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027: When Should You Claim Social Security? (Part 2)
Episode 277th December 2022 • Retirement Equals Freedom • Josh Bretl
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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!

Transcripts

Josh Bretl:

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

Josh Bretl:

the most money from Uncle Sam.

Josh Bretl:

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

Josh Bretl:

money from Uncle Sam, you may actually be putting yourself

Josh Bretl:

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

Dave Schmidt:

Have you been counting down the hour

Dave Schmidt:

since our last episode?

Dave Schmidt:

Well, it's here.

Dave Schmidt:

Part two of what promises to be a Retirement Equals

Dave Schmidt:

Freedom ratings bonanza.

Dave Schmidt:

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

Dave Schmidt:

factor into the decision about when to start receiving

Dave Schmidt:

your social security.

Dave Schmidt:

Sooner or later?

Dave Schmidt:

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

Dave Schmidt:

you require to live comfortably.

Dave Schmidt:

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

Dave Schmidt:

could suffer big penalties if you try to tap social

Dave Schmidt:

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

Dave Schmidt:

But wait, there's more.

Dave Schmidt:

Listen in as we tease a part three to our series

Dave Schmidt:

on social security.

Dave Schmidt:

This is The Retirement Equals Freedom Podcast.

Dave Schmidt:

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

Dave Schmidt:

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

Dave Schmidt:

helping fine folks like you thrive in their retirement.

Dave Schmidt:

And me?

Dave Schmidt:

Well, I'm Dave.

Dave Schmidt:

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

Dave Schmidt:

fan of the new Wednesday Addams show on Netflix.

Dave Schmidt:

So now let me let you let me end this introduction

Dave Schmidt:

so you can enjoy part two of social security.

Dave Schmidt:

FSR Wealth Management is a registered investment advisor

Dave Schmidt:

located in Elmhurst, Illinois.

Dave Schmidt:

Information and opinions contained in this audio

Dave Schmidt:

have been arrived at by FSR Wealth advisors.

Dave Schmidt:

All information herein is for informational purposes

Dave Schmidt:

and should not be construed as investment advice.

Dave Schmidt:

It does not constitute an offer, a solicitation or recommendation

Dave Schmidt:

to purchase any security.

Dave Schmidt:

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

Dave Schmidt:

planning advice in this audio.

Dave Schmidt:

These views are as of the date of this publication

Dave Schmidt:

and are subject to change.

Josh Bretl:

So thanks for getting COVID.

Dave Schmidt:

Yeah.

Josh Bretl:

What episode number will this be, Dave?

Dave Schmidt:

27.

Josh Bretl:

27.

Josh Bretl:

And after episode four, we realized how much better

Josh Bretl:

it was doing it in person together, sitting next to

Josh Bretl:

each other, holding hands,

Dave Schmidt:

playing footsies, occasionally,

Dave Schmidt:

occasionally, footsies.

Josh Bretl:

Occasionally.

Josh Bretl:

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

Josh Bretl:

But here we are.

Josh Bretl:

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

Josh Bretl:

this remotely with each other.

Dave Schmidt:

What makes it even worse is that November,

Dave Schmidt:

the month of November and Thanksgiving, are my favorite.

Dave Schmidt:

And I was sick for the vast majority of November

Dave Schmidt:

and tested positive on Thanksgiving morning.

Dave Schmidt:

I mean, could it be any worse?

Dave Schmidt:

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

Dave Schmidt:

from Nu Crepes all month.

Dave Schmidt:

I've literally lost sleep over this.

Josh Bretl:

I think the last few years we had six or seven

Josh Bretl:

in the month of November.

Josh Bretl:

And Niall's probably hurt.

Josh Bretl:

I mean, Nu Crepes is probably hurting right now.

Dave Schmidt:

I was wondering the same thing.

Dave Schmidt:

So I'm going to send an anonymous donation their

Dave Schmidt:

way and just be like...

Josh Bretl:

You don't donate to anything.

Dave Schmidt:

That's right.

Dave Schmidt:

Yeah, it's true.

Dave Schmidt:

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

Dave Schmidt:

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

Josh Bretl:

Didn't you do that last year?

Josh Bretl:

Didn't I freeze one for you last year?

Josh Bretl:

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

Dave Schmidt:

No, I think I like the last day of November

Dave Schmidt:

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

Dave Schmidt:

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

Dave Schmidt:

But yeah, recording remotely is just, apart from trying

Dave Schmidt:

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

Dave Schmidt:

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

Dave Schmidt:

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

Dave Schmidt:

I miss you.

Josh Bretl:

Well, I have something sad to say.

Dave Schmidt:

Oh no.

Josh Bretl:

And it has to do with my buddy Alex,

Josh Bretl:

the hashtag tax nerd.

Dave Schmidt:

Oh, shoot.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

to take a podcast break.

Josh Bretl:

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

Josh Bretl:

letting him listen to the podcast for a while.

Josh Bretl:

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

Josh Bretl:

And-

Dave Schmidt:

Oh no.

Josh Bretl:

I drove the kids to school today.

Josh Bretl:

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

Josh Bretl:

And I was listening to our latest podcast and they

Josh Bretl:

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

Josh Bretl:

listen to the podcast?"

Josh Bretl:

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

Dave Schmidt:

oh no.

Dave Schmidt:

Let's dig in a little deeper though Josh.

Dave Schmidt:

What about the podcast is making him obsessed and

Dave Schmidt:

bringing out things that you don't necessarily like?

Josh Bretl:

You know how eight year olds talk about Pokemon

Josh Bretl:

and sports and stuff like that?

Dave Schmidt:

Yeah.

Josh Bretl:

Alex loves to have what he thinks are

Josh Bretl:

very serious conversations about IRAs and taxes.

Josh Bretl:

And it's just...

Josh Bretl:

socially inappropriate.

Josh Bretl:

He's asking people questions that are socially

Josh Bretl:

really inappropriate.

Josh Bretl:

And I mean, I ask people questions about money for

Josh Bretl:

a living, and I know how uncomfortable people get.

Josh Bretl:

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

Josh Bretl:

"Do you have a Roth IRA?

Josh Bretl:

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

Josh Bretl:

"This is Mr.

Josh Bretl:

So and So."

Josh Bretl:

"Do you have a Roth IRA?

Josh Bretl:

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

Josh Bretl:

All right, we got to stop listening to Retirement Equals

Josh Bretl:

Freedom for a little bit, buddy.

Dave Schmidt:

"Mr.

Dave Schmidt:

Smith, what was your RMD this year?"

Dave Schmidt:

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

Alex:

Hashtag tax nerd.

Dave Schmidt:

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

Dave Schmidt:

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

Josh Bretl:

So I was listening to our podcast

Josh Bretl:

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

Josh Bretl:

Now there's been a big gap between the

Josh Bretl:

recording of our podcast.

Josh Bretl:

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

Josh Bretl:

month and a half ago, I think.

Dave Schmidt:

It was early, mid October.

Josh Bretl:

Yeah.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

about being our biggest fan.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

And some random person's going to be called into

Josh Bretl:

our podcast tomorrow.

Dave Schmidt:

Well, hey, we'd have a new subscriber

Dave Schmidt:

at least, then, because they would sit through the

Dave Schmidt:

whole thing and love us.

Josh Bretl:

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

Josh Bretl:

I know how to do it.

Josh Bretl:

Yeah.

Dave Schmidt:

He is still distraught he was not able

Dave Schmidt:

to enjoy his Thanksgiving feast because all I could

Dave Schmidt:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

So you are now officially our number one fan.

Dave Schmidt:

:

Congratulations, dad.

Dave Schmidt:

:

You've made it.

Josh Bretl:

But speaking of you getting COVID at

Josh Bretl:

a family wedding, how was your big family wedding

Dave Schmidt:

Awesome.

Dave Schmidt:

It was awesome.

Dave Schmidt:

It exceeded everyone's expectations.

Dave Schmidt:

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

Dave Schmidt:

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

Dave Schmidt:

So it was like a family reunion.

Dave Schmidt:

Despite the six degree weather right there on

Dave Schmidt:

Lake Geneva, because they got married literally on

Dave Schmidt:

this cool little venue that is on the lake almost.

Dave Schmidt:

Despite the temp, it was awesome.

Dave Schmidt:

Super smooth, lot of fun.

Dave Schmidt:

Great DJ playing all of our nineties jams.

Dave Schmidt:

It was epic.

Dave Schmidt:

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

Dave Schmidt:

whipped out the tie around the head, and inspired

Dave Schmidt:

dozens of others to join me.

Dave Schmidt:

And so...

Josh Bretl:

That is our signature move, David.

Josh Bretl:

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

Josh Bretl:

well, they think it's all me.

Josh Bretl:

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

Josh Bretl:

the tie around the head, so.

Dave Schmidt:

And people think it's for looks.

Dave Schmidt:

It's actually, it's dual purpose.

Dave Schmidt:

It does help with sweat, too.

Dave Schmidt:

As you and I, we're big sweaters.

Dave Schmidt:

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

Dave Schmidt:

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

Dave Schmidt:

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

Dave Schmidt:

You hit all the bases.

Dave Schmidt:

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

Dave Schmidt:

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

Dave Schmidt:

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

Josh Bretl:

Well, Erin does our show notes, and

Josh Bretl:

her knowledge of this information is second to none.

Josh Bretl:

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

Josh Bretl:

I talk about social security all the time.

Josh Bretl:

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

Josh Bretl:

both thought this would be a two episode series.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

bore the snot out of people.

Josh Bretl:

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

Josh Bretl:

social security, I think.

Dave Schmidt:

Happy holidays.

Dave Schmidt:

Happy holidays to you, listener.

Josh Bretl:

So last week we talked about, the last

Josh Bretl:

episode, I should say.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

And today, my intention was to talk about the decision

Josh Bretl:

making process as to when you should take social security.

Josh Bretl:

Because the number one question we get in our

Josh Bretl:

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

Josh Bretl:

And it's not a black and white answer.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

and the decisions behind it.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

should actually think about.

Josh Bretl:

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

Josh Bretl:

So we'll see how that comes in here.

Dave Schmidt:

I'm never bored.

Josh Bretl:

Does that make sense?

Dave Schmidt:

Yeah.

Dave Schmidt:

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

Josh Bretl:

Let me go back, and I want start with thought

Josh Bretl:

that I have regularly.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

you type in, when should I take Social security?

Josh Bretl:

Let me do this right now.

Josh Bretl:

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

Josh Bretl:

I literally get 690 million results.

Josh Bretl:

And in theory, what that calculator is doing is that

Josh Bretl:

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

Josh Bretl:

government from social security.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

Well, there's two problems to that.

Josh Bretl:

The first problem is...

Josh Bretl:

Two.

Dave Schmidt:

Two, right.

Dave Schmidt:

I was saying number one is, because yeah.

Josh Bretl:

Yeah.

Josh Bretl:

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

Josh Bretl:

how long you're going to live.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

the rest of your life.

Josh Bretl:

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

Josh Bretl:

your other sources of income.

Josh Bretl:

There's lots of things in those calculators that are

Josh Bretl:

really difficult to determine.

Josh Bretl:

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

Josh Bretl:

need and stuff like that.

Josh Bretl:

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

Josh Bretl:

It's not a precise tool.

Josh Bretl:

And the second thing is your goal, I always tell

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

money from Uncle Sam, you may actually be putting yourself

Josh Bretl:

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

Dave Schmidt:

Sure.

Josh Bretl:

I always tell people your goal is always to have the

Josh Bretl:

most secure retirement possible.

Josh Bretl:

And you have to think about those differently.

Josh Bretl:

So what is the goal of the calculator versus

Josh Bretl:

what is your goal?

Josh Bretl:

So those calculators are great.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

But let's talk about how social security works,

Josh Bretl:

how it's calculated, okay?

Josh Bretl:

And I sent you two acronyms, David.

Dave Schmidt:

Yep.

Josh Bretl:

What was the first one that I sent you?

Dave Schmidt:

FRA, which stands for full retirement age.

Josh Bretl:

Let's talk about FRA real quick.

Josh Bretl:

FRA, these are two really important numbers.

Josh Bretl:

FRA full retirement age is the age at which social security

Josh Bretl:

says you should "retire."

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

should say, your age is 66.

Josh Bretl:

Anyone born in 1954 is already 66.

Josh Bretl:

But, if you were born between 1954 and 1960,

Josh Bretl:

they start increasing that.

Josh Bretl:

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

Josh Bretl:

months, 66 and 10 months.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

but that's where it is.

Dave Schmidt:

So they can change it, then?

Dave Schmidt:

They can change whenever they want?

Josh Bretl:

Yes.

Josh Bretl:

They have changed that.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

But right now, that FRA number is what they use

Josh Bretl:

to calculate your...

Josh Bretl:

Dave, what's the next acronym?

Dave Schmidt:

PIA.

Josh Bretl:

PIA stands for primary insurance amount.

Josh Bretl:

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

Dave Schmidt:

FRA.

Josh Bretl:

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

Josh Bretl:

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

Dave Schmidt:

Okay.

Josh Bretl:

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

Josh Bretl:

So, how do they calculate your primary insurance amount?

Josh Bretl:

Because it all starts with that number.

Josh Bretl:

That's the big calculation that goes into it.

Josh Bretl:

So the first thing they do is they take all of

Josh Bretl:

your earnings that you've earned your entire life.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

you all of your earnings.

Josh Bretl:

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

Josh Bretl:

Now they have it a little bit more grouped together.

Josh Bretl:

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

Josh Bretl:

And they take your 35 highest years.

Josh Bretl:

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

Josh Bretl:

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

Dave Schmidt:

And if you work six months, like I have?

Josh Bretl:

No, you have to work at least 10 years

Josh Bretl:

for social security.

Dave Schmidt:

Oh,

Josh Bretl:

But, you're self-employed, you do

Josh Bretl:

pay into social security.

Josh Bretl:

So you do have those numbers as well.

Josh Bretl:

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

Josh Bretl:

So the way they calculate this is how much is

Josh Bretl:

on your FICA income.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

Now why 420?

Josh Bretl:

Because 420 is the number of months in 35 years.

Josh Bretl:

And that gives us what they call an average monthly

Josh Bretl:

earnings, or an average index monthly earnings.

Josh Bretl:

Now, that is not the amount you receive.

Josh Bretl:

They take that number, and they put it into a

Josh Bretl:

secondary calculation.

Josh Bretl:

And that secondary calculation will really determine

Josh Bretl:

how much you receive.

Josh Bretl:

So what they do is the lower amounts receive more

Josh Bretl:

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

Josh Bretl:

of your overall income.

Josh Bretl:

And that calculation gives you your primary insurance

Josh Bretl:

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

Dave Schmidt:

And this is always, always calculated

Dave Schmidt:

on an individual basis, not spousal or partner.

Josh Bretl:

We'll get to spousal in a second, but

Josh Bretl:

it's all an individual basis.

Josh Bretl:

All right, so we have your primary insurance amount

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

Well, if you start before your primary insurance amount,

Josh Bretl:

they're going to reduce the amount you receive.

Josh Bretl:

And that reduction comes to about 7% a year.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

benefits by about 7% a year.

Josh Bretl:

And if you wait longer, you get what they call

Josh Bretl:

delayed retirement credits.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Dave Schmidt:

Right.

Josh Bretl:

Does that make sense?

Dave Schmidt:

No, it makes sense.

Dave Schmidt:

We addressed this in a previous episode in last

Dave Schmidt:

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

Dave Schmidt:

can wait as long as possible to get social security.

Josh Bretl:

Yeah.

Josh Bretl:

Oh, without a doubt.

Josh Bretl:

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

Dave Schmidt:

Oh, minimum.

Dave Schmidt:

Minimum.

Josh Bretl:

So one of the considerations that you

Josh Bretl:

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

Josh Bretl:

And let me put this into perspective for you.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

Okay?

Josh Bretl:

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

Josh Bretl:

you have to give up three years.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

and money and all those things that come into play.

Josh Bretl:

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

Josh Bretl:

And for the average person, that break even comes

Josh Bretl:

to about 82 years old.

Josh Bretl:

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

Josh Bretl:

average that we see.

Josh Bretl:

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

Josh Bretl:

And the same is true if you start early.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

So one of the decisions you have to make is how

Josh Bretl:

long are you going to live?

Josh Bretl:

And are you in good health or not?

Josh Bretl:

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

Josh Bretl:

to stick with it, because your health could change.

Josh Bretl:

We have really good family friends who the plan was

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

it on now because your life expectancy just got shortened.

Josh Bretl:

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

Josh Bretl:

giving up that time period.

Josh Bretl:

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

Josh Bretl:

Your kids don't get it.

Josh Bretl:

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

Josh Bretl:

talk about in a second.

Josh Bretl:

You can't give your social security like a life

Josh Bretl:

insurance or like an IRA you can to your kids.

Josh Bretl:

The other thing on timing wise is some people have

Josh Bretl:

long life in their family.

Josh Bretl:

So if you and your parents have always lived a long

Josh Bretl:

time, that's a great thing.

Josh Bretl:

You may be unhealthy, you want to start early.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

decision making process, as well, that the calculator

Josh Bretl:

takes into consideration.

Josh Bretl:

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

Josh Bretl:

Because if you want to start collecting before your full

Josh Bretl:

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

Josh Bretl:

to how much you can earn.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

back 50 cents for every dollar you earn above that.

Josh Bretl:

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

Josh Bretl:

$10,000 of your social security.

Dave Schmidt:

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

Dave Schmidt:

the board for all Americans, or are there some different

Dave Schmidt:

factors that change that number?

Josh Bretl:

It's a pretty flat rate based on age.

Josh Bretl:

The year that you turn your FRA age, the number

Josh Bretl:

goes up significantly.

Josh Bretl:

But no, it's a set number.

Josh Bretl:

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

Josh Bretl:

It changes every year.

Josh Bretl:

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

Josh Bretl:

up to $20,000 right now.

Josh Bretl:

But that's the number that comes in.

Dave Schmidt:

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

Dave Schmidt:

loves working so much right now.

Dave Schmidt:

It's because there's no penalty.

Dave Schmidt:

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

Dave Schmidt:

he's like, "This is great."

Josh Bretl:

right.

Josh Bretl:

Because once you reach FRA or especially once you're

Josh Bretl:

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

Josh Bretl:

I mean, I guarantee you Warren Buffet's

Josh Bretl:

getting social security.

Josh Bretl:

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

Dave Schmidt:

How about his younger brother, Jimmy?

Josh Bretl:

Jimmy?

Josh Bretl:

He's wasting away again.

Josh Bretl:

Margaritaville.

Dave Schmidt:

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

Dave Schmidt:

I didn't catch you.

Josh Bretl:

Really quickly, I was trying to go through a

Josh Bretl:

Jimmy Buffett song in my head.

Josh Bretl:

And I should have went to Cheeseburger in Paradise,

Josh Bretl:

but I went with Wasted Away Again in Margaritaville.

Josh Bretl:

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

Josh Bretl:

if you're married or not.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

about your spouse's scenario.

Josh Bretl:

Because if one spouse passes away, what happens

Josh Bretl:

is you lose the lower of the two social securities.

Josh Bretl:

So it doesn't matter whose is lower, the

Josh Bretl:

lower one just goes away.

Josh Bretl:

And the surviving spouse gets to keep the higher amount.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

the road, they are so excited.

Dave Schmidt:

We just can't.

Josh Bretl:

No, no.

Josh Bretl:

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

Josh Bretl:

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

Dave Schmidt:

I think we're creeping way

Dave Schmidt:

past that right now.

Dave Schmidt:

But no, I was thinking about something.

Dave Schmidt:

Yeah, okay.

Dave Schmidt:

I found it.

Dave Schmidt:

Hey, Mr.

Dave Schmidt:

Josh.

Dave Schmidt:

Hey Mr.

Dave Schmidt:

Josh.

Dave Schmidt:

Let's take a break.

Dave Schmidt:

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

Dave Schmidt:

Let's not make them snore.

Dave Schmidt:

We already have.

Dave Schmidt:

Listening shouldn't be a chore.

Dave Schmidt:

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

Dave Schmidt:

Oh yeah.

Josh Bretl:

We've talked about Erin already on the episode,

Josh Bretl:

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

Josh Bretl:

He's also eight.

Josh Bretl:

And but he also just likes that song.

Josh Bretl:

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

Dave Schmidt:

Well, Finn, let me have my agent call

Dave Schmidt:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

I think, drives you nuts.

Josh Bretl:

But I went a little bit easy today.

Josh Bretl:

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

Josh Bretl:

that I heard on a different podcast and it actually changed

Josh Bretl:

my whole answer to this.

Josh Bretl:

But the question is, if you could have one

Josh Bretl:

superpower, what would it be?

Dave Schmidt:

So Josh, if I had one superpower?

Dave Schmidt:

That's just really not fair.

Dave Schmidt:

I have so many things I would love to do.

Dave Schmidt:

my superpower would be, it's kind pretty

Dave Schmidt:

generic, pretty boring.

Dave Schmidt:

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

Dave Schmidt:

Maybe not for the same reasons that everybody

Dave Schmidt:

else would want to fly.

Dave Schmidt:

I just want to be able to quickly get my

Dave Schmidt:

coffee and get back.

Dave Schmidt:

Quickly go get my crepes and get back.

Dave Schmidt:

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

Dave Schmidt:

That's why I want to be fast.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

No.

Dave Schmidt:

No.

Josh Bretl:

That's fair.

Dave Schmidt:

Talking hawk and eagle speed.

Josh Bretl:

Yeah.

Dave Schmidt:

How about you Josh?

Dave Schmidt:

What's your superpower?

Josh Bretl:

So, what I really want to have the ability

Josh Bretl:

to do is to slow down time.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

And I don't want to slow myself down.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

God, I would be so efficient and so effective.

Josh Bretl:

It would be incredible.

Dave Schmidt:

Can you imagine the things you

Dave Schmidt:

would accomplish, Josh?

Josh Bretl:

We'd have daily podcasts, Dave, daily.

Dave Schmidt:

Daily podcasts.

Dave Schmidt:

I can't even imagine.

Dave Schmidt:

You would have-

Josh Bretl:

Although, I'd be talking be at normal speed

Josh Bretl:

and you'd be going like this.

Dave Schmidt:

That's true.

Dave Schmidt:

You could make so many cocktails so quickly.

Josh Bretl:

Yeah, people wouldn't even

Josh Bretl:

know what hit them.

Josh Bretl:

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

Dave Schmidt:

Exactly.

Dave Schmidt:

Dave relates to retirees.

Dave Schmidt:

Yeah.

Dave Schmidt:

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

Dave Schmidt:

Of course I do.

Dave Schmidt:

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

Dave Schmidt:

I can relate to this whole huge decision of social

Dave Schmidt:

security for retirees and soon to be retirees.

Josh Bretl:

The seriousness in your face.

Dave Schmidt:

Yeah, no, this is a big one.

Dave Schmidt:

This is deep.

Dave Schmidt:

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

Dave Schmidt:

about what to watch on TV.

Dave Schmidt:

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

Dave Schmidt:

Addams show on Netflix.

Dave Schmidt:

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

Dave Schmidt:

Reynolds and Will Farrell.

Dave Schmidt:

Or I could just watch the Bulls game.

Dave Schmidt:

All three viable options.

Dave Schmidt:

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

Dave Schmidt:

I'm having a coughing attack here.

Dave Schmidt:

I got to keep that in consideration.

Dave Schmidt:

The movie Spirited is a Christmas movie.

Dave Schmidt:

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

Dave Schmidt:

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

Dave Schmidt:

Christmas will be over.

Dave Schmidt:

So that's a factor.

Dave Schmidt:

However, I'm married.

Dave Schmidt:

So some retirees who are married, they have to take

Dave Schmidt:

that into consideration.

Dave Schmidt:

So do I.

Dave Schmidt:

Carla and I grew up loving the Addams family.

Dave Schmidt:

So Wednesday Addams, not only is it made by and

Dave Schmidt:

directed by Tim Burton, it just looks phenomenal.

Dave Schmidt:

So should I watch that?

Dave Schmidt:

But then there's also this third factor.

Dave Schmidt:

I don't have much money here.

Dave Schmidt:

I probably shouldn't be paying for all these

Dave Schmidt:

streaming services.

Dave Schmidt:

So how about I cancel streaming services and

Dave Schmidt:

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

Dave Schmidt:

So retirees, I get it.

Dave Schmidt:

Huge decision for you.

Dave Schmidt:

Huge decision for me.

Dave Schmidt:

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

Josh Bretl:

You know, once again, Dave,

Josh Bretl:

you are so relatable.

Josh Bretl:

It's unbelievable.

Dave Schmidt:

Thank you.

Josh Bretl:

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

Josh Bretl:

And I also wonder sometimes why you are everyone's

Josh Bretl:

favorite on this podcast when I hear stuff like that.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Dave Schmidt:

I just coughed and spit water all over the place.

Dave Schmidt:

Yeah.

Dave Schmidt:

Oh my God, I'm a mess.

Dave Schmidt:

My screen is dowsed with water right now.

Josh Bretl:

Dave, you amaze me sometimes in how you are

Josh Bretl:

able to relate to retirees.

Dave Schmidt:

Thank you.

Josh Bretl:

And your thought process in regards to which

Josh Bretl:

show you should watch is obviously deep on your mind.

Josh Bretl:

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

Josh Bretl:

There's many studies that have been done that say

Josh Bretl:

people spend more time planning their vacations

Josh Bretl:

than they do their finances.

Josh Bretl:

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

Josh Bretl:

planning what shows you watch than your finances.

Josh Bretl:

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

Josh Bretl:

potential risk that's there.

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

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

Josh Bretl:

somebody for help later in life.

Josh Bretl:

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

Josh Bretl:

back into their basement.

Josh Bretl:

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

Josh Bretl:

don't want to make mad either.

Josh Bretl:

But I think that she'll understand more than if

Josh Bretl:

someone makes the wrong social security decision.

Josh Bretl:

But I do understand, in your mind, how important

Josh Bretl:

of a decision that is.

Josh Bretl:

So on behalf of all the retirees, thank you-

Dave Schmidt:

Sure.

Josh Bretl:

For your concern.

Dave Schmidt:

Absolutely.

Dave Schmidt:

Now, do you have any advice for me?

Josh Bretl:

Yeah, watch the Bulls.

Josh Bretl:

It's live.

Josh Bretl:

You love the Bulls.

Dave Schmidt:

I do love the Bulls.

Josh Bretl:

Hands down.

Dave Schmidt:

I do love the bulls.

Josh Bretl:

I mean, it has nothing to do with

Josh Bretl:

the streaming services.

Josh Bretl:

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

Dave Schmidt:

True.

Josh Bretl:

You can watch Spirited with Carla

Josh Bretl:

sometime this weekend.

Josh Bretl:

Just watch the Bulls.

Dave Schmidt:

Okay, I think I will.

Dave Schmidt:

Josh, thank you.

Josh Bretl:

Our next episode, we're going to talk about

Josh Bretl:

what I consider to be actually more important that

Josh Bretl:

we just talked about today.

Josh Bretl:

And those are the bigger variables that go into when

Josh Bretl:

to collect social security that those calculators don't

Josh Bretl:

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

Dave Schmidt:

If Apple doesn't feature us on their

Dave Schmidt:

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

Dave Schmidt:

world, to be honest with you.

Josh Bretl:

Oh, I agree.

Josh Bretl:

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

Dave Schmidt:

Unfathomable.

Dave Schmidt:

Cool.

Dave Schmidt:

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

Dave Schmidt:

a big bite out of my bagel.

Dave Schmidt:

So friends, listeners, especially you, Deb,

Dave Schmidt:

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

Dave Schmidt:

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

Follow

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