July 14, 2025 • 19 mins
Too many people delay retirement just to boost their Social Security benefits, often at the cost of time, energy, and joy. But at Root, we believe retirement planning should be about more than just maximizing one metric. It should be about maximizing your life.
If you're working extra years simply to avoid gaps in your earnings history or to earn a slightly higher monthly benefit, it's worth rethinking the bigger picture. In many cases, the trade-off isn't worth the lost years of freedom and vitality.
A more holistic strategy might involve intentionally drawing from your portfolio early—when you're healthy and active—while allowing Social Security to grow in the background. And for those pursuing tax planning strategies like Roth conversions, delaying benefits can actually create opportunities for long-term savings.
The bottom line? Don’t let Social Security be the sole driver of your retirement timeline. Check your earnings record, run the numbers, and build a plan that aligns with your goals, health, and lifestyle. At Root, we help clients retire with confidence, not just by the numbers, but by what matters most.
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Advisory services are offered through Root Financial Partners, LLC, an SEC-registered investment adviser. This content is intended for informational and educational purposes only and should not be considered personalized investment, tax, or legal advice. Viewing this content does not create an advisory relationship. We do not provide tax preparation or legal services. Always consult an investment, tax or legal professional regarding your specific situation.
The strategies, case studies, and examples discussed may not be suitable for everyone. They are hypothetical and for illustrative and educational purposes only. They do not reflect actual client results and are not guarantees of future performance. All investments involve risk, including the potential loss of principal.
Comments reflect the views of individual users and do not necessarily represent the views of Root Financial. They are not verified, may not be accurate, and should not be considered testimonials or endorsements
Participation in the Retirement Planning Academy or Early Retirement Academy does not create an advisory relationship with Root Financial. These programs are educational in nature and are not a substitute for personalized financial advice. Advisory services are offered only under a written agreement with Root Financial.
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Ari Taublieb, CFP ®, MBA is the Chief Growth Officer of Root Financial Partners and a Fiduciary Financial Planner specializing in helping clients retire early with confidence.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
I view a large part of my role in your life for
however long you've listened tothe podcast or watched on
YouTube as giving you realinsight that you can take away
so that you worry less aboutyour retirement, but that you
also get very transparentguidance.
I find a lot of you think, ohmy gosh, I can't retire early, I
haven't maxed out socialsecurity.
I think it takes my 35 highestyears of how much I've made and
(00:22):
so because I've only worked for30 years, I'm not going to
retire.
I'm going to tell you why thatis not a healthy framework.
I'm going to give you a realexample today so that you can
understand.
How does social securityactually work?
Should you plan on it, how toconfigure it in your plan?
I'm going to hopefully remove alot of what I call head trash
Now, before I do, I'm going togive you the example that I give
(00:45):
all of my clients when I talkabout social security.
If I'm ever having aconversation, this is the really
simple way I like to start, soI will tell people.
Most people think one of twoways when it comes to social
security.
Number one they're thinkingover here.
They're going wow, okay, I'veworked a really long time.
I feel like I've saved andinvested really well along the
(01:07):
way.
Social Security yeah, peoplehave been saying it's going away
for a long time, but it's stillhere and I want to factor it
into my plan and I'm notcollecting until age 70, because
I can collect anywhere from 62to 70.
I'm waiting till 70 because I'mgoing to max that thing out and
I love the idea that ifanything happens to me, my
(01:31):
spouse, they're able to receivethat benefit for the rest of
their life.
Okay, that's some people.
That's let's call it people A,people B.
I should probably say person a,but we're going to stick with
people a.
To keep it more fun here I'mtrying to entertain you guys.
Okay, stick with me here,because I know there's a lot.
This is people A, not person A.
Okay, now we're going to gopeople B, not person B.
Person B is thinking you know,people have been saying social
(01:55):
security is going to be here andI just I'm not seeing it.
Less people are paying into it.
I'm the one doing all theresearch.
This is kind of my part-timejob, because I really want to
retire early.
Social Security I think I'mgoing to collect early, as early
as I can.
I'm going to collect at 62because I think if I collect my
(02:16):
benefit even though I know Icould delay I could actually
invest and do even better,because I know people say it
grows every time you wait.
But I think I'm just a genius.
So I'm going to collect SocialSecurity early, at 62.
And then, yeah, if somethinghappens to me, my spouse,
they're going to get thatbenefit, which would have been
more.
But I don't know how long I'mgoing to live.
What if I pass away at 75?
I would have regrettedcollecting at 70.
(02:37):
That really would not have beeneffective and they would have
been correct.
So here is the short answer.
Now, with all of this, pleaseconsult a financial professional
.
Do not take any of this asfinancial advice.
I'm giving you insight onSocial Security so that
hopefully you can think reallyclearly for your strategy.
Now, if you're unaware, my nameis Ari Talble.
(02:58):
I'm a certified financialplanner.
I'm the host of this podcast,the Early Retirement Podcast.
All of my videos go on YouTubeas well as the podcast.
So if you want to see me rightnow, you can just go to YouTube.
If you want to listen on thepodcast app, keep listening.
I will find that a lot of myepisodes because it records so
much, they hit the podcast appfirst.
So many of you are wonderingI'm looking on YouTube.
(03:22):
I don't see this episode here.
If it's an urgent episode whereI am going over a lot of
numbers and a deep case study,I'll make sure the YouTube video
goes out at the same time asthe podcast.
But sometimes I have so manyYouTube videos queued up and I
also love doing the podcast thatI'll have the podcast app go
out first.
So right now, if you go onYouTube and you don't see this,
(03:43):
keep listening on the podcastapp.
If you're watching on YouTube,it's definitely out on the
podcast.
Now, with the logistics out ofthe way, we're going to go
through an example.
I hope this one example at thebeginning hopefully makes you
worry about a million times less.
Okay, ready for this.
So I created an example so thatI could illustrate to you guys
why some of you don't need toworry nearly as much as you may
(04:05):
have been worrying.
So the way it works with socialsecurity is it is based off
your 35 highest years ofearnings.
So if there are any years whereyou have a zero of income, that
impacts how much socialsecurity will give you in the
future.
Okay.
So a lot of you will go I needto max it out.
I've been maxing out my 401k,been maxing out my Roth IRA.
(04:26):
I got to max out my socialsecurity.
So even if financially you'rein a good position to retire at
60, a lot of you will work until63 or 64 because you're like I
want to max out my socialsecurity.
Don't make that mistake.
That is head trash.
You know what that feels like.
To me that's like goldenhandcuffs.
Imagine you were in a great spotto retire and your employer
(04:47):
said hey, you know, jeff, Ithink you can retire.
And I know you're excited.
And you told me that a year agoyou were going to retire in a
year.
And here we are.
But you're just doing such agreat job at the company.
I want to give you $300,000this year.
(05:18):
Now Jeff is ready to retire.
Emotionally he's excited.
His spouse is ready for him tohave more time together and kids
.
But $300,000, I mean I wouldhave loved young Jeff would have
done anything to make 300,000.
He's a human, he's not a robot.
I'm not upset at Jeff, but Iwould want Jeff to be very clear
.
Are you working because youwant to or because you have to,
because if Jeff were to look athis plan and go, I knew I'm in a
(05:39):
good spot.
You don't need to keep workingNow.
Maybe Jeff goes.
Hey, honey, I can work one moreyear at $300,000.
That means we can take likefive more trips.
Maybe the spouse goes.
That's awesome, jeff.
If you're not miserable, do it.
Maybe they go.
We already have six tripsplanned.
I don't want five more tripsanyway.
So all of this to say, there'salways going to be a question.
(05:59):
If you're a good, naturallygood person, healthy person,
who's not too arrogant, andyou're naturally a down to earth
person who's going to think tothemselves, what if I don't have
enough?
I'm still going to worry.
Oh my gosh, what if there'ssomething I miss and I retire
and I get unlucky becausemarkets go down?
What if Social Security is cut?
There's so many things out ofyour control.
You can only plan on what youcan plan for.
(06:20):
But what you can plan for onsocial security is the following
Okay, so I gave an example ofsomeone who retire who starts
working at 20 and then they stopworking at 50, and someone who
starts working at 20 and stopsworking at 55.
And the way social securityworks.
Many of you are aware of this,but there's a wage index each
(06:42):
year.
So social security takes your35 highest years of earnings,
even if it's not consecutive soit could be zero, and then 100K,
and then zero and 100K versus50K over four years.
It's looking at each year.
So the goal if you wanna trulyoptimize Social Security is you
don't need to make 100,000 ayear.
What you need to do is you needto make something so that
Social Security knows thatyou're paying into it.
(07:05):
Okay, I'm not going to gothrough all the specifics
because you will fall asleep onme.
Here's the example.
So, with 30 years of earnings Igave an example Imagine that
you made $50,000 a year for 30years, which you wouldn't.
You would have gotten raisesalong the way.
Okay, but the way it works, ifyou really want to know, is you
take 35 years.
You divide that by 420 months,so over 30 years, you make
(07:31):
50,000 a year.
That's 1.5 million of what arecalled total indexed earnings.
If you divide that by 420, youhave what's called 3,571,
adjusted for inflation earnings.
Okay, don't worry about whatthat means.
Okay.
Now, if we're taking 2025Social Security estimates,
here's how it works you receivefor Social Security in terms of
(07:54):
points 90% of your first $1,174you earn and then 32% from 1,174
to 7,078.
So if you are retiring,hypothetically, at 50 years old,
your full retirement agebenefit would be $1,822 per
(08:17):
month.
Okay, now some of you arethinking well, that's at 50.
If I work at, start working at20, stop working at 50, I could
start collecting 1,822 at fullretirement age.
That's correct.
You couldn't start collectingit immediately.
You'd start collecting it atfull retirement age.
So you still have a long time.
It would still keep growing.
I'm just using $20, $25 toillustrate my point here.
(08:38):
So I want you to think aboutthis number $1,800 a month.
Let's keep it real simple here.
Okay, you start working at 20,you stop working at 50, you made
50,000 a year.
Every year you would startcollecting at full retirement
age $1,800 a month.
Now let's pretend you work from20 to 55, okay, five more years
of working because you want tomaximize Social Security.
(09:00):
Once again, that happens at 35years, which you would be at.
How much more do you think youwould have?
That's the question here,because many of you are thinking
well, if it's $1,800 a monththat I get from Social Security.
But if I work five more years,it would be like $3,000 a month.
Well, that's something toconsider.
Maybe it's worth it.
It would be $2,015 a month.
Okay, it's about a $200 a monthdifference.
(09:23):
That's 2,400 bucks a year.
It's significant.
But if we're taking $2,400times 30 years, that's $72,000,
okay.
So if you retire at 50 and worktill 80, hypothetically and you
start collecting SocialSecurity at full retirement age
and you end up passing away at90, just hypothetical here
(09:50):
$72,000.
That is the difference over 30years once you start collecting
Social Security.
So a better example here wouldbe if you start collecting at 67
and you pass away at 97.
The question for you to askyourself would it have been
worth it to work five more yearsfor an extra $200 a month?
For some of you yes, it is.
For many of you you'd go wait asecond.
(10:10):
I could just work like one moreyear.
The idea of that I'm stillworking just to collect or quote
unquote max out my socialsecurity benefit, that's not too
logical, it's not.
So that is hopefully whatyou're taking away, guys.
Don't keep working just to maxout social security.
Now here's a big mistake I see alot of people make.
(10:31):
People will go.
I'm going to retire early andI'm not going to spend too much
money.
I don't have social securityyet.
It's all up to my portfolio.
I'm not going to spend too muchmoney.
But at the same time, they'rethinking, hey, aren't these the
years that I have my energy,that I have my health?
Shouldn't I be enjoying thismoney?
Well, the reality is, mostpeople will look at their
(10:52):
situation and they will notunderstand the reality, which is
I want you to spend more moneywhen you have your energy and
your health.
Yes, you don't have socialsecurity yet, so spend from the
portfolio that you work so hardto accumulate.
And then, when you're in your70s or 80s, you're not going to
need as much from your portfoliobecause you have Social
Security.
That's now helping you out.
(11:12):
So here are some just importantstats to know about Social
Security as I round out thisepisode.
Now, I love Social Securityoptimization.
You can go into the softwaretool that we use for our clients
that you can get access to inthe Early Retirement Academy in
the description of the episode.
You can go play around and see.
It will tell you, based off allyour assumptions, when is
(11:34):
optimal to collect.
So if you don't want to do anyanalysis.
You can go in there, click abunch of buttons and you'll see
it's going to say for you itmakes sense to collect at this
age based on passing away atthis age and yada, yada.
Now that's really cool.
What social security will neverbe able to do is it does not
know how long you're going tolive.
So you can play around withdifferent assumptions, but the
(11:58):
idea of trying to optimize ormax out to the nth degree that
causes a lot of stress.
So don't let social security bethe driver of the decision.
Another thing to consider andthis is a pro tip that I was
just thinking in my head maybe Ishouldn't mention this because
it's a little advanced, butlet's pretend that you want to
retire early and you've heard myother episodes where you're
ready to do Roth conversions andyou understand the value of
paying a little bit in taxes nowfrom your 401k to move it to a
(12:21):
Roth IRA where you'll pay nomore taxes for the rest of your
life.
Okay, let's pretend you're onboard with that concept.
If that's the case, should youturn on Social Security More
often than not?
The answer is no, because ifyou turn on Social Security
earlier.
That's more income that you'recreating, which leads us less
room to fill out optimal taxbrackets.
(12:43):
For example, let's pretend thatyou want to do a $40,000 Roth
conversion and you have noincome.
Now, if we were to convert atthe 10% and 12% levels, you
wouldn't pay much in taxes tomove a good amount of money
$40,000 from your 401k to yourRoth, so it's never taxed, ever
again.
Let's pretend you turn onSocial Security, though, and you
(13:05):
have $40,000 coming in.
We don't get to convert at 10%.
We're now at 12%, and even at12%, you've already filled up a
lot of that bracket, so nowwe're almost closer to paying at
let's call it 22% or 24% withtoday's brackets.
So don't let Social Securityinterrupt your tax strategy.
(13:25):
At the same time, don't marryyour Social Security strategy.
What if it turns out you're 67and you're planning to delay
until 70 and a big health careevent occurs?
You might go.
I'm turning on Social Securitynow because I don't know how
long I'm going to live.
Great, stay dynamic with it.
I tell people, be a retirementboxer, be dynamic.
Okay, here's some other stats tojust be aware of.
You can, of course, retireearly and claim Social Security.
(13:48):
Claiming early before your fullretirement age reduces your
benefit by up to 30% if youclaim at age 62.
Now an important stat to knowis delaying to age 70 gives you
8% per year up to 70.
So what the heck does that meanin English?
If you were to delay SocialSecurity every single year,
(14:09):
every year you delay from 62 to63, you're receiving basically a
guaranteed rate of about 6.5%.
So people will say you know thestock market does 10% per year.
Why don't I collect early andinvest?
Well, you know why people saynot to do that?
Because most people collect andthey don't invest it, they
spend it.
So it would have been betterfor them to let it stay in
(14:30):
social security's hands so thatby the time they collect it it's
a larger amount.
Now, from full retirement ageuntil age 70, you get an 8% bump
, not six and a half, which ismore attractive.
Now I will say it's very rare,but sometimes I'll see Social
Security have earnings inputtedincorrectly.
So you can go to SSAgov makesure your earnings record is
(14:53):
accurate.
If you're close to retirementin the next five years, please
just do a gut check.
I've had one client who saw azero in a year.
They knew they worked, had atax return and we got that
adjusted.
It seems like not a big deal,but it does make a big
difference.
That's about $50 to $75 a monthevery month that they otherwise
would not have had if they didnot check for about five seconds
(15:14):
.
So when it comes to SocialSecurity, here's another example
I'll give to finalize theepisode today.
So there's a true story.
I went to a doctor and I toldthe doc you did a great job
explaining that.
I think you did a good job.
I think you think you did agood job.
I just didn't fully understandit.
You explained it great but I'msorry, I just didn't get the
takeaway.
(15:35):
I'm not trying to be difficulthere.
I know I need to take a pill,but I'm not going to take it
blindly.
And your explanation there,although you thought was good
and it sounded good, I just Ineed more.
And I said it just like thatbecause I'm a very transparent
person.
And then he said oh, I'm sorry,let me explain again.
So he starts explaining to methe lab where the pills are made
that he wants to give me.
And I said respectfully, doc, Idon't care about the lab, I
(15:58):
want to know why I'm taking thispill or why I'm not taking this
pill and once again, I'm nottaking it blindly.
I feel bad and I don't want tobe difficult.
I know you have lots of clients.
I just want a clear answer.
And he said, oh okay, I get it.
So then he explained it againand he did great and I took away
what I needed to take the pilland I said I'm really, I'm
really proud of you, like, thankyou for doing this, because I
(16:19):
know it's annoying when peoplelike me ask further questions.
But now that you've explainedthat perfectly, I do want to go
into the lab a little bit tofurther understand it, but not
everything, just this portion.
Then he did that.
He did that brilliantly.
Now I'm a very happy camper.
I was unclear.
He explained it really well.
He went into so much depth thatI wanted to learn more.
I learned even more and now Isleep well at night, knowing
(16:42):
exactly why I'm taking a certainsupplement.
Beautiful, that is how I wouldwant you to work with your
advisor.
I would want you to say okay,advisor, I know that was great
and you think you did a greatjob explaining Social Security,
but I'm still not clear on whyI'm collecting at 62 versus 67.
I know you made a veryconvincing argument and the
numbers and graph look greeninstead of red, and I know green
(17:04):
is good, but I'm still notclear and I'm sorry, but try
again.
And that advisor should go.
Oh, I'm sorry.
Yeah, let me give you anotherexample.
Did that help and you might go?
That really helped, but nowlet's run it again.
If my spouse predeceases me andvice versa, okay, let's do that
.
You should be working withsomeone who's optimizing and
willing and excited.
Not, you're a burden.
(17:26):
You're asking more questions.
No, this is your money.
You've worked really hard.
It's time for it to work ashard as you have.
So this is one example of allthe types of things we do at
Root Umbrella insurance, estateplanning, managing the portfolio
, tax strategy.
We love to do this.
If this is the type of serviceyou're looking for guidance on,
(17:48):
once again I've said it amillion times this is what we do
here at Root.
If you go to our website,rootfinancialcom, in the upper
right, you'll see a button thatsays see if you're a fit.
If you click on that, fill outa few questions.
Then we'll be in touch to beable to potentially work
together.
You'll receive an answerimmediately and see prompts for
next steps.
If you're just watching thisepisode and you're going, I just
(18:13):
want to optimize socialsecurity, what the heck do I do?
You can use a tool like the onein the early retirement Academy
, and the benefit of doing thisis you can go instantly and
start playing around withdifferent projections to see,
okay, what if I were to collectat this age versus this age and
start to really get dialed inand optimal.
That is available in thedescription below.
There's no one-on-one advice.
You're not getting arecommendation directly from me
(18:34):
on that but you're able to goand run figures and kind of be
your own advisor.
So some people use this inconjunction to their existing
advisory relationship becauseit's a completely separate
software and it's awesome forgood planning.
So that's it for this episode.
I'll see you guys next time.
Thank you all, as always, forlistening to the early
retirement podcast.
(18:54):
I love getting to host theseshows and make different content
for you guys every single week.
I've not missed a single weekin years and that is because I
love getting to do this.
Now, please be smart about this, before you actually execute
any strategy that you see metalk about or hear me talk about
?
Should I say Please talk toyour financial advisor, your tax
preparer, your estate attorney.
(19:15):
Please be smart about this.
None of this should beconstrued as financial advice.
This is for fun, educational,informational purposes only.
Once again, just quickdisclaimer here.
Guys, please be smart aboutthis.
Appreciate you listening, asalways, and you can, of course,
submit a question on my website,earlyretirementpodcastcom.
(19:35):
If you, of course, want me toaddress a specific case study or
topic.
I will not promise I can get toit, but I respond to every
single person and if I find itwill be helpful for a lot of
people, I will absolutely makean episode on it, at the very
least give you some insight.
That's it, thanks, guys.
I view a large part of my role in your life for
however long you've listened tothe podcast or watched on
YouTube as giving you realinsight that you can take away
so that you worry less aboutyour retirement, but that you
also get very transparentguidance.
I find a lot of you think, ohmy gosh, I can't retire early, I
haven't maxed out socialsecurity.
I think it takes my 35 highestyears of how much I've made and
(00:22):
so because I've only worked for30 years, I'm not going to
retire.
I'm going to tell you why thatis not a healthy framework.
I'm going to give you a realexample today so that you can
understand.
How does social securityactually work?
Should you plan on it, how toconfigure it in your plan?
I'm going to hopefully remove alot of what I call head trash
Now, before I do, I'm going togive you the example that I give
(00:45):
all of my clients when I talkabout social security.
If I'm ever having aconversation, this is the really
simple way I like to start, soI will tell people.
Most people think one of twoways when it comes to social
security.
Number one they're thinkingover here.
They're going wow, okay, I'veworked a really long time.
I feel like I've saved andinvested really well along the
(01:07):
way.
Social Security yeah, peoplehave been saying it's going away
for a long time, but it's stillhere and I want to factor it
into my plan and I'm notcollecting until age 70, because
I can collect anywhere from 62to 70.
I'm waiting till 70 because I'mgoing to max that thing out and
I love the idea that ifanything happens to me, my
(01:31):
spouse, they're able to receivethat benefit for the rest of
their life.
Okay, that's some people.
That's let's call it people A,people B.
I should probably say person a,but we're going to stick with
people a.
To keep it more fun here I'mtrying to entertain you guys.
Okay, stick with me here,because I know there's a lot.
This is people A, not person A.
Okay, now we're going to gopeople B, not person B.
Person B is thinking you know,people have been saying social
(01:55):
security is going to be here andI just I'm not seeing it.
Less people are paying into it.
I'm the one doing all theresearch.
This is kind of my part-timejob, because I really want to
retire early.
Social Security I think I'mgoing to collect early, as early
as I can.
I'm going to collect at 62because I think if I collect my
(02:16):
benefit even though I know Icould delay I could actually
invest and do even better,because I know people say it
grows every time you wait.
But I think I'm just a genius.
So I'm going to collect SocialSecurity early, at 62.
And then, yeah, if somethinghappens to me, my spouse,
they're going to get thatbenefit, which would have been
more.
But I don't know how long I'mgoing to live.
What if I pass away at 75?
I would have regrettedcollecting at 70.
(02:37):
That really would not have beeneffective and they would have
been correct.
So here is the short answer.
Now, with all of this, pleaseconsult a financial professional
.
Do not take any of this asfinancial advice.
I'm giving you insight onSocial Security so that
hopefully you can think reallyclearly for your strategy.
Now, if you're unaware, my nameis Ari Talble.
(02:58):
I'm a certified financialplanner.
I'm the host of this podcast,the Early Retirement Podcast.
All of my videos go on YouTubeas well as the podcast.
So if you want to see me rightnow, you can just go to YouTube.
If you want to listen on thepodcast app, keep listening.
I will find that a lot of myepisodes because it records so
much, they hit the podcast appfirst.
So many of you are wonderingI'm looking on YouTube.
(03:22):
I don't see this episode here.
If it's an urgent episode whereI am going over a lot of
numbers and a deep case study,I'll make sure the YouTube video
goes out at the same time asthe podcast.
But sometimes I have so manyYouTube videos queued up and I
also love doing the podcast thatI'll have the podcast app go
out first.
So right now, if you go onYouTube and you don't see this,
(03:43):
keep listening on the podcastapp.
If you're watching on YouTube,it's definitely out on the
podcast.
Now, with the logistics out ofthe way, we're going to go
through an example.
I hope this one example at thebeginning hopefully makes you
worry about a million times less.
Okay, ready for this.
So I created an example so thatI could illustrate to you guys
why some of you don't need toworry nearly as much as you may
(04:05):
have been worrying.
So the way it works with socialsecurity is it is based off
your 35 highest years ofearnings.
So if there are any years whereyou have a zero of income, that
impacts how much socialsecurity will give you in the
future.
Okay.
So a lot of you will go I needto max it out.
I've been maxing out my 401k,been maxing out my Roth IRA.
(04:26):
I got to max out my socialsecurity.
So even if financially you'rein a good position to retire at
60, a lot of you will work until63 or 64 because you're like I
want to max out my socialsecurity.
Don't make that mistake.
That is head trash.
You know what that feels like.
To me that's like goldenhandcuffs.
Imagine you were in a great spotto retire and your employer
(04:47):
said hey, you know, jeff, Ithink you can retire.
And I know you're excited.
And you told me that a year agoyou were going to retire in a
year.
And here we are.
But you're just doing such agreat job at the company.
I want to give you $300,000this year.
(05:18):
Now Jeff is ready to retire.
Emotionally he's excited.
His spouse is ready for him tohave more time together and kids
.
But $300,000, I mean I wouldhave loved young Jeff would have
done anything to make 300,000.
He's a human, he's not a robot.
I'm not upset at Jeff, but Iwould want Jeff to be very clear
.
Are you working because youwant to or because you have to,
because if Jeff were to look athis plan and go, I knew I'm in a
(05:39):
good spot.
You don't need to keep workingNow.
Maybe Jeff goes.
Hey, honey, I can work one moreyear at $300,000.
That means we can take likefive more trips.
Maybe the spouse goes.
That's awesome, jeff.
If you're not miserable, do it.
Maybe they go.
We already have six tripsplanned.
I don't want five more tripsanyway.
So all of this to say, there'salways going to be a question.
(05:59):
If you're a good, naturallygood person, healthy person,
who's not too arrogant, andyou're naturally a down to earth
person who's going to think tothemselves, what if I don't have
enough?
I'm still going to worry.
Oh my gosh, what if there'ssomething I miss and I retire
and I get unlucky becausemarkets go down?
What if Social Security is cut?
There's so many things out ofyour control.
You can only plan on what youcan plan for.
(06:20):
But what you can plan for onsocial security is the following
Okay, so I gave an example ofsomeone who retire who starts
working at 20 and then they stopworking at 50, and someone who
starts working at 20 and stopsworking at 55.
And the way social securityworks.
Many of you are aware of this,but there's a wage index each
(06:42):
year.
So social security takes your35 highest years of earnings,
even if it's not consecutive soit could be zero, and then 100K,
and then zero and 100K versus50K over four years.
It's looking at each year.
So the goal if you wanna trulyoptimize Social Security is you
don't need to make 100,000 ayear.
What you need to do is you needto make something so that
Social Security knows thatyou're paying into it.
(07:05):
Okay, I'm not going to gothrough all the specifics
because you will fall asleep onme.
Here's the example.
So, with 30 years of earnings Igave an example Imagine that
you made $50,000 a year for 30years, which you wouldn't.
You would have gotten raisesalong the way.
Okay, but the way it works, ifyou really want to know, is you
take 35 years.
You divide that by 420 months,so over 30 years, you make
(07:31):
50,000 a year.
That's 1.5 million of what arecalled total indexed earnings.
If you divide that by 420, youhave what's called 3,571,
adjusted for inflation earnings.
Okay, don't worry about whatthat means.
Okay.
Now, if we're taking 2025Social Security estimates,
here's how it works you receivefor Social Security in terms of
(07:54):
points 90% of your first $1,174you earn and then 32% from 1,174
to 7,078.
So if you are retiring,hypothetically, at 50 years old,
your full retirement agebenefit would be $1,822 per
(08:17):
month.
Okay, now some of you arethinking well, that's at 50.
If I work at, start working at20, stop working at 50, I could
start collecting 1,822 at fullretirement age.
That's correct.
You couldn't start collectingit immediately.
You'd start collecting it atfull retirement age.
So you still have a long time.
It would still keep growing.
I'm just using $20, $25 toillustrate my point here.
(08:38):
So I want you to think aboutthis number $1,800 a month.
Let's keep it real simple here.
Okay, you start working at 20,you stop working at 50, you made
50,000 a year.
Every year you would startcollecting at full retirement
age $1,800 a month.
Now let's pretend you work from20 to 55, okay, five more years
of working because you want tomaximize Social Security.
(09:00):
Once again, that happens at 35years, which you would be at.
How much more do you think youwould have?
That's the question here,because many of you are thinking
well, if it's $1,800 a monththat I get from Social Security.
But if I work five more years,it would be like $3,000 a month.
Well, that's something toconsider.
Maybe it's worth it.
It would be $2,015 a month.
Okay, it's about a $200 a monthdifference.
(09:23):
That's 2,400 bucks a year.
It's significant.
But if we're taking $2,400times 30 years, that's $72,000,
okay.
So if you retire at 50 and worktill 80, hypothetically and you
start collecting SocialSecurity at full retirement age
and you end up passing away at90, just hypothetical here
(09:50):
$72,000.
That is the difference over 30years once you start collecting
Social Security.
So a better example here wouldbe if you start collecting at 67
and you pass away at 97.
The question for you to askyourself would it have been
worth it to work five more yearsfor an extra $200 a month?
For some of you yes, it is.
For many of you you'd go wait asecond.
(10:10):
I could just work like one moreyear.
The idea of that I'm stillworking just to collect or quote
unquote max out my socialsecurity benefit, that's not too
logical, it's not.
So that is hopefully whatyou're taking away, guys.
Don't keep working just to maxout social security.
Now here's a big mistake I see alot of people make.
(10:31):
People will go.
I'm going to retire early andI'm not going to spend too much
money.
I don't have social securityyet.
It's all up to my portfolio.
I'm not going to spend too muchmoney.
But at the same time, they'rethinking, hey, aren't these the
years that I have my energy,that I have my health?
Shouldn't I be enjoying thismoney?
Well, the reality is, mostpeople will look at their
(10:52):
situation and they will notunderstand the reality, which is
I want you to spend more moneywhen you have your energy and
your health.
Yes, you don't have socialsecurity yet, so spend from the
portfolio that you work so hardto accumulate.
And then, when you're in your70s or 80s, you're not going to
need as much from your portfoliobecause you have Social
Security.
That's now helping you out.
(11:12):
So here are some just importantstats to know about Social
Security as I round out thisepisode.
Now, I love Social Securityoptimization.
You can go into the softwaretool that we use for our clients
that you can get access to inthe Early Retirement Academy in
the description of the episode.
You can go play around and see.
It will tell you, based off allyour assumptions, when is
(11:34):
optimal to collect.
So if you don't want to do anyanalysis.
You can go in there, click abunch of buttons and you'll see
it's going to say for you itmakes sense to collect at this
age based on passing away atthis age and yada, yada.
Now that's really cool.
What social security will neverbe able to do is it does not
know how long you're going tolive.
So you can play around withdifferent assumptions, but the
(11:58):
idea of trying to optimize ormax out to the nth degree that
causes a lot of stress.
So don't let social security bethe driver of the decision.
Another thing to consider andthis is a pro tip that I was
just thinking in my head maybe Ishouldn't mention this because
it's a little advanced, butlet's pretend that you want to
retire early and you've heard myother episodes where you're
ready to do Roth conversions andyou understand the value of
paying a little bit in taxes nowfrom your 401k to move it to a
(12:21):
Roth IRA where you'll pay nomore taxes for the rest of your
life.
Okay, let's pretend you're onboard with that concept.
If that's the case, should youturn on Social Security More
often than not?
The answer is no, because ifyou turn on Social Security
earlier.
That's more income that you'recreating, which leads us less
room to fill out optimal taxbrackets.
(12:43):
For example, let's pretend thatyou want to do a $40,000 Roth
conversion and you have noincome.
Now, if we were to convert atthe 10% and 12% levels, you
wouldn't pay much in taxes tomove a good amount of money
$40,000 from your 401k to yourRoth, so it's never taxed, ever
again.
Let's pretend you turn onSocial Security, though, and you
(13:05):
have $40,000 coming in.
We don't get to convert at 10%.
We're now at 12%, and even at12%, you've already filled up a
lot of that bracket, so nowwe're almost closer to paying at
let's call it 22% or 24% withtoday's brackets.
So don't let Social Securityinterrupt your tax strategy.
(13:25):
At the same time, don't marryyour Social Security strategy.
What if it turns out you're 67and you're planning to delay
until 70 and a big health careevent occurs?
You might go.
I'm turning on Social Securitynow because I don't know how
long I'm going to live.
Great, stay dynamic with it.
I tell people, be a retirementboxer, be dynamic.
Okay, here's some other stats tojust be aware of.
You can, of course, retireearly and claim Social Security.
(13:48):
Claiming early before your fullretirement age reduces your
benefit by up to 30% if youclaim at age 62.
Now an important stat to knowis delaying to age 70 gives you
8% per year up to 70.
So what the heck does that meanin English?
If you were to delay SocialSecurity every single year,
(14:09):
every year you delay from 62 to63, you're receiving basically a
guaranteed rate of about 6.5%.
So people will say you know thestock market does 10% per year.
Why don't I collect early andinvest?
Well, you know why people saynot to do that?
Because most people collect andthey don't invest it, they
spend it.
So it would have been betterfor them to let it stay in
(14:30):
social security's hands so thatby the time they collect it it's
a larger amount.
Now, from full retirement ageuntil age 70, you get an 8% bump
, not six and a half, which ismore attractive.
Now I will say it's very rare,but sometimes I'll see Social
Security have earnings inputtedincorrectly.
So you can go to SSAgov makesure your earnings record is
(14:53):
accurate.
If you're close to retirementin the next five years, please
just do a gut check.
I've had one client who saw azero in a year.
They knew they worked, had atax return and we got that
adjusted.
It seems like not a big deal,but it does make a big
difference.
That's about $50 to $75 a monthevery month that they otherwise
would not have had if they didnot check for about five seconds
(15:14):
.
So when it comes to SocialSecurity, here's another example
I'll give to finalize theepisode today.
So there's a true story.
I went to a doctor and I toldthe doc you did a great job
explaining that.
I think you did a good job.
I think you think you did agood job.
I just didn't fully understandit.
You explained it great but I'msorry, I just didn't get the
takeaway.
(15:35):
I'm not trying to be difficulthere.
I know I need to take a pill,but I'm not going to take it
blindly.
And your explanation there,although you thought was good
and it sounded good, I just Ineed more.
And I said it just like thatbecause I'm a very transparent
person.
And then he said oh, I'm sorry,let me explain again.
So he starts explaining to methe lab where the pills are made
that he wants to give me.
And I said respectfully, doc, Idon't care about the lab, I
(15:58):
want to know why I'm taking thispill or why I'm not taking this
pill and once again, I'm nottaking it blindly.
I feel bad and I don't want tobe difficult.
I know you have lots of clients.
I just want a clear answer.
And he said, oh okay, I get it.
So then he explained it againand he did great and I took away
what I needed to take the pilland I said I'm really, I'm
really proud of you, like, thankyou for doing this, because I
(16:19):
know it's annoying when peoplelike me ask further questions.
But now that you've explainedthat perfectly, I do want to go
into the lab a little bit tofurther understand it, but not
everything, just this portion.
Then he did that.
He did that brilliantly.
Now I'm a very happy camper.
I was unclear.
He explained it really well.
He went into so much depth thatI wanted to learn more.
I learned even more and now Isleep well at night, knowing
(16:42):
exactly why I'm taking a certainsupplement.
Beautiful, that is how I wouldwant you to work with your
advisor.
I would want you to say okay,advisor, I know that was great
and you think you did a greatjob explaining Social Security,
but I'm still not clear on whyI'm collecting at 62 versus 67.
I know you made a veryconvincing argument and the
numbers and graph look greeninstead of red, and I know green
(17:04):
is good, but I'm still notclear and I'm sorry, but try
again.
And that advisor should go.
Oh, I'm sorry.
Yeah, let me give you anotherexample.
Did that help and you might go?
That really helped, but nowlet's run it again.
If my spouse predeceases me andvice versa, okay, let's do that
.
You should be working withsomeone who's optimizing and
willing and excited.
Not, you're a burden.
(17:26):
You're asking more questions.
No, this is your money.
You've worked really hard.
It's time for it to work ashard as you have.
So this is one example of allthe types of things we do at
Root Umbrella insurance, estateplanning, managing the portfolio
, tax strategy.
We love to do this.
If this is the type of serviceyou're looking for guidance on,
(17:48):
once again I've said it amillion times this is what we do
here at Root.
If you go to our website,rootfinancialcom, in the upper
right, you'll see a button thatsays see if you're a fit.
If you click on that, fill outa few questions.
Then we'll be in touch to beable to potentially work
together.
You'll receive an answerimmediately and see prompts for
next steps.
If you're just watching thisepisode and you're going, I just
(18:13):
want to optimize socialsecurity, what the heck do I do?
You can use a tool like the onein the early retirement Academy
, and the benefit of doing thisis you can go instantly and
start playing around withdifferent projections to see,
okay, what if I were to collectat this age versus this age and
start to really get dialed inand optimal.
That is available in thedescription below.
There's no one-on-one advice.
You're not getting arecommendation directly from me
(18:34):
on that but you're able to goand run figures and kind of be
your own advisor.
So some people use this inconjunction to their existing
advisory relationship becauseit's a completely separate
software and it's awesome forgood planning.
So that's it for this episode.
I'll see you guys next time.
Thank you all, as always, forlistening to the early
retirement podcast.
(18:54):
I love getting to host theseshows and make different content
for you guys every single week.
I've not missed a single weekin years and that is because I
love getting to do this.
Now, please be smart about this, before you actually execute
any strategy that you see metalk about or hear me talk about
?
Should I say Please talk toyour financial advisor, your tax
preparer, your estate attorney.
(19:15):
Please be smart about this.
None of this should beconstrued as financial advice.
This is for fun, educational,informational purposes only.
Once again, just quickdisclaimer here.
Guys, please be smart aboutthis.
Appreciate you listening, asalways, and you can, of course,
submit a question on my website,earlyretirementpodcastcom.
(19:35):
If you, of course, want me toaddress a specific case study or
topic.
I will not promise I can get toit, but I respond to every
single person and if I find itwill be helpful for a lot of
people, I will absolutely makean episode on it, at the very
least give you some insight.
That's it, thanks, guys.
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