Take Back Retirement
What Women Need to Know About Social Security
Social Security is the foundation for every retirement income plan, and it seems really simple: you hit retirement age then turn around and start getting your money. In fact, the benefits you can reap are actually much more powerful than most people think; however, it’s also a more complicated topic than many of us realize.
In this episode, we highlight several important points that women specifically need to know about Social Security (while going down a rabbit hole or two along the way!).
Listen in and learn the factors that make the Social Security experience different for men and women, and what to know if you’re not working for pay, are divorced, or a widow. Finally, we answer the question: Is it true that Social Security is going bankrupt?
Breaking down the complications of Social Security (2:36)
How the Social Security experience is different for men and women (3:59)
Why is it important to check your earnings record? (07:11)
Must-knows about Social Security taxes (9:28)
What do you get from your Social Security if you don’t work outside the home? (11:40)
What about divorced women? (13:17)
What about widows? (15:51)
Three important dates to note down (17:08)
Considerations around claiming benefits before full retirement age (18:15)
Why the government may withhold some of your benefits (22:30)
Paying income tax on your Social Security (24:14)
Addressing concerns around Social Security solvency (27:58)
Stephanie McCul…: 00:06 Welcome to Take Back Retirement, the show for women 50 and better facing a financial future on their own. I’m Stephanie McCullough. And along with my fellow financial planner, Kevin Gaines, we’re going to tackle the myths and mysteries of quote unquote retirement, so you can make wise decisions toward a sustainable financial future. Through conversations and interviews. You’ll get the information and motivation you need to move forward with confidence, and we’ll be sure to have some fun along the way. We’re so glad you’re here. Let’s dive in.
Stephanie McCul…: So, way back when I was a baby financial planner, I met with a woman who was terrified about retirement. She really was feeling very anxious about whether she’d ever have enough to be able to leave her job. Now, this woman was divorced. And when she came in, she had all her papers and all her numbers and her account statements and that kind of thing. So, the first thing we looked at was social security. She had her statement and her ex-husband’s statement, and we’ll talk about why that’s important. But, when we looked at that and we started and I put down that number, that amount of money she was going to get every month for the rest of her life, her whole demeanor changed. She was like, ‘oh, thank goodness. Now I won’t be living on cat food.
Stephanie McCul…: Coming to you semi live from the beautiful Westlakes Office Park in suburban Philadelphia, this is Stephanie McCullough and Kevin Gaines of Sofia Financial and American Financial Management Group. Say, ‘hello,’ Kevin.
Kevin Gaines: Hello, Kevin. So, a few weeks ago, we did an episode about IRAs, very popular episode and we covered a lot of territory on that, but we started off that episode the same way we’re starting off this episode with not so much a disclaimer, but a warning. Social security sounds really simple. ‘Oh, I just, once I hit the age, I turn around, I say, give me my money and I start getting my money.’ By the end of this episode, much like the IRA episode, you may actually have more questions than you have answers because I suspect we’re going to be opening some people’s eyes as to how complicated, but how powerful the social security benefit is. This is the foundation for every retirement income plan. The first thing we start off with every time is knowing social security and we work from there. So, this is important and we want to know it.
Stephanie McCul…: Yeah, it is really important. And I used to work for the federal government for a time. And I learned that anything conceived by Congress and implemented by the federal government is just going to be complicated. Right? This is a program that’s been around for years. Things get added on, things get tweaked. It’s complicated. So, what we’re going to do here today, please hear us, we’re not giving you every single detail about social security. We’ve picked out the highlights of what we think is important for women to be aware of in the program. But this is not meant to be a comprehensive course on all things social security.
Kevin Gaines: In fact, we should probably start off apologizing to our editor, our podcast editor, because it’s very easy to go down various rabbit holes that we’re going to be just touching the surface of. And we’re probably going to have to be cutting ourselves off going, ‘oh no, we don’t want to spend 20 minutes talking about this when we only want to do the episode for 30 minutes.’ So, Zack, apologies in advance of how much editing you may have to do.
Stephanie McCul…: [laughter] And it’s harder since we’re not recording in the same room. I can’t kick Kevin under the table and be like, ‘okay, enough, cut it off.’ [laughter]
Kevin Gaines: [laughter] All right. You’re not trying to imply that I can be long-winded or get tied up in the minutia, by chance.
Stephanie McCul…: Of course not. I would never say such a thing.
All speakers: [laughter]
Stephanie McCul…: So, one of the first important things to realize is that yes, social security is crucial. It forms the backbone of our retirement income plan. And as in many things in life, it tends to be different for men and women. So, I saw a statistic recently that the average retirement benefit for a man is $1,646 a month. Whereas the average benefit for a woman is $1,281 a month. Why might that be? Well, as we know, women on average tend to earn less than men and we tend to take time off of the workforce. So, that brings us to an important thing that people should realize, Kevin, how is our social security benefit calculated?
Kevin Gaines: So, the rules are fairly simple, again, at least to start. So, what they do to calculate your benefit is they look at the top 35 years of earnings that you’ve accumulated and I need to stress that these are earnings that they know about. If the social security administration doesn’t know you earned that money, they’re not going to include it in the calculation.
Stephanie McCul…: 05:09 You mean, if I get paid under the table from my cousin for helping out during tax season?
Kevin Gaines: It might help you avoid some issues with the IRS, but you’ll probably be complaining when your social security benefit is a little bit lower than you think it should be. Yes.
Stephanie McCul…: Yeah. So highest 35 years, what if I’m a woman who took time off to take care of my kids and didn’t work for 35 years. What happens then?
Kevin Gaines: Well, see, and now this is one of the things that hurts women, because they’re more likely to take off for family than men. Well, if you don’t have 35 years, they just throw in zeros. So, you work 30 years and you have five years missing, you’re going to have five years of zeros. And we can have a whole conversation about how to try to work around or help yourself on these points, but keep in mind that they will look. Even if it’s $2, they will call that $2 and not zero. And if we touch on how the cost-of-living adjustments work with social security, you understand why that can be important.
Stephanie McCul…: Let’s make sure we get back to that point. But here’s the thing. Years ago, we all used to get a statement in the mail once a year, that showed not only our expected benefit at different ages, but also it shows the earnings record that the social security administration is basing that calculation on. As a cost cutting and maybe environmental measure, they are no longer sending the paper unless you’re over 60, but you can log on to socialsecurity.gov, or it might be ssa.gov, social security administration. And you have to do all those creepy knowledge-based authentication things where they say of these four cars, which one have you ever owned? And which street has you lived on? But once you get through that, you can see your statement. And it’s always a good thing to check on that earnings record, right? It’ll say in 1973, you earned $40. And you’re like, ‘oh yeah, that’s when I worked at the local swim club or something, but Kevin, why is it important to check your earnings record?
Kevin Gaines: Because bottom line is, they’re humans that are putting these numbers in. They make mistakes. Doesn’t happen often, but they make mistakes. So, you want to be able to verify that the number they’re showing for you is your correct number. If they show 20,000, when you actually earned 60,000, that can be an issue. More importantly, if you had earnings and they have you down as a zero, my opinion, that’s a bigger problem.
Stephanie McCul…: Yep. So, then you want to contact the social security administration and get that updated. Again, not for under the table money.
Kevin Gaines: Exactly. And obviously you’re going to have to be able to prove it.
Stephanie McCul…: Right. So, a W2 or a 1099, or some type of proof of those earnings. Now, another thing to note here is that there is a cap. So, if you earned $350,000 one year, they only count up to a certain level of earnings in the calculations. Is that right, Kevin?
Kevin Gaines: Yes. And what they do is they adjust that for inflation. So, each year it goes up a little bit more.
Stephanie McCul…: Yeah. So, you might see numbers where it looks like you actually earned more than is in there, but know that there is a cap to what they calculate.
Kevin Gaines: And if you get a W2, you can see that. Here it is, we’re approaching tax time. You probably have the W2 within reach. Take a look at it. There’s box one, social security wages, and then box three, which is taxable wages, I think is the term for that box. Those numbers don’t always match up. And now maybe because of 401k contributions, for example, but if you earn over the annual limit, you will see that that box one is going to be a lot less than box three. So, that’s just a good way to eyeball what you’re dealing with.
Stephanie McCul…: So, I’m looking at my handy dandy, cheat sheet here for all these things, all these numbers. And in 2020, that cap was $137,700. So, if you earned over that, in box one of your W2, you would see $137,700.
Kevin Gaines: Now, if you earn that much, if you earn over that amount, you don’t have to pay social security tax over that amount.
Stephanie McCul…: Tell me about social security tax.
Kevin Gaines: So, here’s the thing. Social security is what’s referred to as a pay as you go system, meaning unlike an IRA, you don’t have an account that you’ve paid into the system and theoretically you could go in and grab that money whenever you want. It doesn’t exist. The money you are paying today is covering the beneficiaries of the program today. You’re basically paying for your parents or grandparents.
Stephanie McCul…: 09:56 So, there’s no account that says Stephanie McCullough on it and it’s my money?
Kevin Gaines: No, there is not. Now, when you start collecting, you’re going to be relying on your kids, grandkids, neighbors, whoever to pay for your benefit. And we’re going to get to this. This gets into the conversation about the quote unquote solvency of social security. And I have several issues with that, even using that term, but anyway.
Stephanie McCul…: Let’s postpone that for the moment.
Kevin Gaines: Yes, please.
Stephanie McCul…: So, just to be clear, the social security tax, the amount that’s coming out of your pay, if you’re paid on a W2 basis, if you’re an employee it’s listed as FICA, do you remember what FICA stands for?
Kevin Gaines: No, I don’t.
Stephanie McCul…: [laughter] I don’t either.
Kevin Gaines: [laughter]
Stephanie McCul…: But when you see FICA on your pay stub, you’ll see FICA, that’s the social security tax and it’s 6.2% that you pay. And 6.2% that your boss pays, your employer. However, if you’re self-employed, if you don’t get a W2, if you get a 1099, or if you own your own business, you’ve got to pay all of that on your own. So, you have to pay 12.4% of FICA taxes, which is what’s going to the social security system.
Kevin Gaines: Right. For the record, I took a quick second federal insurance contribution act.
Stephanie McCul…: There you go. Who knew? Again, Washington DC: land of the acronym.
Kevin Gaines: Yes. And will I remember that in a week? No.
Stephanie McCul…: [laughter] So, what if I am a woman who really hasn’t worked, right? I’ve only maybe had a couple of years of working and then I have stayed home and been a stay-at-home mom, been a homemaker. Do I get nothing from social security?
Kevin Gaines: Au contraire, you do. And you can get it a couple different ways. There’s this thing called the spousal benefit. Spousal benefit kicks in when your lifetime earnings aren’t that high relative to your spouse. For example, you look at your benefit statement and it says, you’re entitled to $500 a month. And you look at your spouses and it says that they’re entitled to $2,000 a month. Well, the spousal benefit works that you get one half of your spouse’s benefit. If it’s more than what you’re entitled to. So, now all of a sudden, your 500 is a thousand. That’s definitely there to help you if you don’t have a whole lot of earnings. So, that’s a nice protection.
Stephanie McCul…: So, instead of the $500 that I would be entitled to based on my earnings record, I could actually get a thousand dollars because that’s half of my spouses. And here’s a confusion that a lot of people have they say, ‘oh, I don’t want to reduce my spouse’s.’ But that’s the interesting thing. The spouse still gets a hundred percent of their benefit and you get half of that amount. So, it’s not taking away from the higher earner. It’s just the way they calculate it to actually, like Kevin said, give you kind of a little bonus, give you a bump up.
Kevin Gaines: Right. And that’s the thing to remember is you’re not going to impact their numbers.
Stephanie McCul…: Right. And let’s now go to divorce. What if I used to be married, but I’m not anymore?
Kevin Gaines: Well now, assuming you’ve been married for 10 years, that’s the first rule you need to keep in mind. If you only had one of these Hollywood marriages that lasts seven months or something ridiculous like that, yeah no, you don’t get that benefit. But if you’ve been married for at least 10 years and you haven’t gotten remarried, then you’re allowed to use your ex-spouse’s benefit and be able to claim your spousal benefit off of that. Just because you’re divorced, doesn’t mean you’re not entitled to that.
Stephanie McCul…: So, a spousal benefit still applies if I’m divorced, as long as I was married for 10 years.
Kevin Gaines: Right.
Stephanie McCul…: And haven’t remarried somebody else, because then they would calculate the spousal benefit on my new spouse.
Kevin Gaines: Right.
Stephanie McCul…: So, the crazy thing is you get these situations where let’s say, to be stereotypical, one man has been married multiple times and he was married to the first wife 10 years. And he was ready to the second wife 10 years. And now he’s got a third wife. So, this man let’s say he was a super high earner. He is still entitled to a hundred percent of his benefit. And there could be three women collecting spousal benefits, which again, don’t reduce his benefit at all. And now you can see why maybe the social security system has bitten off more than it can chew in terms of promises.
Kevin Gaines: Yes. And again, we’ll put a pin into that because we could actually do a whole episode of why social security isn’t going to be insolvent.
Stephanie McCul…: Yeah, spoiler alert. It’s not going away.
Kevin Gaines: [laughter] It’s not going away. And the same thing’s true. If you’ve been married multiple times. As long as you are not married when you file, then you can actually look at a couple of spouses and say, ‘who are in the most money?’ I want half of that.
Stephanie McCul…: 15:00 But what if things aren’t so friendly with your ex, how do you figure out, if you’re trying to do your planning, you’re not retired yet. How do you figure out what that spousal benefit might be?
Kevin Gaines: Well, you see. The nice thing about the government is they are worried about protection from time to time. And this is one of those times. You don’t have to talk to your ex about this. You reach out to social security; you go to the office or 1-800 and walk through the benefits.
Stephanie McCul…: I think you have to submit proof that you had been married for 10 years.
Kevin Gaines: Right. You have to prove that you’re entitled to have the number and that you’re no longer married and such, but then they will just say, ‘hey, here it is.’
Stephanie McCul…: Okay. We’re going to get to that when you can start getting benefits. But that is a good point. Unlikely if you’re still married, right?
Kevin Gaines: Correct. If you’re still married, you do actually have to have things filed.
Stephanie McCul…: Okay. Before we get to when you can get your money, let’s talk about, ‘what if I’m widowed? What if I was married and now my spouse is no longer here? How does that affect my social security?’
Kevin Gaines: Well, again, another planning opportunity actually is how I would phrase it, is because you’re entitled to something called the survivor benefit, which is a hundred percent of your spouse’s social security.
Stephanie McCul…: If it’s higher than your own.
Kevin Gaines: If it’s higher than your own or, rabbit hole alert, this can get real complicated. And this is actually something we spend a lot of time on when working with widows and widowers is when to claim which benefit because you actually do have some flexibility of claiming your benefit and then claiming the survivor benefit later or vice versa.
Stephanie McCul…: That’s true. Maybe I spoke too soon saying if it’s higher. You actually are entitled to both, right?
Kevin Gaines: Right.
Stephanie McCul…: You can’t get both added on top of each other, but it can be different times you claim each one.
Kevin Gaines: Right. And especially if you have children, younger children, because that survivor benefit also applies to or can apply to the children. And there are certain limits constrained within that. But that’s part of the conversation of, ‘which benefit do I claim?’ Again, another rabbit hole that we could go down and not emerge from for an hour or two.
Stephanie McCul…: We’ve alluded to this already. All right. ‘You, you pay into the system and then you turn it on when you retire.’ But there are rules around when you can get your benefit. There are three dates you need to know about. One is your full retirement age, FRA in the lingo of social security. So, the full retirement age in the beginning of the program, okay, here’s an interesting side note. The full retirement age was 65. And then when they made the adjustment, they decided that if you were born in 1937 or earlier, your full retirement age was 65. If you were born in 1938, it’s 65 and two months, 1939, 65 and four months, et cetera. And they work at all the way up until the point that folks who were born in 1960 or later, your full retirement age is 67. So, I think people still kind of have that ’65’ in their heads. They’re like, ‘when can I retire? Oh, 65.’ Well, you can retire whenever you want to. However, when can you apply for your full unreduced social security benefit? That used to be 65. And, now for younger folks it’s 67. So, when I say unreduced, Kevin, tell me about what that means.
Kevin Gaines: So, you can collect your full retirement benefit at your FRA full retirement age. However, starting at age 62 or age 60, in some cases, you can claim early and in exchange for claiming early, the government’s going to say, ‘well, you don’t get a hundred percent of this. You’re only going to get a certain percent.’ And the math actually gets a little convoluted. Another place security gets really complicated is math because they look at everything in terms of months. So, if they reduce something, they reduce it by eight twelfths for first couple of years.
Stephanie McCul…: [laughter]
Kevin Gaines: And then something like that, so yeah. So, it gets convoluted. What you need to know is if you’re not at full retirement age, you’re going to get less than what that benefit statement says.
Stephanie McCul…: Right. So, the earliest you can get it is 62. If you’re a widow it’s actually 60. And there might be some other cases where it’s 60, but for the most part, think 62 or my full retirement age. Lower amount at 62, because they’re going to be paying you for more years. So, they’re going to be paying you a smaller amount. Now, some people have the attitude like, ‘oh, I want to get some dollars out of that system as soon as I can.’ And other people are like, ‘oh no, it’s worth waiting so I get a higher amount.’ There’s actually kind of a crossover age where you can see, I have to live to this age to get more dollars out of the system if I wait versus claiming early. So, there’s different feelings on it.
Kevin Gaines: Yeah. If you have a crystal ball, it’s easy to figure out when you should claim.
Stephanie McCul…: Exactly.
Kevin Gaines: But if you don’t have that knowledge, it’s a little bit more difficult.
Stephanie McCul…: And then there’s a third piece of the puzzle, which is age 70. What’s that all about?
Kevin Gaines: So, to encourage people to work longer or more importantly, delay claiming, the SSA says, ‘hey, every month you put off claiming after you reach full retirement age, we’re going to give you an extra bump.’ It works out to be about 8% per year, but at age 70, they then say, ‘okay, we’re done giving you the bump, just start collecting at this point and you’ll be done.’ So, either somewhere between the age 65, although truthfully, if you were eligible at 65, you’d already be claiming. So, say 67, you can accumulate three years of an extra 8%, if you avoid claiming, which is a nice benefit, if you’re able to do that.
Stephanie McCul…: 20:36 Yeah. So that if you have other places to pull money to pay your bills, or if you’re still working, maybe you delay. And like Kevin said, it’s all about months. So, you don’t have to wait to 70. Maybe you get to 68 and a half. You’re still getting more than you would gotten at 67.
Kevin Gaines: Right. Again, rabbit hole alert. You need to be careful if you do claim after your full retirement age, because when you file, after your full retirement age, social security will actually assume you meant to file six months previous. You actually have to tell them.
Stephanie McCul…: What?
Kevin Gaines: Yeah, yes, you have to be affirmative in when you want to claim your benefit because you actually do have the luxury of saying I’m filing in December, but I really wish I would’ve filed in July. Social security will let you do that.
Stephanie McCul…: Will they pay you a lump sum?
Kevin Gaines: They’ll give you a lump sum of those months that you missed. So, where this can come in useful is if you have a really huge unexpected bill, and obviously you’re older, eligible to claim, you can make that claim retroactive and say, oh, and then you get this lump sum and that can help. Also, on a more dour note, if you get notified that you’ve got five months to live or something along those lines, again, you can make the claim retroactive and get a bigger lump sum to do whatever you want to do. Although, if you’re married, you may not want to do that. We’ll get to that later or in a different episode.
Stephanie McCul…: So, when you claim, is a piece of the puzzle, right? ‘How much am I going to get?’ Step number one. Step number two. ‘All right. When might I want to claim?’ And there’s another piece that we want to just throw out there and again, not go into huge detail, but just let you know. If you’re still working, but you want to collect your benefit you actually, if you’re claiming before your full retirement age, social security will ding your benefit. They will withhold some of it if you’re earning over a certain amount, which is a pretty low bar. So, if you’re working and earning $50,000 a year, but you think it would be nice to get some social security to help you with the bills, you’re not going to get your full amount. Now, they don’t withhold it forever. They’ll make you whole after you reach your full retirement age, but that is something to be aware of.
Kevin Gaines: Correct. And by making you whole, making you whole on the benefit you were entitled to at the age you filed, they’re not going to make you whole and bump you up to your full retirement age benefit or anything along those lines.
Stephanie McCul…: Right. But if they withheld a certain amount per month.
Kevin Gaines: Correct, and what they also do is that amount they withhold, they will use that to credit you for time spent. So, for example, keep the simple, if you claim at 62, but you had extra earnings, so they were withholding and the amount they withheld adds up to the equivalent of a year’s worth of benefits for you, they will adjust, once you hit full retirement age, they will adjust your claiming date from age 62 to age 63, in this example, so that you get a slightly higher benefit than what you had claimed.
Stephanie McCul…: Interesting. It’s all very complex because we’re in Washington, DC.
Kevin Gaines: As we said at the beginning, you may have more questions at the end than at the beginning.
Stephanie McCul…: [laughter] More than you ever dreamed of.
Kevin Gaines: You see this happening. You see it happening as we’re having this conversation.
Stephanie McCul…: Another misconception I hear is people don’t actually realize that they’re going to pay income tax on their social security.
Kevin Gaines: Yes, when you hit full retirement age, you don’t have to worry about having money withheld, but you’ve got to worry about it getting taxed. And it’s done in bands. There are three bands you have to worry about, and it’s not a tax rate. It’s how much of your social security benefit is eligible to be taxed or exposed to taxation. So, up to, and I forget what this year’s limits are, up to a certain amount 0% of your social security benefit is subject to taxation. Then once you hit that first break point 50% is subject to taxation. And then when you hit the second break point, you enter that third band. It’s 85% of your…
Stephanie McCul…: 25:08 So just to fill in, if you’re married, filing jointly, and I think it’s your total income is under $32,000. Then none of your social security will be taxable. If you earn between 32 and $44,000 up to 50% is subject to tax. And when we say subject to tax, we mean thrown into the pot with your ordinary income tax. If you earn over $44,000 up to 85%, and then if you’re single, that 44, it’s actually $34,000. So, if you earn over 34,000 up to 85% of your social security is taxed. So, here’s a scenario for you. We’ve got a couple, kind of maybe your stereotypical couple. Stay at home mom, high earning husband, working super high stress job. And they’re looking towards retirement and thinking, all right, how are we going to make all this work? It’s possible that they’re getting towards maybe 65 and thinking, ‘oh hubby, he’s not that healthy.’
Stephanie McCul…: He’s lived a really stressful, unhealthy lifestyle. If we’re thinking about life expectancy, he might not be around that long, but wife has been doing yoga all the time. She’s been living the healthy life, eating organic. We think she’s going to be around a long time. What do you think about social security claiming strategies? So, we’ll have a husband with a higher benefit, wife with a lower benefit. When one of them passes away, the remaining spouse gets the higher of the two benefits.
Kevin Gaines: So yeah, this is a good point you’re bringing up. Especially, if you expect the higher earner to go first. Whether because of age or lifestyle or whatever reason. You may say automatic, ‘oh, well, we want to claim as early as possible so we can get, start getting the money. So, we get the money back,’ as people conceptualize in their head. But if the surviving spouse is expected to live, especially if the surviving spouse is expected to live a long time, again, because of lifestyle or genes or whatever reason, you still may want to avoid filing as soon as you hit full retirement age and try to build up as much credits as possible because of that surviving spouse going to be claiming another 20, 30, 40 years. So, it’s actually a benefit.
Stephanie McCul…: If you wait until age 70, not only will the high earner get the higher benefit for as long as he’s around, but the surviving spouse for the rest of her life gets that higher benefit.
Kevin Gaines: Right. So, that’s definitely something to consider. It’s not cut and dry. I know John is going to pass at age 71. So, we want to claim as early as possible. If we know Sue is going to live to 110, yeah. You want to get that benefit as high as possible, something to consider.
Stephanie McCul…: All right, let’s spend three minutes on this whole concern about social security solvency. I have talked to people who are like, ‘oh no, it’s never even going to be there. I’m not counting on it at all.’ And maybe planning wise, that’s a good strategy. Rely on your own resources, but is social security going away?
Kevin Gaines: Hells to the no.
Stephanie McCul…: [laughter]
Kevin Gaines: I’m going to be fairly definitive. In our industry, we’re never allowed to be definitive, but I’m going to go out on a limb and maybe run into compliance issues.
Stephanie McCul…: [laughter]
Kevin Gaines: But no, it is going to be here. Here’s what they’re talking about when they say that social security is going to go bankrupt. Back in 1983, when they quote unquote saved social security, they made a bunch of changes and social security tax revenue was higher than what they were paying out at the time. So, what they did was they created the trust fund and all the excess savings went into this trust fund. And when social security started paying out more than they were taking in, in taxes, they started drawing down on this trust fund. And depending on how things paying out the trust fund is expected to go to zero sometime later this decade.
Kevin Gaines: The really, really optimistic puts it at 2030s. Some are saying in 2025, 2026, depends. But here’s the thing to understand, even after that date and the trust fund goes to zero, there’s still social security taxes coming in. Right now, it’s estimated that about 77% of what social security is paying out is coming in in the form of current taxes. So, worst case scenario, assuming those ratios stay true, after this date and the trust fund is at zero, your benefit could be reduced to 77% or whatever that actual number is. But I would take it a step further. Politicians are going to make the decision on how to make up the difference with social security or if they’re going to make up the difference. And does anybody out there really think a politician who wants to get reelected is going to say, ‘no, grandma, no grandpa, we’re going to reduce your benefit. We’re not going to find new ways to come up with the funding for this.’ Yeah. Good luck getting reelected on that particular stance, no matter what side of the isle you’re on.
Stephanie McCul…: 30:24 And there’s other ways you could tweak it, right? They can increase taxation of the social security. They can adjust how they calculate the cost-of-living adjustment, which is something we’ve gone the whole episode without talking about. Unlike many other income sources, social security benefits get a bump when there’s inflation. Now, there’s been low inflation recently, so they haven’t been huge, but there is a bump and they can fiddle with a lot of things. They can increase the retirement age again for younger people. So, there’s plenty of ways they can tweak it. And it’s often called the third rail of politics, right? You don’t want to touch those social security benefits because those retirees man, they vote.
Kevin Gaines: They vote in big numbers. And the closer you get, you’re really interested in this stat as well.
Stephanie McCul…: All right. As you can tell, there’s tons about social security. I’m sure we’ll do at least one more episode about it, but we hope you found this helpful. Thanks for being with us. We’ll talk to you next time. It’s goodbye from me.
Kevin Gaines: And it’s goodbye from her.
Stephanie McCul…: Be sure to subscribe to the show and please share it with your friends. Show notes and more information available at TakeBackRetirement.com. Huge thanks for the original music by the one and only Raymond Loewy through New Math in New York. See you next time.
Disclaimer: 31:37 Investment advice offered through Private Advisor Group, LLC, a registered investment advisor. Private Advisor Group, American Financial Management Group, and Sofia Financial are separate entities. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investments may be appropriate for you consult your financial advisor prior to investing. This information is not intended to be substitute for individualized tax advice. Please consult your tax advisor regarding your specific situation.