Episode 027:
When Should You Claim Social Security? (Part 2)


Episode 027 Summary:

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!

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Click here to learn more about or listen to previous episodes of The Retirement Equals Freedom Podcast. Don’t forget to sign up for the show’s new weekly email at this link and definitely come join the conversation at our new private Facebook group, which you can find here.

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Flying. Slow down time. Wednesday.

Flying. Slow down time. Wednesday.

Talking Points

Oh no! Covid19 took Dave down during one of his favorite times of the year. He tested positive on Thanksgiving Day!

Also: Updates on two of the pod’s top #TaxNerd fans and an “epic” family wedding!

Google It: Search for a “Social Security calculator” and get 690,000,000 results based on two basically impossible-to-answer questions:

  • How long are you and your spouse going to live?
  • How much are you going to need to live comfortably?

Social Security calculators can be helpful – if deployed appropriately!

Defining Terms:

  • FRA – Full Retirement Age, which is the age on which the government bases all its calculations and is determined by year of birth.
  • PIA – Primary Insurance Amount, which is the amount of money you will receive upon reaching FRA.

How PIA is calculated: Based on an aggregate equation of an individual’s 35 top-earning years of employment divided by 420 (the number of months in 35 years).

You can tap Social Security as early as age 62 or as late as 70 – but every year you start earlier than the peak of your PIA, you will take about a 7% annual reduction in payout. And if you hold off longer? You get delayed retirement credits worth about 8% a year for every year you wait!

How long do you plan to live? How’s your health and family longevity? There’s a break-even point calculus to be done when determining whether it’s worth it to delay receiving Social Security.

Other variables that impact the decision about when to tap Social Security:

  • Are you still working? If so, you can only earn up to about $18,000 per year before the government takes back 50 cents for every dollar you earn above that threshold.
  • Once you hit your FRA you can earn as much as you want without penalty (even if you’re wastin’ away in Margaritaville …).
  • Are you married? If one spouse passes away, you lose the lower of the two Social Securities and the surviving spouse gets to keep the higher amount.

Get to Know Josh & Dave (listening shouldn’t be a chore …): If you could have one superpower, what would it be?

  • Dave thinks one is too limiting! But if forced to choose just one, it would be the ability to fly (and – just like that – get his crepes and coffee superhero fast).
  • Josh would like the ability to slow down time. He’d go at his same speed, but have access to a “pause” button to increase efficiency and quality of life!

Dave Relates to Retirees: Neither entertainment choices nor resources to pay for them are infinite. Such life changing decisions require careful consideration. Risk is relative (and watch the Bulls – it’s live!).

Stay Tuned for Next Time: Josh will take a look at some important decisions that aren’t generally factored into Social Security calculators but merit consideration!

Quotable Quotes

“As long as I’m with you, Josh, I’m never bored.” ~Dave

“Your goal is not to take the most money you can from Uncle Sam. You may think that’s your goal, but by taking the most money from Uncle Sam you may be putting yourself in a worse situation.” ~Josh

“You would think, ‘Hey I want to start taking (Social Security) as early as possible.’ Well, if you start before your Primary Insurance Amount they are going to reduce the amount you receive and that reduction comes to about 7% a year.” ~Josh

“If you wait until 70, you’re going to get a heckuva lot more but you’ve given up three years of income.” ~Josh

“You can’t give Social Security to your kids like a life insurance or IRA.” ~Josh

“Once you reach FRA, and especially once you’re over 70, you can work as much as you want. I guarantee you Warren Buffet’s getting Social Security!” ~Josh

“Dave, you amaze me sometimes in how you are able to relate to retirees and your thought process … is obviously deep on your mind.” ~Josh

“Studies have shown that people spend more time planning their vacations than they do their finances.” ~Josh

“In your case (Dave), you’re really just upsetting your wife, who I don’t want to make mad either! But you’ve upset her before and she’s recovered.” ~Josh

“Part III of Social Security. If Apple doesn’t feature us on their ‘must listen’ list then I don’t know what’s wrong with the world!” ~Dave

Episode Extras

About your Co-Hosts

A certified public accountant, Josh Bretl has spent the past two decades growing FSR Wealth Strategies into a firm that specializes in tax-focused retirement planning. Because taxes have the single biggest impact on how much you can spend in retirement, Josh is dedicated to developing individualized financial plans that extend and grow his clients’ retirement savings. Based in Elmhurst, Illinois, FSR Wealth strategically preserves and maximizes resources through tax-efficient strategies designed to fulfill retirement dreams.

Apart from producing and co-hosting The Retirement = Freedom Podcast, Josh's longtime friend Dave Schmidt is a content production and marketing adviser to local businesses and nonprofits. He’s also an advocate for t-shirts, all things 90s (especially the music), short walks and long naps. A serial “wallet forgetter,” Dave nonetheless swears that he has picked up the check on at least one or two meals with Josh over the years. Evidence pending.

Standard Disclaimer:
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.

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