Have you been counting down the hours? Well, it’s heeere! Part II of what promises to be a Retirement Equals Freedom ratings bonanza focused on – you asked for it – Social Security!

Host Josh Bretl is walking us through some of the variables that we all want to factor into the all-important decision about when to start receiving Social Security. Sooner or later? It depends on your age, health history and how much you (and your spouse) require to live comfortably.

It also depends on how much you’re earning. (Did you know you could suffer big penalties if you try to tap Social Security while earning more than $18,000 per year?)

You’ll also want to hear what superpowers Josh and Co-Host Dave Schmidt would most like to have and how choosing what to watch on TV this weekend may have some similarities to financial planning for retirement (it’s a stretch … but there are parallels).

And if you’re feeling bereft that this up-close-and-personal special series on Social Security has come to an end, we’re here to say: But wait! There’s more!! Yep. Josh and Dave will be back next time to dig deep into some more variables those Social Security calculators oftentimes miss.

So stay tuned for Part III – sure to be a fan fave!

Your goal, I always tell people, is not to take

the most money from Uncle Sam.

You may think that's your goal, but by taking the most

money from Uncle Sam, you may actually be putting yourself

in a worse situation, because it may put you to a detriment.

Have you been counting down the hour

since our last episode?

Well, it's here.

Part two of what promises to be a Retirement Equals

Freedom ratings bonanza.

Josh walks us through some of the variables you'll wanna

factor into the decision about when to start receiving

your social security.

Sooner or later?

Well, it depends on your age, health history, and how much

you require to live comfortably.

It also depends on how much you're earning because you

could suffer big penalties if you try to tap social

security while earning more than 18,000 bucks per year.

But wait, there's more.

Listen in as we tease a part three to our series

on social security.

This is The Retirement Equals Freedom Podcast.

Your host, Josh Bretl, is the owner of FSR Wealth Strategies.

And it's Josh, who for the last few decades, has been

helping fine folks like you thrive in their retirement.

And me?

Well, I'm Dave.

Josh's longtime friend, co-host of the podcast and

fan of the new Wednesday Addams show on Netflix.

So now let me let you let me end this introduction

so you can enjoy part two of social security.

FSR Wealth Management is a registered investment advisor

located in Elmhurst, Illinois.

Information and opinions contained in this audio

have been arrived at by FSR Wealth advisors.

All information herein is for informational purposes

and should not be construed as investment advice.

It does not constitute an offer, a solicitation or recommendation

to purchase any security.

FSR is not providing legal, tax, accounting, or financial

planning advice in this audio.

These views are as of the date of this publication

and are subject to change.

So thanks for getting COVID.

Yeah.

What episode number will this be, Dave?

27.

27.

And after episode four, we realized how much better

it was doing it in person together, sitting next to

each other, holding hands,

playing footsies, occasionally,

occasionally, footsies.

Occasionally.

So you could knock the snot of the microphone every time.

But here we are.

You had to go get COVID, and now we're sitting here doing

this remotely with each other.

What makes it even worse is that November,

the month of November and Thanksgiving, are my favorite.

And I was sick for the vast majority of November

and tested positive on Thanksgiving morning.

I mean, could it be any worse?

And to top it all off, I've had one jive turkey

from Nu Crepes all month.

I've literally lost sleep over this.

I think the last few years we had six or seven

in the month of November.

And Niall's probably hurt.

I mean, Nu Crepes is probably hurting right now.

I was wondering the same thing.

So I'm going to send an anonymous donation their

way and just be like...

You don't donate to anything.

That's right.

Yeah, it's true.

Well, see if you order it today, then just throw

one in the freezer and I'll heat it up later.

Didn't you do that last year?

Didn't I freeze one for you last year?

Or did you freeze one for me or something like that?

No, I think I like the last day of November

I bought two and just brought one home for the next day.

Because I knew I was going to miss it so dearly.

But yeah, recording remotely is just, apart from trying

to get all the tech right, it's just, this is not...

Man, I got my phone in front of me as a camera.

I don't know, it's just not the same.

I miss you.

Well, I have something sad to say.

Oh no.

And it has to do with my buddy Alex,

the hashtag tax nerd.

Oh, shoot.

But he's eight years old and he's becoming

a little obsessed with the podcast and in an unhealthy way.

So my wife and I have made the decision that he's got

to take a podcast break.

We haven't told him that, but we're just not

letting him listen to the podcast for a while.

And it's been a good month or so since he's heard one.

And-

Oh no.

I drove the kids to school today.

Zach was homesick, so I drove Alex and Maggie to school.

And I was listening to our latest podcast and they

saw it up on my radio and they both said, "Can we

listen to the podcast?"

I was like, "No we can't."

oh no.

Let's dig in a little deeper though Josh.

What about the podcast is making him obsessed and

bringing out things that you don't necessarily like?

You know how eight year olds talk about Pokemon

and sports and stuff like that?

Yeah.

Alex loves to have what he thinks are

very serious conversations about IRAs and taxes.

And it's just...

socially inappropriate.

He's asking people questions that are socially

really inappropriate.

And I mean, I ask people questions about money for

a living, and I know how uncomfortable people get.

And here's this little eight year old going up like,

"Do you have a Roth IRA?

How come you don't have a Roth IRA?"

"This is Mr.

So and So."

"Do you have a Roth IRA?

How come you don't have a Roth IRA?"

All right, we got to stop listening to Retirement Equals

Freedom for a little bit, buddy.

"Mr.

Smith, what was your RMD this year?"

Yeah, in his honor though, we'll just do a little.

Hashtag tax nerd.

It's there for what he's ready, when

he's able to re-listen our podcast, he'll hear himself.

So I was listening to our podcast

from our last one, and we talked about your dad a lot.

Now there's been a big gap between the

recording of our podcast.

And so the last one we recorded, we recorded, God, a

month and a half ago, I think.

It was early, mid October.

Yeah.

And your father was just coming into town, or he was just in

town, and we had all these plans to have him on and he talked

about being our biggest fan.

So I was going to try and surprise you today and have him

call in via a phone call, but I figured I'll do that later

. And then I went to text him last night and I was like, I

don't even know if this is the same cell phone number or not.

And some random person's going to be called into

our podcast tomorrow.

Well, hey, we'd have a new subscriber

at least, then, because they would sit through the

whole thing and love us.

When we're back in person, I figured it out.

I know how to do it.

Yeah.

He is still distraught he was not able

to enjoy his Thanksgiving feast because all I could

think about was, "Ugh, I let them down again."

Well Big Mike, I'm not letting Alex listen to the

podcast, and Dave apparently still lets you listen to it.

So you are now officially our number one fan.

Dave Schmidt:

Congratulations, dad.

Dave Schmidt:

You've made it.

But speaking of you getting COVID at

a family wedding, how was your big family wedding

Awesome.

It was awesome.

It exceeded everyone's expectations.

On this side of the family, it's my mom's side.

We just don't get together often, for whatever reason.

So it was like a family reunion.

Despite the six degree weather right there on

Lake Geneva, because they got married literally on

this cool little venue that is on the lake almost.

Despite the temp, it was awesome.

Super smooth, lot of fun.

Great DJ playing all of our nineties jams.

It was epic.

But Josh, you'll be proud to know that I once again

whipped out the tie around the head, and inspired

dozens of others to join me.

And so...

That is our signature move, David.

I mean, my friends from college who you don't know all that

well, they think it's all me.

And I'm like, no, there's a group of us that can do

the tie around the head, so.

And people think it's for looks.

It's actually, it's dual purpose.

It does help with sweat, too.

As you and I, we're big sweaters.

You know what, Josh, I got to tell you, listening to episode

26, I'm like, we're going to do a part two to social security.

And I'm thinking, what else could we possibly cover?

You hit all the bases.

And I'm reading through the notes and I'm like, just

when I thought there wasn't any more to talk about,

Erin and Josh come up with a whole episode about it.

Well, Erin does our show notes, and

her knowledge of this information is second to none.

And so she types our show notes up and I'm reading through them.

I talk about social security all the time.

And I listened to our last podcast, and I think we

both thought this would be a two episode series.

I actually, looking at this and I go, oh, I think if I talked

about all of what's on these show notes, we're going to

bore the snot out of people.

So we're going to break this into three episodes of

social security, I think.

Happy holidays.

Happy holidays to you, listener.

So last week we talked about, the last

episode, I should say.

We talked about the history of social security, what is it?

I mean, it's been around since the 1930s.

It has become an integral part of people's retirement.

And today, my intention was to talk about the decision

making process as to when you should take social security.

Because the number one question we get in our

office is "When should I take my social security?"

And it's not a black and white answer.

But today I wanted to go into how the calculation works.

I'm always someone who wants to know how something works

and the decisions behind it.

And if I haven't completely bored the snot out of you Dave,

then maybe we can get into the decision making, what you

should actually think about.

But maybe that really fun part might be a part three.

So we'll see how that comes in here.

I'm never bored.

Does that make sense?

Yeah.

As long as I'm with you Josh, I'm never bored.

Let me go back, and I want start with thought

that I have regularly.

And if you go into Google, the Google machine and you

type in, the Google, social Security calculator, or if

you type in, when should I take Social security?

Let me do this right now.

I'm going to type in my computer social security calculator.

I literally get 690 million results.

And in theory, what that calculator is doing is that

is telling you how to get the most money from the US

government from social security.

And most people think that's all I want to do.

How do I take as much as possible from Uncle Sam?

Well, there's two problems to that.

The first problem is...

Two.

Two, right.

I was saying number one is, because yeah.

Yeah.

Number one is the fact that that calculator is going to ask you

how long you're going to live.

If you're married, how long your spouse is going to live.

It's going to ask you how much income you need for

the rest of your life.

It may, if it's a good calculator, ask you about

your other sources of income.

There's lots of things in those calculators that are

really difficult to determine.

The day you're going to die and how much you

need and stuff like that.

So first off, it's those calculators are very imprecise.

It's not a precise tool.

And the second thing is your goal, I always tell

people, is not to take the most money from Uncle Sam.

You may think that's your goal, but by taking the most

money from Uncle Sam, you may actually be putting yourself

in a worse situation, because it may put you to a detriment.

Sure.

I always tell people your goal is always to have the

most secure retirement possible.

And you have to think about those differently.

So what is the goal of the calculator versus

what is your goal?

So those calculators are great.

We use them in our office once we understand what the tools

we need going forward are, or what the thought process is.

But, you have to be very careful in how you use them.

But let's talk about how social security works,

how it's calculated, okay?

And I sent you two acronyms, David.

Yep.

What was the first one that I sent you?

FRA, which stands for full retirement age.

Let's talk about FRA real quick.

FRA, these are two really important numbers.

FRA full retirement age is the age at which social security

says you should "retire."

It's the age at which they do all of their calculations for.

So if you were born before 1954, or before 1955, I

should say, your age is 66.

Anyone born in 1954 is already 66.

But, if you were born between 1954 and 1960,

they start increasing that.

So it might be 66 and two months, 66 and six

months, 66 and 10 months.

All the way out until 1960 where your FRA goes to 67.

For you and I, our FRA is 67 years old.

Now, I don't think it's going to stay that way,

but that's where it is.

So they can change it, then?

They can change whenever they want?

Yes.

They have changed that.

Remember, that's the number that I told you on last episode

that has been 65 forever, and they just upped it to 67.

But right now, that FRA number is what they use

to calculate your...

Dave, what's the next acronym?

PIA.

PIA stands for primary insurance amount.

And PIA is the amount of social security you'll receive at FRA.

FRA.

It's the amount you'll receive at, and

I'm going to use the age 67 just to make it easy.

Okay.

So it's the amount you'll receive at age 67.

So, how do they calculate your primary insurance amount?

Because it all starts with that number.

That's the big calculation that goes into it.

So the first thing they do is they take all of

your earnings that you've earned your entire life.

And every year, in fact, if you look at your social

security statement, I encourage you to do that, it will show

you all of your earnings.

Now, they used to break it down year by year by year.

Now they have it a little bit more grouped together.

But they'll show you all your earnings in there.

And they take your 35 highest years.

So if you worked for 50 years, they take your 35 highest.

If you worked for 20 years, you get all 20 years, plus 15 zeros.

And if you work six months, like I have?

No, you have to work at least 10 years

for social security.

Oh,

But, you're self-employed, you do

pay into social security.

So you do have those numbers as well.

But that is, they're looking at your FICA tax.

So the way they calculate this is how much is

on your FICA income.

They take those 35 highest years, and they add them all up.

So they get a sum, and they divide it by 420.

Now why 420?

Because 420 is the number of months in 35 years.

And that gives us what they call an average monthly

earnings, or an average index monthly earnings.

Now, that is not the amount you receive.

They take that number, and they put it into a

secondary calculation.

And that secondary calculation will really determine

how much you receive.

So what they do is the lower amounts receive more

and the higher it goes up, it's a lower percentage

of your overall income.

And that calculation gives you your primary insurance

amount, which is the amount you'll receive at 67.

And this is always, always calculated

on an individual basis, not spousal or partner.

We'll get to spousal in a second, but

it's all an individual basis.

All right, so we have your primary insurance amount

now, so that's the amount you'll receive at 67.

But, on your social security statement, you can start social

security as early as age 62, or you can start as late as age

You would think, "Hey, I want to take it as early as possible."

Well, if you start before your primary insurance amount,

they're going to reduce the amount you receive.

And that reduction comes to about 7% a year.

It's not precise, but it's about 7% a year.

So every year you start, you're reducing your lifetime

benefits by about 7% a year.

And if you wait longer, you get what they call

delayed retirement credits.

And you can wait all the way to 70 and they will

give you an extra 8% a year for every year you wait.

So if you wait until 70, you're going to get a heck of

a lot more, but you've given up three years of income.

Right.

Does that make sense?

No, it makes sense.

We addressed this in a previous episode in last

episode, how you and I being peak physical specimens, we

can wait as long as possible to get social security.

Yeah.

Oh, without a doubt.

I think I'm going to live until 125, so.

Oh, minimum.

Minimum.

So one of the considerations that you

should take into play is how long you're going to live.

And let me put this into perspective for you.

Let's say that your age 67 amount is $2,000 a

month, and your age 70 amount is $3,000 a month.

Okay?

The age 70 amount sounds a heck of a lot greater than that, but

you have to give up three years.

Now, three years of $2,000 a month, that's $24,000 a year.

That is $72,000 that you've given up.

So that extra thousand dollars that you're going to get every

month, in theory, it's actually takes more than 72 months

to make up that difference, because you have time, value,

and money and all those things that come into play.

So there's a break even that comes into it.

And for the average person, that break even comes

to about 82 years old.

Now, that's not a perfect math, but that's an

average that we see.

So you have to live long enough to make up the difference.

And the same is true if you start early.

I mean, if you start earlier, you're going to get less,

but you'll get it for a longer period of time.

So one of the decisions you have to make is how

long are you going to live?

And are you in good health or not?

And that's not a decision you have to make and you have

to stick with it, because your health could change.

We have really good family friends who the plan was

always to wait until 70, and then when one of them was

diagnosed with Parkinson's, we said, no, you have to turn

it on now because your life expectancy just got shortened.

And it doesn't make any sense to wait, you're just

giving up that time period.

Because you don't get it back on the end.

Your kids don't get it.

Your spouse, there is some spousal things which we'll

talk about in a second.

You can't give your social security like a life

insurance or like an IRA you can to your kids.

The other thing on timing wise is some people have

long life in their family.

So if you and your parents have always lived a long

time, that's a great thing.

You may be unhealthy, you want to start early.

That's a decision that you have to think through all the time.

So in addition to your health and how long you're going

to live, there's some other variables that go into the

decision making process, as well, that the calculator

takes into consideration.

One of those is if you're still working or not.

Because if you want to start collecting before your full

retirement age, age 67 for most people, you are limited

to how much you can earn.

And right now that number comes to about 18,000 bucks a year.

And if you earn more than that, they're going to take

back 50 cents for every dollar you earn above that.

So if you earn $20,000 too much, they're going to take back

$10,000 of your social security.

Is that $18,000, is that a flat rate across

the board for all Americans, or are there some different

factors that change that number?

It's a pretty flat rate based on age.

The year that you turn your FRA age, the number

goes up significantly.

But no, it's a set number.

And it's about $18,000, it could be up to $20,000 now.

It changes every year.

With the inflation that we've had, we could be

up to $20,000 right now.

But that's the number that comes in.

I think that's part of the reason that my dad

loves working so much right now.

It's because there's no penalty.

He's working 30 hours a week, making 21 bucks an hour and

he's like, "This is great."

right.

Because once you reach FRA or especially once you're

over 70, you can work and earn as much as you want.

I mean, I guarantee you Warren Buffet's

getting social security.

You can't earn too much at that point in time.

How about his younger brother, Jimmy?

Jimmy?

He's wasting away again.

Margaritaville.

I thought I'd catch you up on that one.

I didn't catch you.

Really quickly, I was trying to go through a

Jimmy Buffett song in my head.

And I should have went to Cheeseburger in Paradise,

but I went with Wasted Away Again in Margaritaville.

But the last variable I want to touch on this morning is

if you're married or not.

Because the other rule is for spouses, you don't only

have to think about your own scenario, you have to think

about your spouse's scenario.

Because if one spouse passes away, what happens

is you lose the lower of the two social securities.

So it doesn't matter whose is lower, the

lower one just goes away.

And the surviving spouse gets to keep the higher amount.

So those are the decisions that kind of go into the calculator.

Next week, or on our next episode, I should say, I want

to discuss some of the decisions that the calculators don't take

into consideration, and I would say are equally as important.

But if I talk about those now, there will be people driving off

the road, they are so excited.

We just can't.

No, no.

And you yell at me anytime a podcast goes more than 30

minutes, and I'm going to guess this is what already is.

I think we're creeping way

past that right now.

But no, I was thinking about something.

Yeah, okay.

I found it.

Hey, Mr.

Josh.

Hey Mr.

Josh.

Let's take a break.

You've been talking for so long, and my ears are sore.

Let's not make them snore.

We already have.

Listening shouldn't be a chore.

So let's get to know Josh and Dave and watch our ratings soar.

Oh yeah.

We've talked about Erin already on the episode,

and she says that her son, Finn, also listens to the podcast.

He's also eight.

And but he also just likes that song.

So if we could get him that song, that would be great.

Well, Finn, let me have my agent call

you and we can see what we could work out here.

So we used to go back and forth as to who got to

pick these questions, and I've pretty much taken this over.

I like to have control over these questions, and that,

I think, drives you nuts.

But I went a little bit easy today.

And I went easy on this one because this is a question

that I heard on a different podcast and it actually changed

my whole answer to this.

But the question is, if you could have one

superpower, what would it be?

So Josh, if I had one superpower?

That's just really not fair.

I have so many things I would love to do.

my superpower would be, it's kind pretty

generic, pretty boring.

We've all heard it before, but I would still love to fly.

Maybe not for the same reasons that everybody

else would want to fly.

I just want to be able to quickly get my

coffee and get back.

Quickly go get my crepes and get back.

It's so fast that Carla wouldn't even know I'm gone.

That's why I want to be fast.

It's flying, but really fast flying, too.

This is not some lazy little robin up....

No.

No.

That's fair.

Talking hawk and eagle speed.

Yeah.

How about you Josh?

What's your superpower?

So, what I really want to have the ability

to do is to slow down time.

I mean, you've seen me, I run around a nut job here.

And I always feel at the end of the day, I didn't get

enough done or I didn't achieve what I wanted to do here.

And I don't want to slow myself down.

I want to go at my same speed, but I want the ability to

pause button or slow button and keep going through my life.

God, I would be so efficient and so effective.

It would be incredible.

Can you imagine the things you

would accomplish, Josh?

We'd have daily podcasts, Dave, daily.

Daily podcasts.

I can't even imagine.

You would have-

Although, I'd be talking be at normal speed

and you'd be going like this.

That's true.

You could make so many cocktails so quickly.

Yeah, people wouldn't even

know what hit them.

Like, "Hey, this cocktail wasn't in my hand a few seconds ago."

Exactly.

Dave relates to retirees.

Yeah.

So Josh, do I have a way to relate to this?

Of course I do.

In fact, I thought about it last night watching basketball.

I can relate to this whole huge decision of social

security for retirees and soon to be retirees.

The seriousness in your face.

Yeah, no, this is a big one.

This is deep.

Because look, tonight, I got to make that same decision

about what to watch on TV.

Because here's the thing, I could watch the new Wednesday

Addams show on Netflix.

I could watch the new Spirited movie on Apple TV with Ryan

Reynolds and Will Farrell.

Or I could just watch the Bulls game.

All three viable options.

But here's the thing, I'm not in great health.

I'm having a coughing attack here.

I got to keep that in consideration.

The movie Spirited is a Christmas movie.

If I don't watch that soon, I may never see it again.

Not like I'm going to die, but just because

Christmas will be over.

So that's a factor.

However, I'm married.

So some retirees who are married, they have to take

that into consideration.

So do I.

Carla and I grew up loving the Addams family.

So Wednesday Addams, not only is it made by and

directed by Tim Burton, it just looks phenomenal.

So should I watch that?

But then there's also this third factor.

I don't have much money here.

I probably shouldn't be paying for all these

streaming services.

So how about I cancel streaming services and

just watch the Bulls game, because that's free on TV.

So retirees, I get it.

Huge decision for you.

Huge decision for me.

Josh, I'd love for you to take this home.

You know, once again, Dave,

you are so relatable.

It's unbelievable.

Thank you.

And I didn't think you'd be able to do it.

And I also wonder sometimes why you are everyone's

favorite on this podcast when I hear stuff like that.

I kind of see where you're going with it.

The timing of it is there, and it's a life changing decision

that you're only going to make once in your entire life.

I just coughed and spit water all over the place.

Yeah.

Oh my God, I'm a mess.

My screen is dowsed with water right now.

Dave, you amaze me sometimes in how you are

able to relate to retirees.

Thank you.

And your thought process in regards to which

show you should watch is obviously deep on your mind.

And I'm going to take this in a whole nother world.

There's many studies that have been done that say

people spend more time planning their vacations

than they do their finances.

And in your case, I think you spend a lot more time

planning what shows you watch than your finances.

But I think we're a little bit of amiss on the outcome and the

potential risk that's there.

I understand your concerns, but those retirees, I think,

are a little bit more concerned in regards to how long their

money's going to last and making sure that they don't have to ask

somebody for help later in life.

Specifically, their children who don't want them to move

back into their basement.

In your case, you're really just upsetting your wife, who I

don't want to make mad either.

But I think that she'll understand more than if

someone makes the wrong social security decision.

But I do understand, in your mind, how important

of a decision that is.

So on behalf of all the retirees, thank you-

Sure.

For your concern.

Absolutely.

Now, do you have any advice for me?

Yeah, watch the Bulls.

It's live.

You love the Bulls.

I do love the Bulls.

Hands down.

I do love the bulls.

I mean, it has nothing to do with

the streaming services.

You're going to pay for them no matter what.

True.

You can watch Spirited with Carla

sometime this weekend.

Just watch the Bulls.

Okay, I think I will.

Josh, thank you.

Our next episode, we're going to talk about

what I consider to be actually more important that

we just talked about today.

And those are the bigger variables that go into when

to collect social security that those calculators don't

take into consideration, but you as a retiree need to.

If Apple doesn't feature us on their

must listen list, I don't know what's wrong with the

world, to be honest with you.

Oh, I agree.

I mean, it's unfathomable if they don't do that.

Unfathomable.

Cool.

I think after this podcast what I'm going to do is go take

a big bite out of my bagel.

So friends, listeners, especially you, Deb,

from Josh and I from our hearts, we like to say bye.

And I'm going to cough again in just a second.