Safe Money - 4-27-24

Episode Transcript

(00:00):
Good Saturday morning to all on thislast Saturday in April twenty twenty four.
Believe it or not, May Dayis right around the corner. Actually,
May first is on Wednesday. Nextweek, tic sali heare and this is
safe Money. We are here everySaturday to talk with you about those strategies

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we use to manage IM protect assetsand to MANAGEIM protect assets safely here in
today's very unsafe world, you know. Talking about a new month, I
want to remind everyone that our virtualcommunity meetings are coming up here on May
twenty first and May twenty third.That's Tuesday, May twenty first and Thursday

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May twenty third. These meetings concentrateon Medicare. On Tuesday May twenty first,
we talk about the basics of Medicareand then focus on the Medicare supplements
that are the we call there areten Medicare supplements. We get to choose
one of these ten Medicare supplements.That's our topic of presentation for Tuesday.

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On Thursday May twenty third, weagain talk about the basics of Medicare and
then focus on the alternative to originalMedicare, and that alternative is Medicare Part
C that's the advantage plan, andin particular, what we believe is the
more competitive of the advantage plans,and that alternative is the AARP Medicare Advantage

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Plan. So, folks, ifyou are aging into Medicare, turning sixty
five and initially becoming eligible for Medicare, I know you are being inundated by
solicitation requests from lots of companies andlots of products. How do you make
sense of all of it? Well, be one of my attendees at our

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Medicare information meetings and be able tosay, now I understand the choices I
have for Medicare. Again, ifyou are aging into Medicare or helping someone
who is aging into Medicare, Iknow you will be confident in your understanding
of Medicare as a result of participatingin these informational meetings. So if you'd

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like to have more information on those, call us call me at five sixty
three three three two twenty two hundred, or email me. Open my website
go to Wwwdikshillig dot com and scrollover to the contact drop down for my

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email address and send me a noteby email if you'd like to correspond in
that manner beginning a new month,I want to delve into a topic closely
related to Medicare, and that topicis social security and our eligibility for social
security. According to the Social SecurityAdministration, you should apply for Social Security

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benefits approximately three months before your retirementdate. To apply for Social security benefits,
you can fill out an application onlineor call or visit your local Social
Security office. You can also callthere's an eight hundred number here. It
it's eight hundred seven seven to twoone two one three. Call that number

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to discuss your options or to getmore information about the application process. Social
security retirement benefit is based upon thenumber of years you've been working in the
amount you have earned. Earned whenyou begin taking Social Security benefits also greatly
affects the size of your benefits.When you work and pay Social Security taxes

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as FIKA taxes, you earn socialSecurity credits. You can earn up to
four credits each year, and youneed to have at least forty credits or
ten years of work to be eligiblefor retirement benefits. Now, you can
work much longer than ten years andstill become eligible for retirement benefits. The

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Social Security Administration calculates your primary insuranceamount based upon which your retirement benefit will
be based using a formula that takesinto account your thirty five highest earning years.
At your full retirement age, you'llbe entitled to receive that amount.

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This is known as your full retirementbenefit. Because your retirement benefit is based
upon your average earnings over your workingcareer, if you have some years of
no earnings or lower earnings, yourbenefit amount may be lower than if you
had worked steadily. Your age atthe time you start receiving benefits also affects

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the benefit amount. Although you canretire early at age sixty two, the
longer you wait to begin receiving yourbenefit up to age seventy. The longer
you wait, the more you receiveeach month you can estimate. You can

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estimate your retirement benefit under current lawby using the benefit calculators available on your
Social Security Administration's website that's SSA dotgov. SSA dot gov. You can
also sign up for a My Securityaccount so that you can view your online

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Social Security statement. Your statement containsa detailed record of your earnings, as
well as estimates of retirement, survivorand disability benefits. If you are not
registered for an online account and arenot receiving benefits, you'll receive a statement

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in the mail every year starting atage sixty. Your full retirement age depends
upon the year in which you wereborn. If you retire at full retirement
age, you'll receive an unreduced retirementbenefit. So if you were born between

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nineteen forty three and nineteen fifty four, then your full retirement age is sixty
six. If you were born innineteen fifty five, then your full retirement
age is sixty six in two months. If you were born in nineteen fifty
six, your full retirement age issixty six and four months. If you

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were born in fifty seven, yourfull retirement age is sixty six and six
months. If you were born innineteen fifty eight, your full retirement age
is age sixty six and eight months, and so on. So you can
begin receiving Social Security benefits before yourfull retirement age, as early as age

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sixty two. However, if youbegin receiving benefits early, your social Security
benefit will be less than if youwait until your full retirement age to begin
receiving benefits. Your retirement benefit willbe reduced by five ninths of one percent.

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Boy, what a formula. Thatis, retirement benefits will be reduced
by I have ninths of one percentfor every month between your retirement date and
your full retirement age up to thirtysix months. This reduction is permanent,
so you won't be able you won'tbe eligible for a benefit increase once you

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reach full retirement age. That is, if you start taking Social Security retirement
early, and that early benefit thenwill stick with you for the rest of
your working for the rest of yourretirement life. However, even though your
monthly benefit will be less, youmay receive the same or more over your

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total lifetime benefit as you would havehad you waited until full retirement age to
start collecting benefits. That's because eventhough you'll receive less per month, you
might receive benefits over a longer periodof time. For each month that you

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delay receiving Social Security benefits past yourfull retirement age, your benefit will be
permanently increased by a certain percentage upto the maximum age of seventy For any
one born in nineteen forty three orlater, the monthly percentage is two thirds

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of one percent, so the annualpercentage is eight percent. So for example,
If your full retirement age is sixtyseven and you delay receiving benefits for
three years, your benefit at ageseventy will be eight will be twenty four
percent higher than at age sixty seven. Now I have a newsletter which gives

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the illustration and gives monthly examples andcharts to calculate your retirement benefit. So
this chart is available. If you'dlike to have a copy of this copy
of this newsletter, please give mea call five sixty three three three two

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twenty two hundred or send me anemail. Remember, go to my website.
Go to Wwwdickshilli dot com and thenscroll over to the contact icon for
a dropdown or my email address.It'll be there for you. You can
work and still receive Social Security retirementbenefits, but the income that you earn

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before you reach full retirement age maytemporarily affect your benefit. Here's how it
affects your benefit. If you're underfull retirement age for the entire year,
then one dollar of your benefit willbe withheld for every two dollars you earn
over the average earning earning slimit.In twenty four that was twenty two and

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three hundred twenty dollars. That wasin twenty twenty four, the amount was
twenty two thousand, three hundred twentydollars. A higher earning limit applies in
the year you reach full retirement age, and the calculation is different too.
One dollar of your benefit will bewithheld for every three dollars you earn over

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fifty nine thousand, five hundred andtwenty dollars. Now that's in twenty twenty
four. One dollar of your benefitwill be withheld for every three dollars you
earn over fifty nine thousand, fivehundred and twenty dollars. Once you reach
full retirement age, you can workand earn as much income as you want

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without reducing your Social Security retirement benefit. Now that's very very important. Let
me repeat that, once you reachfull retirement age, you can work and
earn as much income as you wantwithout reducing your Social Security retirement benefit.
Keep in mind that if some ofyour benefits are withheld prior to your full

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retirement age, you generally receive ahigher monthly benefit at full retirement age,
because after retirement age, the SocialSecurity Administration recalculates your benefit every year.
He gives you credit for those withheldearnings. Even if your spouse has never

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worked outside your home or in ajob covered by Social Security, he or
she may be eligible for spousal benefitsbased on your social Based upon your Social
Security earnings record, other members ofyour family may also be eligible. Retirement

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benefits are generally paid to family memberswho relied on your income for financial support.
If you are receiving retirement benefits,the members of your family who may
be eligible for family benefits include yourspouse age sixty two or older, if
married at least one year, yourformer spouse age sixty two were older,

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if you were married for at leastten years, your spouse or former spouse
at any age, if caring foryour child who is under age sixteen or
disabled, your child under age eighteenif unmarried, your child under age nineteen

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if a full time student through gradetwelve or disabled, your children older than
eighteen, if severely disabled. Nowthere's a lot to that, and sometimes
I gets confusing, So listeners,like I said, if you would like
to have a copy of this newsletterthat outlines is for you in black and

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white, feel free to give mea call. Call me at five sixty
three three three two twenty two hundredor send me an email. Go to
my website, go to Wwwdickschilling dotcom and scroll over to the contact icon
for a dropdown on for my emailaddress, and if you'd like to correspond,

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then in that manner, your eligiblefamily benefits will receive a monthly benefit
as much as fifty percent of yourbenefit. However, that amount that can
be paid each month to your familyis limited. The total benefit that your
family can receive, based upon yourearnings record, is about one hundred and

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fifty to one hundred and eighty percentof your full retirement benefit amount. If
the total family benefit exceeds this limit, each family member will be reduced for
portionately, so your benefit your benefitwon't be affected. For more information on
retirement benefits or the application process,contact the Social Security Administration. There's an

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eight one hundred number that is eighthundred seven seven to two one two one
three. Again, that Social SecurityAdministration number is eight hundred seven seven to
two one two one three, andagain, if you want to correspond with

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me by email, then go tomy website. Go to Dickshillig dot com
and scroll over to the contact iconfor my email address. If you'd like
to correspond in that manner, sofeel free to do so. You know,
last week I spoke of an articlewhich came across my desk, and

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it was titled that most Americans nowfear poverty in retirement more than death.
So American high inflation and social securitycurrent and concerns have people of all ages
worried about life in retirement American Americans. Concerns about high inflation and the state

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of the Social Security program, amongother worries, are pushing up the level
of financial anxiety across the generations.This is a conclusion drawn in a new
survey report which was published by AllianceLife Insurance Company. Strikingly, some sixty
three percent of survey respondents this yearsay they worry more about running out of

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money than about dying and death,up from fifty seven percent in a twenty
twenty two edition of the survey,so fifty percent in twenty twenty two.
Now in twenty twenty four, sixtythree percent of survey respondents indicated that they

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worry about running out of money morethan they worry about death or dying.
Generation exers are more likely to saythis, according to the survey, with
seventy one percent reporting they are moreworried about running out of money in retirement

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than in dying. This compares tosixty four percent of millennials and fifty three
percent of boomers. The results areeye opening, and it's understandable that running
out of money in retirement is avery, very scary thought. That's why

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it is so important to have athorough financial strategy for retirement. That is
why when I do retirement planning formy clients, I use those very fantastic

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split annuity strategies because those strategies preservethe principle. Those strategies preserve the principle.
And I gave a couple of examples. For example, if I start
out with one hundred thousand dollars ofretirement funds. Of that one hundred thousand

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dollars of money, I then puta sum in an immediate annuity, and
the sum of money that's transferred tothat immediate annuity is twenty thousand, five
hundred dollars. So I started withone hundred thousand dollars of i R money,
and out of that one hundred thousanddollars, I put twenty thousand,

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five one hundred dollars into a fiveyear fixed immediate annuity. So that annuity,
that five year annuity would pay outthree hundred and fifty four dollars a
month to the client every month fora period of sixty payments for a period
of five years. So the valueat the end of five years is zero

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dollars, and they would have paidout a little more than twenty one thousand
dollars. So I put out twentythousand, five hundred dollars for a five
year immediate annuity. The balance ofthat one hundred thousand dollars, which is
seventy nine thousand, five hundred dollars, I put into a five year index

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annuity. And that index annuity currentlypays a bonus of thirty five percent.
So if that deferred annuity receives athirty five percent bonus, and if it
earns at least three percent interest overa period of five years, then the

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value of that annuity at the endof five years will be a little more
than one hundred and one thousand dollars. So remember I started with one hundred
thousand dollars and I put twenty thousand, five hundred into an immediate annuity that
pays three hundred and fifty four dollarsper month for each month for a period

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of five years or sixty payments.At the end of that period of time,
then that immediate annuity would be exhausted. The immediate annuity would have been
spent down to a zero value.Now, while that's going on, while
that is being paid out over aperiod of five years, then I put

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the balance of that one hundred thousanddollars into a tax deferred fixed index annuity.
Seventy nine five hundred dollars went intothat fixed annuity, and at seventy
nine thousand, five hundred dollars receivedan immediate thirty five percent bonus, And

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the value of that deferred annuity atthe end of five years would be more
than one hundred and one thousand dollars. Remember I started out with one hundred
I paid out three hundred and fiftyfour dollars a month for a period of
sixty months or a period of fiveyears. And so at the end of

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that five year period of time,when the immediate annuity is exhausted, then
I have recovered what I've paid out. I have one hundred and one thousand
dollars left at the end of thatfive year period of time. So that
is preserving the principle, and that'sthe objective of our retirement strategy. And

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I can do that with any amountof money, amount of qualified or non
qualified. Remember Uncle Sam classifies allof our money one of two ways.
It's either qualified or it's non qualified. Qualified money is anything that's related to
a retirement plan like an IRA ora four to one K or a four

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fifty seven plan ROTH would be includedas a qualified money. Now everything else
Uncle Sam classifies as non qualifies.So I create these split annuity strategies and
I use both qualified and non qualifiedmoney. Now I can't put I can't

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commingle qualified in non qualified money.But I can create a split annuity using
qualified money or non qualified money.If I had twice set amount of money,
if I have two hundred thousand dollarsof retirement money, I would place
out of that two hundred thousand dollars, I would put thirty nine thousand,

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four hundred dollars into a five yearimmediate tenuity which would pay seven hundred dollars
a month for a period of sixtymonths. So at the end of that
sixty month or at the end ofthat five year period of time, that
two hundred thousand dollars is paid downto zero. While that's going on,

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Remember I started out with two hundredthousand dollars, and I only put thirty
nine thousand, four hundred dollars intothe immediate tenuity. I put the balance
of that money, the balance ofthe two hundred thousand dollars into a tax
deferred index annuity, and so thatwas one hundred and sixty thousand, five

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hundred and seventy dollars. And thatamount was bonus immediately by thirty five percent.
And then if I compound that overa period of five years, at
the end of five years, whenthe immediate annuity is down to zero,
then I've recovered the two hundred thousanddollars and actually have gained about five thousand

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dollars. More So, the valueof my fixed index annuity is now two
hundred and five thousand dollars. Well, I'm running out of time here this
morning, so I encourage you togive me a call. Call me at
five sixty three three three to twotwenty two hundred, or go to my
website for my email address. Goto wwwdikshilling dot com and scroll over to

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the contact icon for my email addressand send me an email if you'd like
to correspond in that manner. Rememberthose dates are May twenty first and May
twenty third for our virtual community meetingsduring the month of May. Thank you
for listening this morning, Have agreat, great weekend. Good day,