Social Security in 2026 and Beyond

Episode Transcript

Speaker 1 (00:03):
Thirteen ten, Wi b A and Ask the Experts, joined
this morning by Tom and Nathan Plumb. Of course, Tom
and Nate comes to us from Wisconsin Capital Management online
whiz cap dot com. That's Wi s cap dot com.
Great website to learn more about Wisconsin Capital Management. Also
great place there a little chat bubble there you can
have a conversation of course, no obligation. Conversation with the

(00:26):
folks at Wisconsin Capital Management. Again the website whiz cap
dot com. That's wys cap dot com. Tom is a
chartered Financial analyst and Nathan is a Certified Trust Financial
Advisor with an executive MBA.

Speaker 2 (00:40):
Tom, how you doing this morning?

Speaker 3 (00:42):
We're doing very good, Sean. It's a beautiful day. Of course,
it's always a beautiful day, right, every day.

Speaker 1 (00:49):
Can It's sure, it's sure. Ken, It's kind of what
you make of it, that's for sure.

Speaker 2 (00:53):
Nate, how have you been doing?

Speaker 4 (00:55):
Wonderful? Very happy to be traveling, and yeah, I'm always
happy to be on the show.

Speaker 2 (01:01):
So great to have you doing any fun traveling this time? Here?
Where are you heading to?

Speaker 4 (01:07):
We're in near Fort Myersouth, Florida. So it's beautiful, aid
to degrees, sunny, every day there's a manatees and little
dolphins swimming around the canals. So yeah, life is good.

Speaker 2 (01:19):
That is great.

Speaker 1 (01:20):
That's a fun part of the country, that is for sure,
especially this time of year as things get a little
cooler up north, chasing the sun. And I know a
lot of the folks that you guys work with that
Wisconsin Capitol Management do just that. Spend those beautiful spring
and summer and fall days here in Wisconsin, and as
the temperature starts to get cool and that snow stuff
rolls in, they say, you know, what's a good time

(01:41):
to head down to the beautiful shores of whether the
Gulf or the Atlantic. And as you talk about that stuff,
good reminders. We talk about financial planning with Tom and
Nate and the importance of doing it right. We talked about,
of course heading on over to wiz cap dot com.
That's wi sc ap dot com. Not only again, Cauld
you get to know the team and everyone Wisconsin Capital Management.
You can also schedule that no obligation conversation. Just headed

(02:04):
over to Wisconsin Cap Capital Management's website, which is wizcap
dot com. It's wscap dot com. Well, maybe you're looking
to retire in the Sunshine state of Florida. This week
we're talking about social Security and specifically some new things
on the horizon in twenty twenty six. The big thing
I always hear about In some years I hear really

(02:25):
happy things about people are really excited, and other years
I hear kind of grumbling. It's not keeping up, it's
not this other. It's cola, Tom, What is cola?

Speaker 2 (02:35):
What is cola?

Speaker 1 (02:36):
And how does that apply to our conversation this morning
on social Security?

Speaker 3 (02:40):
Well, every year they we have a COLA adjustment, which
is the cost of living adjustment, and it's based on
the federal government's view of what the inflation rate was
for the last year. And so for many years now
we've had a COLA adjustment to Social Security benefits so

(03:01):
that people, supposedly or and by a design, can be
offset some of the damage that inflation does your retirement income.

Speaker 2 (03:12):
That's interesting.

Speaker 1 (03:13):
So with that in Nate, when it comes to that
that COLA adjustment, what did I see two point eight percent?
Eight two point eight percent raise? Is that what I'm seeing?

Speaker 2 (03:22):
Nate?

Speaker 4 (03:23):
Yeah, they came out for a two point eight percent
percent cost of living adjustment in twenty twenty six. So again,
when you're talking about investments and just you know, kind
of budgeting, you know, inflation is just this like termite
that is constantly eating at the foundation of your investments
and so you know, and so you have to think

(03:47):
about this. So if I'm getting you had money in
my checking or in CDs, you might you know, these
rates might sound okay at you know, three percent, but
you know that's just equally inflation. So what you're thinking
that you're taking a no risk investment, you're actually you know,
sometimes losing money. So you know, you have to take

(04:09):
a calculator risk with your life or with your investments.
You have to have it, you know, know where the
risks are the risks of me more in the retirement
type portion of your accounts. But yeah, if you're just
putting money into your checking or savings or in CDs, yeah,
the main thing we worried about is inflation because that

(04:29):
is eating away and you're you're not really kind of
making money. So yeah, I just think of the termite
that's constantly eating at your checking, savings and CDs.

Speaker 2 (04:39):
It's funny.

Speaker 1 (04:39):
I remember when I was when I was younger, and
I'd hear folks talk about, you know, the cost of
a loaf of bread and all that stuff, and I
remember just kind of shake my head, like, you guys
are what are you worried about that for? And now
that I'm getting a little bit older, I'm watching it constantly.
I'm going I'm telling telling my son and the younger generation.
Back in my day, it was you know, you you'd

(05:00):
pay it, you know, a dollar for a dozen eggs
or a dollar for a loaf of bread, and you know,
a six pack of soda was a couple of bucks,
and everybody was.

Speaker 2 (05:10):
Everybody's happy.

Speaker 1 (05:10):
And Tom, when we talk about that, speaking of that soda,
that cola, the cost of living adjustment, what does that
kind of break down to two point eight percent kind
of dollars wise? For the average retiree folks collecting Social Security,
what does that kind of break out to?

Speaker 3 (05:28):
Well, Sean, right now, they're about seventy million beneficiaries of
Social Security in this country, and the average retirement benefit
for twenty twenty five was two thousand and fifteen dollars
a month, So on average it's going to go up
fifty six dollars to two thousand and seventy one dollars.

Speaker 2 (05:49):
You know.

Speaker 3 (05:50):
That's and when we talk about inflation, of course, the
government figures are averages, and averages are often very misleading.
It may not be your personal inflation rate. You know.
For example, housing for example, is a significant part of inflation,
but if you own your own home and have paid

(06:11):
off your mortgage, then that portion of the CPI and
the inflation may not apply to you. Or the way
the government calculates it is such a strange, convoluted affair.
If an automobile, for example, goes up seven percent price
yeared over year, they may actually say, well, five percent

(06:35):
of that is new technology and safety features, so they
might only count two percent of the increase as inflation.
But if you're buying a new car, the car costs
seven percent more than it did the year before.

Speaker 2 (06:48):
Wow, Nathan and Nathan.

Speaker 1 (06:49):
That kind of ties in with what you were talking
about earlier with the termite is you know, kind of
that that eroding away and eating away, and it doesn't
seem like like the maybe the wood filler is keeping
up with some of the damage that that that term
mighte's been doing.

Speaker 4 (07:04):
Yeah, that's exactly right. So in recent survey, seventy seven
percent of older adults have three percent colon our inflation,
our cola inflation is not enough to keep ahead of
rising costs. And that's goes not silly talk either. So
this year, the meta, the Medicare Part B premiums are
going to jump eleven point six percent. So essentially what

(07:27):
uh Cola gives you Medicare is going to take roughly
half away. So that's why it doesn't feel like a
net net win. No, uh this year for sure. So yeah,
it's uh yes. So for example, so if you're the
average Medicare Part B premium just went from one hundred
and eighty five to two hundred and six dollars a month,

(07:50):
and yeah, so that's uh you know, so Medicare essentially
UH Cola gave you fifty six dollars raise and took
twenty dollars of it back. Wow.

Speaker 1 (08:01):
That's literally, in this case a tough pill to swallow,
I think for a lot of folks and Tom. Then
as we as we kind of get a break down
then of some of the social security changes coming up
in twenty twenty six, what about wage base and what
exactly is a wage base and what's going on in
that area of social Security taxes.

Speaker 3 (08:23):
Well, if you're still working, you should listen. So you
pay six point two percent of your wages into Social
Security and your employer has to match that, so it's
different number. It's twice that if you're independently employed, but
if you're working for someone else, they have to pay half.

(08:43):
You pay half six point two. Well, the amount of
money that you have to earn and still be subject
to that has gone up also with inflation. So this
twenty twenty six they're going to apply that Social Security
withholding on one hundred and eighty four thousand, five hundred dollars.

(09:07):
That'll be up from one hundred and seventy six one
hundred dollars. So basically you're going to pay on a
greater percentage of your income. So even people making a
higher amount are going to pay more into Social Security
next year than they have this year.

Speaker 2 (09:25):
Wow, it's some big changes here.

Speaker 1 (09:27):
As we talked this morning with Nate and Tom Plum
of Wisconsin Capital Management, the website whizcap dot com. That's
wis cap dot com. Great way to get to know
Tom and Nate. Also great opportunity there. There's a little
chat bubble that pops up you can start a conversation
with the folks at Wisconsin Capital Management. No pressure, no obligation.
If you've got a question, just head on over to

(09:49):
whizcap dot com. That's wis cap dot com. Now we
got that stuff out of the way. Nathan will have
some good news for us. We'll talk about that in
just a moment. A couple of things I mentioned the
website whizcap dot com. Of course, Tom Plumb and Nathan
Plum come to us from Wisconsin Capital Management. We'll continue
your conversation with Nate and Tom. We will do that
next as ask the experts with Wisconsin Capital Management comes

(10:10):
your way next right here, I'm thirteen ten DOUBLEUIBA thirteen
ten wib A and asked the experts talking this morning
with Tom and Nate Plumb of Wisconsin Capital Management. Of course,
Tom is a chartered financial analyst. Nathan certified Trust Financial
Advisor with an executive MBA talking this week about some

(10:34):
social security changes on the horizon for twenty twenty six.
I heard a little bit about COLA. Sounded good, and
then you started realizing what's happening with Medicare Part B
and all the other things as far as their costs
and how everything seems to be costing more. Also heard
some news about what's going on when it comes to
your Social Security taxes. They're going up. Let's talk some

(10:54):
good news though, Nathan, I'm gonna give this one to you.
There is some good news out there, isn't there.

Speaker 4 (11:01):
Yeah, So in this uh what was named the Big
Beautiful Bill, there is a new six thousand dollars deduction
for people sixty five and older that begins in twenty
twenty six. And so of course they wanted to cap this.
They don't want they'd be exploited by people that earn
a lot of money, so they capped it with if

(11:23):
you're single, you can make up to seventy five thousand
dollars or if you're married, of one hundred and fifty
thousand dollars not to take the full deduction. And so
that is a really nice relief that will happen in
the tax here twenty twenty six. Of course, it's not
so easy where it's not above the line deduction, so
you can't take your salary my six thousand and go,

(11:44):
so a little bit more complicated than that, so it's
up blow the line deduction. But yeah, it's Essentially, Social
Security just kind of sent out a six thousand dollars
umbrella the shield part of your retirement. So that was
one of the positives of the bill.

Speaker 1 (12:00):
Some pretty good news there. As we talked this morning
with Naton Tom Plumb of Wisconsin Capitol Management Online wiz
cap dot com. That's wiscap dot com. What about Tom,
as we talk about our full retirement age? What is
new in that area? Is there any are there any changes,
any adjustments to the FRA?

Speaker 3 (12:20):
Oh yeah, there are Sean. So remember you, if you
are taking Social Security benefits before your full retirement age,
and depending on when you were born, that's ranges between
sixty six and sixty seven, you actually have an earnings
test and if you earn over twenty four thousand, four

(12:41):
hundred and eighty dollars in adjusted gross, social Security will
actually reduce the payments that they make to you by
a dollar for every two dollars you earn. So let's say,
for example, you earn forty thousand dollars, Well, that means
that you might lose seven thousand, seven hundred benefits temporarily

(13:03):
or at least half the amount that you earned over
at twenty four thousand, four hundred and eighty dollars. So
if you think of Social Security, it's a little bit
like leaking faucet for someone who retires takes early because
if you keep working, the faucet doesn't completely shut off,
so some drips out for everything that comes in. So

(13:25):
you have to be very conscious of that and make
sure that you understand that if you elect to take
early retirement benefits.

Speaker 1 (13:34):
Really important considerations and definitely something as we talk with
our friends from Wisconsin Capital Management, very important things to consider.
There's some great opportunities, there's also some pitfalls you want
to avoid. That's one of a nice things about taking
them up on the opportunity to have that no obligation conversation.
If you head on over to wizcap dot com, that's
wiscap dot com, you can ask a question of the

(13:55):
folks at Wisconsin Capital Management right online again the website
wizcap dot com. It's wys cap dot com. What about
credits and we talk about kind of qualifying for benefits.
I hear about about you know, you need so many
credits to qualify. What exactly are they? How are they calculated?

(14:15):
And why are they? Why are they so important, Nathan.

Speaker 4 (14:18):
Yeah, just to kind of back up what social Security
is and how you actually earn it. Right, So to
be eligible for Social Security, you need forty credits, and
so they count credits as one quarter of work. So
usually if you work ten years in the workforce, so
you can be eligible for Social Security. So they actually

(14:41):
have a monetary value on the credits. So one credit
one quarter equals and ninety dollars of wages, and you
max out at four credits once you own seven, five
hundred and sixty dollars a year. So the education part
which we really enjoy Wisconsin capital management is that young
people really shoguards to early if they can work. They

(15:03):
have a job at fifteen, sixteen, seventeen, eighteen, and a
lot of local kids work at someplace like Culver's. Highly
encourage that to do that because that really starts the
part ticking. You get more credits and then you'll be
thankful when you have Social Security, so you'll come in with,
you know, a lot more credits than someone starts work

(15:24):
at twenty four as a twenty three twenty four years
of age after college, so it really starts the time clicking,
and it's a huge benefit. So just using an analogy,
it's kind of like just lego bricks, right, If you
just start stacking up early, they have a bigger foundation,
and then you have you'll have more in social Security
and more in retirement and more flexibility in the future.

(15:45):
So again a common the HEE mode is start now,
start early. So yeah, if you have you know, kids,
grandkids that are playing too many video games in the basement,
a summer job is you can try to try to
educate them and try to get them out and try
to give them some credits to really help their future
in their life, you know, and Nathan.

Speaker 3 (16:05):
Oh, I'm sorry. And you know. The other point is
as not just for retirement, they're also for disability benefits
and survivor benefits. So starting early isn't just smart, it's
also very protective.

Speaker 2 (16:21):
That is great.

Speaker 1 (16:22):
The other fun thing to do is, I don't know
if you guys have ever done this. I'll go back
on to the Social Security website and of course a
great website and look back at my earnings from those
those high school and college years and you're like, how
did I remember thinking I was the richest kid in
the world, And it's like, oh, I made three thousand dollars.
You were on cloud nine that but then again, room

(16:44):
board and everything else was covered by your parents.

Speaker 3 (16:47):
I remember the first year I made over ten thousand
dollars shot.

Speaker 2 (16:50):
I thought, wow, yeah, that is fun to do.

Speaker 1 (16:54):
And yes, as our friends from the Capital Magic point out,
it is important to start early as I get that
those part time jobs and really start earning those credits.
And some really really really good foundation being laid out there.
And speaking of a great foundation and great information laid out,
Nathan wants to take us down the home stretch and
kiss kind of wrap things up and kind of encapsulate

(17:16):
all that we've discussed this morning.

Speaker 4 (17:19):
Yeah, so just to recap what we've been talking about.
So we've had a monicon adjustment in cola against that
cost of living adjustment, so that went up that two
point eight percent, and we also talked about the higher
Medicare premiums for a part B, so that went up
eleven point six percent. We also talked about the six

(17:39):
thousand dollars tax reduction for Social Security, so we at
age when we come to retirement age. We kind of
talked about having a higher wage base for Social Security taxes.
And we also have increased kind of earning test limits.
So the main thing is, you know, also about starting

(18:03):
early as well, so you know, get those in and
then I'll put a final point in two. If someone
tries to scare you and tries to say, hey, you
know someone thumb party is going to try to take
your social Security away, so you should give me money,
that's probably a fraud. So, uh, social security is the

(18:23):
third where rail politics, So I'd be very skeptical if
anyone approaches you in that vein.

Speaker 1 (18:29):
You know who votes people that collect so security and
big numbers. You know who's not going to let anyone
get elected. We're gonna mess with social Security and those
people that receive it. That is a really good, really
good advice, and Tom as you as you kind of
work through this kind of what's kind of the key
to planning here when it comes to applying social Security
to your to your retirement.

Speaker 3 (18:49):
Well, Sean, remember we're talking about the average benefit being
only a little over two thousand dollars, which for a
lot of people wouldn't pay rent. Uh, So it's social
Security was initially thought of a supplemental income. It's smart
to start planning early and also to see how to
make your savings work for you, because you need to

(19:12):
add to other sources of income to actually have a successful,
comfortable retirement. And that means good planning, good investments. And
we're glad to help at Wiscott's Capital Management.

Speaker 1 (19:28):
And all you got to do is head on over
to the website wizcap dot com. That's wiscap dot com.
You can start that conversation today. As a matter of fact,
you can do it right now. Just head right out
over to wizcap dot com. That's wis cap dot com.
There's a little chat bubble there you can answer. Ask
a question to get answered, of course, if you just
want to want to get to know the guys, no obligation,

(19:49):
no pressure at Wisconsin Capital Management's website again, that's wizcap
dot com. That's wis cap dot com. Of course, naint
Tom come to us from Wisconsin Capital Management right here
on thirteen ten.

Speaker 2 (20:01):
W I b A. Tom. You enjoy this great Dan.
We'll talk real soon.

Speaker 3 (20:05):
Thanks so much. That was great to chat with you.

Speaker 1 (20:08):
Always goot chair with you, Nate. Enjoy your time in
Florida and we'll talk real soon.

Speaker 4 (20:12):
All right, wonderful, Take care, take.

Speaker 1 (20:13):
Care, and again that website whizcap dot com. That's w
I s c ap dot Com. News comes your way
next right here on thirteen ten WI B A