August 10, 2023 • 34 mins
They say timing is everything and that is especially true when it comes to Social Security benefits. Eric, Maleeah, and Shawn talk about that and take your questions on today's show.
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Episode Transcript
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(00:00):
This is money in Motion with ClassFinancial, a fun and informative show designed
to help you get answers to allyour retirement questions in one place. And
joining us this morning our our retirementplanning professionals from Class Financial, Malia Quavis
and Eric Schwartz. Don't forget aswe talk with Malia and Eric this morning.
Phone lines are open to you andyour questions. Love to hear from
(00:22):
you. Telephone number six O eightthree two one thirteen ten. That's six
O eight three two one thirteen tengets you on year with Malia and Eric.
The website for Class Financial class financialdot com that's Klaas Financial dot com.
From the website you can learn moreabout Class their separate divisions, get
to know the team. They're alsosign up for the weekly Market Pulse newsletter.
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A little envelope down at the bottomtowards the bottom of the page says
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Again that available to you at Classfinancial dot com. The telephone number
six eight four four two five sixthree seven. No charge for that initial
get to know your appointment Deck LossFinancial. It will be complimentary to you
(01:06):
again their number six O eight fourfour two five six three seven and the
number to join us on Aaron Geton the Show six O eight three two
one thirteen ten At six O eightthree two one thirteen ten. Eric,
how are you doing this morning?I am doing great, Sean, glad
to be here. Great to haveyou back. Malia. How is your
week so far? So far,so good? It's already Thursday, Oh
(01:27):
it is, it's it's great.It's funny how the weeks just fly by.
It's great to talk with both ofyou, and we've got good,
good information. Has always had animportant conversation about fire and the questions about
social security, and this is alwaysone of those very popular topics and of
course one that not only folks listenback to quite often, but also we
(01:47):
get a lot of calls and alot of questions. If you've got questions,
I love to get you on theair six O eight three two one
thirteen ten. That's six O eightthree two one thirteen ten before we start
our conversation on social security, andof course, well and exactly our full
retirement age and those type of things. Before we get on that topic and
that conversation. One of the greatthings that goes on on the program each
and every week. Our friends fromClaus Financi will provide a price this week
(02:09):
at twenty five dollars gift card toAmazon for the class Quiz Question a week.
Will be doing one of those lateron in the program. Great thing
about the class quiz question a week. Typically both the question and answer come
up during each week's program, Solisten closely, give you a lig up
on everybody else for the class quizquestion week, and then we'll be doing
that a little bit later on inthe program. And before we start the
(02:29):
topic this week, let's actually takea look back at last week's class quiz
question weak get the question and theanswer there as well. Yeah, so
last week we had a great conversationabout, you know, looking internally at
what your own risk tolerance really isas you get closer to retirement and so
forth, it is important to understandthat about yourself so that you're invested properly.
(02:52):
So the question revolved around that itwas a true or false question.
Your risk tolerance refers to your abilityand willingness to take investment risks that you
are comfortable with. Correct answer wastrue. Congratulations to Lisa of Madison who
called in with a correct answer.Listening carefully to today's question, and don't
forget if you miss any part oflast week's program or today's show, you
(03:15):
can always listen back to the podcastClaus Financial dot com. That's Klaas Financial
dot Com. Phone lines are openfor your question right now at six eight
three two one thirteen ten. That'sthree two one thirteen ten. Today we're
gonna be talking about exactly what ourfull retirement age and what we should be
taking our social security should we dothat at sixty two? And what do
(03:35):
we need to know there? Eric, Yeah, Sean, you touched on
this little earlier. This is areally really popular topic we hear from clients
a lot, and I think that'sbecause, you know, for a lot
of people's social Security is a reallyreally important part of their future retirement income.
In some cases it's, you know, the only income people have in
retirement. But beyond that, Ithink it's it's really difficult to find the
(04:00):
I guess what you would call theperfect answer when should I draw you know
what's the most advantageous. That's becausethere's a lot of different factors, right,
how much do you have saved,separately, how much do you spend?
The most important thing is how longwill you live? And we're still
working on a calculator for that.We don't know exactly how long everybody's going
to live, but that is that'sthe biggest factor when it comes to you
(04:24):
know, when the opportune time totake Social Security is. But let's let's
just look at a couple of importantthings to know for our conversations today.
So there's a difference between when you'refirst eligible to clux social Security and when
you actually meet your full retirement ageor FIRA. So you're eligible to draw
(04:45):
as early as sixty two, butyour full retirement age is going to depend
on when you were born. Soif you were born between nineteen forty three
and nineteen fifty four, full retirementage is sixty six, and for those
between born between nineteen fifty five andnineteen fifty nine, it's a little more
complicated. It's sixty six and somenumber of months. And then for everyone
(05:08):
born after nineteen sixty, full retirementage is sixty seven. And this full
retirement age is when you are actuallyeligible to collect one hundred percent of your
retirement benefit. So it's gonna bea big, a really important topic as
we go through today. Your fullretirement age is when you are collecting one
(05:28):
hundred percent of your retirement benefit.Talk this morning with Eric Schwartzimile E.
Quavius our retirement planning professionals from ClassFinancially. If you've got a question,
love to get you on the airsix O eight three two one thirteen ten.
That's six O eight three two onethirteen ten. The website for Class
Financial Class Financial dot Com TELF numbersix O eight four four two five six
three seven. No charge for finitialbecause no you eployment TCH Class Financial.
(05:49):
It is complementary to you. Againthat number six O eight four four two
five six three seven and number getdown the air three two one thirteen ten.
That's three two one thirteen ten.So Eric, are there things you
need to be thinking about if youwant to are considering taking benefits early?
Yeah? Absolutely so. You candraw as early as sixty two. You
(06:09):
can also wait until as late asseventy to draw benefits. Now if you
draw benefits as early as sixty two, you are going to be getting a
smaller benefit because theoretically you would becollecting benefits for a longer period of time,
so the amount that you actually getwith each payment would be would be
smaller. Now, if you wantto get an idea of what your personal
(06:30):
benefit looks like, what is mysixty two benefit versus my sixty five seventy,
you can actually go to SSA dotgov and you can log in and
view your work history, your expectedbenefits, pretty much everything that you need
to know about your personal situation.Now, when we're thinking about when's the
best time to collect, you know, we love to say this, but
(06:53):
it depends on your situation. Okay, So we generally like to see clients
if they can wait until they've reachedtheir full retirement age to start collecting Social
Security, not only because the benefitis larger if they wait until they reach
their full retirement age. But theother thing that comes into play that not
a lot of people think about isif you draw your benefits before you meet
(07:16):
your full retirement age, and thenlet's say you're working part time or maybe
you're still working full time, socialSecurity actually limits the amount that you can
earn from working income while you're collectingyour benefit before Social Security. So let's
say you're sixty two and you're collectingyour benefit and you are earning more than
(07:39):
I think the number of this yearis just over twenty one thousand, you'll
actually start having part of your SocialSecurity benefit deducted for every two dollars you
earn over that amount. Now itends up coming back to you later on
in the form of higher benefits.But it's just kind of an administrative thing
that people generally like to avoid.But just to kind of get back to
(08:01):
the best time to collect depends onyour situation a lot of different factors,
but generally we like to see clientsif they can wait till full retirement age.
You can. Oh no, it'sokay. I just say, talking
this morning with Eric Sports and LeaQuamas, our retirement planning professionals for clause
financial full lines are open six toeight three two one thirteen ten. That's
six o eight three two one thirteenten. So you mentioned best time to
(08:26):
collect, what are some of theother areas people need to know about there?
Eric, Well, you can delay, as I mentioned, you can
delay to your full retirement age.You can also delay all the way up
to seventy, So again as earlyas sixty two, as late as seventy,
or any combination of months in between. There people often think, oh,
I can only collect at sixty two, sixty five, sixty seven or
seventy. The truth is you cancollect at any point in between sixty two
(08:50):
and seventy. Now if you delaybenefits beyond your full retirement age. So
let's say, for example, yourfull retirement age is sixty seven. For
each year there after that you delaybenefits, you're actually getting increase of up
to eight percent per year until youbegin taking your benefits. Now at Class
(09:11):
we obviously are in the business ofmanaging investments, and I think we would
agree that it's pretty tough to finda guaranteed eight percent increase on a benefit
in the investment world. Doctor thismorning with our retirement planning professionals, Eric
Schwartz and Malia Quavis. Course,they come to us from Class Financial mention
the website class financial dot com that'sklaas financial dot Com. A lot of
(09:35):
great information there. I noticed alittle easter egg as well on class financial
dot Com. If you have timethis morning, head on over to the
website, click on about, andthen when you go to about, go
to our team and just scroll overeverybody's picture at class Financial. A little
surprise there for you, A reallynifty thing at class financial dot com.
And I've been on the website probablya thousand times and I had never noticed
(09:56):
this before. So check that outand get to know the team at lost
Financial also little a little bit aboutthem, even just by scrolling over the
pictures at class financial dot com.Our top number six O eight four four
two five six three seven, nocharge for the initial gets no appointment tech
Class Financial, it will be complimentaryto you. That's tolph number to get
on the air this morning six eightthree two one thirteen ten. That's six
O eight three two one thirteen ten. Head down to Stoughton where Dennis is.
(10:20):
Dennis, welcome to the program.You're on the air with Eric and
Malia of Class Financial. Good morning. I have a question on Social Security
that's always been confusing to me.I had to sign up for course and
they give you this date, andI got all worried because I wouldn't sign
up at time. And I finallysigned up and all of a sudden started
(10:43):
receiving checks when I turned sixty fivea couple of months after that, and
I don't want to I didn't wantto read get any checks until my full
retirement age. And so I triedpaul in him and this was during COVID
and they had their office supposed theywouldn't take any appointment, and I couldn't
(11:03):
get through. I left the message. And so now I've had checks.
It's about mid twenty two, andI'd like to stop them, pay back
the amount and if that's possible,even if there's interest, because I'm now
making more money now than I didduring that time, and I hear there's
(11:24):
this pal penalty. What's my options? Y, Eric, you want to
take that? Sure? I will. I will take that. So first
here your question about the penalty forearning too much while you're collecting your benefits.
(11:46):
Just to be clear there, thepenalty is you do have to pay
it back, but it will beincluded in your work history, obviously,
which would increase later benefits. Soprovided that you pay those dollars back,
there shouldn't be a penalty. Butwhat you're talking about doing is suspending your
your Social Security benefit. It soundslike inadvertently you've signed up for benefits probably
(12:13):
around the time you were enrolling inMedicare, I would imagine at sixty five.
But the ability to suspend your benefits, you can do that and you
can pay back your the benefits you'vereceived and still received those delayed retirement credits.
So you would just need to workdirectly with Social Security on doing that.
(12:37):
But to answer your question, yes, you are able to do that.
Really good question this morning. Yeah, that's great to hear as well.
Great answers also, Dennis, thankyou so much for the call.
You two can be like Dennis ifyou've got a question, love to get
you on the air this morning withMalia and Eric are Retirement Planet professionals from
Class Financial teleph number six eight threetwo one thirteen ten. That's six O
eight three two one thirteen ten telefand all Class Financial sixzo eight four four
(13:01):
two five six three seven. Nocharge for the initial kids know you Employment
Tech Class Financially, it will becomplimentary to you again. They're number six
eight four four two five six threeseven and the website Class financial dot com
that's k l as financial dot com. Looktinue our conversation, we'll talk about
how exactly that benefit with Social Security. How is that determined? We'll get
the details next and take your callas Money in Motion with Class Financial continues
(13:26):
right here on thirteen ten wi Va. This is Money in Motion with Class
Financial, a fun and informative showdesigned to help you get answers to all
your retirement questions in one place.Rights help a number here at station six
eight three two one thirteen ten.That's six O eight three two one thirteen
ten. The website for Class Financial. It is class financial dot Com.
(13:48):
Get to know the team out ofthat about table, scroll over the pictures
again. A little little easter eggfor you this morning night, Melia.
I've never noticed that before, andnow it's one of the games. Relate
to the game I am whoever,whoever's idea that was, I'm gonna I'm
gonna say it was yours, Malia. It's it's very clever, it's very
very neat. Again, that's classfinancial dot Com. That's klaas Financial dot
(14:09):
Com. There tell for number fourfour two five six three seven. No
charge for the finitially get to knowyou employment at Class Financial. It will
be complimentary to you. Hanging outthis morning with Malia Quavis and Eric schwartzon
if you've got a question, getyou on the air six O eight three
two one thirteen ten. That's sixO eight three two one thirteen ten,
and Matt joins us. Matt,welcome to the program. You're on the
air with Malia A. Quavis andEric Schwartz of Class Financial. Hi,
(14:31):
good morning. You have a questionregarding money market account versus uh CP and
that I've had about one hundred andfifty thousand in a money market for the
past year or so, so I'mearning, you know, around four hundred
pour twenty five an interest every month. But I've been wondering would it be
(14:58):
worth it to maybe pull uh onehundred and twenty five thousand out of that
and invest in a seven months CDand UH see what I can get that
way. So what are your thoughtsthat are? What are the pros and
cons on that is it? Matt? I'm hearing Olly you want to take
(15:26):
that one, and you want tosure I can take that, So Matt,
I think again, as we alwayssay in our show, it depends
on your entire situations. So wedon't want to just give off the cover
suggestions to you. We are startingto see you know, CD rates slowly,
you know, decrease, so Imean they're they're a little random.
(15:50):
Right now, you're seeing you know, maybe nine months at a certain certain
point, you're seeing if you gofurther out, you're seeing them not necessarily
at a much higher rate. Soreally, you know, we're talking about
liquidity here. We want you toget the best you know, bang for
your buck, so to speak.But at the same point, when you
put it into a CD, weknow there's that locking up situation. So
(16:12):
when I say with regards to yoursituation, you know, we're always looking
at is their debt you should bepaying off first, rather than you know,
just trying to get the best dollarreturn for your for your money market
or your CD. If you've gotdebt taken care of, if you're okay,
you know, with that short termlockup of money to get a little
(16:34):
better advance on your money, thatthat could make sense. But we are
big fans of liquidity and that's whatthe money markets do afford you, and
those rates tend to be pretty competitive. So those are my thoughts, Eric,
Do you have anything to add tothat, No, I would I
would agree with that. I thinkthe big thing is whether or not you
(16:55):
think you're going to need access tothe dollars in the timeline of the CD.
Now you mentioned that one hundred andtwenty five thousand of the one hundred
and fifty thousand, so it soundslike you're thinking about having some that's still
liquid to you obviously. But toMalia's point, money markets the rates,
because they they're a little bit morefluid, because they're not based on a
(17:19):
specific timeline, they have become reallycompetitive. So I would I would be
a little bit cautious jumping to aCD just because maybe it's a little you
know, a little bit higher oninterest, because the liquidity of a money
market is really really attractive. Matt, great question this morning. I hope
that helps, and again don't forget. As always, you can learn more
(17:41):
about Claus Financial on their website Clausfinancial dot com. Alright self number six
or eight four four two, five, six three seven, No charge for
the financial get to know you appointmentto at class Financial. It will be
complimentary to you. Talking this weekwith Malia Quavis and Eric Schwartz of Claus
Financial. Talking this week about aboutsocial security and Malia, I think one
of the big questions that people oftenwonder is where does this number come from?
(18:02):
How exactly is because it's obviously individualto your work history and all those
other things. How exactly is thatbenefit determined? And will it ever go
up over time or going down?Yeah, those are great questions, not
for you, Sean, Yours willnever go up, okay, But this
word we talk about credits, andthat's what you need is you're earning Social
(18:23):
Security credits as you work. Nowthat that term used to be called quarters,
so not to confuse people, buttoday we call them credits. So
this is what you need to know. In twenty twenty three, you actually
earn one credit for every sixteen hundredand forty dollars in earnings, so you
can only earn a maximum of fourcredits per year, So it doesn't matter
(18:45):
if you make more than that.At this point that you can only earn
four credits, So the amount ofmoney needed to earn one credit usually goes
up every year, just slightly so, and then most people do need forty
credits or ten years of work toqualify for their own benefit. So if
you stop working before you've got enoughcredits to qualify for your benefits, your
(19:07):
credits will stay on your record,and then if you return to work later
on, more credits could be addedon. So we see this a lot
with stay at home moms or dads, where you know they were in the
workforce maybe for you know, eightyears, and their benefit has not increased
because they were staying home raising children. Then they go back into the workforce
(19:30):
they can start earning credits to getto those that magic number of forty.
So if you don't have at leastforty though, and you're not currently entitled
to a retirement benefit, your credits. As I said, stay on your
record. So I recommend you goto this website SSA dot gov. They
have a publication called how You EarnCredits. They'll give you some more information
(19:52):
on that, assuming you do haveenough credits. Though. This is where
Social Security comes in, and maybeEric has an inside scoop on how this
calculation really works, but it's kindof kind of interesting. They base it
on a thirty five year average ofyour covered wages of your highest years and
(20:12):
then they adjust it for inflation.So that's the high level how they really
do it. None of us reallyquite know. But the point is is
that early on in your career,you probably had years where you made very
little. If you go back towhen you were sixteen, seventy, eighteen
years old, maybe some years you'vemade nothing. So each year you work,
(20:33):
you're replacing some of those zeros.So that's what you need to know,
and that's very helpful to make surethat you know. Again, when
you go to collect your benefit,they are looking at the highest of thirty
five years. So looking at that, what's important to understand is that you
are eligible for cost of living benefitincreases. And this is where people are
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like, well, is my benefitalways going to be the same as it
permanent? Those increases actually start witha year you become age eighty two.
So even if you don't get benefitsuntil your full retirement age or even age
seventy, cost of living increases actuallystart beginning with the year you reach sixty
two, and so a reference pointfor people because they're like, well,
how much is that really? Willit go up? Well, they look
(21:18):
at cost of living adjustments and sofor many years, quite honestly, it
was hovering in the two percent rangethree percent range. Back in twenty twenty
two it went up by five pointnine percent, which was the largest in
many decades. But last year itwent up by eight point seven percent,
So everybody in January of this yearthat currently collects Social Security you saw a
(21:42):
big hike, and that really isreflective of last October, and that's when
Social Security takes a look at things. Inflation was almost at its peak.
So again it helps you know withthe cost of livings, helping you stay
within you know where we're at withinflation. So you just want to kind
(22:02):
of tune in every October and go, Okay, what's Social Security looking looking
like this year? How much willmy benefit likely increase? And then finally,
if you're a government worker and youhave a pension, they use a
whole different formula and it's applied toyour average indexed monthly earnings. So if
you want to find out about windfallelimination provisions, again go to social Security
dot gov and they have an onlinecalculator for that really good website. They're
(22:26):
speaking of great websites claus financial dotcom. That's Klaas Financial dot com.
Outstanding website and resource to learn aboutclass financial. Also subscribe to the weekly
Market Pulse newsletter all online. Theretelephone number six so eight four four two
five six three seven no charge forthe initial get to know you appointment Tech
Class Financial. It will be complimentaryto you again the number six eight four
four two five six three seven.So, Eric, how do you know
(22:49):
like what age is right? Youknow, and that break even point?
Do we have any numbers or statisticsas far as what is that break even
point for benefits? Yeah? Well, Sean, you know, we always
have a lot of numbers and lookingat looking at your your individual situation is
obviously going to be important in this. But let's just start with some examples
(23:11):
because I think that helps explain itthe best. So let's start by what
just talking about what the actual reductionin benefits is for taking your benefit early.
So let's say you take it atsixty two when you're first eligible,
so depending on when you were born, because remember that determines your your full
retirement age, so somewhere between sixtysix and sixty seven. Generally, if
(23:33):
you draw your benefits at sixty two, you are going to receive about twenty
five to thirty percent less than youwould receive at your full retirement age.
Now, each month that you waitthen after sixty two, you're actually getting
a larger percentage of your full retirementage amount. Just another example, if
(23:56):
you were sixty five, I'm reallygoing to get around ninety percent of the
full retirement age benefit. Now,I you know, I was reading this
statistic and to me it was alittle surprising, But then maybe it wasn't.
The The most popular benefits or ageto actually draw benefits is still sixty
two. We're not big on thedelayed gratification, I guess. But one
(24:22):
reason that people might want to taketheir benefits early, you know, at
sixty two, is if there isyou know, a chronic health condition or
maybe not a lot of longevity inthe family. So there are reasons to
take benefits early, because again they'reonly paying as long as you live.
But one one question we get askeda lot related to waiting or starting earlier
(24:45):
is related to what we call thebreak even age for Social Security. So
I describe this as, if youdecide not to take your benefits at sixty
two, and you decide to waittill you are sixty seven, Let's say
that it's your full retirement age.Starting at sixty two, you're eligible for
a Social Security check every month,right, So if you wait until you
(25:08):
are sixty seven, basically you needto pay yourself back for the five years
that you didn't collect benefits, right, the twelve monthly payments a year that
you didn't get, Well, howare you going to pay yourself back those
dollars. It's in the form ofthe larger benefit you're getting at sixty seven,
Okay. So basically, let's sayyour benefit at sixty seven is five
(25:29):
hundred dollars a month more, whileevery month you're paying yourself back five hundred
dollars for the benefits you didn't get. So the break even point is the
point at which you have fully paidyourself back, okay for waiting. So
let's look at an example of this. I think it makes a little bit
more sense. Let's say you wereborn in nineteen sixty So, like we've
learned earlier, that means your fullretirement age is sixty seven, and if
(25:52):
you choose to begin getting benefits atsixty two, that would mean that you
are going to have a thirty percentreduction in your benefit. So let's say
your full retirement age benefit is athousand dollars a month. If you start
at sixty two, you would getseven hundred. Right, that's a thirty
percent reduction. Now, if youwaited until your full retirement age five years
(26:15):
later, your benefit would then bea thousand dollars each month. You'd be
receiving twelve thousand dollars a year insteadof collecting eighty four hundred dollars a year.
Now, that eighty four hundred dollarsa year for the five years that's
forty two thousand dollars that you didnot collect because you were waiting for that
larger benefit. So essentially, theextra three hundred dollars a month is what's
(26:37):
paying back that forty two thousand andso in in this example, your break
even age is seventy eight and eightmonths. That's the point at which your
extra three hundred dollars a month paysyou back for all of the benefits you
didn't collect. Now, the conventionalin halth would say, well, as
long as you think you're going tolive to seventy eight and eight months,
(26:57):
then you should, you should tillyou're sixty seven. But I think Malia
would probably say, we've. We'vedon't often have people come into our offices
at seventy eight and eight months andsay, I did it. I got
back all the money I didn't getand now I'm happy and everything's yet.
So just keep in mind that themath is one piece of it, but
there are other factors longevity and youknow what else you have saved and how
(27:22):
you want to live in the earlyyears versus the later years. So as
always, the math is one pieceof it, but there's also a life
to consider as well. Fascinating stuffthis week, as always, from our
retirement planning professionals from Claus Financial,Malia Quavis and Eric Schwartz joining us this
week. Learn more online Class Financialdot com. That's Klaas Financial dot com.
They're telephone number six O eight fourfour two five six three seven.
(27:44):
No charge for that initial get tono appointment at Class Financially. It will
be complimentary to you again the numbersix O eight four four two five six
three seven that X may be ofvalue to you. We'll find out what
that means exactly. We'll talk aboutthat, we'll do the class quiz question.
The week next is money and withClass Financial continues right here at thirteen
ten WYBA. This is Money inMotion with Class Financial, a fun and
(28:10):
informative show designed to help you getanswers to all your retirement questions in one
place talking with our retirement planning professionalsMalia Quavis and Eric Schwartz of Class Financial,
the website class financial dot com.That's k l as financial dot com.
And the telephone number six O eightfour four two five six three seven.
No charge for the initial get toknow you appointment deck Class Financial.
(28:30):
It will be complimentary to you againthe number six to eight four four two
five six three seven. And beforewe get to the class quiz question question
of the Week a little bit earliermentioned, of course, how to earn
credits to qualify for Social Security.Some folks may have been listening, going
but I haven't achieved that, orI'm not entirely sure if I have.
There are other things you can doif you've never earned enough credits to qualify
(28:52):
for Social Security. Correct, Malia, that is true. So sometimes people
get really nervous about this, orlike, I mean, I didn't I
didn't work all those years, andI didn't get my own benefits, So
what are my options? So ifyou're not entitled to benefit retirement benefits based
on your own work record, youstill might be entitled based on the work
(29:12):
record of a current or a divorcedspouse, So people perk up when we
start talking about this. So toqualify for let's just start with this.
Your spouse is benefit. You mustbe at least sixty two years of age
or any age. If you're caringfor a child who's younger than age sixteen
or disabled, you are entitled toreceive benefits on your spouse's records. So
(29:34):
you're currently married. So if youstart receiving benefits as a spouse at your
full retirement age, so you've gotto be full retirement age. According to
what you'll find on SSA dot gov. If you go there, you will
get fifty percent of the monthly benefityour spouse would receive if their benefits started
at full retirement age. So ifyou start receiving benefits sooner than your full
(29:56):
retirement age, then your benefit ispermanent reduced, and that's important to understand.
Once it's reduced, it's reduced,so you don't go back. The
other thing to know, we workwith this quite a bit is the if
you're a widow or a widower,you have benefits available to you as early
as age sixty. However, thisis what you need to understand. You
(30:19):
can start collecting If you're a widowor widower, you can collect Social Security
benefits based on your own record,and then you can then you can later
switch to survivor benefits because if youstart survivor benefits early, again, it's
a done deal and you have permanentlyreduced them. So you really want to
(30:40):
look at that situation if it appliesto you. When is the best time
to collect your own and then switchover to survivor not necessarily just start with
survivor because you can. And ifyou're divorced and you're looking at survivor benefits,
if you're at least sixty and themarriage lasted at least ten years and
you didn't marry before age sixty,you may be able to collect your late
spouse's benefit. It gets really hairybecause some people are married more than once,
(31:04):
maybe they've lost a husband, andyou want to make sure you're getting
the best, honestly, the bestbenefit possible, So you do want to
sit down with Social Security, layit out to them so that they're making
sure they're paying you the best benefitfor you, and sit down with your
financial advisor and make sure that you'renot missing something as well. Real vital
there and real quick, Malia,what about And we had an earlier caller
(31:26):
that it mentioned may have inadvertently signedup for Social Security? When when should
you actually apply? How? Howdoes that process go? Yeah? So,
assuming Social Security is working on time, which I hear it is right
now, you can apply up tofour months to Social Security before you want
your retirement benefits to start. Solet's give you an example. If you're
(31:48):
if you're going to turn sixty twonext April of next year, you can
actually apply for benefits as early asDecember so that they kick off in time
in April. So you do wantto plan ahead to make sure that you're
going to get the check when youwant the check to start. So get
on too, SSA dot gov.Make an appointment so you can be ready
to go a lot of really importantinformation in this week's show. Don't forget.
(32:12):
You can always listen back to thepodcast at class Financial dot com.
That's Klaas Financial dot com. Thetelephone number six O eight four four two
five six three seven. No chargefor that initial get to know your appointment
tech Class Financial. It is complimentaryto you again. The telephone number six
SO eight four four two five sixthree seven. Hold on to that number
now because it's time for the classquiz Question the Week. It works like
this. In just a moment,I'll ask you the class quiz question the
(32:36):
week. You will then have thirtyminutes from the interday's program to call the
Class Financial office right here in Madisonat six eight four four two five six
three seven. If you are thefirst call with the correct answer, you'll
win yourself at twenty five dollars giftcard too Amazon. This week's class quiz
question the week is this, Accordingto Social Security, if you were born
after the year nineteen sixty, whatdo they consider your full retirement age FRA
(33:01):
A to B. Is it sixtyfive or age sixty seven? Telephone number
six eight four four two five sixthree seven. First call, It's Greg
Dancer. Win the twenty five dollarsgift card to Amazon. Don't forget as
well. That is Claus Financial's officehere in Madison six eight four four two
five six three seven. Malia,Eric, it's always great chatting with you
(33:21):
guys. You enjoyed its most beautifulday. Thanks son. We'll be talking
take care, We'll be talking baseball. Two games left in the regular season,
for the Madison Mallards at Warner Parkand the playoff hopes they are on
the line. Will be checking ingeneral manager of the Mallard Samantha Rubin.
We will do that next here onthirteen ten WIBA. This is Money in
(33:45):
Motion with Class Financial Asset Advisors LLC, a registered investment advisor registered with the
SEC. The content of this showis for informational purposes only and should not
be considered individual investment advice. ClassFinancial does not offer tax or legal advice.
Any opinion offered during the course ofthis show is the opinion of that
(34:07):
particular investment advisor representative, and notnecessarily the opinion of Class Financial
This is money in Motion with ClassFinancial, a fun and informative show designed
to help you get answers to allyour retirement questions in one place. And
joining us this morning our our retirementplanning professionals from Class Financial, Malia Quavis
and Eric Schwartz. Don't forget aswe talk with Malia and Eric this morning.
Phone lines are open to you andyour questions. Love to hear from
(00:22):
you. Telephone number six O eightthree two one thirteen ten. That's six
O eight three two one thirteen tengets you on year with Malia and Eric.
The website for Class Financial class financialdot com that's Klaas Financial dot com.
From the website you can learn moreabout Class their separate divisions, get
to know the team. They're alsosign up for the weekly Market Pulse newsletter.
(00:44):
A little envelope down at the bottomtowards the bottom of the page says
stay current. From there, youjust sign up and then you get an
email once a week from Class Financialgives you a little snapshot of what's been
going on in the markets. Alsoa link to the most recent programs podcast.
Again that available to you at Classfinancial dot com. The telephone number
six eight four four two five sixthree seven. No charge for that initial
get to know your appointment Deck LossFinancial. It will be complimentary to you
(01:06):
again their number six O eight fourfour two five six three seven and the
number to join us on Aaron Geton the Show six O eight three two
one thirteen ten At six O eightthree two one thirteen ten. Eric,
how are you doing this morning?I am doing great, Sean, glad
to be here. Great to haveyou back. Malia. How is your
week so far? So far,so good? It's already Thursday, Oh
(01:27):
it is, it's it's great.It's funny how the weeks just fly by.
It's great to talk with both ofyou, and we've got good,
good information. Has always had animportant conversation about fire and the questions about
social security, and this is alwaysone of those very popular topics and of
course one that not only folks listenback to quite often, but also we
(01:47):
get a lot of calls and alot of questions. If you've got questions,
I love to get you on theair six O eight three two one
thirteen ten. That's six O eightthree two one thirteen ten before we start
our conversation on social security, andof course, well and exactly our full
retirement age and those type of things. Before we get on that topic and
that conversation. One of the greatthings that goes on on the program each
and every week. Our friends fromClaus Financi will provide a price this week
(02:09):
at twenty five dollars gift card toAmazon for the class Quiz Question a week.
Will be doing one of those lateron in the program. Great thing
about the class quiz question a week. Typically both the question and answer come
up during each week's program, Solisten closely, give you a lig up
on everybody else for the class quizquestion week, and then we'll be doing
that a little bit later on inthe program. And before we start the
(02:29):
topic this week, let's actually takea look back at last week's class quiz
question weak get the question and theanswer there as well. Yeah, so
last week we had a great conversationabout, you know, looking internally at
what your own risk tolerance really isas you get closer to retirement and so
forth, it is important to understandthat about yourself so that you're invested properly.
(02:52):
So the question revolved around that itwas a true or false question.
Your risk tolerance refers to your abilityand willingness to take investment risks that you
are comfortable with. Correct answer wastrue. Congratulations to Lisa of Madison who
called in with a correct answer.Listening carefully to today's question, and don't
forget if you miss any part oflast week's program or today's show, you
(03:15):
can always listen back to the podcastClaus Financial dot com. That's Klaas Financial
dot Com. Phone lines are openfor your question right now at six eight
three two one thirteen ten. That'sthree two one thirteen ten. Today we're
gonna be talking about exactly what ourfull retirement age and what we should be
taking our social security should we dothat at sixty two? And what do
(03:35):
we need to know there? Eric, Yeah, Sean, you touched on
this little earlier. This is areally really popular topic we hear from clients
a lot, and I think that'sbecause, you know, for a lot
of people's social Security is a reallyreally important part of their future retirement income.
In some cases it's, you know, the only income people have in
retirement. But beyond that, Ithink it's it's really difficult to find the
(04:00):
I guess what you would call theperfect answer when should I draw you know
what's the most advantageous. That's becausethere's a lot of different factors, right,
how much do you have saved,separately, how much do you spend?
The most important thing is how longwill you live? And we're still
working on a calculator for that.We don't know exactly how long everybody's going
to live, but that is that'sthe biggest factor when it comes to you
(04:24):
know, when the opportune time totake Social Security is. But let's let's
just look at a couple of importantthings to know for our conversations today.
So there's a difference between when you'refirst eligible to clux social Security and when
you actually meet your full retirement ageor FIRA. So you're eligible to draw
(04:45):
as early as sixty two, butyour full retirement age is going to depend
on when you were born. Soif you were born between nineteen forty three
and nineteen fifty four, full retirementage is sixty six, and for those
between born between nineteen fifty five andnineteen fifty nine, it's a little more
complicated. It's sixty six and somenumber of months. And then for everyone
(05:08):
born after nineteen sixty, full retirementage is sixty seven. And this full
retirement age is when you are actuallyeligible to collect one hundred percent of your
retirement benefit. So it's gonna bea big, a really important topic as
we go through today. Your fullretirement age is when you are collecting one
(05:28):
hundred percent of your retirement benefit.Talk this morning with Eric Schwartzimile E.
Quavius our retirement planning professionals from ClassFinancially. If you've got a question,
love to get you on the airsix O eight three two one thirteen ten.
That's six O eight three two onethirteen ten. The website for Class
Financial Class Financial dot Com TELF numbersix O eight four four two five six
three seven. No charge for finitialbecause no you eployment TCH Class Financial.
(05:49):
It is complementary to you. Againthat number six O eight four four two
five six three seven and number getdown the air three two one thirteen ten.
That's three two one thirteen ten.So Eric, are there things you
need to be thinking about if youwant to are considering taking benefits early?
Yeah? Absolutely so. You candraw as early as sixty two. You
(06:09):
can also wait until as late asseventy to draw benefits. Now if you
draw benefits as early as sixty two, you are going to be getting a
smaller benefit because theoretically you would becollecting benefits for a longer period of time,
so the amount that you actually getwith each payment would be would be
smaller. Now, if you wantto get an idea of what your personal
(06:30):
benefit looks like, what is mysixty two benefit versus my sixty five seventy,
you can actually go to SSA dotgov and you can log in and
view your work history, your expectedbenefits, pretty much everything that you need
to know about your personal situation.Now, when we're thinking about when's the
best time to collect, you know, we love to say this, but
(06:53):
it depends on your situation. Okay, So we generally like to see clients
if they can wait until they've reachedtheir full retirement age to start collecting Social
Security, not only because the benefitis larger if they wait until they reach
their full retirement age. But theother thing that comes into play that not
a lot of people think about isif you draw your benefits before you meet
(07:16):
your full retirement age, and thenlet's say you're working part time or maybe
you're still working full time, socialSecurity actually limits the amount that you can
earn from working income while you're collectingyour benefit before Social Security. So let's
say you're sixty two and you're collectingyour benefit and you are earning more than
(07:39):
I think the number of this yearis just over twenty one thousand, you'll
actually start having part of your SocialSecurity benefit deducted for every two dollars you
earn over that amount. Now itends up coming back to you later on
in the form of higher benefits.But it's just kind of an administrative thing
that people generally like to avoid.But just to kind of get back to
(08:01):
the best time to collect depends onyour situation a lot of different factors,
but generally we like to see clientsif they can wait till full retirement age.
You can. Oh no, it'sokay. I just say, talking
this morning with Eric Sports and LeaQuamas, our retirement planning professionals for clause
financial full lines are open six toeight three two one thirteen ten. That's
six o eight three two one thirteenten. So you mentioned best time to
(08:26):
collect, what are some of theother areas people need to know about there?
Eric, Well, you can delay, as I mentioned, you can
delay to your full retirement age.You can also delay all the way up
to seventy, So again as earlyas sixty two, as late as seventy,
or any combination of months in between. There people often think, oh,
I can only collect at sixty two, sixty five, sixty seven or
seventy. The truth is you cancollect at any point in between sixty two
(08:50):
and seventy. Now if you delaybenefits beyond your full retirement age. So
let's say, for example, yourfull retirement age is sixty seven. For
each year there after that you delaybenefits, you're actually getting increase of up
to eight percent per year until youbegin taking your benefits. Now at Class
(09:11):
we obviously are in the business ofmanaging investments, and I think we would
agree that it's pretty tough to finda guaranteed eight percent increase on a benefit
in the investment world. Doctor thismorning with our retirement planning professionals, Eric
Schwartz and Malia Quavis. Course,they come to us from Class Financial mention
the website class financial dot com that'sklaas financial dot Com. A lot of
(09:35):
great information there. I noticed alittle easter egg as well on class financial
dot Com. If you have timethis morning, head on over to the
website, click on about, andthen when you go to about, go
to our team and just scroll overeverybody's picture at class Financial. A little
surprise there for you, A reallynifty thing at class financial dot com.
And I've been on the website probablya thousand times and I had never noticed
(09:56):
this before. So check that outand get to know the team at lost
Financial also little a little bit aboutthem, even just by scrolling over the
pictures at class financial dot com.Our top number six O eight four four
two five six three seven, nocharge for the initial gets no appointment tech
Class Financial, it will be complimentaryto you. That's tolph number to get
on the air this morning six eightthree two one thirteen ten. That's six
O eight three two one thirteen ten. Head down to Stoughton where Dennis is.
(10:20):
Dennis, welcome to the program.You're on the air with Eric and
Malia of Class Financial. Good morning. I have a question on Social Security
that's always been confusing to me.I had to sign up for course and
they give you this date, andI got all worried because I wouldn't sign
up at time. And I finallysigned up and all of a sudden started
(10:43):
receiving checks when I turned sixty fivea couple of months after that, and
I don't want to I didn't wantto read get any checks until my full
retirement age. And so I triedpaul in him and this was during COVID
and they had their office supposed theywouldn't take any appointment, and I couldn't
(11:03):
get through. I left the message. And so now I've had checks.
It's about mid twenty two, andI'd like to stop them, pay back
the amount and if that's possible,even if there's interest, because I'm now
making more money now than I didduring that time, and I hear there's
(11:24):
this pal penalty. What's my options? Y, Eric, you want to
take that? Sure? I will. I will take that. So first
here your question about the penalty forearning too much while you're collecting your benefits.
(11:46):
Just to be clear there, thepenalty is you do have to pay
it back, but it will beincluded in your work history, obviously,
which would increase later benefits. Soprovided that you pay those dollars back,
there shouldn't be a penalty. Butwhat you're talking about doing is suspending your
your Social Security benefit. It soundslike inadvertently you've signed up for benefits probably
(12:13):
around the time you were enrolling inMedicare, I would imagine at sixty five.
But the ability to suspend your benefits, you can do that and you
can pay back your the benefits you'vereceived and still received those delayed retirement credits.
So you would just need to workdirectly with Social Security on doing that.
(12:37):
But to answer your question, yes, you are able to do that.
Really good question this morning. Yeah, that's great to hear as well.
Great answers also, Dennis, thankyou so much for the call.
You two can be like Dennis ifyou've got a question, love to get
you on the air this morning withMalia and Eric are Retirement Planet professionals from
Class Financial teleph number six eight threetwo one thirteen ten. That's six O
eight three two one thirteen ten telefand all Class Financial sixzo eight four four
(13:01):
two five six three seven. Nocharge for the initial kids know you Employment
Tech Class Financially, it will becomplimentary to you again. They're number six
eight four four two five six threeseven and the website Class financial dot com
that's k l as financial dot com. Looktinue our conversation, we'll talk about
how exactly that benefit with Social Security. How is that determined? We'll get
the details next and take your callas Money in Motion with Class Financial continues
(13:26):
right here on thirteen ten wi Va. This is Money in Motion with Class
Financial, a fun and informative showdesigned to help you get answers to all
your retirement questions in one place.Rights help a number here at station six
eight three two one thirteen ten.That's six O eight three two one thirteen
ten. The website for Class Financial. It is class financial dot Com.
(13:48):
Get to know the team out ofthat about table, scroll over the pictures
again. A little little easter eggfor you this morning night, Melia.
I've never noticed that before, andnow it's one of the games. Relate
to the game I am whoever,whoever's idea that was, I'm gonna I'm
gonna say it was yours, Malia. It's it's very clever, it's very
very neat. Again, that's classfinancial dot Com. That's klaas Financial dot
(14:09):
Com. There tell for number fourfour two five six three seven. No
charge for the finitially get to knowyou employment at Class Financial. It will
be complimentary to you. Hanging outthis morning with Malia Quavis and Eric schwartzon
if you've got a question, getyou on the air six O eight three
two one thirteen ten. That's sixO eight three two one thirteen ten,
and Matt joins us. Matt,welcome to the program. You're on the
air with Malia A. Quavis andEric Schwartz of Class Financial. Hi,
(14:31):
good morning. You have a questionregarding money market account versus uh CP and
that I've had about one hundred andfifty thousand in a money market for the
past year or so, so I'mearning, you know, around four hundred
pour twenty five an interest every month. But I've been wondering would it be
(14:58):
worth it to maybe pull uh onehundred and twenty five thousand out of that
and invest in a seven months CDand UH see what I can get that
way. So what are your thoughtsthat are? What are the pros and
cons on that is it? Matt? I'm hearing Olly you want to take
(15:26):
that one, and you want tosure I can take that, So Matt,
I think again, as we alwayssay in our show, it depends
on your entire situations. So wedon't want to just give off the cover
suggestions to you. We are startingto see you know, CD rates slowly,
you know, decrease, so Imean they're they're a little random.
(15:50):
Right now, you're seeing you know, maybe nine months at a certain certain
point, you're seeing if you gofurther out, you're seeing them not necessarily
at a much higher rate. Soreally, you know, we're talking about
liquidity here. We want you toget the best you know, bang for
your buck, so to speak.But at the same point, when you
put it into a CD, weknow there's that locking up situation. So
(16:12):
when I say with regards to yoursituation, you know, we're always looking
at is their debt you should bepaying off first, rather than you know,
just trying to get the best dollarreturn for your for your money market
or your CD. If you've gotdebt taken care of, if you're okay,
you know, with that short termlockup of money to get a little
(16:34):
better advance on your money, thatthat could make sense. But we are
big fans of liquidity and that's whatthe money markets do afford you, and
those rates tend to be pretty competitive. So those are my thoughts, Eric,
Do you have anything to add tothat, No, I would I
would agree with that. I thinkthe big thing is whether or not you
(16:55):
think you're going to need access tothe dollars in the timeline of the CD.
Now you mentioned that one hundred andtwenty five thousand of the one hundred
and fifty thousand, so it soundslike you're thinking about having some that's still
liquid to you obviously. But toMalia's point, money markets the rates,
because they they're a little bit morefluid, because they're not based on a
(17:19):
specific timeline, they have become reallycompetitive. So I would I would be
a little bit cautious jumping to aCD just because maybe it's a little you
know, a little bit higher oninterest, because the liquidity of a money
market is really really attractive. Matt, great question this morning. I hope
that helps, and again don't forget. As always, you can learn more
(17:41):
about Claus Financial on their website Clausfinancial dot com. Alright self number six
or eight four four two, five, six three seven, No charge for
the financial get to know you appointmentto at class Financial. It will be
complimentary to you. Talking this weekwith Malia Quavis and Eric Schwartz of Claus
Financial. Talking this week about aboutsocial security and Malia, I think one
of the big questions that people oftenwonder is where does this number come from?
(18:02):
How exactly is because it's obviously individualto your work history and all those
other things. How exactly is thatbenefit determined? And will it ever go
up over time or going down?Yeah, those are great questions, not
for you, Sean, Yours willnever go up, okay, But this
word we talk about credits, andthat's what you need is you're earning Social
(18:23):
Security credits as you work. Nowthat that term used to be called quarters,
so not to confuse people, buttoday we call them credits. So
this is what you need to know. In twenty twenty three, you actually
earn one credit for every sixteen hundredand forty dollars in earnings, so you
can only earn a maximum of fourcredits per year, So it doesn't matter
(18:45):
if you make more than that.At this point that you can only earn
four credits, So the amount ofmoney needed to earn one credit usually goes
up every year, just slightly so, and then most people do need forty
credits or ten years of work toqualify for their own benefit. So if
you stop working before you've got enoughcredits to qualify for your benefits, your
(19:07):
credits will stay on your record,and then if you return to work later
on, more credits could be addedon. So we see this a lot
with stay at home moms or dads, where you know they were in the
workforce maybe for you know, eightyears, and their benefit has not increased
because they were staying home raising children. Then they go back into the workforce
(19:30):
they can start earning credits to getto those that magic number of forty.
So if you don't have at leastforty though, and you're not currently entitled
to a retirement benefit, your credits. As I said, stay on your
record. So I recommend you goto this website SSA dot gov. They
have a publication called how You EarnCredits. They'll give you some more information
(19:52):
on that, assuming you do haveenough credits. Though. This is where
Social Security comes in, and maybeEric has an inside scoop on how this
calculation really works, but it's kindof kind of interesting. They base it
on a thirty five year average ofyour covered wages of your highest years and
(20:12):
then they adjust it for inflation.So that's the high level how they really
do it. None of us reallyquite know. But the point is is
that early on in your career,you probably had years where you made very
little. If you go back towhen you were sixteen, seventy, eighteen
years old, maybe some years you'vemade nothing. So each year you work,
(20:33):
you're replacing some of those zeros.So that's what you need to know,
and that's very helpful to make surethat you know. Again, when
you go to collect your benefit,they are looking at the highest of thirty
five years. So looking at that, what's important to understand is that you
are eligible for cost of living benefitincreases. And this is where people are
(20:55):
like, well, is my benefitalways going to be the same as it
permanent? Those increases actually start witha year you become age eighty two.
So even if you don't get benefitsuntil your full retirement age or even age
seventy, cost of living increases actuallystart beginning with the year you reach sixty
two, and so a reference pointfor people because they're like, well,
how much is that really? Willit go up? Well, they look
(21:18):
at cost of living adjustments and sofor many years, quite honestly, it
was hovering in the two percent rangethree percent range. Back in twenty twenty
two it went up by five pointnine percent, which was the largest in
many decades. But last year itwent up by eight point seven percent,
So everybody in January of this yearthat currently collects Social Security you saw a
(21:42):
big hike, and that really isreflective of last October, and that's when
Social Security takes a look at things. Inflation was almost at its peak.
So again it helps you know withthe cost of livings, helping you stay
within you know where we're at withinflation. So you just want to kind
(22:02):
of tune in every October and go, Okay, what's Social Security looking looking
like this year? How much willmy benefit likely increase? And then finally,
if you're a government worker and youhave a pension, they use a
whole different formula and it's applied toyour average indexed monthly earnings. So if
you want to find out about windfallelimination provisions, again go to social Security
dot gov and they have an onlinecalculator for that really good website. They're
(22:26):
speaking of great websites claus financial dotcom. That's Klaas Financial dot com.
Outstanding website and resource to learn aboutclass financial. Also subscribe to the weekly
Market Pulse newsletter all online. Theretelephone number six so eight four four two
five six three seven no charge forthe initial get to know you appointment Tech
Class Financial. It will be complimentaryto you again the number six eight four
four two five six three seven.So, Eric, how do you know
(22:49):
like what age is right? Youknow, and that break even point?
Do we have any numbers or statisticsas far as what is that break even
point for benefits? Yeah? Well, Sean, you know, we always
have a lot of numbers and lookingat looking at your your individual situation is
obviously going to be important in this. But let's just start with some examples
(23:11):
because I think that helps explain itthe best. So let's start by what
just talking about what the actual reductionin benefits is for taking your benefit early.
So let's say you take it atsixty two when you're first eligible,
so depending on when you were born, because remember that determines your your full
retirement age, so somewhere between sixtysix and sixty seven. Generally, if
(23:33):
you draw your benefits at sixty two, you are going to receive about twenty
five to thirty percent less than youwould receive at your full retirement age.
Now, each month that you waitthen after sixty two, you're actually getting
a larger percentage of your full retirementage amount. Just another example, if
(23:56):
you were sixty five, I'm reallygoing to get around ninety percent of the
full retirement age benefit. Now,I you know, I was reading this
statistic and to me it was alittle surprising, But then maybe it wasn't.
The The most popular benefits or ageto actually draw benefits is still sixty
two. We're not big on thedelayed gratification, I guess. But one
(24:22):
reason that people might want to taketheir benefits early, you know, at
sixty two, is if there isyou know, a chronic health condition or
maybe not a lot of longevity inthe family. So there are reasons to
take benefits early, because again they'reonly paying as long as you live.
But one one question we get askeda lot related to waiting or starting earlier
(24:45):
is related to what we call thebreak even age for Social Security. So
I describe this as, if youdecide not to take your benefits at sixty
two, and you decide to waittill you are sixty seven, Let's say
that it's your full retirement age.Starting at sixty two, you're eligible for
a Social Security check every month,right, So if you wait until you
(25:08):
are sixty seven, basically you needto pay yourself back for the five years
that you didn't collect benefits, right, the twelve monthly payments a year that
you didn't get, Well, howare you going to pay yourself back those
dollars. It's in the form ofthe larger benefit you're getting at sixty seven,
Okay. So basically, let's sayyour benefit at sixty seven is five
(25:29):
hundred dollars a month more, whileevery month you're paying yourself back five hundred
dollars for the benefits you didn't get. So the break even point is the
point at which you have fully paidyourself back, okay for waiting. So
let's look at an example of this. I think it makes a little bit
more sense. Let's say you wereborn in nineteen sixty So, like we've
learned earlier, that means your fullretirement age is sixty seven, and if
(25:52):
you choose to begin getting benefits atsixty two, that would mean that you
are going to have a thirty percentreduction in your benefit. So let's say
your full retirement age benefit is athousand dollars a month. If you start
at sixty two, you would getseven hundred. Right, that's a thirty
percent reduction. Now, if youwaited until your full retirement age five years
(26:15):
later, your benefit would then bea thousand dollars each month. You'd be
receiving twelve thousand dollars a year insteadof collecting eighty four hundred dollars a year.
Now, that eighty four hundred dollarsa year for the five years that's
forty two thousand dollars that you didnot collect because you were waiting for that
larger benefit. So essentially, theextra three hundred dollars a month is what's
(26:37):
paying back that forty two thousand andso in in this example, your break
even age is seventy eight and eightmonths. That's the point at which your
extra three hundred dollars a month paysyou back for all of the benefits you
didn't collect. Now, the conventionalin halth would say, well, as
long as you think you're going tolive to seventy eight and eight months,
(26:57):
then you should, you should tillyou're sixty seven. But I think Malia
would probably say, we've. We'vedon't often have people come into our offices
at seventy eight and eight months andsay, I did it. I got
back all the money I didn't getand now I'm happy and everything's yet.
So just keep in mind that themath is one piece of it, but
there are other factors longevity and youknow what else you have saved and how
(27:22):
you want to live in the earlyyears versus the later years. So as
always, the math is one pieceof it, but there's also a life
to consider as well. Fascinating stuffthis week, as always, from our
retirement planning professionals from Claus Financial,Malia Quavis and Eric Schwartz joining us this
week. Learn more online Class Financialdot com. That's Klaas Financial dot com.
They're telephone number six O eight fourfour two five six three seven.
(27:44):
No charge for that initial get tono appointment at Class Financially. It will
be complimentary to you again the numbersix O eight four four two five six
three seven that X may be ofvalue to you. We'll find out what
that means exactly. We'll talk aboutthat, we'll do the class quiz question.
The week next is money and withClass Financial continues right here at thirteen
ten WYBA. This is Money inMotion with Class Financial, a fun and
(28:10):
informative show designed to help you getanswers to all your retirement questions in one
place talking with our retirement planning professionalsMalia Quavis and Eric Schwartz of Class Financial,
the website class financial dot com.That's k l as financial dot com.
And the telephone number six O eightfour four two five six three seven.
No charge for the initial get toknow you appointment deck Class Financial.
(28:30):
It will be complimentary to you againthe number six to eight four four two
five six three seven. And beforewe get to the class quiz question question
of the Week a little bit earliermentioned, of course, how to earn
credits to qualify for Social Security.Some folks may have been listening, going
but I haven't achieved that, orI'm not entirely sure if I have.
There are other things you can doif you've never earned enough credits to qualify
(28:52):
for Social Security. Correct, Malia, that is true. So sometimes people
get really nervous about this, orlike, I mean, I didn't I
didn't work all those years, andI didn't get my own benefits, So
what are my options? So ifyou're not entitled to benefit retirement benefits based
on your own work record, youstill might be entitled based on the work
(29:12):
record of a current or a divorcedspouse, So people perk up when we
start talking about this. So toqualify for let's just start with this.
Your spouse is benefit. You mustbe at least sixty two years of age
or any age. If you're caringfor a child who's younger than age sixteen
or disabled, you are entitled toreceive benefits on your spouse's records. So
(29:34):
you're currently married. So if youstart receiving benefits as a spouse at your
full retirement age, so you've gotto be full retirement age. According to
what you'll find on SSA dot gov. If you go there, you will
get fifty percent of the monthly benefityour spouse would receive if their benefits started
at full retirement age. So ifyou start receiving benefits sooner than your full
(29:56):
retirement age, then your benefit ispermanent reduced, and that's important to understand.
Once it's reduced, it's reduced,so you don't go back. The
other thing to know, we workwith this quite a bit is the if
you're a widow or a widower,you have benefits available to you as early
as age sixty. However, thisis what you need to understand. You
(30:19):
can start collecting If you're a widowor widower, you can collect Social Security
benefits based on your own record,and then you can then you can later
switch to survivor benefits because if youstart survivor benefits early, again, it's
a done deal and you have permanentlyreduced them. So you really want to
(30:40):
look at that situation if it appliesto you. When is the best time
to collect your own and then switchover to survivor not necessarily just start with
survivor because you can. And ifyou're divorced and you're looking at survivor benefits,
if you're at least sixty and themarriage lasted at least ten years and
you didn't marry before age sixty,you may be able to collect your late
spouse's benefit. It gets really hairybecause some people are married more than once,
(31:04):
maybe they've lost a husband, andyou want to make sure you're getting
the best, honestly, the bestbenefit possible, So you do want to
sit down with Social Security, layit out to them so that they're making
sure they're paying you the best benefitfor you, and sit down with your
financial advisor and make sure that you'renot missing something as well. Real vital
there and real quick, Malia,what about And we had an earlier caller
(31:26):
that it mentioned may have inadvertently signedup for Social Security? When when should
you actually apply? How? Howdoes that process go? Yeah? So,
assuming Social Security is working on time, which I hear it is right
now, you can apply up tofour months to Social Security before you want
your retirement benefits to start. Solet's give you an example. If you're
(31:48):
if you're going to turn sixty twonext April of next year, you can
actually apply for benefits as early asDecember so that they kick off in time
in April. So you do wantto plan ahead to make sure that you're
going to get the check when youwant the check to start. So get
on too, SSA dot gov.Make an appointment so you can be ready
to go a lot of really importantinformation in this week's show. Don't forget.
(32:12):
You can always listen back to thepodcast at class Financial dot com.
That's Klaas Financial dot com. Thetelephone number six O eight four four two
five six three seven. No chargefor that initial get to know your appointment
tech Class Financial. It is complimentaryto you again. The telephone number six
SO eight four four two five sixthree seven. Hold on to that number
now because it's time for the classquiz Question the Week. It works like
this. In just a moment,I'll ask you the class quiz question the
(32:36):
week. You will then have thirtyminutes from the interday's program to call the
Class Financial office right here in Madisonat six eight four four two five six
three seven. If you are thefirst call with the correct answer, you'll
win yourself at twenty five dollars giftcard too Amazon. This week's class quiz
question the week is this, Accordingto Social Security, if you were born
after the year nineteen sixty, whatdo they consider your full retirement age FRA
(33:01):
A to B. Is it sixtyfive or age sixty seven? Telephone number
six eight four four two five sixthree seven. First call, It's Greg
Dancer. Win the twenty five dollarsgift card to Amazon. Don't forget as
well. That is Claus Financial's officehere in Madison six eight four four two
five six three seven. Malia,Eric, it's always great chatting with you
(33:21):
guys. You enjoyed its most beautifulday. Thanks son. We'll be talking
take care, We'll be talking baseball. Two games left in the regular season,
for the Madison Mallards at Warner Parkand the playoff hopes they are on
the line. Will be checking ingeneral manager of the Mallard Samantha Rubin.
We will do that next here onthirteen ten WIBA. This is Money in
(33:45):
Motion with Class Financial Asset Advisors LLC, a registered investment advisor registered with the
SEC. The content of this showis for informational purposes only and should not
be considered individual investment advice. ClassFinancial does not offer tax or legal advice.
Any opinion offered during the course ofthis show is the opinion of that
(34:07):
particular investment advisor representative, and notnecessarily the opinion of Class Financial
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