November 23, 2022 • 33 mins
Are you ready for all things Social Security? On this episode of Retirement Equals Freedom, Host Josh Bretl is starting off a 360° look at this federal program that touches the lives of just about every retired American. (We promise, it’s exciting!)
This jam-packed show is focused on the system’s history – from how it got started to how its parameters have evolved. Established by President Franklin D. Roosevelt at the height of the Great Depression, as Josh says, “Social Security is a beast of a government program that has a huge impact on almost everyone’s lives.”
Along with Co-Host Dave Schmidt, we’re learning about why more people than ever are relying more heavily on their Social Security checks over longer periods of time (thanks to the evaporation of pensions and increasing lifespans).
Josh ponders how the Social Security system may be reformed – but never entirely replaced – and emphasizes the importance of strategizing about when to tap your benefits and how to supplement your income if that traditional “three-legged stool” retirement plan turns into a bicycle (tune in and it will all become crystal clear … along with a national need for an Alf reboot).
If you enjoyed the show, please do us a favor and us at Apple Podcasts to comment, rate and review Retirement Equals Freedom. It helps us stay inspired, boosts visibility and grows our audience. We really appreciate the support!
This episode was fueled by Cometeer Coffee, both iced and hot!
Click here to learn more about or listen to previous episodes of The Retirement Equals Freedom Podcast. Don’t forget to sign up for the show’s new weekly email at this link and definitely come join the conversation at our new private Facebook group, which you can find here.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Josh Bretl (00:02):
But Social Security, it's a beast of
a government program, andit has a huge impact on
almost everyone's lives.
So there's a lot ofmisconceptions about it.
There's a lot of unknowns.
People get afraid of it.
They don't want to makethe wrong decision with it.
So what I thought I'd dotoday is to get a good
basic understanding of it.
(00:23):
I thought we'd actuallytalk a little about the
history of Social Security.
Dave Schmidt (00:26):
Are you ready for all things Social Security?
Well, I hope so!
On this episode of RetirementEquals Freedom, we take
a 360 degree look at thisfederal program that touches
the lives of just aboutevery retired American.
And I promise, it'sgonna be exciting.
This jampacked show focuseson the system's history, from
(00:48):
how it got started, to howthe parameters have evolved.
You'll learn why more peoplethan ever are relying more
heavily on their socialsecurity checks over
longer periods of time.
You'll hear Josh's thoughts onhow the social security system
may be reformed, but neverreplaced, as he emphasizes the
importance of strategizing whento tap into your benefits and
(01:12):
how to supplement your income.
Oh yeah, we also discuss thenational need for an ALF reboot.
This is The RetirementEquals Freedom Podcast.
Your host, Josh Bretl, isthe owner of FSR Wealth
Strategies, and for thelast two decades, he's been
helping fine folks like youthrive in their retirement.
(01:33):
And me?
I'm Dave.
Josh's longtime friend,co-host of this podcast,
and fan of the new StarbucksSugar Cookie Latte.
So now, let me let you letme, end this introduction
so you can get the lowdown on social security.
FSR Wealth Management is aregistered investment advisor
located in Elmhurst, Illinois.
(01:53):
Information and opinionscontained in this audio
have been arrived atby FSR Wealth advisors.
All information herein isfor informational purposes
and should not be construedas investment advice.
It does not constitute an offer,a solicitation or recommendation
to purchase any security.
FSR is not providing legal,tax, accounting, or financial
planning advice in this audio.
These views are as of thedate of this publication
and are subject to change.
Josh Bretl (02:31):
Hi, David.
Dave Schmidt (02:32):
Oh, Joshua Edward.
Good morning to you.
Josh Bretl (02:36):
You are still one of the favorite people in my house.
Dave Schmidt (02:38):
In your house, in your office,
in your life in general.
Josh Bretl (02:41):
That was kind of sick.
By the way, I'm going toforeshadow a few things.
Dave Schmidt (02:47):
Ooh, by the way, that was one of the big words
I used on last week's podcast.
Josh Bretl (02:51):
Foreshadow?
Dave Schmidt (02:51):
You were like, remember, you're like, hey,
what's this big word we usedall the time in high school?
I'm like, thereforehence, foreshadowing.
And you got all excited.
You're like, plethora.
But foreshadowingwas one of them.
Go ahead.
Josh Bretl (03:03):
Was last week's podcast, the one where
you didn't know the wayto use whatever word you
didn't know how to use?
Dave Schmidt (03:08):
Extrapolate.
Josh Bretl (03:09):
Extrapolate.
That's true.
Yeah.
I got to pick the get to knowJosh and Dave question today,
and that will come back, Ithink, to what we said here.
So no, I never thought that atthis point in my life, I'd be
spending as much time and you'dbe as integral into my life
as you've become, which is funand scary all at the same time.
Dave Schmidt (03:33):
All at the same time.
So really quick, what'scool in my life is my dad's
in town, picked him upfrom Colorado on Monday.
Josh Bretl (03:39):
Fun.
He comes out a few times a year.
Dave Schmidt (03:41):
Yeah, two or three times a year.
He is the Retirement EqualsFreedom biggest fan, more
so than Al, I believe.
Josh Bretl (03:49):
Oh, Al's going to be really upset when,
if your dad gets his own...
Where is it?
Where's my...
Dave Schmidt (03:58):
Top left?
Al (03:59):
Hashtag tax nerd.
Josh Bretl (04:00):
If your dad gets his own sound drop, Al's
going to be really upset.
Dave Schmidt (04:03):
All right, well, I'll see what I can happen.
So he legitimately, we wentto breakfast yesterday, and he
started telling me about thathe has all these different notes
that he takes on every episode.
And he has funny storiesto add on top of our funny
stories and questions abouttopics you bring up and so
on and so forth, to the pointwhere he now works part-time
(04:25):
at Ikea to keep himself busy.
And he freaking lovesit to begin with.
But he uses some of thecustomer feedback cards so
he'll take one, take a stackof them, flip them over, and
start writing notes that hejust thinks of from previous
episodes of our podcast.
I am so impressed.
But he got a kick out ofit because yesterday, this
would've been October 24thor fifth, I was recording the
(04:48):
introduction for episode 24 andI'm like, "Dad, come on in here.
Come see how the sausageis made, so to speak."
And he loved it.
He got to watch merecord the introduction.
He didn't understand thatshuffling his big old slippers
on my hardwood floor wouldget picked up in a microphone.
So I had to rerecordit like three times.
Josh Bretl (05:07):
Well, I still don't think you understand things
get picked up the microphone.
Every little noise you make,it's like, oh listen to that.
Dave Schmidt (05:13):
Hey, studio version two is
going to be much better.
Josh Bretl (05:15):
Oh, that.
Dave Schmidt (05:16):
Much better.
So it's really cool.
And we are going tohave him on the podcast.
I think we're going to recorda special episode with all of
his notes and feedback, andhe's got great stories about us.
Josh Bretl (05:25):
So yesterday you sent me a text that
I did not reply to.
I am famous for notreplying to text messages.
And I looked at it inthe middle of a meeting.
I had a text come through.
And you know how thepicture preview pops up?
And it was just a pictureof all of these note cards
spread out on a couch.
And I was like, I don'tknow what the heck this is.
I don't know.
So I just kind of let it go.
And then when I read it later,it was really very funny.
Dave Schmidt (05:44):
I know he's so excited.
He was a little offended that wekeep talking about interviewing
my mom instead of him first.
So there's a battle.
There's a battle going on.
Josh Bretl (05:57):
We can interview both of them, but I feel
like your dad will try andadd a lot of humor, and
the humor will come from usmaking fun of your father.
Your mother is justhumor in herself.
She comes with an energylevel that is unbelievable.
Dave Schmidt (06:15):
That is so true.
Hey, how is your remodel going?
Josh Bretl (06:22):
We are three weeks in, four weeks in.
So we've been waiting forever.
Actually, my wifeand I were talking.
My wife's birthday was lastweek, and it was on her
birthday last year that wesigned the contract with the
architect designer person.
And we're like, yep, we're goingto start building in March.
We're looking forward to it.
We went and boughtappliances in December.
(06:44):
And we thought, hey,we're good to go.
Well, demo didn't startuntil the end of September.
And that first day of demo,I remember coming home
from work being like, ohmy God, what did we do?
But we're living in ourliving room, which is also,
I'll see if I can post apicture or a little video
of this onto our RetirementEquals Freedom Facebook page.
(07:06):
But it's our kitchen, our livingroom, our dining room, our
craft room, our homework room.
It has turned into everysingle thing except for our
sleeping in our bedrooms.
Dave Schmidt (07:17):
Well, do you have a port-a-potty
in your living room?
Josh Bretl (07:19):
No, but there's one in our driveway.
So if you need.
And I feel bad.
We have a shared drivewith our neighbors.
Our neighbors are the nicestpeople in the world, and they
have put the port-a-pottyright outside their back door.
I feel bad for them.
But no, all bathrooms andbedrooms are still in use
upstairs, but it's a mess.
Dave Schmidt (07:40):
Wait, does Alex still have easy access to
his history of taxes books?
Josh Bretl (07:45):
Oh, those are in his bedroom.
The history of taxes.
I mean, this might become oneof Alex's favorite episodes.
We are going to do oneon social security today.
Dave Schmidt (07:53):
Oh, man.
Josh Bretl (07:57):
And we're going to talk a little bit about the
history of Social Security,which is really riveting
stuff, but I think maybe Alwill get into Social Security.
He was trying to tellmy wife all these
things about Roth IRAs.
And you know how your father isthe biggest podcast fan we have?
Our wives are ourlowest podcast fan.
(08:19):
There's people who don't knowabout us, and they obviously
aren't fans, but then there'sour wives who know we do
this and still won't listen.
Dave Schmidt (08:26):
Did I tell you the quote that came from
Carla's mouth the other day?
Josh Bretl (08:29):
No.
Dave Schmidt (08:29):
So it might have been the other night when my
dad was telling me about hisfavorite moments from the show.
And Carla was kind ofgiving a half laugh in the
background she heard us.
And she was like ha, ha, ha.
I'm like, Carla, tellus about your favorite
moment on the podcast.
And she's like, I am theleast supportive wife ever
when it comes to your show.
(08:49):
I've never listenedto any of it.
I'm more interestedin TikTok videos.
Like, wow.
Josh Bretl (08:55):
Dave, we need a TikTok account.
Dave Schmidt (08:58):
Oh, yeah.
Josh Bretl (09:00):
Retirement equals freedom.
Dave Schmidt (09:01):
We should do it.
I mean, I'm all for it.
And then we should playthe algorithm so that Carla
and Missy, that's all theysee is our little snippets.
Josh Bretl (09:09):
Oh, yeah.
We'll have to have some sortof celebrity hashtag then.
But at least your wifehears you edit these.
I don't think Missy hasever heard any of this.
Dave Schmidt (09:18):
Oh man, that's too bad.
Josh Bretl (09:19):
Dave, today we talk about Social Security a
little bit, and this is goingto be a multi episode topic
because it is so important.
And Social Security isone of those things that
everybody has to deal with.
I mean, I don't reallycare who you are.
I shouldn't say everybody.
We'll talk a little bit aboutthat, but almost everybody has
to deal with Social Securityand wants to deal with it.
(09:42):
And it becomes an integral partinto everyone's retirement.
So there's a lot ofmisconceptions about it.
There's a lot of unknowns.
People get afraid of it.
They don't know.
They don't want to makethe wrong decision with it.
There's fears thatgo along with it.
So what I thought I'd dotoday is to get a good
basic understanding of it.
(10:03):
I thought we'd actuallytalk a little about the
history of Social security.
Doesn't that sound riveting?
Dave Schmidt (10:08):
Only a true hashtag tax nerd would know
the history of Social Security.
Al (10:13):
Hashtag tax nerd.
Josh Bretl (10:15):
I used to give a lot of Social Security workshops.
In fact, we stoppedgiving them a little bit.
I don't know why we stopped.
I think I'll blame COVID.
Yeah, we can blame everythingon COVID, but I actually
was thinking, I'm going tostart recording a Social
Security webinar just becauseit can be evergreen that
people can see whenever theywant to that's out there.
But You did so well in UShistory that I actually
(10:37):
had to take some of yourtests for you, I think, but
was part of the New Deal.
Do you rememberthe New Deal, Dave?
This was back out ofthe Great Depression.
Dave Schmidt (10:44):
Yeah, it rings a bell.
Yeah.
Josh Bretl (10:48):
This came from President Roosevelt.
He was the one that concoctedthe idea of a social
insurance program, and theynamed it Social Security.
And the thought was everyworker would pay into this
program and then when peopleretired, it would pay out
for the rest of their lives.
And it was a way to take careof retirees as people got older.
(11:13):
And that was the design.
Now I want to talk a little bitabout the design because this
was back in the early thirtiesand a few things had to happen.
One is they had to pickan age at which you'd
start Social Security.
So it was signedinto law in '35.
The first person who collectedSocial Security was in 1940.
Dave Schmidt (11:32):
Anything big happening around the forties?
Josh Bretl (11:34):
Yeah, we seemed to have.
We just went out of GreatDepression, and then we
went into World War II.
Dave Schmidt (11:39):
Oh, World War II.
Yeah.
Josh Bretl (11:39):
Yeah, there's a lot of things that
occurred back then.
And Social Security mightbe the single biggest tax
change we've ever had.
I mean, it's a verysocial program.
It's for the greater goodthat everyone pays into.
And I'm not going tosay good or bad on that.
Every listener we have,some are going to love it,
some are going to hate it.
But back then the design, theyhad to pick an age that people
(12:03):
could collect social security.
And do you know what agethey picked back then?
Dave Schmidt (12:06):
Well...
Josh Bretl (12:08):
Maybe you do, because you actually
listen to me sometimes.
I'm shocked by that.
Dave Schmidt (12:11):
Yeah, 65.
Josh Bretl (12:13):
65.
Yeah, that was the age.
Dave Schmidt (12:14):
Wasn't it started by some German dude?
Josh Bretl (12:17):
Well, that's what I was going to get to.
Do you know howthey picked age 65?
Dave Schmidt (12:21):
I think I do.
Do you actuallywant me to answer?
Josh Bretl (12:23):
Yeah, let's see what you got.
Dave Schmidt (12:24):
I believe, if I remember correctly...
Josh Bretl (12:26):
Some German dude.
Dave Schmidt (12:28):
Well, I believe the idea back then by this
German dude was because...
Josh Bretl (12:34):
Chancellor Bismarck is the German dude.
Dave Schmidt: Chancellor Biz Markie. (12:36):
undefined
No, that's the American rapper.
Oh baby, you got what I need.
Isn't that Biz Markie?
But you say he's just a friend.
Anyways...
Josh Bretl (12:51):
The one thing I know less than movies is rap artists.
Dave Schmidt (12:55):
Yeah, sure.
But I believe it was becausethere were not enough jobs
for younger people, right?
So he started incentivizingolder individuals
to stop working.
And he chose 65 because mostpeople would be dead by then.
Josh Bretl (13:10):
And it said that was kind of an arbitrary
line in the sand he drew.
And that was the 1800s.
And it had to dowith the railroad.
Young people couldn'tget jobs in the railroad.
So he just said, ifyou're over 65, Mr.
Biz Markie retired them and saidthe government will take care
of you from that point forward.
And Roosevelt said, worked forBismarck, it'll work for us.
He picked 65.
(13:32):
Now here's the funny thing.
The funny thing was, do you knowwhat the life expectancy of an
American male was in the 1940s?
Dave Schmidt (13:39):
I do believe, I think it was like 63 or 67.
It was only...
Josh Bretl (13:44):
62.
Dave Schmidt (13:45):
Oh, man.
Josh Bretl (13:46):
It was 62.
So the average American didn'tlive long enough at that point
to even collect Social Security.
And if they happened tolive to 65, do you know how
average long they'd live?
Dave Schmidt (14:00):
Two years?
Three years?
Josh Bretl (14:01):
Two years.
Two years.
They lived to 67.
So what that meant was therewas a lot of people working and
not a lot of people collecting.
In fact, Erin as she waspreparing our show notes,
found this really cool graphon the Social Security website,
a chart where it breaks downhow many people were working
versus how many beneficiaries,how many thousands of
(14:22):
people were collecting.
Dave Schmidt: Well, really quick. (14:24):
undefined
We can post this inthe show notes and on
the Facebook page too.
Josh Bretl (14:28):
Yeah, no, that'd be great.
Okay, so in 1945.
1945, so we're really earlyinto Social Security, there
were 46 million, almost47 million people working
for Social Security.
So workers payinginto Social Security.
And how they pay in, that'sthat FICA tax on your paycheck.
(14:48):
And there were 1.1million people collecting.
So 46 million people payingin, 1.1 people collecting.
So you had, that comes toabout a 42 to one ratio.
So for every one personcollecting, there was
42 people paying in.
Dave Schmidt (15:04):
Wow.
How about that.
Josh Bretl (15:05):
No, that sounds good.
That should work.
That's a Ponzischeme that works.
And to take it one step further,the average American didn't
live long enough to collect.
And if they did live longenough, they collected for two
years and dropped over dead.
Social Security,that's built upon a...
That's structurally sound.
(15:25):
If that continued, weshouldn't be talking about
Social Security being bankrupttoday, but things changed.
People live longer,medicine got better, the
life expectancy increased.
Today, the average lifeexpectancy of an American
male comes in at like 78.
But that includes infantmortality and all the bad
things that can happento you early in life.
If you get to be aboutSocial Security age, you
(15:49):
on average are going tolive to about 83 years old.
Dave Schmidt (15:51):
And you and I, we take care of ourselves
and eat the best foods.
Josh Bretl (15:55):
Physical specimens.
Dave Schmidt (15:56):
I'm thinking like 115, 120 for you and I.
Josh Bretl (15:57):
Oh yeah.
Dave Schmidt (15:59):
Easy, cool.
Josh Bretl (15:59):
Easy, all right.
Dave Schmidt (16:00):
And I'm going to have a lot of fun
in that time period too.
Josh Bretl (16:03):
Oh, yeah.
Dave Schmidt (16:04):
We'll be fit.
We'll be playingbasketball at 100.
Josh Bretl (16:06):
That'd be great.
Dave Schmidt (16:07):
I have to start playing basketball
in my forties first.
Josh Bretl (16:10):
But that ratio kept decreasing because people
got older and older and older.
You had a smaller ratio.
In fact, it went from 42to one all the way down
into 1970, it went to threeto one, is 3.7 to one.
Dave Schmidt (16:23):
Wow.
That's only like 25 years later.
Josh Bretl (16:26):
It wasn't...
Dave Schmidt (16:26):
It dropped drastically.
Josh Bretl (16:27):
Dropped drastically at that point in time.
So we had a lot more peoplecollecting for people paying
into the system, in fact.
But it stayed in that threerange all the way through
until they actually stopped.
The government stops postingthese numbers in 2013
because it dropped a 2.8.
Dave Schmidt (16:46):
To one.
Josh Bretl (16:47):
To one.
So that was back in 2013.
It's gotten worse sincethen as the baby boomers
continue to retire.
And we're down supposedlyunder two to one.
I haven't foundthe exact numbers.
I did hear that as a rumor.
So that's not official.
But that Ponzi scheme doesn'twork quite as well because
we have less people paying infor those that are collecting.
(17:08):
And they're collecting fora heck of a lot longer.
It used to be if you collectedat 65, you collected for
two years on average andyou didn't collect anymore.
Now you turn it on, youcould collect for 20,
30, some people 40 years.
And it's a much differentsystem than it used to be.
So no, they didmake a big change.
(17:28):
Life expectancy increasedby 13 years, and they
pushed the Social Securityage back by two years.
Dave Schmidt (17:34):
By two years.
Josh Bretl (17:35):
So two years.
It's a big difference.
Dave Schmidt (17:36):
Yeah, big.
Josh Bretl (17:37):
But it's there.
It's still there.
Now so people alwaysask, will it be there?
Do I have to worry about it?
And I will tell you, you and Iwe're in our early forties, we
should expect social security.
Our kids who are below10, I believe they'll
get social security.
(17:57):
It's just a matter of,it will look different.
I don't think it will bethe same as we have now.
It'll have to change insome way, shape, or form.
Dave Schmidt (18:05):
Do you have ideas in how it will look?
Josh Bretl (18:08):
I do.
I have predictions.
They'll definitelypush the age back.
I think they'll push theage into the seventies, 75.
I don't think you and Ishould expect to receive
it in our sixties.
They're also going tochange how they pay for it.
So the FICA tax is interesting.
For higher income earners,you stop paying into
FICA once you make about$150,000 for round numbers.
(18:29):
And so for people who earna million dollars, the last
$850,000 of your incomehad no FICA tax on it.
They'll change that.
They'll make it so youpay FICA all the way up.
So those two changes will makesocial security solvent again.
Dave Schmidt (18:48):
Quick question, is an individual who is well off,
can you decline Social Security?
Josh Bretl (18:55):
I've never had anyone decline Social Security.
I always tell people, evenif you don't need it or want
it, find a good use for it.
Be charitable with it.
Even if you want to giveit back to the government,
there is a donationpage on the IRS website.
That no one usesit, but it's there.
I have never seen anyonedecline it . I don't
even know if you can.
That's a good question.
I don't know who would want to.
Dave Schmidt (19:14):
But you could do better uses with it than give
it back to the government.
Josh Bretl (19:18):
Yeah.
Yeah.
Oh, without a doubt.
So Erin printed up somestatistics for us, which
were pretty interesting.
So in 2022, for the average 65year old, the Social Security's
going to replace about 37%of their earnings on average.
And the question comes,what part of their income
or what part of theirexpenses does that replace?
(19:40):
She had it here that the averageSocial Security benefit in
2022 was $1,614 per month orabout 20,000 bucks a year.
So for a married couple,that's about $40,000 a year.
And if you spend 60,000bucks a year, it's making up
two thirds of your income.
(20:00):
That's a big deal.
So if it's not there or ifit's not as big as it used to
be, you have to find somethingelse to replace that income.
And it takes a pretty sizableasset to replace 20 or
$40,000 a year of income.
So Social Security isimportant to a lot of people,
but here's why I thinkit's going to be there.
The government has areally hard time taking a
(20:21):
benefit away from somebody.
And for about 20 to 25%of our population, Social
Security makes up over95% of their income.
Dave Schmidt (20:31):
Oh, wow.
What's that percentage again?
Josh Bretl (20:34):
About 20 to 25%, the last numbers that I saw
of our population who areretired, Social Security makes
up over 90% of their income.
And so you can't take thatlevel of benefit away from
such a large percentageof the population without
a massive social issue.
So the government knowsthat they have to fix it in
(20:55):
some way, shape, or form.
And so they'regoing to get there.
You will get Social Security.
It may look different, it may betaxed different, but But having
a plan for when you take it,there's all sorts of options.
And we're going to get into thatin the next episode is to when
should you take Social Security?
It's probably the biggestquestion I get is when should
(21:15):
I take Social Security?
And there's all sorts ofvariables that go into it.
It is not black and white,but it's an important decision
because it will impactall the other retirement
issues that you have.
It's going to impactyour other assets.
It's going to impacthow much you can spend.
It's going to impact howmuch you leave to your kids.
It's going to impactall sorts of things.
Dave Schmidt (21:35):
You mentioned that as the most common
question that you get asked,but I have a different
question I'd like to ask you.
Why did you not shave thismorning for our podcast?
I'm looking over atScruff McGruff over here.
Josh Bretl (21:48):
I pulled in the parking lot.
My mind was likeshot this morning.
I think I was so excited to seeyou and record this podcast.
Dave Schmidt (21:54):
I don't blame you.
Josh Bretl (21:55):
And I pulled in the parking lot this morning and I
touched my face, and I went, Iforgot to shake this morning.
Dave Schmidt (22:01):
That is incredible.
Josh Bretl (22:02):
And I was expecting to record videos
and everything with you today,but no one wants to see this.
Dave Schmidt (22:07):
I disagree.
I think that's you.
Josh Bretl (22:08):
I'm not...
Dave Schmidt (22:09):
You are scruffy as just part of your look.
Josh Bretl (22:11):
I'm Scruff McGruff.
Dave Schmidt (22:12):
Did I ever tell you I had an elderly client
when I was working at thebank, come in and sit down
and she looked at me and shesaid, I have never met a banker
who didn't shave their face.
And she was offended thatI didn't shave my face.
I said, well, I'm Dave.
Hello.
Josh Bretl (22:28):
You are either I love you or I
hate you personality.
Dave Schmidt (22:32):
You think so?
Josh Bretl (22:33):
And you don't really care one way or the other.
Dave Schmidt (22:35):
No.
No.
I don't really care.
Josh Bretl (22:36):
I think more people love you than hate you.
Dave Schmidt (22:38):
Yeah, I hope nobody hates me.
Geez.
Josh Bretl (22:40):
Well, that lady at the bank did not care for you.
Dave Schmidt (22:42):
No, she just didn't like the way I looked.
I won her over withmy charm later.
Believe you me.
Josh Bretl (22:51):
But Social Security, it's a beast
of a government program.
And it has a huge impacton almost everyone's lives.
Dave Schmidt: Three legged stool. (23:01):
undefined
Do you see this in our notes?
Josh Bretl (23:04):
Three legged stool, what's your question about it?
Dave Schmidt (23:07):
I'm just...
Josh Bretl (23:09):
How does Social Security a three legged
stool come into play?
So the three legged stool issomething that's been around
since the early eighties.
This started probably evenearly before that, with
identifying the differentsources of retirement income.
I told you before thatSocial Security is for
people, is for the averageperson, 37% of their income.
But for some peopleit's greater, for
(23:31):
some people it's less.
You have to replacethe rest of the income.
So they call it athree legged stool.
And traditionally prior,I mean this was not now.
But traditionally it wasa third Social Security, a
third was a corporate pension.
And the other third wasyour own personal savings.
So why the Social Securityhas become so, so important
(23:53):
is because the pensionsare pretty much gone.
There's not a pension anymore.
So that leaves SocialSecurity and your own personal
savings as the only twovehicles that are out there.
So now we have a bicycleas opposed to a stool.
Dave Schmidt (24:08):
Took me a while to get that analogy, but I got it.
Josh Bretl (24:11):
Yeah, yeah.
Dave Schmidt (24:11):
Two versus three.
Josh Bretl (24:12):
So the three-legged stool is kind of like
they've had one leg kickedout from underneath it.
It makes those other two legsreally, really important.
Dave Schmidt (24:19):
What do they call those apparatuses that clowns
and people at circus drive?
It's one wheel and they wheel...
Josh Bretl (24:25):
A unicycle.
Dave Schmidt (24:26):
Yeah.
So you're my unicycle.
I don't need Social Securityor pension or income.
I got Joshua.
Josh Bretl (24:34):
I don't need more people.
Dave Schmidt (24:36):
No, you don't.
Oh Josh, you have beentalking for a while.
Josh Bretl (24:42):
Can we dance?
Dave Schmidt (24:42):
Yeah.
Let's do it.
Let's dance.
Yeah.
What, what.
Okay.
Hey Mr.
Josh, let's take a break.
You've been talking for solong and my ears are sore.
Let's not make them snore.
Listening shouldn't be a chore.
So let's get to know Josh andDavid watch a rating soar.
(25:05):
Oh, yeah.
Josh Bretl (25:11):
You are so much fun to watch.
Dave Schmidt (25:13):
I add a little bit of extra beatbox in there.
Josh Bretl (25:16):
Well, I got to pick our question
today and we foreshadowedit a little bit earlier.
And usually when I pickthe question, I also
think of the answer.
So I didn't think of thisanswer for this one yet,
but I thought this would bea fun question to ask you.
Dave Schmidt (25:31):
Now sometimes you have these really high
expectations of my answers.
Josh Bretl (25:34):
Yeah, I do.
Dave Schmidt (25:35):
I feel like I...
Josh Bretl (25:35):
You let me down a lot.
Dave Schmidt (25:36):
I fail you?
Josh Bretl (25:36):
Yeah, you do.
Dave Schmidt (25:36):
A lot?
Josh Bretl (25:37):
I mean, every time I think, boy, Dave's got to
have a great answer for this.
And I know whatit's going to be.
I'm so wrong.
Dave Schmidt (25:42):
Look, I love going for the yucks, but
sometimes I just don't have it.
So let's see what this is.
Josh Bretl (25:46):
Well, this is not really.
Well, let's just see.
Okay.
What did your 15 yearold self imagine you'd
be doing right now?
Dave Schmidt (25:54):
So that would've been like freshman year?
Sophomore year of high school?
Josh Bretl (25:57):
Yeah, freshman, sophomore year.
We probably weren't friendsat that point in time.
Dave Schmidt (26:01):
Yeah.
No, so that's when I reallystarted getting into cooking.
So at that point, I'dalready started planning
out my first restaurant.
And I was already startingcooking classes at York.
So I thought for sureI'd be a restauranteur.
Josh Bretl (26:16):
Ooh.
Owning a restaurant, cooking ina restaurant, all that stuff.
Dave Schmidt (26:18):
Owning, yeah.
I did like cooking.
But I liked the idea of, again,using that creative side of me
of just starting restaurants.
Now, again, 15, you don'trealize all the different
aspects of owning restaurants.
But I wanted to be inthat industry for sure.
Josh Bretl (26:34):
And now I cook more than you do.
Dave Schmidt (26:35):
You cook a lot more than me.
Yeah, I just don'tlike to cook anymore.
It's bad.
So yeah.
Joshua Bretl, at age 15.
How about you?
Josh Bretl (26:44):
Age 15 was probably when I started
wanting to do somethingin the financial world.
I started...
Dave Schmidt (26:51):
Yes, yes.
Josh Bretl (26:52):
That's when I always took after my father.
And I liked a lot of whathe did and how he did it.
And I liked that he wasalways home for dinner,
coached all the baseballteams, all that fun stuff.
Before then, I actually wantedto follow in your footsteps.
I always said that inthe summer I was going
to be a baseball umpire.
And in the winter, Iwas going to be a chef.
Dave Schmidt (27:11):
Oh, cool.
Josh Bretl (27:12):
I mean, I had two jobs in my mind growing up.
I mean, most kids wantto be firefighters or
doctors or whatever.
Nope, I wanted to bean umpire and a cook.
Dave Schmidt (27:20):
That's cool.
My brother-in-lawBill, his brother Chris
Schultz lives in Vegas.
I don't know if you rememberthis, but he made it really
far in umpiring to triple A
Josh Bretl (27:29):
oh, that's right.
I forgot about that.
Dave Schmidt (27:31):
And it is a really hard career to break into.
Josh Bretl (27:34):
It's very competitive.
Statistically, it'sharder to get to the major
leagues as an umpire thanas a baseball player.
Dave Schmidt (27:39):
Wow.
Wow.
Josh Bretl (27:40):
Yeah, and here we are now.
We sit and do a podcastabout finances and food.
Dave Schmidt (27:45):
And food.
I'm actually thinking,what are we getting today?
I'm getting hungry.
Josh Bretl (27:48):
Me too.
Dave Schmidt (27:49):
So that's awesome.
Josh Bretl (27:50):
That's kind of fun.
Dave Schmidt (27:51):
Cool.
So I think it's going to wrapup the show today, except
for Dave relates to retirees.
Josh Bretl (27:58):
That's my favorite part of the show.
Dave Schmidt (28:00):
Is it your favorite or is it the part
that worries you the most?
Josh Bretl (28:04):
My therapist has helped me deal with
anxiety and how to handle it.
So it's where I have tostart doing my breathing
and things like that.
But I'm used to it now.
Dave Schmidt (28:15):
So I'm going to relate to our dear retirees
and soon to be retirees.
We're talking about the historyof Social Security, and I
do think it's important foreverybody to know the history.
I've learned quitea bit myself today.
I compare it to the historyof Josh Bretl and Dave
Schmidt, the history of us.
Josh Bretl (28:32):
Oh, we have a history.
Dave Schmidt (28:33):
And there are so many direct parallels to our
friendship and Social Security.
What once started off as justa great idea, great thing has
now become a little bit scarier.
And it's scarier for youand I because you expect
me to do things for my foodnow and for my free stuff.
I don't know, do podcastsand help you with stuff.
(28:55):
And I find it kind of crazy.
Also, started offgreat, our relationship.
It got a little testy there whenyou had the audacity to go off
to college and leave me behindat art school all by myself.
Josh Bretl (29:09):
All by myself.
Dave Schmidt (29:11):
So it's like when humans had the audacity to
start living longer and screwingup the whole Social Security
ratio, you had the audacityof going to the University
of Illinois to get smart.
Yeah, ridiculous.
However, you did redeemyourself by going to my
college graduation in whichmy wife did not attend.
Josh Bretl (29:31):
No, but me and Matthew did.
Dave Schmidt (29:32):
You and Matthew did.
And just like Social Securityis going to eventually redeem
itself, it's going to find away to better integrate with
how we live as Americans.
Josh Bretl (29:41):
We can hope.
Dave Schmidt (29:42):
We can hope.
Yep.
So Before this episode Iwas worried about Social
Security/our friendshipending, but now I'm not
because you have put me atpeace knowing David, as long
as you're above ground, I willbuy you whatever you want.
Josh Bretl (29:57):
First off, I never said that.
But second, let's talk alittle bit more about the
relationship there becausesometimes you have stretches.
This one, I thinkI got a little bit.
Dave Schmidt (30:09):
Insert full house music.
Josh Bretl (30:12):
I love the music.
Dave Schmidt (30:13):
Yeah, it's good.
Josh Bretl (30:14):
I think when you and I first became friends,
we didn't ever think itwould become this level
of important in our lives.
I now see you as much as Isee almost anybody else in my
life besides my wife and kids.
And you have becomedifficult to replace.
Dave Schmidt (30:34):
That's what I like to hear.
Josh Bretl (30:35):
And also a pain in the butt to deal with.
Dave Schmidt (30:37):
Yeah, that's true.
Josh Bretl (30:38):
So you're just like Social Security.
Dave Schmidt (30:41):
Perfect.
Josh Bretl (30:43):
And I actually think that I have learned
and we have learned how towork very well together.
And if it's going to be suchan important part of our
life that we better make surethat we understand how it
goes together and how we canseamlessly live symbiotically
(31:03):
so that we can better therest of both of our lives.
Dave Schmidt (31:07):
I mean, that is exactly how I
was thinking about it.
I mean, look, dear listener,he's even not shaving.
I don't shave.
What does that say aboutmy influence on him?
Josh Bretl (31:20):
I don't remember ever not shaving.
I can't remember I've everpulled in the office and
went, oh, I forgot to shave.
I mean, I've laid in bed atnight and been like, ooh, I
forgot to take my contacts out.
But I've neverforgotten to shave.
Dave Schmidt (31:31):
And when I work here on Mondays, I pull
into your parking, be like,crap, I shaved last night.
It's just the opposite thing.
Look, I have a very certainimage I need to maintain
when I walk into your office.
I need to be the onethat brings levity, that
brings a certain level ofcavalierness to everything.
Because let's be honest,you guys deal with really,
really, really importantthings for other people.
(31:54):
You got to be on yourA game all the time.
And I see the stress level justgo way down when I walk in.
Josh Bretl (31:59):
Wah, wah.
Dave Schmidt (32:00):
And in our words of our friend ALF.
ALF (32:03):
Why must you needlessly complicate everything?
Dave Schmidt (32:07):
That's what I say to your team.
I'm like, hey, let's just takea breath and have some fun.
Josh Bretl (32:13):
We're going to end on this.
And you have a hugepoint right there.
And I was on a traininglast week and the number one
thing they kept saying overand over again is, clients
want clarity and simplicity.
Clarity and simplicity.
And in our words of ALF, I hopeyou are helping us bring that.
Dave Schmidt (32:34):
There have been several rumors of an ALF reboot.
Have I mentioned this?
Josh Bretl (32:39):
No.
Dave Schmidt (32:39):
Seth Rogan is pushing for it.
And if he gets involved,it's going to be awesome.
So I will put money behinda Kickstarter campaign,
whatever it takes for an ALFreboot because who wouldn't
love a little alien life forminvading our television sets.
Josh Bretl (32:57):
Makes everyone happy.
Dave Schmidt (32:58):
It does, I know.
You know what elsemakes me happy?
Josh Bretl (33:02):
Saying-
Dave Schmidt (33:03):
No!
Not having to shopat Buy Buy Baby.
So Deb, this is for you.
Bye.
I totally stolethat from SmartLess.
That's how they do it.
Josh Bretl (33:16):
I actually got it now.
Dave Schmidt (33:17):
Yeah, you got it.
Josh Bretl (33:18):
I got that now.
Dave Schmidt (33:18):
All right, good stuff.
Al (33:19):
Hashtag tax nerd.
But Social Security, it's a beast of
a government program, andit has a huge impact on
almost everyone's lives.
So there's a lot ofmisconceptions about it.
There's a lot of unknowns.
People get afraid of it.
They don't want to makethe wrong decision with it.
So what I thought I'd dotoday is to get a good
basic understanding of it.
(00:23):
I thought we'd actuallytalk a little about the
history of Social Security.
Dave Schmidt (00:26):
Are you ready for all things Social Security?
Well, I hope so!
On this episode of RetirementEquals Freedom, we take
a 360 degree look at thisfederal program that touches
the lives of just aboutevery retired American.
And I promise, it'sgonna be exciting.
This jampacked show focuseson the system's history, from
(00:48):
how it got started, to howthe parameters have evolved.
You'll learn why more peoplethan ever are relying more
heavily on their socialsecurity checks over
longer periods of time.
You'll hear Josh's thoughts onhow the social security system
may be reformed, but neverreplaced, as he emphasizes the
importance of strategizing whento tap into your benefits and
(01:12):
how to supplement your income.
Oh yeah, we also discuss thenational need for an ALF reboot.
This is The RetirementEquals Freedom Podcast.
Your host, Josh Bretl, isthe owner of FSR Wealth
Strategies, and for thelast two decades, he's been
helping fine folks like youthrive in their retirement.
(01:33):
And me?
I'm Dave.
Josh's longtime friend,co-host of this podcast,
and fan of the new StarbucksSugar Cookie Latte.
So now, let me let you letme, end this introduction
so you can get the lowdown on social security.
FSR Wealth Management is aregistered investment advisor
located in Elmhurst, Illinois.
(01:53):
Information and opinionscontained in this audio
have been arrived atby FSR Wealth advisors.
All information herein isfor informational purposes
and should not be construedas investment advice.
It does not constitute an offer,a solicitation or recommendation
to purchase any security.
FSR is not providing legal,tax, accounting, or financial
planning advice in this audio.
These views are as of thedate of this publication
and are subject to change.
Josh Bretl (02:31):
Hi, David.
Dave Schmidt (02:32):
Oh, Joshua Edward.
Good morning to you.
Josh Bretl (02:36):
You are still one of the favorite people in my house.
Dave Schmidt (02:38):
In your house, in your office,
in your life in general.
Josh Bretl (02:41):
That was kind of sick.
By the way, I'm going toforeshadow a few things.
Dave Schmidt (02:47):
Ooh, by the way, that was one of the big words
I used on last week's podcast.
Josh Bretl (02:51):
Foreshadow?
Dave Schmidt (02:51):
You were like, remember, you're like, hey,
what's this big word we usedall the time in high school?
I'm like, thereforehence, foreshadowing.
And you got all excited.
You're like, plethora.
But foreshadowingwas one of them.
Go ahead.
Josh Bretl (03:03):
Was last week's podcast, the one where
you didn't know the wayto use whatever word you
didn't know how to use?
Dave Schmidt (03:08):
Extrapolate.
Josh Bretl (03:09):
Extrapolate.
That's true.
Yeah.
I got to pick the get to knowJosh and Dave question today,
and that will come back, Ithink, to what we said here.
So no, I never thought that atthis point in my life, I'd be
spending as much time and you'dbe as integral into my life
as you've become, which is funand scary all at the same time.
Dave Schmidt (03:33):
All at the same time.
So really quick, what'scool in my life is my dad's
in town, picked him upfrom Colorado on Monday.
Josh Bretl (03:39):
Fun.
He comes out a few times a year.
Dave Schmidt (03:41):
Yeah, two or three times a year.
He is the Retirement EqualsFreedom biggest fan, more
so than Al, I believe.
Josh Bretl (03:49):
Oh, Al's going to be really upset when,
if your dad gets his own...
Where is it?
Where's my...
Dave Schmidt (03:58):
Top left?
Al (03:59):
Hashtag tax nerd.
Josh Bretl (04:00):
If your dad gets his own sound drop, Al's
going to be really upset.
Dave Schmidt (04:03):
All right, well, I'll see what I can happen.
So he legitimately, we wentto breakfast yesterday, and he
started telling me about thathe has all these different notes
that he takes on every episode.
And he has funny storiesto add on top of our funny
stories and questions abouttopics you bring up and so
on and so forth, to the pointwhere he now works part-time
(04:25):
at Ikea to keep himself busy.
And he freaking lovesit to begin with.
But he uses some of thecustomer feedback cards so
he'll take one, take a stackof them, flip them over, and
start writing notes that hejust thinks of from previous
episodes of our podcast.
I am so impressed.
But he got a kick out ofit because yesterday, this
would've been October 24thor fifth, I was recording the
(04:48):
introduction for episode 24 andI'm like, "Dad, come on in here.
Come see how the sausageis made, so to speak."
And he loved it.
He got to watch merecord the introduction.
He didn't understand thatshuffling his big old slippers
on my hardwood floor wouldget picked up in a microphone.
So I had to rerecordit like three times.
Josh Bretl (05:07):
Well, I still don't think you understand things
get picked up the microphone.
Every little noise you make,it's like, oh listen to that.
Dave Schmidt (05:13):
Hey, studio version two is
going to be much better.
Josh Bretl (05:15):
Oh, that.
Dave Schmidt (05:16):
Much better.
So it's really cool.
And we are going tohave him on the podcast.
I think we're going to recorda special episode with all of
his notes and feedback, andhe's got great stories about us.
Josh Bretl (05:25):
So yesterday you sent me a text that
I did not reply to.
I am famous for notreplying to text messages.
And I looked at it inthe middle of a meeting.
I had a text come through.
And you know how thepicture preview pops up?
And it was just a pictureof all of these note cards
spread out on a couch.
And I was like, I don'tknow what the heck this is.
I don't know.
So I just kind of let it go.
And then when I read it later,it was really very funny.
Dave Schmidt (05:44):
I know he's so excited.
He was a little offended that wekeep talking about interviewing
my mom instead of him first.
So there's a battle.
There's a battle going on.
Josh Bretl (05:57):
We can interview both of them, but I feel
like your dad will try andadd a lot of humor, and
the humor will come from usmaking fun of your father.
Your mother is justhumor in herself.
She comes with an energylevel that is unbelievable.
Dave Schmidt (06:15):
That is so true.
Hey, how is your remodel going?
Josh Bretl (06:22):
We are three weeks in, four weeks in.
So we've been waiting forever.
Actually, my wifeand I were talking.
My wife's birthday was lastweek, and it was on her
birthday last year that wesigned the contract with the
architect designer person.
And we're like, yep, we're goingto start building in March.
We're looking forward to it.
We went and boughtappliances in December.
(06:44):
And we thought, hey,we're good to go.
Well, demo didn't startuntil the end of September.
And that first day of demo,I remember coming home
from work being like, ohmy God, what did we do?
But we're living in ourliving room, which is also,
I'll see if I can post apicture or a little video
of this onto our RetirementEquals Freedom Facebook page.
(07:06):
But it's our kitchen, our livingroom, our dining room, our
craft room, our homework room.
It has turned into everysingle thing except for our
sleeping in our bedrooms.
Dave Schmidt (07:17):
Well, do you have a port-a-potty
in your living room?
Josh Bretl (07:19):
No, but there's one in our driveway.
So if you need.
And I feel bad.
We have a shared drivewith our neighbors.
Our neighbors are the nicestpeople in the world, and they
have put the port-a-pottyright outside their back door.
I feel bad for them.
But no, all bathrooms andbedrooms are still in use
upstairs, but it's a mess.
Dave Schmidt (07:40):
Wait, does Alex still have easy access to
his history of taxes books?
Josh Bretl (07:45):
Oh, those are in his bedroom.
The history of taxes.
I mean, this might become oneof Alex's favorite episodes.
We are going to do oneon social security today.
Dave Schmidt (07:53):
Oh, man.
Josh Bretl (07:57):
And we're going to talk a little bit about the
history of Social Security,which is really riveting
stuff, but I think maybe Alwill get into Social Security.
He was trying to tellmy wife all these
things about Roth IRAs.
And you know how your father isthe biggest podcast fan we have?
Our wives are ourlowest podcast fan.
(08:19):
There's people who don't knowabout us, and they obviously
aren't fans, but then there'sour wives who know we do
this and still won't listen.
Dave Schmidt (08:26):
Did I tell you the quote that came from
Carla's mouth the other day?
Josh Bretl (08:29):
No.
Dave Schmidt (08:29):
So it might have been the other night when my
dad was telling me about hisfavorite moments from the show.
And Carla was kind ofgiving a half laugh in the
background she heard us.
And she was like ha, ha, ha.
I'm like, Carla, tellus about your favorite
moment on the podcast.
And she's like, I am theleast supportive wife ever
when it comes to your show.
(08:49):
I've never listenedto any of it.
I'm more interestedin TikTok videos.
Like, wow.
Josh Bretl (08:55):
Dave, we need a TikTok account.
Dave Schmidt (08:58):
Oh, yeah.
Josh Bretl (09:00):
Retirement equals freedom.
Dave Schmidt (09:01):
We should do it.
I mean, I'm all for it.
And then we should playthe algorithm so that Carla
and Missy, that's all theysee is our little snippets.
Josh Bretl (09:09):
Oh, yeah.
We'll have to have some sortof celebrity hashtag then.
But at least your wifehears you edit these.
I don't think Missy hasever heard any of this.
Dave Schmidt (09:18):
Oh man, that's too bad.
Josh Bretl (09:19):
Dave, today we talk about Social Security a
little bit, and this is goingto be a multi episode topic
because it is so important.
And Social Security isone of those things that
everybody has to deal with.
I mean, I don't reallycare who you are.
I shouldn't say everybody.
We'll talk a little bit aboutthat, but almost everybody has
to deal with Social Securityand wants to deal with it.
(09:42):
And it becomes an integral partinto everyone's retirement.
So there's a lot ofmisconceptions about it.
There's a lot of unknowns.
People get afraid of it.
They don't know.
They don't want to makethe wrong decision with it.
There's fears thatgo along with it.
So what I thought I'd dotoday is to get a good
basic understanding of it.
(10:03):
I thought we'd actuallytalk a little about the
history of Social security.
Doesn't that sound riveting?
Dave Schmidt (10:08):
Only a true hashtag tax nerd would know
the history of Social Security.
Al (10:13):
Hashtag tax nerd.
Josh Bretl (10:15):
I used to give a lot of Social Security workshops.
In fact, we stoppedgiving them a little bit.
I don't know why we stopped.
I think I'll blame COVID.
Yeah, we can blame everythingon COVID, but I actually
was thinking, I'm going tostart recording a Social
Security webinar just becauseit can be evergreen that
people can see whenever theywant to that's out there.
But You did so well in UShistory that I actually
(10:37):
had to take some of yourtests for you, I think, but
was part of the New Deal.
Do you rememberthe New Deal, Dave?
This was back out ofthe Great Depression.
Dave Schmidt (10:44):
Yeah, it rings a bell.
Yeah.
Josh Bretl (10:48):
This came from President Roosevelt.
He was the one that concoctedthe idea of a social
insurance program, and theynamed it Social Security.
And the thought was everyworker would pay into this
program and then when peopleretired, it would pay out
for the rest of their lives.
And it was a way to take careof retirees as people got older.
(11:13):
And that was the design.
Now I want to talk a little bitabout the design because this
was back in the early thirtiesand a few things had to happen.
One is they had to pickan age at which you'd
start Social Security.
So it was signedinto law in '35.
The first person who collectedSocial Security was in 1940.
Dave Schmidt (11:32):
Anything big happening around the forties?
Josh Bretl (11:34):
Yeah, we seemed to have.
We just went out of GreatDepression, and then we
went into World War II.
Dave Schmidt (11:39):
Oh, World War II.
Yeah.
Josh Bretl (11:39):
Yeah, there's a lot of things that
occurred back then.
And Social Security mightbe the single biggest tax
change we've ever had.
I mean, it's a verysocial program.
It's for the greater goodthat everyone pays into.
And I'm not going tosay good or bad on that.
Every listener we have,some are going to love it,
some are going to hate it.
But back then the design, theyhad to pick an age that people
(12:03):
could collect social security.
And do you know what agethey picked back then?
Dave Schmidt (12:06):
Well...
Josh Bretl (12:08):
Maybe you do, because you actually
listen to me sometimes.
I'm shocked by that.
Dave Schmidt (12:11):
Yeah, 65.
Josh Bretl (12:13):
65.
Yeah, that was the age.
Dave Schmidt (12:14):
Wasn't it started by some German dude?
Josh Bretl (12:17):
Well, that's what I was going to get to.
Do you know howthey picked age 65?
Dave Schmidt (12:21):
I think I do.
Do you actuallywant me to answer?
Josh Bretl (12:23):
Yeah, let's see what you got.
Dave Schmidt (12:24):
I believe, if I remember correctly...
Josh Bretl (12:26):
Some German dude.
Dave Schmidt (12:28):
Well, I believe the idea back then by this
German dude was because...
Josh Bretl (12:34):
Chancellor Bismarck is the German dude.
Dave Schmidt: Chancellor Biz Markie. (12:36):
undefined
No, that's the American rapper.
Oh baby, you got what I need.
Isn't that Biz Markie?
But you say he's just a friend.
Anyways...
Josh Bretl (12:51):
The one thing I know less than movies is rap artists.
Dave Schmidt (12:55):
Yeah, sure.
But I believe it was becausethere were not enough jobs
for younger people, right?
So he started incentivizingolder individuals
to stop working.
And he chose 65 because mostpeople would be dead by then.
Josh Bretl (13:10):
And it said that was kind of an arbitrary
line in the sand he drew.
And that was the 1800s.
And it had to dowith the railroad.
Young people couldn'tget jobs in the railroad.
So he just said, ifyou're over 65, Mr.
Biz Markie retired them and saidthe government will take care
of you from that point forward.
And Roosevelt said, worked forBismarck, it'll work for us.
He picked 65.
(13:32):
Now here's the funny thing.
The funny thing was, do you knowwhat the life expectancy of an
American male was in the 1940s?
Dave Schmidt (13:39):
I do believe, I think it was like 63 or 67.
It was only...
Josh Bretl (13:44):
62.
Dave Schmidt (13:45):
Oh, man.
Josh Bretl (13:46):
It was 62.
So the average American didn'tlive long enough at that point
to even collect Social Security.
And if they happened tolive to 65, do you know how
average long they'd live?
Dave Schmidt (14:00):
Two years?
Three years?
Josh Bretl (14:01):
Two years.
Two years.
They lived to 67.
So what that meant was therewas a lot of people working and
not a lot of people collecting.
In fact, Erin as she waspreparing our show notes,
found this really cool graphon the Social Security website,
a chart where it breaks downhow many people were working
versus how many beneficiaries,how many thousands of
(14:22):
people were collecting.
Dave Schmidt: Well, really quick. (14:24):
undefined
We can post this inthe show notes and on
the Facebook page too.
Josh Bretl (14:28):
Yeah, no, that'd be great.
Okay, so in 1945.
1945, so we're really earlyinto Social Security, there
were 46 million, almost47 million people working
for Social Security.
So workers payinginto Social Security.
And how they pay in, that'sthat FICA tax on your paycheck.
(14:48):
And there were 1.1million people collecting.
So 46 million people payingin, 1.1 people collecting.
So you had, that comes toabout a 42 to one ratio.
So for every one personcollecting, there was
42 people paying in.
Dave Schmidt (15:04):
Wow.
How about that.
Josh Bretl (15:05):
No, that sounds good.
That should work.
That's a Ponzischeme that works.
And to take it one step further,the average American didn't
live long enough to collect.
And if they did live longenough, they collected for two
years and dropped over dead.
Social Security,that's built upon a...
That's structurally sound.
(15:25):
If that continued, weshouldn't be talking about
Social Security being bankrupttoday, but things changed.
People live longer,medicine got better, the
life expectancy increased.
Today, the average lifeexpectancy of an American
male comes in at like 78.
But that includes infantmortality and all the bad
things that can happento you early in life.
If you get to be aboutSocial Security age, you
(15:49):
on average are going tolive to about 83 years old.
Dave Schmidt (15:51):
And you and I, we take care of ourselves
and eat the best foods.
Josh Bretl (15:55):
Physical specimens.
Dave Schmidt (15:56):
I'm thinking like 115, 120 for you and I.
Josh Bretl (15:57):
Oh yeah.
Dave Schmidt (15:59):
Easy, cool.
Josh Bretl (15:59):
Easy, all right.
Dave Schmidt (16:00):
And I'm going to have a lot of fun
in that time period too.
Josh Bretl (16:03):
Oh, yeah.
Dave Schmidt (16:04):
We'll be fit.
We'll be playingbasketball at 100.
Josh Bretl (16:06):
That'd be great.
Dave Schmidt (16:07):
I have to start playing basketball
in my forties first.
Josh Bretl (16:10):
But that ratio kept decreasing because people
got older and older and older.
You had a smaller ratio.
In fact, it went from 42to one all the way down
into 1970, it went to threeto one, is 3.7 to one.
Dave Schmidt (16:23):
Wow.
That's only like 25 years later.
Josh Bretl (16:26):
It wasn't...
Dave Schmidt (16:26):
It dropped drastically.
Josh Bretl (16:27):
Dropped drastically at that point in time.
So we had a lot more peoplecollecting for people paying
into the system, in fact.
But it stayed in that threerange all the way through
until they actually stopped.
The government stops postingthese numbers in 2013
because it dropped a 2.8.
Dave Schmidt (16:46):
To one.
Josh Bretl (16:47):
To one.
So that was back in 2013.
It's gotten worse sincethen as the baby boomers
continue to retire.
And we're down supposedlyunder two to one.
I haven't foundthe exact numbers.
I did hear that as a rumor.
So that's not official.
But that Ponzi scheme doesn'twork quite as well because
we have less people paying infor those that are collecting.
(17:08):
And they're collecting fora heck of a lot longer.
It used to be if you collectedat 65, you collected for
two years on average andyou didn't collect anymore.
Now you turn it on, youcould collect for 20,
30, some people 40 years.
And it's a much differentsystem than it used to be.
So no, they didmake a big change.
(17:28):
Life expectancy increasedby 13 years, and they
pushed the Social Securityage back by two years.
Dave Schmidt (17:34):
By two years.
Josh Bretl (17:35):
So two years.
It's a big difference.
Dave Schmidt (17:36):
Yeah, big.
Josh Bretl (17:37):
But it's there.
It's still there.
Now so people alwaysask, will it be there?
Do I have to worry about it?
And I will tell you, you and Iwe're in our early forties, we
should expect social security.
Our kids who are below10, I believe they'll
get social security.
(17:57):
It's just a matter of,it will look different.
I don't think it will bethe same as we have now.
It'll have to change insome way, shape, or form.
Dave Schmidt (18:05):
Do you have ideas in how it will look?
Josh Bretl (18:08):
I do.
I have predictions.
They'll definitelypush the age back.
I think they'll push theage into the seventies, 75.
I don't think you and Ishould expect to receive
it in our sixties.
They're also going tochange how they pay for it.
So the FICA tax is interesting.
For higher income earners,you stop paying into
FICA once you make about$150,000 for round numbers.
(18:29):
And so for people who earna million dollars, the last
$850,000 of your incomehad no FICA tax on it.
They'll change that.
They'll make it so youpay FICA all the way up.
So those two changes will makesocial security solvent again.
Dave Schmidt (18:48):
Quick question, is an individual who is well off,
can you decline Social Security?
Josh Bretl (18:55):
I've never had anyone decline Social Security.
I always tell people, evenif you don't need it or want
it, find a good use for it.
Be charitable with it.
Even if you want to giveit back to the government,
there is a donationpage on the IRS website.
That no one usesit, but it's there.
I have never seen anyonedecline it . I don't
even know if you can.
That's a good question.
I don't know who would want to.
Dave Schmidt (19:14):
But you could do better uses with it than give
it back to the government.
Josh Bretl (19:18):
Yeah.
Yeah.
Oh, without a doubt.
So Erin printed up somestatistics for us, which
were pretty interesting.
So in 2022, for the average 65year old, the Social Security's
going to replace about 37%of their earnings on average.
And the question comes,what part of their income
or what part of theirexpenses does that replace?
(19:40):
She had it here that the averageSocial Security benefit in
2022 was $1,614 per month orabout 20,000 bucks a year.
So for a married couple,that's about $40,000 a year.
And if you spend 60,000bucks a year, it's making up
two thirds of your income.
(20:00):
That's a big deal.
So if it's not there or ifit's not as big as it used to
be, you have to find somethingelse to replace that income.
And it takes a pretty sizableasset to replace 20 or
$40,000 a year of income.
So Social Security isimportant to a lot of people,
but here's why I thinkit's going to be there.
The government has areally hard time taking a
(20:21):
benefit away from somebody.
And for about 20 to 25%of our population, Social
Security makes up over95% of their income.
Dave Schmidt (20:31):
Oh, wow.
What's that percentage again?
Josh Bretl (20:34):
About 20 to 25%, the last numbers that I saw
of our population who areretired, Social Security makes
up over 90% of their income.
And so you can't take thatlevel of benefit away from
such a large percentageof the population without
a massive social issue.
So the government knowsthat they have to fix it in
(20:55):
some way, shape, or form.
And so they'regoing to get there.
You will get Social Security.
It may look different, it may betaxed different, but But having
a plan for when you take it,there's all sorts of options.
And we're going to get into thatin the next episode is to when
should you take Social Security?
It's probably the biggestquestion I get is when should
(21:15):
I take Social Security?
And there's all sorts ofvariables that go into it.
It is not black and white,but it's an important decision
because it will impactall the other retirement
issues that you have.
It's going to impactyour other assets.
It's going to impacthow much you can spend.
It's going to impact howmuch you leave to your kids.
It's going to impactall sorts of things.
Dave Schmidt (21:35):
You mentioned that as the most common
question that you get asked,but I have a different
question I'd like to ask you.
Why did you not shave thismorning for our podcast?
I'm looking over atScruff McGruff over here.
Josh Bretl (21:48):
I pulled in the parking lot.
My mind was likeshot this morning.
I think I was so excited to seeyou and record this podcast.
Dave Schmidt (21:54):
I don't blame you.
Josh Bretl (21:55):
And I pulled in the parking lot this morning and I
touched my face, and I went, Iforgot to shake this morning.
Dave Schmidt (22:01):
That is incredible.
Josh Bretl (22:02):
And I was expecting to record videos
and everything with you today,but no one wants to see this.
Dave Schmidt (22:07):
I disagree.
I think that's you.
Josh Bretl (22:08):
I'm not...
Dave Schmidt (22:09):
You are scruffy as just part of your look.
Josh Bretl (22:11):
I'm Scruff McGruff.
Dave Schmidt (22:12):
Did I ever tell you I had an elderly client
when I was working at thebank, come in and sit down
and she looked at me and shesaid, I have never met a banker
who didn't shave their face.
And she was offended thatI didn't shave my face.
I said, well, I'm Dave.
Hello.
Josh Bretl (22:28):
You are either I love you or I
hate you personality.
Dave Schmidt (22:32):
You think so?
Josh Bretl (22:33):
And you don't really care one way or the other.
Dave Schmidt (22:35):
No.
No.
I don't really care.
Josh Bretl (22:36):
I think more people love you than hate you.
Dave Schmidt (22:38):
Yeah, I hope nobody hates me.
Geez.
Josh Bretl (22:40):
Well, that lady at the bank did not care for you.
Dave Schmidt (22:42):
No, she just didn't like the way I looked.
I won her over withmy charm later.
Believe you me.
Josh Bretl (22:51):
But Social Security, it's a beast
of a government program.
And it has a huge impacton almost everyone's lives.
Dave Schmidt: Three legged stool. (23:01):
undefined
Do you see this in our notes?
Josh Bretl (23:04):
Three legged stool, what's your question about it?
Dave Schmidt (23:07):
I'm just...
Josh Bretl (23:09):
How does Social Security a three legged
stool come into play?
So the three legged stool issomething that's been around
since the early eighties.
This started probably evenearly before that, with
identifying the differentsources of retirement income.
I told you before thatSocial Security is for
people, is for the averageperson, 37% of their income.
But for some peopleit's greater, for
(23:31):
some people it's less.
You have to replacethe rest of the income.
So they call it athree legged stool.
And traditionally prior,I mean this was not now.
But traditionally it wasa third Social Security, a
third was a corporate pension.
And the other third wasyour own personal savings.
So why the Social Securityhas become so, so important
(23:53):
is because the pensionsare pretty much gone.
There's not a pension anymore.
So that leaves SocialSecurity and your own personal
savings as the only twovehicles that are out there.
So now we have a bicycleas opposed to a stool.
Dave Schmidt (24:08):
Took me a while to get that analogy, but I got it.
Josh Bretl (24:11):
Yeah, yeah.
Dave Schmidt (24:11):
Two versus three.
Josh Bretl (24:12):
So the three-legged stool is kind of like
they've had one leg kickedout from underneath it.
It makes those other two legsreally, really important.
Dave Schmidt (24:19):
What do they call those apparatuses that clowns
and people at circus drive?
It's one wheel and they wheel...
Josh Bretl (24:25):
A unicycle.
Dave Schmidt (24:26):
Yeah.
So you're my unicycle.
I don't need Social Securityor pension or income.
I got Joshua.
Josh Bretl (24:34):
I don't need more people.
Dave Schmidt (24:36):
No, you don't.
Oh Josh, you have beentalking for a while.
Josh Bretl (24:42):
Can we dance?
Dave Schmidt (24:42):
Yeah.
Let's do it.
Let's dance.
Yeah.
What, what.
Okay.
Hey Mr.
Josh, let's take a break.
You've been talking for solong and my ears are sore.
Let's not make them snore.
Listening shouldn't be a chore.
So let's get to know Josh andDavid watch a rating soar.
(25:05):
Oh, yeah.
Josh Bretl (25:11):
You are so much fun to watch.
Dave Schmidt (25:13):
I add a little bit of extra beatbox in there.
Josh Bretl (25:16):
Well, I got to pick our question
today and we foreshadowedit a little bit earlier.
And usually when I pickthe question, I also
think of the answer.
So I didn't think of thisanswer for this one yet,
but I thought this would bea fun question to ask you.
Dave Schmidt (25:31):
Now sometimes you have these really high
expectations of my answers.
Josh Bretl (25:34):
Yeah, I do.
Dave Schmidt (25:35):
I feel like I...
Josh Bretl (25:35):
You let me down a lot.
Dave Schmidt (25:36):
I fail you?
Josh Bretl (25:36):
Yeah, you do.
Dave Schmidt (25:36):
A lot?
Josh Bretl (25:37):
I mean, every time I think, boy, Dave's got to
have a great answer for this.
And I know whatit's going to be.
I'm so wrong.
Dave Schmidt (25:42):
Look, I love going for the yucks, but
sometimes I just don't have it.
So let's see what this is.
Josh Bretl (25:46):
Well, this is not really.
Well, let's just see.
Okay.
What did your 15 yearold self imagine you'd
be doing right now?
Dave Schmidt (25:54):
So that would've been like freshman year?
Sophomore year of high school?
Josh Bretl (25:57):
Yeah, freshman, sophomore year.
We probably weren't friendsat that point in time.
Dave Schmidt (26:01):
Yeah.
No, so that's when I reallystarted getting into cooking.
So at that point, I'dalready started planning
out my first restaurant.
And I was already startingcooking classes at York.
So I thought for sureI'd be a restauranteur.
Josh Bretl (26:16):
Ooh.
Owning a restaurant, cooking ina restaurant, all that stuff.
Dave Schmidt (26:18):
Owning, yeah.
I did like cooking.
But I liked the idea of, again,using that creative side of me
of just starting restaurants.
Now, again, 15, you don'trealize all the different
aspects of owning restaurants.
But I wanted to be inthat industry for sure.
Josh Bretl (26:34):
And now I cook more than you do.
Dave Schmidt (26:35):
You cook a lot more than me.
Yeah, I just don'tlike to cook anymore.
It's bad.
So yeah.
Joshua Bretl, at age 15.
How about you?
Josh Bretl (26:44):
Age 15 was probably when I started
wanting to do somethingin the financial world.
I started...
Dave Schmidt (26:51):
Yes, yes.
Josh Bretl (26:52):
That's when I always took after my father.
And I liked a lot of whathe did and how he did it.
And I liked that he wasalways home for dinner,
coached all the baseballteams, all that fun stuff.
Before then, I actually wantedto follow in your footsteps.
I always said that inthe summer I was going
to be a baseball umpire.
And in the winter, Iwas going to be a chef.
Dave Schmidt (27:11):
Oh, cool.
Josh Bretl (27:12):
I mean, I had two jobs in my mind growing up.
I mean, most kids wantto be firefighters or
doctors or whatever.
Nope, I wanted to bean umpire and a cook.
Dave Schmidt (27:20):
That's cool.
My brother-in-lawBill, his brother Chris
Schultz lives in Vegas.
I don't know if you rememberthis, but he made it really
far in umpiring to triple A
Josh Bretl (27:29):
oh, that's right.
I forgot about that.
Dave Schmidt (27:31):
And it is a really hard career to break into.
Josh Bretl (27:34):
It's very competitive.
Statistically, it'sharder to get to the major
leagues as an umpire thanas a baseball player.
Dave Schmidt (27:39):
Wow.
Wow.
Josh Bretl (27:40):
Yeah, and here we are now.
We sit and do a podcastabout finances and food.
Dave Schmidt (27:45):
And food.
I'm actually thinking,what are we getting today?
I'm getting hungry.
Josh Bretl (27:48):
Me too.
Dave Schmidt (27:49):
So that's awesome.
Josh Bretl (27:50):
That's kind of fun.
Dave Schmidt (27:51):
Cool.
So I think it's going to wrapup the show today, except
for Dave relates to retirees.
Josh Bretl (27:58):
That's my favorite part of the show.
Dave Schmidt (28:00):
Is it your favorite or is it the part
that worries you the most?
Josh Bretl (28:04):
My therapist has helped me deal with
anxiety and how to handle it.
So it's where I have tostart doing my breathing
and things like that.
But I'm used to it now.
Dave Schmidt (28:15):
So I'm going to relate to our dear retirees
and soon to be retirees.
We're talking about the historyof Social Security, and I
do think it's important foreverybody to know the history.
I've learned quitea bit myself today.
I compare it to the historyof Josh Bretl and Dave
Schmidt, the history of us.
Josh Bretl (28:32):
Oh, we have a history.
Dave Schmidt (28:33):
And there are so many direct parallels to our
friendship and Social Security.
What once started off as justa great idea, great thing has
now become a little bit scarier.
And it's scarier for youand I because you expect
me to do things for my foodnow and for my free stuff.
I don't know, do podcastsand help you with stuff.
(28:55):
And I find it kind of crazy.
Also, started offgreat, our relationship.
It got a little testy there whenyou had the audacity to go off
to college and leave me behindat art school all by myself.
Josh Bretl (29:09):
All by myself.
Dave Schmidt (29:11):
So it's like when humans had the audacity to
start living longer and screwingup the whole Social Security
ratio, you had the audacityof going to the University
of Illinois to get smart.
Yeah, ridiculous.
However, you did redeemyourself by going to my
college graduation in whichmy wife did not attend.
Josh Bretl (29:31):
No, but me and Matthew did.
Dave Schmidt (29:32):
You and Matthew did.
And just like Social Securityis going to eventually redeem
itself, it's going to find away to better integrate with
how we live as Americans.
Josh Bretl (29:41):
We can hope.
Dave Schmidt (29:42):
We can hope.
Yep.
So Before this episode Iwas worried about Social
Security/our friendshipending, but now I'm not
because you have put me atpeace knowing David, as long
as you're above ground, I willbuy you whatever you want.
Josh Bretl (29:57):
First off, I never said that.
But second, let's talk alittle bit more about the
relationship there becausesometimes you have stretches.
This one, I thinkI got a little bit.
Dave Schmidt (30:09):
Insert full house music.
Josh Bretl (30:12):
I love the music.
Dave Schmidt (30:13):
Yeah, it's good.
Josh Bretl (30:14):
I think when you and I first became friends,
we didn't ever think itwould become this level
of important in our lives.
I now see you as much as Isee almost anybody else in my
life besides my wife and kids.
And you have becomedifficult to replace.
Dave Schmidt (30:34):
That's what I like to hear.
Josh Bretl (30:35):
And also a pain in the butt to deal with.
Dave Schmidt (30:37):
Yeah, that's true.
Josh Bretl (30:38):
So you're just like Social Security.
Dave Schmidt (30:41):
Perfect.
Josh Bretl (30:43):
And I actually think that I have learned
and we have learned how towork very well together.
And if it's going to be suchan important part of our
life that we better make surethat we understand how it
goes together and how we canseamlessly live symbiotically
(31:03):
so that we can better therest of both of our lives.
Dave Schmidt (31:07):
I mean, that is exactly how I
was thinking about it.
I mean, look, dear listener,he's even not shaving.
I don't shave.
What does that say aboutmy influence on him?
Josh Bretl (31:20):
I don't remember ever not shaving.
I can't remember I've everpulled in the office and
went, oh, I forgot to shave.
I mean, I've laid in bed atnight and been like, ooh, I
forgot to take my contacts out.
But I've neverforgotten to shave.
Dave Schmidt (31:31):
And when I work here on Mondays, I pull
into your parking, be like,crap, I shaved last night.
It's just the opposite thing.
Look, I have a very certainimage I need to maintain
when I walk into your office.
I need to be the onethat brings levity, that
brings a certain level ofcavalierness to everything.
Because let's be honest,you guys deal with really,
really, really importantthings for other people.
(31:54):
You got to be on yourA game all the time.
And I see the stress level justgo way down when I walk in.
Josh Bretl (31:59):
Wah, wah.
Dave Schmidt (32:00):
And in our words of our friend ALF.
ALF (32:03):
Why must you needlessly complicate everything?
Dave Schmidt (32:07):
That's what I say to your team.
I'm like, hey, let's just takea breath and have some fun.
Josh Bretl (32:13):
We're going to end on this.
And you have a hugepoint right there.
And I was on a traininglast week and the number one
thing they kept saying overand over again is, clients
want clarity and simplicity.
Clarity and simplicity.
And in our words of ALF, I hopeyou are helping us bring that.
Dave Schmidt (32:34):
There have been several rumors of an ALF reboot.
Have I mentioned this?
Josh Bretl (32:39):
No.
Dave Schmidt (32:39):
Seth Rogan is pushing for it.
And if he gets involved,it's going to be awesome.
So I will put money behinda Kickstarter campaign,
whatever it takes for an ALFreboot because who wouldn't
love a little alien life forminvading our television sets.
Josh Bretl (32:57):
Makes everyone happy.
Dave Schmidt (32:58):
It does, I know.
You know what elsemakes me happy?
Josh Bretl (33:02):
Saying-
Dave Schmidt (33:03):
No!
Not having to shopat Buy Buy Baby.
So Deb, this is for you.
Bye.
I totally stolethat from SmartLess.
That's how they do it.
Josh Bretl (33:16):
I actually got it now.
Dave Schmidt (33:17):
Yeah, you got it.
Josh Bretl (33:18):
I got that now.
Dave Schmidt (33:18):
All right, good stuff.
Al (33:19):
Hashtag tax nerd.
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