch and see how things go, and then when God blesses me and puts it where it needs to be, then I'll probably just roll it over. Okay, I think that's great. Well, listen, if we can help you again along the way, don't hesitate to reach out, Ingrid, and I appreciate you checking in with us today.

God bless you. Folks, a quick email that came in to us. Actually, this was posted in our MoneyWise community, and if you'd like to post in our MoneyWise community, you can do that on our website at MoneyWise.org. Just click the community button, or you can access the MoneyWise community in the MoneyWise app. Folks are posting questions every day.

Others in the MoneyWise community are answering those, plus our coaches, and then a few make their way onto the air. Emily writes, should I consolidate my credit cards using a signature loan? The interest is so much lower, and Emily, unfortunately, it's not a good idea to pay off debt with more debt. It does solve the immediate problem, but not the underlying issue, which is typically overspending, and therefore the debt returns.

In fact, you'd probably end up with both. This is not a good solution in the sense that it also, even though the interest rate's lower, you'll typically extend the term, and I don't like that as well. Instead, what I'd look at is perhaps, if it's under 4,000 in credit card debt, use the snowball method where you pay the minimums on all, and then take all your margin and go smallest to largest balance, paying them off one at a time. Or if it's more than 4,000 in credit card debt, my preferred approach is debt management, where you get the interest rates down and pay through a credit counseling agency.

I'd call Christian Credit Counselors, or you can catch them online at ChristianCreditCounselors.org. They can help you. We'll be right back with much more Money Wise Live around the corner. Stay with us.

So delighted to have you with us today on Money Wise Live, where we apply God's wisdom to your financial decisions and choices. I'm Rob West. We've got some great questions coming up. Let's head right back to the phones.

York Springs, Pennsylvania. Dave, you're next on the program, sir. Go ahead. How are you today?

I'm great, thanks. Thanks for taking my call. Sure. So my question is, my goal is to be debt-free like everybody else, I believe, and I currently owe around $50,000 on my mortgage, and I have $60,000, $67,000 invested that I'm thinking about pulling out to pay my house off. I'm working, and I have a 401 where I'm working, so I'm just wondering if it's a wise decision to pull that money and be debt-free.

Yeah. Well, I can certainly appreciate that. You know, we've got these competing priorities. You want to be debt-free. We all should strive toward being debt-free, including our home over time, as we're able. But we also want to grow our assets for the future. You know, those two things next to each other, both are good.

The question is, how do we wrestle through the priority order of those to make sure that we're taking full advantage of both opportunities? The $60,000 that's invested, Dave, what type of account is that in? It was 401s that rolled over into like mutuals and stuff.

So it's probably in an IRA? Yes. Yes. Okay.

Yeah, that's the type of account. Very good. And what is your age? 60. 60 years old.

Okay. And would you say that you're on track for retirement with what you've accumulated in your 401k thus far and what you expect it to grow to between now and retirement based on your ongoing contributions? I don't know that my 401 is really going to be enough when I retire, but my wife has investment also and she does not currently work.

I think that would be a good exercise for you. Perhaps you could find a financial planner just to work with you on an hourly basis just to help you do some retirement planning. I think it would be a helpful exercise for you to go through and say, okay, what would we expect our lifestyle to look like in retirement whenever that is? And how much would we need on a monthly basis? How much can we expect to get from Social Security? Do we have any other known income sources that we'll have access to at that time? And if not, what would we need these portfolios, these retirement accounts to grow to so that we could take a reasonable withdrawal rate, maintain the principal balance and use that income, so to speak, from those portfolios to supplement Social Security to make up what our monthly need is going to be?

Typically that's somewhere around 70 to 80% of your pre-retirement income, especially if the house is paid off, the kids are off the payroll and you're not paying for life insurance anymore and you're not commuting to work. I mean, things like that bring your expenses down, but that would help you to know what is our ultimate goal with this retirement savings and are we on track based on what we are going to contribute between now and retirement and what we might allow for a reasonable investment gain between now and then? Or are we ahead? Maybe we've over-accumulated.

Or are we behind and we need to play some catch-up? Unless the Lord has given you all a real conviction to be debt-free, and if so, I'd say there's not even a question here, just pay off the mortgage. But apart from that, I kind of like the idea of rather than you pulling this $60,000 out and just paying off the house right away, I kind of like the idea of you letting what I suspect is some unrealized losses that you've taken in that account, just given what the market's done this year, and let that recover over the balance of the next year or two. And this IRA continue to grow on a tax-deferred basis as another asset that can be compounding to complement your 401k and her retirement account as well, so that you've got all these assets to pull from in retirement. And then perhaps if you can, you have your mortgage company run an amortization schedule that says here's what you would need to send every year, perhaps even a bit more than just the regular scheduled monthly payment, so that you can sync up the payoff of the mortgage with your expected retirement date. And what that would do is kind of give you the best of both worlds. As you're entering retirement, the house is paid off and that largest expense in your budget is now out of the equation which brings your monthly need down significantly and it allows you to continue to grow this IRA so that it can recover if it's had some losses and then compound on a tax-deferred basis between now and retirement.

I like that as kind of a best case scenario, but that assumes that you have the ability to send more than your scheduled monthly payment out of your monthly cash flow to get that more mortgage paid off in line with your retirement. And it also assumes that you don't really just have an absolute conviction that we need to be debt-free as soon as possible. Does that make sense?

Yes, it does. And you hit it right on the head there with the money that we've lost in our investments is what's making us think this way right now. Yeah, yeah. And that's common. A lot of folks have already made the decision to pull out and go to cash. Unfortunately, that's the typical emotional response when we see this even though we can look back over the last 75 years and say, yeah, there are these cycles and they happen every decade on average and there are bull markets and there are bear markets and we came off of a 12-year bull market and now we're slipping potentially into a recession and the market is under a good bit of pressure and we've seen some downside and all of a sudden we kind of react emotionally thinking, well, at least I know that I'm guaranteed the rate of return equal to the interest rate of the mortgage I'm paying off and I'd kind of like to own my home free and clear. And yet if we go back, we know that number one, we're losing purchasing power. So the best way to overcome that is to be in high quality assets like good quality companies here in the United States growing your wealth over time even though there's going to be these bumps along the way that could last even a couple of years. So I think if it were me, given what you've sustained, I'd probably say, listen, time is on our side.

Let's ride this out. When we get beyond this and recover to where we were, then maybe we start to get more conservative with that 60,000 but at least it's still invested and it has the potential to grow and then let's out of current cash flow by limiting our lifestyle, let's try to sync up the payoff of the mortgage with our expected retirement date. I think that would give you the best of both worlds, but you guys pray about it. At the end of the day, you want to pay off that mortgage?

Do it and don't look back. Dave, thanks for your call. We'll be right back on MoneyWise Live. Great to have you with us today on MoneyWise Live, biblical wisdom for your financial decisions. We started out today by talking about social security and perhaps as you're managing your social security income, you'd also like some financial counsel locally in your area to help with either investing or estate planning needs. Well, consider finding a local certified kingdom advisor in your area. These financial, legal and accounting professionals have completed a rigorous certification program to give biblically wise financial advice as a part of their practice. They've met high standards and character and competence and experience and you can find a local CKA professional by going to MoneyWise.org and clicking Find a CKA on the homepage.

That's MoneyWise.org. All right, back to the phones we go. Tulsa, Oklahoma. Doug, you're next on the program, sir. Go ahead.

Hi, Rob. My question is regarding a debt consolidation loan. I've got $29,000 total debt and I've just been approved for a $35,000 loan. The payment would be $540 monthly. That's with a 10% interest rate on the loan and it also includes my property taxes, say, home equity debt consolidation loan. My debt, I've got $23,000 in credit cards and then $6,000 in the vehicle. So most of the debt, the interest rate is much higher and I just wanted to check and see what your thoughts were.

Yeah, I'm not a big fan of that approach, Doug. Where did the credit card debt come from? Was it just kind of overspending over a period of time or was there one single event that led to that? Yes, over the course of 10 years or so, certain events and then also overspending. Okay, yeah. And where are you at now? Have you all corrected that issue? Are you living on a budget and making sure you don't continue to rack up debt?

Yes, yes. I'm actually in quite a bit of a surplus, a couple thousand dollar surplus every month. So I could pay it down relatively quickly but with the lower interest rate on the loan, I didn't know if that was a good idea or not.

Yeah, the reason I don't like it is several. Number one, typically it takes the pressure off which causes you not to treat the underlying issue. You're just treating the symptom, the underlying issue being overspending and then six months later I get a call that, well, they've got the consolidation loan down and guess what? The credit card debt is back.

But even if you can overcome that and you've got yourself in a surplus situation and you're living on a budget, there's a couple of other issues. Number one is you're taking what is unsecured debt and you're securing it to your home. So if the unforeseen comes, you lose a job, you're unable to pay. Right now, there's limited recourse. I mean, they could get a judgment against you and at some point could garnish some wages or something like that but at this point, if you were to convert it to a loan secured by your home, you could have your home foreclosed on if you're unable to make the payment.

So I just don't like that security against the house. The other issue is even though the interest rate is lower, oftentimes that repayment through a lower monthly payment is longer, the term is longer and so we end up paying more in the long run. Bottom line is what I'd prefer you do is use a debt management program to get those interest rates reduced, leave them right where they are on the credit cards but through credit counseling, each of the creditors will have a reduced interest rate available through debt management and you can pay a fixed monthly payment that doesn't change and if you have the ability through surplus to prepay some of those balances, send extra, you're absolutely able to do that. And through a program like that, you keep the debt right where it is and you'll typically pay it off on average 80% faster and so I would focus on getting those credit cards knocked down and then I'd take the money that you were sending to the credit cards and redirect toward getting that car loan paid off and then I'd keep paying that to yourself to build up for the next car purchase for cash. I'd also, as a part of this, make sure you have an emergency fund of three to six months expenses but that would be my preferred option, Doug, versus replacing debt with new debt especially when that debt involves your home. Okay, thank you.

All right. If you want to check into that, ChristianCreditCounselors.org could give you a great just overview of the program, tell you exactly what those new interest rates would be and how it would work. They've worked with literally hundreds and hundreds of our Money Wise listeners. They're wonderful folks.

They see this as a ministry but they're very skilled in what they do and I think you'll be pleasantly surprised. ChristianCreditCounselors.org thanks for your call today. To Chicago, Martha, you're next on the program. Go ahead. Hi, thank you so much for taking my call. Sure.

So, yeah, I have a couple of quick questions. The first one is regarding Social Security. Can you wait till you're 70 or over to take the Social Security benefits and keep contributing?

Yeah. Now, they actually never make you take your Social Security benefits so you don't have to take it but it really doesn't make sense to wait beyond age 70 because that's the age where the annual increases of roughly 8% stop. So from ages 62 to 70, your benefit increases by that amount each year.

It's actually one-twelfth of 8% every month just about. If you wait till full retirement age, you'll get the benefit that was projected for you based on your statement that's a function of your work record and what's called your high 35, your highest 35 years of earnings. Once you reach full retirement age, if you don't take it, then that expected monthly benefit that you would have gotten at full retirement age will continue to increase by one-twelfth of 8% every month. But that caps out at age 70. So there's no purpose or really no benefit in waiting beyond age 70. Okay. Okay.

So you can contribute till you're 70 and receive the higher amount. Yeah. And actually, if you keep working... If you keep higher income. Yeah.

That's a good question. If you keep working, you're limited in how much you can earn up to full retirement age. When you get to full retirement age from that point forward, you can earn as much as you want. And as long as you're paying those FICA taxes, there is no limit to replacing the high 35. So even beyond age 70, if you continued to work and you earned more in those years than some of the years that were used to calculate your benefit, you'll actually get that increase. So that's really the way that you can get that up beyond the cost of living adjustments and beyond waiting to collect until age 70. The other way to keep those benefits growing is by continuing to work and replacing some of those lower earning years. And that really doesn't have a limit. You can continue to do that throughout your whole life. Okay. But then do you still take the Social Security benefits while you're working when you turn 70?

Yeah. So you can replace those lower earnings years while you're collecting. So that doesn't stop. Even though you're collecting your check, if you're continuing to work and pay FICA taxes, you have the ability to replace those lower earnings years, which are going to adjust your monthly benefit up. My goodness, that's such good news. I know it sounds crazy because everybody wants to retire, but the reality with my life is I actually am earning more money now in my older years.

And I'm not in a rush to retire because I enjoy what I'm doing. I love it. Yeah. And I think that's God's design. You remember we were workers before the fall. Adam and Eve had a job to do. He's the ultimate creator. We were made in His image. So we're to be creators too, and to take His creation and improve it and do meaningful and joyful work. And when we do it as unto the Lord, that was part of His design. So I love that.

I don't think we should subscribe to the world's philosophy on this. It sounds like God's giving you a real blessing there. Martha, thank you for your call. We'll be right back on MoneyWise Live. Stick around.

I wanted to have you with us today on MoneyWise Live, biblical wisdom for your financial decisions. I'm Rob West, your host, taking your calls and questions. Let's head right back to the phone.

South Haven, Michigan. Tanya, thank you for calling. Go right ahead.

Hi. Thanks for taking my call. So I have a HELOC and I apologize for having one.

I know you don't like them, but it was before I started listening to you. That's okay. Recently, I noticed that my payment has gotten way bigger. I looked at my interest rate and it has gone up substantially. So I called my bank and asked them if they had, you know, for an explanation, it turns out it was an adjustable rate.

And I don't recall that that's what I did. So I am looking to get a new HELOC. I have called some local banks and I can get one at 5%. I have good credit. My house is paid off. It's the only debt that we have.

My question is this. Are banks like used car lots? Can I use the information I have found to go back to the original bank that holds my current HELOC and say, hey, I've been able to find this rate. I've been able to have a fixed rate. Will you meet that or match that or is it better to just have somebody else buy that loan?

Yeah. Well, there's no reason not to. I mean, it'd be a lot easier if you could just stay with your current lender. The challenge is what you really want is not a HELOC. You want a home equity loan that you want to refinance this with. See, the home equity line of credit is just that. It's a line of credit that's open.

So you have access to the funds. They approve you for a line and then you decide when you want to take it out. And as long as the line is open, you can pull from it until you reach the maximum of the line and you can then pay it back in and then it immediately becomes available to you. And then at some point the line closes and then they amortize the repayment over a period of time that's determined at the outset of the loan. A home equity loan is different. It's like a mortgage in the sense that you take out a loan for a certain amount.

At closing, you get that amount in cash and then you immediately start your repayment. Home equity lines of credit are typically and almost exclusively variable rates, which is the problem you're going to run into if you try to negotiate with your current bank. They're going to say, our home equity line of credits, they're variable.

They're probably not even going to have a fixed option available to you. Whereas the home equity loans are typically fixed rate loans. And so what you would do is you'd get approved for a home equity loan and you use that to pay off the line of credit in full, close it out and then you'd start your repayment with your fixed rate on the home equity loan. Now, you could get the bank to look at perhaps rolling you into their own home equity loan and maybe save some closing costs just because they know you. They may not need to do another appraisal. They've got access to your credit, all of those things.

But you're definitely going to want to have two or three other bids in your hip pocket, not only to make the case, but also just to see what the best loan rates and terms are for you to refinance this. Does all that make sense? Oh, yeah, that. Thank you. That clears things up.

I didn't realize there was a difference in terms. That makes total sense. And then I've also checked a couple of credit unions and they have told me that they don't even do closing costs. They said there might be like a hundred dollar fee, but there's no closing costs. So that might be an option as well. Oh, absolutely.

Yeah. And so I would you're going to want to look at both what are the closing costs? Do they have any fees? Do they require an appraisal?

Who pays for that? And a lot of these banks and credit unions, especially the online banks, because they want to win your business, they're finding ways to roll those costs in and absorb them. But you're going to want to compare both the term for the repayment as well as the interest rate and the closing costs as you evaluate these. I'd probably go to bankrate.com to compare who has the very best rates and terms right now, because it does change all the time, depending on how much money a particular bank has to lend at that moment and how aggressive they're being as to who has the very best offers at any given moment. So I'd do quite a bit of research there. NerdWallet would be a good option. Bankrate would be another one.

Make sure you get at least two online lenders or banks to bid for this as well and then see what your current bank will do and see what you can find. OK, great. Thank you so much. All right. Thank you for calling. God bless you. Lorraine, Ohio. Cindy, you're next on the program. Go ahead.

Hi. My question is regarding Social Security. I've worked two jobs for 14 years now. My part time evening job is Social Security investment, but my full time job is with the schools and I'm in a state teacher's retirement. And so I just wonder what I should do about that or if there's anything I can do because they say you can't collect your Social Security and the STRS. So I feel like all these years of working that I'm paying into something I'm not going to benefit from.

Well, you weren't necessarily paying into it. So the state teacher's retirement system of Ohio doesn't participate in the Social Security program and therefore doesn't collect FICA taxes. So you weren't paying into Social Security. So that means your teacher's pension will trigger what's called the WEP, the Windfall Elimination Provision, and that reduces the Social Security benefits for those who qualify for other retirement benefits like your STRS.

It doesn't automatically eliminate them entirely. So if you worked 40 quarters and, you know, through another job or at some point paid FICA taxes, you'd be still be eligible for some Social Security benefits, perhaps, you know, maybe up to a half of what you'd receive without the teacher's pension. But that is true what you're being told about, you know, the fact that you for the teacher's retirement system have not been participating in the Social Security system and therefore you won't be able to collect the full amount of both.

So I think at this point, what I would do is contact the Social Security Administration, set up an appointment and get them to walk through with you what you would be entitled to just so you have that alongside your STRS so you can do some planning for that season. Excellent. Thank you so much.

I really appreciate your help. All right, Cindy, thank you for your call. God bless you. Let's see.

Bettendorf, Iowa. Ron, you're next on the program. Go ahead, sir.

Yes, thank you for taking my call. I turned 71 this year and my question deals with I've got my 401 tax-free. I rolled over some of my originally 401. So I have my tax-free investments spread over four different companies.

What is the risk of doing that going into the phase where I'm going to have to start withdrawing? Yeah, so you said tax-free investments. You mean tax-deferred investments? Tax-deferred, yes.

Yeah, I'm sorry. I had my 401 in my original account and I rolled some of it over into three different accounts. So what is the risk of that going into when I have to withdraw?

There's really not a problem there. You can have as many retirement accounts as you want. You're going to have to take the total amount that you have in those tax-deferred accounts and use that to determine your required minimum, but it doesn't have to come from each account. You can actually pull it from one as long as you reach the total distribution that is required from the IRS across all the accounts. So will each account send me what that percentage is or will I have to do that manually? No, you do that yourself and you'll be able to determine which account you want to pull that from. The key is between you or you and your CPA, just make sure you know what the full amount of that required minimum is across all of your accounts based on the balances of each and then make sure you get at least that amount out.

The IRS really doesn't care where it comes from. They just want to make sure that you get enough out based on your age and then the total of your tax-deferred retirement assets. Okay, thank you. You answered my question. Yeah, sure, Ron. Yeah, the only other thing I would mention is are you aware of the qualified charitable distribution where you can satisfy that RMD with charitable giving?

On the high level, I am, yes. Okay. Yeah, just make sure you look at that because if you're doing giving out of cash, let's say to your church or other ministries, you could essentially replace that with giving from your IRA, any one of them or 401k, but have to come from an IRA. And in doing so, you would satisfy that RMD or some portion of it and that portion that goes directly to the church or your charity or ministry would not be subject to your taxable income.

So you wouldn't be adding to your adjusted gross income and you could replace money that you would have been giving out of your savings account or your current cash flow with that qualified charitable distribution and it can be really tax-efficient. Okay, I need to look in. Several of my friends have done that. Yeah, very good.

I think I will look into that and do that. Okay, well, thanks again. Excellent. You're welcome, Ron.

David, let's finish in Sarasota. I understand you have a question about the Publix retirement system. Go ahead. Yes, actually, it's kind of a two-part question.

Let me unpack this for you real quick, Rob. So I worked for Publix for seven years and then in my early 20s, I'm 45 now, I was in a bad accident in 2002 and left me in a wheelchair. The hand that got touched me four years later and I'm now walking and the doctor said I'd never walk again and I'm now the owner of my own company. And so my question is, one, the 401k from Publix and my other jobs through my 20s, how do I find out information how to retrieve that to continue to roll that over or add to it? And two, when I was involved in the accident in 2002, 2004, I started receiving social security disability benefits and last year when I started my company, I let social security know that I'm going back to work.

So how does it affect me in the future? Yeah. Well, a couple of thoughts on that and I'm real short on time. With the Publix stock fund and then their 401k, you can't contribute to that once you separate. And with the non-public stock portion, you can just call the HR department and they'll process that and mail that to you or roll it over within two weeks.

With the public shares portion, which is not publicly traded, they process those four times a year. So I would call HR and just let them know that you need to take a distribution. Let's tackle your other question off the air. We appreciate your call.

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