February 3, 2025 • 36 mins
What’s new for Social Security in 2025? – With some 73 million Americans relying on Social
Security for monthly income, there is a lot of interest in the recent changes to Social Security
benefits. Jeff Perry and Russ Ball discuss the recent updates, including the repeal of the Windfall
Elimination Provision (WEP), 2025 cost of living adjustment, and changes to income levels
related to income taxes. Jeff and Russ informed listeners how to check on their future benefit
estimates. Jeff and Russ also discuss best practices for retaining important documents, including
income tax supporting data, military records, and more.
Check out our previous podcast on Social Security Fairness and the repeal of WEP:
https://somethingmorewithchrisboyd.libsyn.com/social-security-fairness
For more information or to reach Chris Boyd, Russ Ball or Jeff Perry, click the following link:
https://www.wealthenhancement.com/s/advisor-teams/amr
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome to something more with Chris Boyd.
Chris Boyd is a certified financial planner, practitioner,
and senior vice president, financial advisor at Wealth
Enhancement Group, one of the nation's largest registered
investment advisors.
We call it something more because we'd like
to talk not only about those important dollar
and cents issues, but also the quality of
life issues that make the money matters matter.
(00:22):
Here he is, your fulfillment facilitator, your partner
in prosperity, advising clients on Cape Cod and
across the country.
Here's your host, Jay, Christopher Boyd.
Hello and welcome to another episode of the
something more with Chris Boyd podcast.
My name is Jeff Perry, and I'm one
of the team AMR individuals here.
And I'm sitting in for Chris this week.
(00:44):
I have with me Russ Ball in the
studio as well, running the control panel and
my cohost for the show.
How are you doing Russ?
Pretty well.
Thanks, Jeff.
How are you?
Good.
Uh, Superbowl is coming up.
That's right.
It's, it's not the teams that I had
hoped for.
I think every team I was rooting for
in the playoffs lost every time.
(01:05):
I, uh, you know, if it's not new
England, it's not as important.
Right.
But it's still quite a spectacle and I'll
be going to a Superbowl party.
And so I'm rooting against the chiefs.
I think I understand now how the rest
of the country felt about the patriots.
You know, I, I didn't understand at the
time I'm going, why don't you love the
(01:27):
Patriots?
They're nice people.
They do a lot in the community, but
they, yeah.
How about you?
Well, I'm a long suffering, uh, New York
Jets fan.
So, yeah, that's a big statement to acknowledge
on air.
Oh, well, you know, it's, uh, it's hard
to, uh, be a fan of a team
(01:49):
like the Jets, but, um, I watched their
games, you know, uh, when they're playing and,
and the season was not unlike any other
Jets season, but, uh, had the potential to
be.
Yeah.
Well, there's always potential.
And then, uh, Aaron Rogers, it's one of
those teams that always seems to underperform no
matter who they have and no matter what
goes on.
(02:09):
So I have a friend and a neighbor
who lives right across the street from me.
He's a retired New York city police officer
and he's a Jets fan as well.
In the fall, August, he was, he was
confident.
Oh yeah.
Yeah.
Yeah.
I think all of, all of New York
is pretty confident, not so much about the
Giants, but, uh, about the Jets at least.
And, um, didn't pan out, didn't, didn't pan
(02:31):
out, but, uh, here we are.
I got the Eagles who is, uh, you
know, they, uh, no, not a lot of
New Yorkers are fans of the Eagles and
then, and the chiefs, so it's not, not
a great, uh, matchup for, for, uh, you
know, old New Yorkers, but, but, uh, yeah,
it should be a good game.
I mean, the teams look pretty evenly matched.
(02:53):
Um, I'm rooting for the Eagles.
Um, not because I don't like New York,
which is a reason to, apparently the root
for the Eagles.
Um, I just, I guess I'm just want
somebody else to win.
I agree.
I agree.
It's time for some, some new, uh, a
new winner out there.
And, um, it would, you know, you always
feel like when the team's one enough and
(03:14):
you, you've been on the other side of
this, obviously with the Patriots.
So I didn't mind it at all.
And my team's winning.
Yeah, but no, it's, it's time for a
different team to, to take it together.
But yeah, lots of reasons to watch Superbowl.
I mean, some people watch it for the
halftime.
Some people watch it for the game.
Some people bet on these games, squares and
all that.
(03:34):
And then some people are going to watch
it to see how many times Taylor Swift
is on TV.
That's right.
Well, at least you got another Superbowl, more
people tuning in.
But yeah, my, whenever we do a Superbowl
party at my place, it's a couple of
people watching the game, a couple of people
talking on the side, cool people play a
game or whatever, just waiting for the good,
(03:55):
uh, good ads to come up on TV.
So it'll probably be like that this year
as well.
Yeah.
Um, go, go Eagles, but at the end
of the day, I don't really care.
Yeah.
Hopefully it's a good game.
That's, that's what we're hoping for.
Well, we're not here to talk about football,
though.
It sounds like we could probably do a
podcast on football.
We're here to talk of today, um, just
(04:16):
to summarize the changes coming to social security
in 2025.
It's a new year and there's changes every
year.
Some of them are, you know, kind of
boring, but we'll still talk about them.
The big news of 2025 social security.
And we, we did a podcast on it.
Uh, you know, when the break news was
breaking and the elimination, uh, the repeal of
(04:37):
the windfall elimination provision, which had to do
with, um, public employees, government employees who did
not pay into social security during the years
that they worked for a governmental entity that
did not collect social security.
They are their social security.
If they had earned it with private sector
work, um, was reduced depending on how many
(05:01):
years and a formula, um, because they had
a public pension and many public employees fought
for decades to have this repealed.
And finally, that's one of the last things
that president Biden did in an office, I
guess, was sign the social security fairness act,
which repealed this.
So I think most government employees, uh, present
(05:22):
and former have heard about it.
But if you haven't heard about it, I'll
put a link in the show notes to
the podcast that we did.
And if, after you listen to it, if
you have a question, please feel free to
reach out to us.
You know, it's a, it's a big deal
for people who, uh, did have, or would
have had their social security reduced because they
(05:43):
worked for the government.
Yeah.
And that's, uh, you know, especially, uh, relevant
in states like, uh, Massachusetts, Texas, California, where,
um, government employees are not paying into social
security and, and they're sort of punished in
a way, uh, as, as a result, but,
uh, um, yeah, definitely a good time to,
(06:06):
uh, to check on your financial plan, uh,
see how that might impact the plan and,
uh, we can definitely, definitely help with that.
I did talk to one, uh, of our
clients last week, I guess it was.
And I assumed I said, Joe, that's not
his name.
Um, Joe, I'm sure you've heard about the
repeal of the windfall elimination provision.
(06:28):
He says, I have no idea what you're
talking about.
Yeah.
So he actually assumed, and this was a
misconception.
It's such a big misconception that, and, and
Joe didn't know about it.
I feel like I need to say it
again is because of this decades long provision,
many public employees drew the misconception of if
(06:48):
I worked for the government and get a
pension, I don't get social security.
That's that that's wrong.
It was always wrong.
So not only did he think that he
hadn't heard about the elimination of the elimination.
So he was very happy to with, uh,
and he jumped on, on the call.
We jumped on social security, uh, for your
(07:09):
own account, people should do that and check
their benefits, future benefits or current benefits, and
he's going to have like an $800 monthly
benefit that he didn't know existed.
Wow.
Yeah.
So if you're not sure, learn more about
it and please feel free to contact us
if we can be of assistance.
And on that one other point on that
(07:29):
is, uh, that there is a retroactive period
from, uh, from the beginning of last year,
I believe.
Uh, so that might end up coming in,
you know, one larger chunk from, uh, what
you, what you might've been, uh, that's right.
Oh, so, uh, you know, nice timetable on
the retroactivity payment, but it's coming sometime.
(07:50):
Right.
Right.
So I just, uh, prepare for that and
maybe you can, uh, have that as a
thought for projects that you have or, or
put it extra into savings, whatever you might
want to do, but, uh, just know that
that might be coming.
So that's right.
Good news for a former and future, future,
former past, everybody who worked for the government
(08:10):
at some point, and it's just a matter
of fairness.
And, um, I'm about, I'm biased.
I'm uniquely, not uniquely, I'm personally impacted by
that as well.
So it's full disclosure.
There's a reason that I'm so happy about
it.
So for those 73 million people out there
that receive retirement income from social security, did
(08:34):
you realize there were 73 million Americans that
get so they're on social security?
No, that's a big number.
Well, so they're, they're interested in all of
these issues that we're going to talk about.
Uh, I think most of them are positive.
Uh, maybe not as positive as people wished,
you know, uh, they get an annual cost
(08:55):
of living when you hear the word Cola,
that means cost of living adjustment.
And during COVID when inflation was high, it
was 8.7% for 2023.
That was, that was a bump that was
much higher than his history indicates last year,
24 was 3.2, which is still a
(09:17):
nice increase.
Uh, this year it's 2.5. Yeah.
So you should have already received that.
It's not bad.
It's an increase, you know, not, not everything
gets adjusted for inflation, but this does.
So the average monthly payment, um, people often
ask, you know, how much should I expect
from social security when I retire?
(09:38):
When we talk to them, obviously the best
choice is to go onto the social security
website and create your account and get your
own earnings benefit statement.
Um, not just because it is accurate and
they'll project out at different ages, what your
social security benefit will be.
It's also a great opportunity to make sure
it is accurate.
You can look at your earnings in any
(10:00):
given year in your past.
And if something doesn't look right, you know,
go back to your tax return.
If you have them, that's a discussion for
later in the podcast, I guess.
Um, but to validate that the earnings that
you're being credited with the years of earnings,
um, are accurate because that will affect your
(10:21):
social security adjustments.
And it's always better to deal with things,
you know, before you're applying for benefits to
have them corrected.
So, but the average, um, social security benefit
is $1,976 for the average person, which
is up from $1,788 last year.
(10:41):
So the average benefit is up.
Okay.
Always, always nice to see those numbers going
up, but I think it, you raise a
good point that, uh, checking on the social
security website is the best thing you can
do.
It's, it's more accurate if we have that
information for a financial plan.
Uh, and, um, uh, it's pretty easy to
set up and create your account.
(11:02):
It is.
And it's good to see, um, you know,
a lot of, a lot of people ask
us the question of when should I collect
social security or some people just default while
I can get it at 62, I'm getting
it while I can.
Right.
Um, but when you really look at the
difference between ages, say 62 and 70, which
is kind of the range of range of
(11:23):
different, um, it does, it should make you
pause and say, Hmm, should I wait?
Let's, let's do some math and that's this
math that we do for our clients all
the time.
It's, it's a, it's not a simple calculation
cause you have to factor in the value
of money, the worth of money, you know,
and it's factored on your health certainly.
(11:43):
And of course the first question is, do
you absolutely need the money?
If you need the money, then you should
take it, but yeah, lots of factors.
So, uh, there also, there is also a
maximum social security benefit.
So, you know, even if you were, had
a high income and you worked a long
time, social security for the people who may
(12:03):
not know is 35, your 35 highest years
of earnings is how the formula is based.
At full re at age 62, the highest
benefit that you're, you can collect it's capped
at $2,831 at age 62.
And if you're age 70, the cap is
5,108.
(12:26):
So big, big rent, you know, that gets
you thinking if you're the highest, if you're
in the highest range and those are your
numbers, should I take age 62, 2,800,
can I wait at age 70 and collect
5,100?
Obviously how much longer you're going to live
is the primary question.
And do you need the money?
But that's a, uh, that's a question that
(12:50):
should be thought of deeply and put into
the context of a financial plan.
Yeah.
And I think when, when we're looking at
the numbers on those financial plans, when I'm
building them out and we are as a
team, uh, you know, more times than not,
it's going to, it's going to look like
70 is the, is the best time to
take it because you're getting those, uh, increases
(13:10):
every year you wait.
And, um, as, like you said, Jeff, as
long as you're able to wait that period
out and have sufficient cashflow or, or, uh,
you know, cash reserves to cover your expenses
between that time, it's usually a pretty good
bet to, to wait until, um, you're 70
to get that full, uh, benefit.
Um, obviously it's going to depend, but, uh,
(13:33):
when, when you look at the numbers, unless
you assume that you're not going to live
all that long, right.
Uh, uh, it can definitely make a big
difference over that retirement period.
Yep.
And we can, when we do a financial
plan, we do some long-term projections and
we can show you how your projection changes
based upon that decision alone or any other
(13:53):
decision you make.
Um, one mistake I see that people make
and I see it, you know, I live
in Florida and I don't live in a
retirement community, but I live in Florida.
So, you know, every community is a retirement
community, basically.
So a lot of retired people, I see
people who, uh, collect their social security at
62.
(14:14):
I don't know their thought process.
I don't interrogate them about it on the
pickleball court or anything, but I see that
they decided to take it at 62 and
then they are also working like either they
had a pause and didn't expect it.
Maybe they thought they would have a lot
more things to do, or maybe they got
(14:34):
a good job and they said, Oh, I'll
go back to work.
But if you're not a full retirement age,
there's an income test.
So if your income is over 23,400
in 2025, 2025, social security deducts $1 benefits
for every $2 earned over that threshold.
(14:55):
So if you're thinking about, I'm going to
retire, um, should I take it at 62?
One of the factors that is a negative
against taking it early is if you think
you might be working and making over $23
,000, know that part of your income, that
part over is going to be taxed.
(15:16):
If you will tax, meaning losing a dollar,
um, for every two.
So it might be a reason to wait,
right?
If you think you're going to go back
to work, or if you're not sure what
you're going to do when you retire, uh,
might be better to wait either way.
Uh, just to see, you know, how, how
(15:37):
early retirement plays out.
If you maybe down the road, you might
want to go back to work.
And, um, then you're already, you already decided
on that social security decision and, uh, you're
going to maybe lose out on some of
the benefits.
Yep.
And if you wait every month that you
wait, your benefit goes up a little bit,
you know, we use the extreme examples by
waiting eight years, but even if you wait
a year to factor that out, if you're
(15:59):
going to go back to work and this
goes back, you know, this is another factor.
Am I going to work?
Well, that has to do with your health
as well.
Right.
Right.
Yeah.
So yeah, get it modeled out and don't
make just to just don't make the quick
decision, like I I'm eligible.
Therefore I should take it.
Yeah.
And that was another thing I was thinking
with a lot of people, at least, um,
(16:20):
you know, people in my age group and,
and maybe even a little older, they think,
all right, well, yeah, I'm going to retire
at 65.
Um, and that's kind of just a lock.
That's, that's what it's going to be.
And so 65 retire and start social security
that same year.
That's kind of just like, if you're not,
if you don't really know about the different
options, a lot of people don't know that,
uh, social security, there's actually benefit to that.
(16:41):
Um, similar with, with pensions.
Um, we've talked about that in previous episodes
and my, um, uh, I seem to be
mother-in-law is, uh, you know, she
was a teacher and she didn't realize that
if she waits, she could actually get the
full benefit of her pension.
So these are things that, uh, not everyone's
thinking about, but definitely things to consider and
(17:03):
maybe, you know, get some guidance from financial
planning.
The other thing that's changing for this year
in social security is the, um, there's a
limit to the income limit to your income.
That is actually taxed by social security.
It's not an unlimited.
Like if you, if you make last year,
if you made over $168,600 earnings above
(17:24):
that, there was no social security, uh, tax,
if you will, being withheld, that number has
gone up to 176,100.
So a little bit more of your earnings,
if you're in that earning level will be
taxed by social security.
And, you know, this is, um, this is
a group, uh, this is a category that
(17:46):
is ripe for political debate of, you know,
we have a social security issue where the
trust fund will not be able to pay
full benefits in the projected of 2034.
So, or 2033, maybe it's a moving number
that people are looking to reform different parts
of social security.
And I think this one having a cap
(18:06):
on earnings being taxed and what that is,
is one that's ripe for discussion, right?
So why should there be a cap?
I guess is the question, right?
Should you pay your social security taxes on
the first dollar all the way up to
whatever your income is, is a legitimate question
(18:28):
that I think we're going to see in
the political arena for debate, is this one
of the ways that we can mitigate the
insolvency of future social security, right?
But for this year, you're, you're being taxed
on the first 176,100.
It's not a real sympathetic group for people
to think about for people making over 176
(18:51):
,100, that they shouldn't pay a little bit
more.
It's a tough principle wise, you know, you
could say, well, there's a maximum benefit to
social security.
So there should be a maximum contribution, right?
As a matter, but when you're talking about
the system and the solvency of the system,
something's got to give, and I think that's
(19:13):
probably going to be one of the things
that is the easiest or the least difficult
to be a little bit movable, right?
Yeah.
And we talk about it a lot, Jeff,
that there are bound to be discussions, very
serious discussions on this topic in the, hopefully
the near future.
We'll see how it plays out, but that's
(19:35):
definitely one way to, to go about getting
some more, you know, cashflow into the social
security system.
Yeah.
Love them or hate them.
President Trump is a bold politician.
And I would like to see him take
on the issue of social security reform.
You know, every year that we wait, it's
like driving a big ship, right?
(19:57):
I mean, the closer you get to shore,
the more aggressive your turn needs to be
if you're heading for a rock, right?
You can't get beyond top of it and
think you're going to turn this big ship.
So the, the closer we get to the
insolvency projected date of 2033, the bigger or
the more difficult decisions, I think there's decisions
(20:20):
we can make now that would make that
date longer, you know, further away at a
minimum or solve it as a maximum.
So he hasn't, he hasn't really talked about
it, but I hope it's one of the
issues that he takes up in his, this
term.
Yeah.
Yeah.
Unfortunately you get the sense that no one
really wants to talk about politics on either
(20:41):
side of the aisle.
And that's, you know, probably every day Americans
are going to be the ones who have
to, you know, suffer potentially because of it,
but here we are.
And hopefully it does get resolved sooner rather
than later.
Cause it's definitely something that people in my
cohort are, are thinking about social security and
(21:01):
even from a planning point of view, can
we count on full social security down the
road?
Yeah, I think we can.
I just think the solutions are better when
it's further away than in the middle of
a crisis.
Yeah.
Right.
So a few, a few changes to social
security for 2025.
Most of it's kind of bland and mundane,
(21:23):
but we wanted to share it with you.
If you have any questions about it, feel
free to contact our office and we'll be
happy to go through with you.
And if you haven't done it, get your
earnings and benefits statement off the social security
website and make sure it's accurate and it'll
help your planning as well.
Another thing that people are thinking about this
time of year, Russ is income tax preparation
(21:43):
time.
Yes.
I can talk about an exciting episode.
Everyone loves to do their taxes.
I don't want to go into income tax
too much, but I saw an article in
this.
I get bottom line, personal finance magazine, and
it's always got these interesting, I think it's
(22:03):
very well written and little things that you
don't comment commonly come across in the, you
know, general media.
So this one was about how you organize
your tax records and other records, what you
should keep, how long you should keep it.
I think there's a lot of people who
ask this question a lot, but there's not
(22:24):
a lot of good answers, meaning it depends
or this long, but so I found the
article really interesting.
I thought it might be good just to
go through, through some of this stuff.
Yeah.
Do you have a system, Russ?
Do you like, so I'll share my system
under my desk right now is a banker's
box.
Right.
(22:45):
And all I'm looking at it for, for
those of us watching on YouTube, I'm looking
at it and everything in it is my
2024 filing cabinet, right.
That I've moved to archives or it sits
there until I do my taxes.
Then I put it in the archives.
I'm not going to tell you where that
is.
So that's, that's a box of paper.
(23:05):
Yeah.
With my last year stuff.
Um, you're younger than me.
I I'm thinking you might not use the
banker's box.
Well, I do, I do keep my, uh,
my paper files and, and I, I do
have a, I do have a folder that
I put them in it's, uh, you know,
not, it's a growing, but you know, not
(23:27):
overwhelming amount of paperwork.
Um, and then for the current year, I
have, um, yeah, just, uh, drawing my desk
that I put in time to do taxes.
Um, I think, uh, personally I do, I
do my taxes on, um, you know, a
tax software.
So, uh, I have the benefit of, if
(23:48):
I need to get my tax return from
previous year or whatever document it is, I
can go into there and, um, I hope
and pray that it's, uh, as secure as
they, as they say, get it on the
IRS website.
If it's okay.
Yeah.
Right.
Right.
Uh, I guess that's a little bit of
a caveat, uh, it's not, not bugging, but,
um, that's a good point.
(24:09):
I think, um, I, I maybe I'm a
little bit old school.
I know my parents had done the same.
They have a drawer full of files from,
from years and years and years of, um,
businesses and personal taxes, whatever it may be.
Uh, so I do like to keep something
physical, a hard copy, but, uh, you know,
it can obviously become overwhelming over time.
(24:30):
Right.
You know, what got me thinking about this,
not just the article, but, uh, thinking about
the larger questions is the fires in California.
Yeah.
So my art, if I, if I lived
in a region like that or had a
incident here, uh, my archives would be gone.
Right.
And, and even, you know, just to magnify
(24:51):
that, I, when I'm watching the news reports
of the fires, they were, um, interviewing at
his home, which was destroyed Mel Gibson, the
actor.
And he said that he had a lot
of his like documents that you say forever.
And that's another question.
What are they?
But, you know, things that you are going
(25:13):
to keep forever, like they're important, either sentimental
or legal or whatever in, in a safe
in that home.
And the safe survived the fire.
I mean, the safe was still a square
piece of steel, but when they opened the
heat of the fire was so much that
everything was incinerated basically.
(25:33):
Wow.
Yeah.
So, you know, you, you can think that
you're protecting whatever Mel Gibson was protecting in
that safe, but it's gone.
So, I mean, that kind of leads people
to maybe use one of those services that
are online or, you know, everything from one
drive to some of these actual vaults.
(25:53):
Um, you know, and there's companies, let's say
the cold, uh, cold mountain, or forget the
name of the first one that, you know,
these storage facilities, these cloud storage facilities that
will do this for a fee.
Right.
Um, and if you do that, then the
next day there's going to be something on
the news that they were hacked.
And then you're going to worry about that.
Right.
(26:13):
Exactly.
Exactly.
And, um, I had a client recently ask,
uh, you know, he has all these estate
planning documents saved, um, on, uh, you know,
on what's considered a secure, uh, portal online.
And, um, the fact of the matter is,
uh, no matter where your, uh, documents are
stored, it seems that, um, with any level
(26:36):
of encryption and security, it's never a hundred
percent secure 99.99%. But the U S
government treasury isn't, they were hacked and utilities
are hacked.
And so what is who can say a
hundred percent, right?
That's right.
But, um, there are a few things you
could look out for when you're, you know,
(26:57):
storing your, your documents online.
Uh, I believe it's a 256 bit encryption.
That's the highest level that's, that's currently available.
And that's, um, uh, you know, reportedly very
secure and, um, and extremely challenging to hack.
I think there are all these, uh, cybersecurity
tips that I could probably rattle off, but
one that, uh, I think is really important
(27:18):
if you're storing your documents online or really
for any.
Uh, online usage is to have multi-factor
authentication.
So that's where you get that text message
or whatever it is, whichever app that you
put in a certain number.
And, um, that's, uh, across the board.
I've, I've always heard that that's, uh, one
of the best things you can do to
add another level of security, especially if you're
(27:40):
dealing with really important documents online.
I think that's good advice.
The minor inconvenience of having that extra step
or having to go get your phone because
it's in the next room or whatever is
worth it, whether it's a bank account or
whether it's storing documents or a financial account,
it's, it's advisable.
It's a standard now.
I think, I think you're kind of negligent
if you're not doing that actually.
(28:02):
Yeah, I agree.
So how long should we keep this stuff?
So I have my archive here.
My box has 2024 on it.
And if you just kind of Google it,
it's going to say, well, you should keep
your tax records and your records for three
years in most circumstances.
Okay.
So that sounds pretty simple, but that doesn't
(28:23):
mean that you shouldn't keep them longer.
Right?
So the situations that come up, um, if
you're audited and it's an issue of fraud,
there's no limit on how long the IRS
can come back to you.
As long as it wasn't statute limitations for
whatever they're accusing you.
But if there's fraud involved, if there's a,
(28:45):
there's also no limit, if they audit you
on a gift tax return that didn't include
adequate disclosure.
Right.
Or there's a six year limit.
If you, they audit you and you underreport
your income by more than 25%.
Or they allege that you underreported your income.
Doesn't have to be true.
It just has to be, that's the subject
(29:05):
of the audit.
So that makes me think, okay, I guess
I should save it for longer than three
years, and then you think about some things
that happen on your tax return.
Um, so maybe you have a house that
you bought and maybe you sell that house
someday and you know, so you have an
(29:27):
exclusion if you're single $250,000 married $500
,000 exclusion from capital gains.
So that might save you.
But if the capital gain is larger than
that, you're going to have to show your
cost basis.
So you're going to have to have some
documentation of what you paid for the house,
all the capital improvements you've made along the
way, and then the sales cost, right?
(29:49):
So a lot of people don't have that.
They might have bought a house 20 years
ago and they have no memory of what
they paid.
Certainly no proof.
Or what happens super often is a home
changes from a primary residence to a rental.
Yeah.
And then, so you, you know, after three
years, you're not going to get that exclusion.
Then you really need those records for your
(30:10):
capital gains.
So I'd say any house home purchases or
sales, you need to keep those documents for
a long time.
So the, the return that made the return
on the year that you sold that property.
There won't be, there won't be something on
your taxes the year that you bought it,
but you'll, you need records like a closing
(30:30):
statement when you bought it to establish your
cost basis.
Right.
How much did I pay for it?
When, and then you add back, you add
in capital improvements, how you increase the value
of the house, not maintenance, but capital improvements.
I put an addition on, right.
I finished the basement, whatever improved the capital.
Investment in the house.
So you have to keep those records to
(30:53):
prove if you audited what your cost basis
was and what the cost of capital improvements
were for when you do the tax return
in my example, 20 years later.
Yeah.
So that's kind of a bit unique that
people don't think about.
We mentioned in earlier in the episode about
checking your social security statement.
(31:14):
So let's say you go on, you're taking
our advice.
After you listen to us, you go on
to social security, you create your account, you
look at your earnings and you say, gee,
in 1995, it says I had no earnings.
I know I didn't miss a whole year
of work.
This is more beefy for me than you,
I think, for the years we're talking about,
(31:34):
but I was working at this company.
I was working with this government.
I, I need to prove to social security.
I'm going to file a claim, if you
will.
I'm going to file a, something's wrong with
my report report.
And they're going to say, show me, right.
Cause they don't have it.
So if you're going with this three year
(31:55):
thing in my archive box system that I
have under my desk, I'm going to keep
it for three years and I need to
prove 1995, that box is gone.
Yeah.
A little bit of trouble there.
Yeah.
So I'm not having, I don't have a
solution here.
I'm just bringing up things that happen.
Um, the other thing that we were talking
about off air that just happened to me
(32:17):
is, um, it's kind of sounds kind of
silly, but it's funny, so I'll share it.
I was buying something that was expensive on
home Depot and I keep, I know that
they give a veteran's discount.
Uh, cause I see it on the form
sometimes on the register or whatever.
And I just never filled out the home
(32:38):
Depot paperwork.
And so I said, well, this is, this
is good.
This, you know, this one, I should do
it.
And they, I needed to know my date
of my end of military service.
I knew the year, but I didn't know
the date.
So when I filled it out, it wouldn't
let me do it.
So I had to go back in.
I had to go to my archives where
they're held and dig into my box that
(32:58):
says military records and pull it out.
Eventually I did it, but if I didn't
save those records, I mean, it's been 24
years since I was in the military.
Yeah.
Why do I need that?
Well, I didn't need it, but it was
convenient that I had it.
Turned out to be helpful.
Yeah, that's right.
And sometimes you need your military records, your
(33:19):
DD 214, which is your discharge papers that
outline your service, your loved ones may need
that when you pass away to get veterans
benefits upon your death or to it's the
whole host of things that happen, you know,
in your life that you should keep your
military records.
If you have them, you should keep your,
you know, some people say you should keep
(33:39):
your college transcripts longer than you think, right?
Yeah.
You don't even know when, when you might
need them.
And as you mentioned, my brother was recently
looking at, you know, interest rates on a,
on a loan and he found that a
specific credit union was, was a viable option
(34:02):
and they had a feature where if your
family member, if your parent, or even I
believe it was even grandparent served in the
military, you would have access.
And, um, we, um, you know, we weren't
sure where to find any of the military
records that we needed to prove that, uh,
long, long story short, it turned out that,
(34:23):
uh, my, my, my father who served his,
his records were, um, got caught on fire
and, and a big warehouse in the big
DOD fire.
Yeah.
Yes.
And, um, so it became a little bit
of a, of a, a tracking thing, try
to find, um, how to get that information.
But, uh, if we had a box with
that information that we might not have thought
we needed, it could have proved helpful and
(34:45):
expedited the whole process.
But I'm sure there's a fine line when
it's like, uh, certain things you, you do
want to keep other things you don't, otherwise
you're going to have boxes and boxes and
boxes of, of, uh, paperwork.
But, uh, I think you brought up some
of the ones that are, you know, more
vital to keep them.
Well, we hope this inspires you to get
organized and prepare for your taxes and to
(35:06):
come up with some system that doesn't take
over your, wherever your archive system is and
is secure.
Um, because sometimes you need to go back
to get these things, to get benefits that
you're entitled to a correct records that were
wrong, Russ.
Thanks for joining us.
And, uh, thank you for listening.
We really do appreciate it and tune in
next week until then keep striving for something
(35:29):
more.
Thank you for listening to something more with
Chris Boyd.
Call us for help, whether it's for financial
planning or portfolio management, insurance concerns, or those
quality of life issues that make the money
matters, batter, whatever's on your mind, visit us
at something more with Chris Boyd.com or
call us toll free at 8 6 6
(35:49):
7 7 1 8 9 0 1.
Or send us your questions to AMR dash
info at wealth enhancement.com.
You're listening to something more with Chris Boyd,
financial talk show wealth enhancement, advisory services, and
Jay Christopher would provide investment advice on an
individual basis to clients only proper advice.
Depends on a complete analysis of all facts
(36:10):
and circumstances.
The information given on this program is general
financial comments and cannot be relied upon as
pertaining to your specific situation.
Wealth enhancement group cannot guarantee that using the
information from this show will generate profits or
ensure freedom from loss.
Listeners should consult their own financial advisors or
conduct their own due diligence before making any
financial decisions.
Welcome to something more with Chris Boyd.
Chris Boyd is a certified financial planner, practitioner,
and senior vice president, financial advisor at Wealth
Enhancement Group, one of the nation's largest registered
investment advisors.
We call it something more because we'd like
to talk not only about those important dollar
and cents issues, but also the quality of
life issues that make the money matters matter.
(00:22):
Here he is, your fulfillment facilitator, your partner
in prosperity, advising clients on Cape Cod and
across the country.
Here's your host, Jay, Christopher Boyd.
Hello and welcome to another episode of the
something more with Chris Boyd podcast.
My name is Jeff Perry, and I'm one
of the team AMR individuals here.
And I'm sitting in for Chris this week.
(00:44):
I have with me Russ Ball in the
studio as well, running the control panel and
my cohost for the show.
How are you doing Russ?
Pretty well.
Thanks, Jeff.
How are you?
Good.
Uh, Superbowl is coming up.
That's right.
It's, it's not the teams that I had
hoped for.
I think every team I was rooting for
in the playoffs lost every time.
(01:05):
I, uh, you know, if it's not new
England, it's not as important.
Right.
But it's still quite a spectacle and I'll
be going to a Superbowl party.
And so I'm rooting against the chiefs.
I think I understand now how the rest
of the country felt about the patriots.
You know, I, I didn't understand at the
time I'm going, why don't you love the
(01:27):
Patriots?
They're nice people.
They do a lot in the community, but
they, yeah.
How about you?
Well, I'm a long suffering, uh, New York
Jets fan.
So, yeah, that's a big statement to acknowledge
on air.
Oh, well, you know, it's, uh, it's hard
to, uh, be a fan of a team
(01:49):
like the Jets, but, um, I watched their
games, you know, uh, when they're playing and,
and the season was not unlike any other
Jets season, but, uh, had the potential to
be.
Yeah.
Well, there's always potential.
And then, uh, Aaron Rogers, it's one of
those teams that always seems to underperform no
matter who they have and no matter what
goes on.
(02:09):
So I have a friend and a neighbor
who lives right across the street from me.
He's a retired New York city police officer
and he's a Jets fan as well.
In the fall, August, he was, he was
confident.
Oh yeah.
Yeah.
Yeah.
I think all of, all of New York
is pretty confident, not so much about the
Giants, but, uh, about the Jets at least.
And, um, didn't pan out, didn't, didn't pan
(02:31):
out, but, uh, here we are.
I got the Eagles who is, uh, you
know, they, uh, no, not a lot of
New Yorkers are fans of the Eagles and
then, and the chiefs, so it's not, not
a great, uh, matchup for, for, uh, you
know, old New Yorkers, but, but, uh, yeah,
it should be a good game.
I mean, the teams look pretty evenly matched.
(02:53):
Um, I'm rooting for the Eagles.
Um, not because I don't like New York,
which is a reason to, apparently the root
for the Eagles.
Um, I just, I guess I'm just want
somebody else to win.
I agree.
I agree.
It's time for some, some new, uh, a
new winner out there.
And, um, it would, you know, you always
feel like when the team's one enough and
(03:14):
you, you've been on the other side of
this, obviously with the Patriots.
So I didn't mind it at all.
And my team's winning.
Yeah, but no, it's, it's time for a
different team to, to take it together.
But yeah, lots of reasons to watch Superbowl.
I mean, some people watch it for the
halftime.
Some people watch it for the game.
Some people bet on these games, squares and
all that.
(03:34):
And then some people are going to watch
it to see how many times Taylor Swift
is on TV.
That's right.
Well, at least you got another Superbowl, more
people tuning in.
But yeah, my, whenever we do a Superbowl
party at my place, it's a couple of
people watching the game, a couple of people
talking on the side, cool people play a
game or whatever, just waiting for the good,
(03:55):
uh, good ads to come up on TV.
So it'll probably be like that this year
as well.
Yeah.
Um, go, go Eagles, but at the end
of the day, I don't really care.
Yeah.
Hopefully it's a good game.
That's, that's what we're hoping for.
Well, we're not here to talk about football,
though.
It sounds like we could probably do a
podcast on football.
We're here to talk of today, um, just
(04:16):
to summarize the changes coming to social security
in 2025.
It's a new year and there's changes every
year.
Some of them are, you know, kind of
boring, but we'll still talk about them.
The big news of 2025 social security.
And we, we did a podcast on it.
Uh, you know, when the break news was
breaking and the elimination, uh, the repeal of
(04:37):
the windfall elimination provision, which had to do
with, um, public employees, government employees who did
not pay into social security during the years
that they worked for a governmental entity that
did not collect social security.
They are their social security.
If they had earned it with private sector
work, um, was reduced depending on how many
(05:01):
years and a formula, um, because they had
a public pension and many public employees fought
for decades to have this repealed.
And finally, that's one of the last things
that president Biden did in an office, I
guess, was sign the social security fairness act,
which repealed this.
So I think most government employees, uh, present
(05:22):
and former have heard about it.
But if you haven't heard about it, I'll
put a link in the show notes to
the podcast that we did.
And if, after you listen to it, if
you have a question, please feel free to
reach out to us.
You know, it's a, it's a big deal
for people who, uh, did have, or would
have had their social security reduced because they
(05:43):
worked for the government.
Yeah.
And that's, uh, you know, especially, uh, relevant
in states like, uh, Massachusetts, Texas, California, where,
um, government employees are not paying into social
security and, and they're sort of punished in
a way, uh, as, as a result, but,
uh, um, yeah, definitely a good time to,
(06:06):
uh, to check on your financial plan, uh,
see how that might impact the plan and,
uh, we can definitely, definitely help with that.
I did talk to one, uh, of our
clients last week, I guess it was.
And I assumed I said, Joe, that's not
his name.
Um, Joe, I'm sure you've heard about the
repeal of the windfall elimination provision.
(06:28):
He says, I have no idea what you're
talking about.
Yeah.
So he actually assumed, and this was a
misconception.
It's such a big misconception that, and, and
Joe didn't know about it.
I feel like I need to say it
again is because of this decades long provision,
many public employees drew the misconception of if
(06:48):
I worked for the government and get a
pension, I don't get social security.
That's that that's wrong.
It was always wrong.
So not only did he think that he
hadn't heard about the elimination of the elimination.
So he was very happy to with, uh,
and he jumped on, on the call.
We jumped on social security, uh, for your
(07:09):
own account, people should do that and check
their benefits, future benefits or current benefits, and
he's going to have like an $800 monthly
benefit that he didn't know existed.
Wow.
Yeah.
So if you're not sure, learn more about
it and please feel free to contact us
if we can be of assistance.
And on that one other point on that
(07:29):
is, uh, that there is a retroactive period
from, uh, from the beginning of last year,
I believe.
Uh, so that might end up coming in,
you know, one larger chunk from, uh, what
you, what you might've been, uh, that's right.
Oh, so, uh, you know, nice timetable on
the retroactivity payment, but it's coming sometime.
(07:50):
Right.
Right.
So I just, uh, prepare for that and
maybe you can, uh, have that as a
thought for projects that you have or, or
put it extra into savings, whatever you might
want to do, but, uh, just know that
that might be coming.
So that's right.
Good news for a former and future, future,
former past, everybody who worked for the government
(08:10):
at some point, and it's just a matter
of fairness.
And, um, I'm about, I'm biased.
I'm uniquely, not uniquely, I'm personally impacted by
that as well.
So it's full disclosure.
There's a reason that I'm so happy about
it.
So for those 73 million people out there
that receive retirement income from social security, did
(08:34):
you realize there were 73 million Americans that
get so they're on social security?
No, that's a big number.
Well, so they're, they're interested in all of
these issues that we're going to talk about.
Uh, I think most of them are positive.
Uh, maybe not as positive as people wished,
you know, uh, they get an annual cost
(08:55):
of living when you hear the word Cola,
that means cost of living adjustment.
And during COVID when inflation was high, it
was 8.7% for 2023.
That was, that was a bump that was
much higher than his history indicates last year,
24 was 3.2, which is still a
(09:17):
nice increase.
Uh, this year it's 2.5. Yeah.
So you should have already received that.
It's not bad.
It's an increase, you know, not, not everything
gets adjusted for inflation, but this does.
So the average monthly payment, um, people often
ask, you know, how much should I expect
from social security when I retire?
(09:38):
When we talk to them, obviously the best
choice is to go onto the social security
website and create your account and get your
own earnings benefit statement.
Um, not just because it is accurate and
they'll project out at different ages, what your
social security benefit will be.
It's also a great opportunity to make sure
it is accurate.
You can look at your earnings in any
(10:00):
given year in your past.
And if something doesn't look right, you know,
go back to your tax return.
If you have them, that's a discussion for
later in the podcast, I guess.
Um, but to validate that the earnings that
you're being credited with the years of earnings,
um, are accurate because that will affect your
(10:21):
social security adjustments.
And it's always better to deal with things,
you know, before you're applying for benefits to
have them corrected.
So, but the average, um, social security benefit
is $1,976 for the average person, which
is up from $1,788 last year.
(10:41):
So the average benefit is up.
Okay.
Always, always nice to see those numbers going
up, but I think it, you raise a
good point that, uh, checking on the social
security website is the best thing you can
do.
It's, it's more accurate if we have that
information for a financial plan.
Uh, and, um, uh, it's pretty easy to
set up and create your account.
(11:02):
It is.
And it's good to see, um, you know,
a lot of, a lot of people ask
us the question of when should I collect
social security or some people just default while
I can get it at 62, I'm getting
it while I can.
Right.
Um, but when you really look at the
difference between ages, say 62 and 70, which
is kind of the range of range of
(11:23):
different, um, it does, it should make you
pause and say, Hmm, should I wait?
Let's, let's do some math and that's this
math that we do for our clients all
the time.
It's, it's a, it's not a simple calculation
cause you have to factor in the value
of money, the worth of money, you know,
and it's factored on your health certainly.
(11:43):
And of course the first question is, do
you absolutely need the money?
If you need the money, then you should
take it, but yeah, lots of factors.
So, uh, there also, there is also a
maximum social security benefit.
So, you know, even if you were, had
a high income and you worked a long
time, social security for the people who may
(12:03):
not know is 35, your 35 highest years
of earnings is how the formula is based.
At full re at age 62, the highest
benefit that you're, you can collect it's capped
at $2,831 at age 62.
And if you're age 70, the cap is
5,108.
(12:26):
So big, big rent, you know, that gets
you thinking if you're the highest, if you're
in the highest range and those are your
numbers, should I take age 62, 2,800,
can I wait at age 70 and collect
5,100?
Obviously how much longer you're going to live
is the primary question.
And do you need the money?
But that's a, uh, that's a question that
(12:50):
should be thought of deeply and put into
the context of a financial plan.
Yeah.
And I think when, when we're looking at
the numbers on those financial plans, when I'm
building them out and we are as a
team, uh, you know, more times than not,
it's going to, it's going to look like
70 is the, is the best time to
take it because you're getting those, uh, increases
(13:10):
every year you wait.
And, um, as, like you said, Jeff, as
long as you're able to wait that period
out and have sufficient cashflow or, or, uh,
you know, cash reserves to cover your expenses
between that time, it's usually a pretty good
bet to, to wait until, um, you're 70
to get that full, uh, benefit.
Um, obviously it's going to depend, but, uh,
(13:33):
when, when you look at the numbers, unless
you assume that you're not going to live
all that long, right.
Uh, uh, it can definitely make a big
difference over that retirement period.
Yep.
And we can, when we do a financial
plan, we do some long-term projections and
we can show you how your projection changes
based upon that decision alone or any other
(13:53):
decision you make.
Um, one mistake I see that people make
and I see it, you know, I live
in Florida and I don't live in a
retirement community, but I live in Florida.
So, you know, every community is a retirement
community, basically.
So a lot of retired people, I see
people who, uh, collect their social security at
62.
(14:14):
I don't know their thought process.
I don't interrogate them about it on the
pickleball court or anything, but I see that
they decided to take it at 62 and
then they are also working like either they
had a pause and didn't expect it.
Maybe they thought they would have a lot
more things to do, or maybe they got
(14:34):
a good job and they said, Oh, I'll
go back to work.
But if you're not a full retirement age,
there's an income test.
So if your income is over 23,400
in 2025, 2025, social security deducts $1 benefits
for every $2 earned over that threshold.
(14:55):
So if you're thinking about, I'm going to
retire, um, should I take it at 62?
One of the factors that is a negative
against taking it early is if you think
you might be working and making over $23
,000, know that part of your income, that
part over is going to be taxed.
(15:16):
If you will tax, meaning losing a dollar,
um, for every two.
So it might be a reason to wait,
right?
If you think you're going to go back
to work, or if you're not sure what
you're going to do when you retire, uh,
might be better to wait either way.
Uh, just to see, you know, how, how
(15:37):
early retirement plays out.
If you maybe down the road, you might
want to go back to work.
And, um, then you're already, you already decided
on that social security decision and, uh, you're
going to maybe lose out on some of
the benefits.
Yep.
And if you wait every month that you
wait, your benefit goes up a little bit,
you know, we use the extreme examples by
waiting eight years, but even if you wait
a year to factor that out, if you're
(15:59):
going to go back to work and this
goes back, you know, this is another factor.
Am I going to work?
Well, that has to do with your health
as well.
Right.
Right.
Yeah.
So yeah, get it modeled out and don't
make just to just don't make the quick
decision, like I I'm eligible.
Therefore I should take it.
Yeah.
And that was another thing I was thinking
with a lot of people, at least, um,
(16:20):
you know, people in my age group and,
and maybe even a little older, they think,
all right, well, yeah, I'm going to retire
at 65.
Um, and that's kind of just a lock.
That's, that's what it's going to be.
And so 65 retire and start social security
that same year.
That's kind of just like, if you're not,
if you don't really know about the different
options, a lot of people don't know that,
uh, social security, there's actually benefit to that.
(16:41):
Um, similar with, with pensions.
Um, we've talked about that in previous episodes
and my, um, uh, I seem to be
mother-in-law is, uh, you know, she
was a teacher and she didn't realize that
if she waits, she could actually get the
full benefit of her pension.
So these are things that, uh, not everyone's
thinking about, but definitely things to consider and
(17:03):
maybe, you know, get some guidance from financial
planning.
The other thing that's changing for this year
in social security is the, um, there's a
limit to the income limit to your income.
That is actually taxed by social security.
It's not an unlimited.
Like if you, if you make last year,
if you made over $168,600 earnings above
(17:24):
that, there was no social security, uh, tax,
if you will, being withheld, that number has
gone up to 176,100.
So a little bit more of your earnings,
if you're in that earning level will be
taxed by social security.
And, you know, this is, um, this is
a group, uh, this is a category that
(17:46):
is ripe for political debate of, you know,
we have a social security issue where the
trust fund will not be able to pay
full benefits in the projected of 2034.
So, or 2033, maybe it's a moving number
that people are looking to reform different parts
of social security.
And I think this one having a cap
(18:06):
on earnings being taxed and what that is,
is one that's ripe for discussion, right?
So why should there be a cap?
I guess is the question, right?
Should you pay your social security taxes on
the first dollar all the way up to
whatever your income is, is a legitimate question
(18:28):
that I think we're going to see in
the political arena for debate, is this one
of the ways that we can mitigate the
insolvency of future social security, right?
But for this year, you're, you're being taxed
on the first 176,100.
It's not a real sympathetic group for people
to think about for people making over 176
(18:51):
,100, that they shouldn't pay a little bit
more.
It's a tough principle wise, you know, you
could say, well, there's a maximum benefit to
social security.
So there should be a maximum contribution, right?
As a matter, but when you're talking about
the system and the solvency of the system,
something's got to give, and I think that's
(19:13):
probably going to be one of the things
that is the easiest or the least difficult
to be a little bit movable, right?
Yeah.
And we talk about it a lot, Jeff,
that there are bound to be discussions, very
serious discussions on this topic in the, hopefully
the near future.
We'll see how it plays out, but that's
(19:35):
definitely one way to, to go about getting
some more, you know, cashflow into the social
security system.
Yeah.
Love them or hate them.
President Trump is a bold politician.
And I would like to see him take
on the issue of social security reform.
You know, every year that we wait, it's
like driving a big ship, right?
(19:57):
I mean, the closer you get to shore,
the more aggressive your turn needs to be
if you're heading for a rock, right?
You can't get beyond top of it and
think you're going to turn this big ship.
So the, the closer we get to the
insolvency projected date of 2033, the bigger or
the more difficult decisions, I think there's decisions
(20:20):
we can make now that would make that
date longer, you know, further away at a
minimum or solve it as a maximum.
So he hasn't, he hasn't really talked about
it, but I hope it's one of the
issues that he takes up in his, this
term.
Yeah.
Yeah.
Unfortunately you get the sense that no one
really wants to talk about politics on either
(20:41):
side of the aisle.
And that's, you know, probably every day Americans
are going to be the ones who have
to, you know, suffer potentially because of it,
but here we are.
And hopefully it does get resolved sooner rather
than later.
Cause it's definitely something that people in my
cohort are, are thinking about social security and
(21:01):
even from a planning point of view, can
we count on full social security down the
road?
Yeah, I think we can.
I just think the solutions are better when
it's further away than in the middle of
a crisis.
Yeah.
Right.
So a few, a few changes to social
security for 2025.
Most of it's kind of bland and mundane,
(21:23):
but we wanted to share it with you.
If you have any questions about it, feel
free to contact our office and we'll be
happy to go through with you.
And if you haven't done it, get your
earnings and benefits statement off the social security
website and make sure it's accurate and it'll
help your planning as well.
Another thing that people are thinking about this
time of year, Russ is income tax preparation
(21:43):
time.
Yes.
I can talk about an exciting episode.
Everyone loves to do their taxes.
I don't want to go into income tax
too much, but I saw an article in
this.
I get bottom line, personal finance magazine, and
it's always got these interesting, I think it's
(22:03):
very well written and little things that you
don't comment commonly come across in the, you
know, general media.
So this one was about how you organize
your tax records and other records, what you
should keep, how long you should keep it.
I think there's a lot of people who
ask this question a lot, but there's not
(22:24):
a lot of good answers, meaning it depends
or this long, but so I found the
article really interesting.
I thought it might be good just to
go through, through some of this stuff.
Yeah.
Do you have a system, Russ?
Do you like, so I'll share my system
under my desk right now is a banker's
box.
Right.
(22:45):
And all I'm looking at it for, for
those of us watching on YouTube, I'm looking
at it and everything in it is my
2024 filing cabinet, right.
That I've moved to archives or it sits
there until I do my taxes.
Then I put it in the archives.
I'm not going to tell you where that
is.
So that's, that's a box of paper.
(23:05):
Yeah.
With my last year stuff.
Um, you're younger than me.
I I'm thinking you might not use the
banker's box.
Well, I do, I do keep my, uh,
my paper files and, and I, I do
have a, I do have a folder that
I put them in it's, uh, you know,
not, it's a growing, but you know, not
(23:27):
overwhelming amount of paperwork.
Um, and then for the current year, I
have, um, yeah, just, uh, drawing my desk
that I put in time to do taxes.
Um, I think, uh, personally I do, I
do my taxes on, um, you know, a
tax software.
So, uh, I have the benefit of, if
(23:48):
I need to get my tax return from
previous year or whatever document it is, I
can go into there and, um, I hope
and pray that it's, uh, as secure as
they, as they say, get it on the
IRS website.
If it's okay.
Yeah.
Right.
Right.
Uh, I guess that's a little bit of
a caveat, uh, it's not, not bugging, but,
um, that's a good point.
(24:09):
I think, um, I, I maybe I'm a
little bit old school.
I know my parents had done the same.
They have a drawer full of files from,
from years and years and years of, um,
businesses and personal taxes, whatever it may be.
Uh, so I do like to keep something
physical, a hard copy, but, uh, you know,
it can obviously become overwhelming over time.
(24:30):
Right.
You know, what got me thinking about this,
not just the article, but, uh, thinking about
the larger questions is the fires in California.
Yeah.
So my art, if I, if I lived
in a region like that or had a
incident here, uh, my archives would be gone.
Right.
And, and even, you know, just to magnify
(24:51):
that, I, when I'm watching the news reports
of the fires, they were, um, interviewing at
his home, which was destroyed Mel Gibson, the
actor.
And he said that he had a lot
of his like documents that you say forever.
And that's another question.
What are they?
But, you know, things that you are going
(25:13):
to keep forever, like they're important, either sentimental
or legal or whatever in, in a safe
in that home.
And the safe survived the fire.
I mean, the safe was still a square
piece of steel, but when they opened the
heat of the fire was so much that
everything was incinerated basically.
(25:33):
Wow.
Yeah.
So, you know, you, you can think that
you're protecting whatever Mel Gibson was protecting in
that safe, but it's gone.
So, I mean, that kind of leads people
to maybe use one of those services that
are online or, you know, everything from one
drive to some of these actual vaults.
(25:53):
Um, you know, and there's companies, let's say
the cold, uh, cold mountain, or forget the
name of the first one that, you know,
these storage facilities, these cloud storage facilities that
will do this for a fee.
Right.
Um, and if you do that, then the
next day there's going to be something on
the news that they were hacked.
And then you're going to worry about that.
Right.
(26:13):
Exactly.
Exactly.
And, um, I had a client recently ask,
uh, you know, he has all these estate
planning documents saved, um, on, uh, you know,
on what's considered a secure, uh, portal online.
And, um, the fact of the matter is,
uh, no matter where your, uh, documents are
stored, it seems that, um, with any level
(26:36):
of encryption and security, it's never a hundred
percent secure 99.99%. But the U S
government treasury isn't, they were hacked and utilities
are hacked.
And so what is who can say a
hundred percent, right?
That's right.
But, um, there are a few things you
could look out for when you're, you know,
(26:57):
storing your, your documents online.
Uh, I believe it's a 256 bit encryption.
That's the highest level that's, that's currently available.
And that's, um, uh, you know, reportedly very
secure and, um, and extremely challenging to hack.
I think there are all these, uh, cybersecurity
tips that I could probably rattle off, but
one that, uh, I think is really important
(27:18):
if you're storing your documents online or really
for any.
Uh, online usage is to have multi-factor
authentication.
So that's where you get that text message
or whatever it is, whichever app that you
put in a certain number.
And, um, that's, uh, across the board.
I've, I've always heard that that's, uh, one
of the best things you can do to
add another level of security, especially if you're
(27:40):
dealing with really important documents online.
I think that's good advice.
The minor inconvenience of having that extra step
or having to go get your phone because
it's in the next room or whatever is
worth it, whether it's a bank account or
whether it's storing documents or a financial account,
it's, it's advisable.
It's a standard now.
I think, I think you're kind of negligent
if you're not doing that actually.
(28:02):
Yeah, I agree.
So how long should we keep this stuff?
So I have my archive here.
My box has 2024 on it.
And if you just kind of Google it,
it's going to say, well, you should keep
your tax records and your records for three
years in most circumstances.
Okay.
So that sounds pretty simple, but that doesn't
(28:23):
mean that you shouldn't keep them longer.
Right?
So the situations that come up, um, if
you're audited and it's an issue of fraud,
there's no limit on how long the IRS
can come back to you.
As long as it wasn't statute limitations for
whatever they're accusing you.
But if there's fraud involved, if there's a,
(28:45):
there's also no limit, if they audit you
on a gift tax return that didn't include
adequate disclosure.
Right.
Or there's a six year limit.
If you, they audit you and you underreport
your income by more than 25%.
Or they allege that you underreported your income.
Doesn't have to be true.
It just has to be, that's the subject
(29:05):
of the audit.
So that makes me think, okay, I guess
I should save it for longer than three
years, and then you think about some things
that happen on your tax return.
Um, so maybe you have a house that
you bought and maybe you sell that house
someday and you know, so you have an
(29:27):
exclusion if you're single $250,000 married $500
,000 exclusion from capital gains.
So that might save you.
But if the capital gain is larger than
that, you're going to have to show your
cost basis.
So you're going to have to have some
documentation of what you paid for the house,
all the capital improvements you've made along the
way, and then the sales cost, right?
(29:49):
So a lot of people don't have that.
They might have bought a house 20 years
ago and they have no memory of what
they paid.
Certainly no proof.
Or what happens super often is a home
changes from a primary residence to a rental.
Yeah.
And then, so you, you know, after three
years, you're not going to get that exclusion.
Then you really need those records for your
(30:10):
capital gains.
So I'd say any house home purchases or
sales, you need to keep those documents for
a long time.
So the, the return that made the return
on the year that you sold that property.
There won't be, there won't be something on
your taxes the year that you bought it,
but you'll, you need records like a closing
(30:30):
statement when you bought it to establish your
cost basis.
Right.
How much did I pay for it?
When, and then you add back, you add
in capital improvements, how you increase the value
of the house, not maintenance, but capital improvements.
I put an addition on, right.
I finished the basement, whatever improved the capital.
Investment in the house.
So you have to keep those records to
(30:53):
prove if you audited what your cost basis
was and what the cost of capital improvements
were for when you do the tax return
in my example, 20 years later.
Yeah.
So that's kind of a bit unique that
people don't think about.
We mentioned in earlier in the episode about
checking your social security statement.
(31:14):
So let's say you go on, you're taking
our advice.
After you listen to us, you go on
to social security, you create your account, you
look at your earnings and you say, gee,
in 1995, it says I had no earnings.
I know I didn't miss a whole year
of work.
This is more beefy for me than you,
I think, for the years we're talking about,
(31:34):
but I was working at this company.
I was working with this government.
I, I need to prove to social security.
I'm going to file a claim, if you
will.
I'm going to file a, something's wrong with
my report report.
And they're going to say, show me, right.
Cause they don't have it.
So if you're going with this three year
(31:55):
thing in my archive box system that I
have under my desk, I'm going to keep
it for three years and I need to
prove 1995, that box is gone.
Yeah.
A little bit of trouble there.
Yeah.
So I'm not having, I don't have a
solution here.
I'm just bringing up things that happen.
Um, the other thing that we were talking
about off air that just happened to me
(32:17):
is, um, it's kind of sounds kind of
silly, but it's funny, so I'll share it.
I was buying something that was expensive on
home Depot and I keep, I know that
they give a veteran's discount.
Uh, cause I see it on the form
sometimes on the register or whatever.
And I just never filled out the home
(32:38):
Depot paperwork.
And so I said, well, this is, this
is good.
This, you know, this one, I should do
it.
And they, I needed to know my date
of my end of military service.
I knew the year, but I didn't know
the date.
So when I filled it out, it wouldn't
let me do it.
So I had to go back in.
I had to go to my archives where
they're held and dig into my box that
(32:58):
says military records and pull it out.
Eventually I did it, but if I didn't
save those records, I mean, it's been 24
years since I was in the military.
Yeah.
Why do I need that?
Well, I didn't need it, but it was
convenient that I had it.
Turned out to be helpful.
Yeah, that's right.
And sometimes you need your military records, your
(33:19):
DD 214, which is your discharge papers that
outline your service, your loved ones may need
that when you pass away to get veterans
benefits upon your death or to it's the
whole host of things that happen, you know,
in your life that you should keep your
military records.
If you have them, you should keep your,
you know, some people say you should keep
(33:39):
your college transcripts longer than you think, right?
Yeah.
You don't even know when, when you might
need them.
And as you mentioned, my brother was recently
looking at, you know, interest rates on a,
on a loan and he found that a
specific credit union was, was a viable option
(34:02):
and they had a feature where if your
family member, if your parent, or even I
believe it was even grandparent served in the
military, you would have access.
And, um, we, um, you know, we weren't
sure where to find any of the military
records that we needed to prove that, uh,
long, long story short, it turned out that,
(34:23):
uh, my, my, my father who served his,
his records were, um, got caught on fire
and, and a big warehouse in the big
DOD fire.
Yeah.
Yes.
And, um, so it became a little bit
of a, of a, a tracking thing, try
to find, um, how to get that information.
But, uh, if we had a box with
that information that we might not have thought
we needed, it could have proved helpful and
(34:45):
expedited the whole process.
But I'm sure there's a fine line when
it's like, uh, certain things you, you do
want to keep other things you don't, otherwise
you're going to have boxes and boxes and
boxes of, of, uh, paperwork.
But, uh, I think you brought up some
of the ones that are, you know, more
vital to keep them.
Well, we hope this inspires you to get
organized and prepare for your taxes and to
(35:06):
come up with some system that doesn't take
over your, wherever your archive system is and
is secure.
Um, because sometimes you need to go back
to get these things, to get benefits that
you're entitled to a correct records that were
wrong, Russ.
Thanks for joining us.
And, uh, thank you for listening.
We really do appreciate it and tune in
next week until then keep striving for something
(35:29):
more.
Thank you for listening to something more with
Chris Boyd.
Call us for help, whether it's for financial
planning or portfolio management, insurance concerns, or those
quality of life issues that make the money
matters, batter, whatever's on your mind, visit us
at something more with Chris Boyd.com or
call us toll free at 8 6 6
(35:49):
7 7 1 8 9 0 1.
Or send us your questions to AMR dash
info at wealth enhancement.com.
You're listening to something more with Chris Boyd,
financial talk show wealth enhancement, advisory services, and
Jay Christopher would provide investment advice on an
individual basis to clients only proper advice.
Depends on a complete analysis of all facts
(36:10):
and circumstances.
The information given on this program is general
financial comments and cannot be relied upon as
pertaining to your specific situation.
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information from this show will generate profits or
ensure freedom from loss.
Listeners should consult their own financial advisors or
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