Subscribe
Share
Share
Embed
Real World Retirement is a podcast hosted by Alexander Pushman, dedicated to exploring all aspects of retirement planning with the help of expert financial advisors. Each episode dives into crucial topics like Social Security, investing, taxes, legacy planning, and income strategies, offering real-world insights and practical advice. Listeners are encouraged to stay engaged by following the podcast, sharing their questions, and shaping future episodes tailored to their retirement needs.
00;00;00;00 - 00;00;27;12
Unknown
Welcome back Real world retirement podcast. I am your host, Alex Pushman. We're in episode six. I hope you've been been right along this journey, getting some good stuff. I'm. I'm fired up. Today, we're going to be talking about a subject, that has a lot of myths, a lot of questions, and it's really just complicated. And the good news is, I arguably have brought in the leading, at least in my world.
00;00;27;15 - 00;00;47;12
Unknown
Social security expert Bradley Vey. Brad, thank you for joining us today, my man. Hey. No problem. It seems somehow that's how I got the moniker of The Office, because I just, I know that the, the subject. So. Well, yeah, because we incorporate it into every plan for for our clients. Yeah. So. Yeah. So Social Security, it's an interesting one.
00;00;47;12 - 00;01;12;19
Unknown
Now, one piece of data that Brad is a humble man and he wouldn't tell you. So Brad has been licensed through the NSA since, what, 2016 17. So yeah, 16 or 17 is when they, when they first started. So it was close. It was within the first year of them, having the designation for national security plans is the only accredited designation for.
00;01;12;19 - 00;01;38;02
Unknown
So Social security planning, which is a big deal. So it stands for the National Social Security Advisor. And and the last statistic I this may be a little outdated, but the last statistic I saw around that certification, just why I'm highlighting this is less than 1% of advisors, at least in the state of Michigan. And I think it was a tiny bit higher nationally, but less than 1% specifically in Michigan, where Brad is an advisor, has this certification.
00;01;38;02 - 00;01;55;02
Unknown
A lot of people would ask me, hey, why do people not get this? Advisors. What what I always start with is think about it. It's really we don't make any extra money helping people with Social Security. We don't charge for that. That's just a value add. The second piece is a lot of advisors don't really know it and it becomes a liability for them.
00;01;55;02 - 00;02;16;23
Unknown
So like, oftentimes I know at least in our firm at Focus Financial Group, when people have questions. Yeah. They're calling Brad. Yeah. And you know it's from my experience. So I started the financial services industry in 2007. I started on the back end building plans for advisors to present to their clients. And, you know, I was like a phone warrior.
00;02;16;23 - 00;02;40;13
Unknown
And whenever I would call, talk to an advisor, I'd ask, I'd like, hey, what do you recommend for Social Security? And I always got the same answer. They said it was. They said, well, I just tell them to call Social Security office. Right. Well, if you've ever had the experience of calling up their, one, you'll call up there with all the greatest questions in the world, and you're going to get someone on the phone that's going to schedule your appointment a month out.
00;02;40;15 - 00;03;05;28
Unknown
Right? Right. So by the time you get to your appointment a month out, you're not even going to remember your question, right? Or questions right. And the best part about it is they are not allowed to give any advice. They're only allowed to take and tell you what amount you would receive at what age. Interesting. And, they, they, they only have a short period of time, like three minutes is what the average call.
00;03;06;01 - 00;03;25;28
Unknown
Oh, probably under three minutes with them. Okay. Yeah. Because there's so many retirees and so few work federal workers, some crazy like 250,000 phone calls a day. A day like, that's just unbelievable. Like I've said that in, workshops before, and I like, I'm up there second guessing myself, like, did I, like, make this number up in my head?
00;03;26;01 - 00;03;53;05
Unknown
But it's crazy because there's so many millions of retirees and, you know, the, youngest boomers are going to be turning 70 soon. Yeah. And it's crazy. So there's not a whole lot of help out there for people. And when I left my previous job, and decided to go down the advisor route, you know, I had been talking to my dad and my, stop, mom about the about retirement.
00;03;53;05 - 00;04;07;27
Unknown
They asked me what I did, and, I, when I was talking to them, I said, hey, I have your advisor about what to do with Social Security and my dad just kind of chuckled. He goes, you know, I've brought it up and they kind of just, you know, wipe it under the rug, kind of just like, oh, well, yeah.
00;04;07;27 - 00;04;27;27
Unknown
You know, your when, when, when, when you retire. We'll discuss it. But usually we have you call Social Security to discuss at the end of it. So and on that note brand not to cut you off. Just some quick question. I know one of the things that I always like to kind of start with this is because we can we have we could dive and talk through our data security really quickly.
00;04;27;27 - 00;04;42;09
Unknown
And you were you were kind of getting into it. So just to tie you up, what's kind of your story about how why you became an advisor? You know, you're kind of passionate about this space. So I feel like you were going so well. I mean, I guess it was luck to get the financial services industry, to be honest.
00;04;42;12 - 00;04;59;21
Unknown
Right place at the right time, to the right person. But then I was on the back and, you know, building and designing plans for for people to present to their clients. And it just so happened, you know, my parents, my dad, actually, I just got off the phone with them. He's still working. He'll be 69 in January.
00;04;59;21 - 00;05;23;24
Unknown
Okay. He wants to do one more year, January 26th, he's saying. But anyways, during this time, I was, I was working at this firm. It was 2000. I'd just gone through 2007 through 2000. 11. Right. So I was 7209 huge market drop. Yeah. Oh nine up into 2011. You know, the markets came back not quite all the way.
00;05;23;26 - 00;05;43;04
Unknown
And, then all of a sudden that summer, in August, the market started, or not August and July, it started going down again. And my dad was scared to death of it because he just had watched his account, right? Cut and half watched it climb back. And then it started having a big drop again. And he got scared.
00;05;43;06 - 00;06;04;29
Unknown
And so he called me up and said, hey, what do you do? Right? So I told him that I, I let him know that I help create plans for people that are nearing retirement, are already retired. And so dad was actually, client numero uno, right? Right. And it just worked out. Actually, grandma was client, number one, but dad was pretty close behind.
00;06;05;02 - 00;06;31;24
Unknown
And so I said I liked that aspect of it more instead of, like, I was actually would put these great plans together, give them to the advisors who knew if they even showed the plan to them and you didn't get that personal touch, mean I was out. It was out of my control. So I decided if I was going to stay in the industry, that I wanted to go out and help people just like my my mom and my dad, so that when they're ready to retire, they have guidance along the way.
00;06;31;25 - 00;06;48;26
Unknown
Got it. And so and it's just, you know, gone from there. It started out as, you know, kind of a part time thing. Yeah. And then, I went off to another firm, for a, you know, a year and a half or so, but it was a it was a fitting and that what might call me.
00;06;48;28 - 00;07;09;00
Unknown
Yeah. And had started expanding and, and, we sat down, had lunch and, from there just decided to. Yeah, to move forward. And now that's, that's been what, eight years? Nine years almost. I know we're coming up on a decade here where I know geez, who. Yeah. So I know you brought a really good unique situation.
00;07;09;02 - 00;07;32;00
Unknown
And I think, you know, from what you had told me prior, prior to us jumping on here and starting the podcast, I think the example you're going to use is a great example that tells a lot also about your heart. Yeah. Which you know, we you know, I could talk about that on a personal level, but it I think this, this examples tell us a lot about your heart, but also your expertise in the Social Security space.
00;07;32;00 - 00;07;49;21
Unknown
So if you don't mind, you know, let's kind of jump into that case study, because I think this is going to resonate with a lot of the audience out there. Yeah. So we do a lot of a lot of just specific Social Security events. And sometimes people attend thinking that it's actually a Social Security administration that is putting it on, which it is not.
00;07;49;23 - 00;08;13;04
Unknown
And so I always like to start out by saying, hey, I do not work for Social Security. I am a financial advisor. Why is a financial advisor up here talking to you about Social Security? Right. And I said, and it's because nobody else does planning and Social Security. So, I did one of these. My favorite event to do, I could do it with my eyes closed, no screen or anything.
00;08;13;07 - 00;08;35;00
Unknown
But at the end of one of the classes, a lady came up, her name was Carol, and she said, great talk, great talk. I don't really have any money to invest. I really came here because I have questions about Social Security, and I said, schedule an appointment and come in and sit down. And I promise you, I will do everything in my power to help you.
00;08;35;03 - 00;08;52;10
Unknown
All right. We'll we'll get down to it. I'll answer any questions and, and we'll we'll, I'll find a solution that best fits your needs at the time, I didn't even know what it was that she needed, but she obviously it came there for a reason. And I told her. She told me. She said she didn't want to waste my time.
00;08;52;10 - 00;09;09;15
Unknown
And I said, it's not a waste of my time. I come up here, I give the talk, I invite you to come in and sit down for no cost. My promise is it doesn't matter, I don't we don't work with everybody, you know? If. But my philosophy has always been, if you always do the right thing, it doesn't matter.
00;09;09;15 - 00;09;32;02
Unknown
Right. Amen to that end of that. And so, she schedule an appointment. She came in, and then I got the full story. So, she got married, right? I don't know if it was right out of, college or whatnot. But she got married young. She got pregnant. And within a few months, her husband was killed in a freak accident in a factory at work.
00;09;32;04 - 00;09;56;21
Unknown
And so the rule states for Social Security widows benefits, that you have to be married for nine months. And that's what she was told by multiple people. Now, I don't know who she talked to. So I know she called Social Security and they basically said, it doesn't look like you qualify. And so, the key word to that whole story was that she said, freak accident.
00;09;56;23 - 00;10;24;10
Unknown
Right? So right after that daughter is born, she starts receiving a Social Security benefit, for, from the daughter. The daughter received the Social Security benefit, and the. And the mom, Carol receives a social security. There are widows benefits from the husband passing because she's the daughter. Daughter's a minor, right. And so for 18 years, she gets Social Security, daughter turns 18, graduated high school and everything.
00;10;24;10 - 00;10;43;24
Unknown
Then all of a sudden, the payments stop. So she, you know, was single mom this whole time, she worked hard labor jobs. And she was actually, work. I actually saw her not too long ago, but, she was working cleaning, like, office buildings or office buildings. Hard work, hard work. And getting up and down on your knees a lot.
00;10;43;25 - 00;11;02;03
Unknown
Right. And she wasn't making the she was making a living. And she she just said, you know, I've been doing this a long time. I need to I need a change. I just, this is killing my back. I'm not going to be able to do it this way. And I said, well, let's let's see what we can do.
00;11;02;03 - 00;11;22;29
Unknown
So we called up social Security. So I, I explained to Social Security what had happened in a way that they knew I got and like, you know, that I hit it, that I knew what I was talking about. Yeah. You knew the rules. Yeah. And so they they put us on hold. And about ten minutes later, they came back and they said, you're right, she qualifies for Social Security.
00;11;23;01 - 00;11;39;03
Unknown
We don't know the benefit right now because it was so long ago. We actually have to go to the archives to get an answer. Right? I was like, okay, the archives, that's it. That's a good start. Yeah. So they said, what we'll do is we'll schedule a call. And it was like a month for which even for that research.
00;11;39;03 - 00;11;58;27
Unknown
So we schedule a call a month out. So it's funny. Funny. Part of it is we call from my cell phone, I have an appointment. Okay. But when we set the appointment, say, hey, call Carol's phone number. So the day of her appointment, because, I mean, she called me. We talked a lot. Yeah, yeah. And, the day of the appointment, my phone rings, and it's.
00;11;58;27 - 00;12;19;08
Unknown
They called my cell phone, and I explained to her what was going on, said, no, you need to call Carol's cell phone. So she hung up. With me. Called Carol. They had the meeting, so it actually worked out. It kind of worked out better for her, so. Sure, I she was earning, basically about $1,500 a month doing what she was doing.
00;12;19;08 - 00;12;36;26
Unknown
Yeah, right. Not a whole heck of a lot of money, but it, was getting by. It was get back at by right. So the widow's benefit kicks in at age 60. You can take it earlier than 62. That's a big deal, right? Because she was right around 60. And she was going to have to wait until 62.
00;12;36;26 - 00;13;01;12
Unknown
Well her widow's benefit at age 60 was about, $50 more a month, 50 or $100 more a month than what she was earning working. Right. The better part of it is, since she is taking the widow's benefit, she can allow her own benefit to continue, to get, to, get full retirement benefit at age 67.
00;13;01;14 - 00;13;24;00
Unknown
And then get the 8% delayed retirement credit each year until age 70. And at 70 she will get an increase of about this back. This is before back before the inflation got has the dad she's she was going to have about $400 additional per month coming in then that she was getting what the widow's benefit. Right.
00;13;24;02 - 00;13;41;14
Unknown
And she was just grateful as can be. It actually, and it made me smile, too. It made me feel good. Absolutely. And so one day I get a call from Kristen and she's like, hey, are you going to be in the Northville office today? And I said, well, yeah, I'm here. And she's like, well, are you going to leave for lunch or anything?
00;13;41;14 - 00;14;02;01
Unknown
I was like, no, I'll be here all day. I just, I'll, I'm not going to leave until I'm done with my last appointment. And she goes, okay, good. Don't leave. I said, okay. About an hour later, Carol walked in. Oh my goodness. And it was in the fall and she knew my anniversary. My, anniversary was in October, so she gave me a nice anniversary card with a gift certificate to take my wife out.
00;14;02;03 - 00;14;25;14
Unknown
Oh, yeah. Goodness. Which was cool as can be. Yeah. And so funny. I ran into her recently, though I can't remember where it was. But she actually is still working. She's changed jobs. Okay. She's actually still working. Change jobs, and, has had nothing but good things to say and everything. Her retirement's better than she ever anticipated that it could ever be.
00;14;25;15 - 00;14;46;11
Unknown
Right. And, you know, all it was was because I knew how the rules work with Social Security. That's it. Now, there's a lot of rules. Do I know every single rule? I had no. Right. But we have a resource, the NSA, that we can reach out to any time, and they will have the exact answer. And they're a family resource.
00;14;46;11 - 00;15;16;18
Unknown
And to your point, though, how many how many rules? It's like 2030. Okay. So there's 567 where, five are the claim, the 567 ways for a married couple of claim benefits, and there's over 4000. Oh, baby. Yeah. So it's a it's it's Catholic cated, right? It is complicated. It is very complex. You know what I'm looking sitting down with the client I look at usually majority of our my clients are married.
00;15;16;18 - 00;15;35;21
Unknown
So I'll use a married example when I'm sitting down with a married couple and we're deciding when to take Social Security. My number one goal is to help take care of the surviving spouse. When, when the husband when one predeceased the other. It's not always that way, right? Because you get to keep the higher the two benefits.
00;15;35;23 - 00;15;57;19
Unknown
And if you're past full retirement age, you get the full whatever benefit the spouse was earning after that. So we're trying to maximize the higher earning spouses benefit. And that's where we start. Yeah, yeah. And then but to your point, like, most of the time we play by the numbers. That's all we do. Yeah. Most of the time the male will predeceased the female in the normal.
00;15;57;20 - 00;16;27;15
Unknown
So the statistically man married younger. Yeah by a couple two, three years. Right. Right. And statistically women live longer. Right. So double whammy. Exactly. So, you know, my goal is, you know, when I, when my grandpa passed away, my grandma got a little, kick up in Social Security. She got his pension was cut and a half, and she struggled like it was, it was struggling like it was crazy.
00;16;27;15 - 00;16;48;10
Unknown
And I look at it and thinking like, hey, if someone would have been able to give her a little bit better advice on it, right. She could have been in a better spot because my grandparents, retired young. And so they both started to get Social Security right when it was available. Yeah. Right. And so, for their situation, it could have been done better.
00;16;48;13 - 00;17;08;25
Unknown
And, you know, I've sat down with thousands of, of of, prospective clients that are all going to do one thing. They're all going to retire at some point. And I'll tell you, if they're a married couple, majority of the time, the spouse, the, the husband wants to take care, wants to make sure their spouse is taken care of.
00;17;08;25 - 00;17;28;06
Unknown
Yeah. If something happens to him. Absolutely. And I think that's kind of like a man thing, like. Yeah, it's just like, hey, like, if I talk to you about with your wife or me with my wife, like, that's naturally, you know, a pretty normal thing. Yeah. Right. And and it could be even if the wife's Social Security benefits higher.
00;17;28;09 - 00;17;48;29
Unknown
Right? You still want to maximize. You want to maximize the highest earnings you got. You got to two balls balancing. Right. And, you know, one of the biggest things I see is people don't look at the tax aspect of it. Like they say, I want to take my Social Security early. I just want to make sure I get the most out of it, which is a great attitude.
00;17;49;02 - 00;18;08;24
Unknown
If you have the full picture. Right. And I say there's no wrong or right time or no specific time for every single, person that when they should, should take Social Security, it all depends on your unique situation. Amen to that. And so, you know, when it comes to Social Security, number one, I, you know, if you're somebody out there hoo hoo hoo hoo.
00;18;08;25 - 00;18;29;21
Unknown
Oh, hey, I'm taking it out at 62. Hey, I'm taking out at 70. Hey, I'm taking it out at full retirement age. Do yourself a service, verify that's the right thing. Because how many times I know we have, like, case study after case study on this spread, but how many times if somebody come in, they have a plan, you run the numbers, verify, hey, we actually probably want to do it this way.
00;18;29;21 - 00;18;45;25
Unknown
And it's much different than how they intended. Right. Like I mean that happens daily weekly all the time. You know what I'm saying? Where you have a game plan, but you gotta look at the full picture. So now when you say the full picture, Brad, what are you really talking about? I you know, I think I know, but when you say you gotta look at the full picture, what do you mean?
00;18;45;25 - 00;19;07;16
Unknown
You got to look at every aspect of your client's retirement. You got to look at their, where their income is going to come from. If they have a pension, what option are they going to choose? You gotta to, make recommendations when to best take Social Security for both of you. Right. We got to make sure that if you have a lump sum pension option that we run the numbers to see, hey, can we do it better?
00;19;07;18 - 00;19;27;01
Unknown
Right. Maybe you don't need a pension. Maybe you'd rather have it as savings. You don't need to live off of, you know. So we're going to run a calculation to see, where's the break even point and how what rate of return you have to get to make it beneficial to your point and the number one thing and I say this is the number one thing that that that hurts people in retirement is, is taxes.
00;19;27;01 - 00;19;51;14
Unknown
Yeah. Right. Tax is if it's, it's unfortunate the way they look at Social Security and taxation is kind of like a surtax. If you look at the tax code without Social Security, the brackets go to or zero ten, 12, that it goes to 22%. You start taking Social Security back at around that $18,000 mark.
00;19;51;16 - 00;20;11;03
Unknown
All of a sudden you're paying like, 18.5% tax that it jumps up to 27% tax. And that's all about where there what income they have and where it puts up. And there's one part of that where they for every dollar they take out, it's about an $8,000 window. Every dollar they're taken out is almost a 50% tax on it.
00;20;11;03 - 00;20;33;28
Unknown
Wow. And so the reason people don't know this or talk about it, because most advisors don't give tax advice and they don't know. They don't know. And even if you could, you know, it catches people off guard when they're doing their required minimum distributions. But even if you do it, you you do your required minimum distributions, your income goes up, taxation and Social Security goes up.
00;20;34;00 - 00;20;54;21
Unknown
You don't know that though. All you do is get a 1099 in the mail and you give it to your CPA or whoever prepares your taxes and you either withheld enough tax or you did it. So you're going to have to pay or get a refund. But if you actually we have the software where it shows us, hey, we know the next dollar, you take out, exactly how much tax you gonna pay out of the 10,000 and so on.
00;20;54;25 - 00;21;16;07
Unknown
Right. And so our goal is to make sure that you keep more in your pocket. And let's go on to Uncle Sam. Amen. Now, can are we miracle workers? No. But with proper planning, and adjusting and having the right type of accounts to pull from, we can minimize taxation. Definitely. Some people, we can even eliminate it in the long run.
00;21;16;07 - 00;21;34;08
Unknown
And you're talking again, specifically looking at the whole picture. You have to look at the whole picture. You can't just say, I was telling someone the other day that they said, they were I was trying they were asking about really what a fiduciary is. And I think it's a misnomer out there what people think of fiduciary, I agree.
00;21;34;08 - 00;21;55;16
Unknown
So, as a fiduciary, we have to have every piece of the puzzle, before we can ever make a recommendation. Correct. Right. So if I don't know your situation and what you have, how can I ever make a recommendation? Right? Right. Whereas, like, so if someone just comes in off the street and says, I have 100,000, I want to invest but doesn't tell you anything else, guess what?
00;21;55;17 - 00;22;15;03
Unknown
You're not going to recommendation from me. You're right. Because I have no clue how it fits with the rest of your situation. Correct? And I could end up doing something that could actually harm you more than help you. Amen to that. So it's we're big on, you know. Well, I mean, it's our company. We do this, but we're huge on full planning.
00;22;15;03 - 00;22;33;02
Unknown
Yes. Yeah. And and and I know you and I have this belief, and we obviously have bias to our own belief system, but I think it's the right bias of comprehensive planning, making sure we're looking at the whole picture. You know, because some people, they'll come up to me, right? And, you know, usually it's when I'm like golfing or something, right?
00;22;33;06 - 00;22;46;22
Unknown
Oh, you're a financial planner. What do I do here? I'm like, well, you got 30 minutes. All right. Because I got to get some details to give you that answer. Yeah, right. And always people I say, well, the word like I always hate it. I hate the answer I have to give when I say it depends. Yeah, right.
00;22;46;28 - 00;23;09;01
Unknown
But it truly does. It does mean you got to get the full spectrum to give people a good answer. Yeah. You know, this is, heading into retirement and choosing to work with someone is probably the biggest decision that they're going to ever have to make in their life, right? Yeah. And so to make a recommendation without knowing the full situation, I think is like going to the dentist and just saying, hey, one of my teeth hurt.
00;23;09;03 - 00;23;26;18
Unknown
But you get to guess which one it is you get to pull. Right? I it's a great analogy. So I know I just thought of that off the top of my head. So let me ask you a couple more questions with Social Security. So, when we're talking about taxation of Social Security, what does that look like?
00;23;26;18 - 00;23;42;10
Unknown
What are some of the kind of the main things people should know when we talk about taxation of specific types of Social Security is there is there limits of income? What goes into that equation? You know, can you kind of walk me through? Yes, I know that one's complicated. Yeah. So what they do is they look at your provisional income.
00;23;42;11 - 00;24;01;27
Unknown
Okay. Right. Was which essentially is your modified adjusted gross income off your tax returns. And then they add in any, half of your Social Security, okay. Which is, you know, if you're a married couple and have 50,000 in Social Security, which is not unheard of these days. Right? Right. 25,000 gets added back into your income. Okay. All right.
00;24;02;03 - 00;24;22;05
Unknown
Then they add in a tax free interest from municipal bonds okay. So manageable bonds pay tax free interest. Great. You never pay federal tax on the, the the dividend or, state tax if it's a Michigan municipal bond. But all that interest you get, if you get it, goes back into the calculation for your provisional income.
00;24;22;05 - 00;24;44;16
Unknown
Got it. So you add up all that income, right? Basically all your income was the standard deduction, plus, half your Social Security and tax free interest. And if it's under if you're married, couple filing jointly and, if it's under 32,000, you pay zero tax on your Social Security. And that's for a married for married couple filing joint.
00;24;44;17 - 00;25;07;01
Unknown
Okay. So now that's zero under 32,000. After that equation you're not paying tax on your Social Security. Correct. Okay. So then where does it come in. You know, what are those other threshold. What you go over 32,000 between 30 244,000. They're going to start taxing your Social Security up to 50% of it okay. Not a 50% tax 50% the number of your Social Security be taxable.
00;25;07;01 - 00;25;31;08
Unknown
So in that case of 50,000, if you reach it to the 50% taxable 25,000 is taxable. Got it. Here's the kicker though. If you go over for hit 44,000 and above, of provisional income, they're going to tax 85% of your. So that's a big jump. Yeah. It's not a small number. So most people are need aren't need more than $44,000 to live on.
00;25;31;08 - 00;26;07;02
Unknown
Right. Retirement. Right. The majority. So when they first put these thresholds in, about 70% of the population was going to pay tax on social Security. Today, about 70% of all people will pay some kind of tax on their Social Security. Wow. Yeah. And and it adds up. So and they tax it at your current tax rate. So today if you're in a 20% tax bracket and you have 50,000 Social Security and 85% is taxable, you're paying $8,500 in federal tax.
00;26;07;03 - 00;26;30;22
Unknown
Right? Right. So you get to yeah, that's a big number. Big number. Now the real scary part is what happens in the future, when our deficit right now is, what, $37 trillion at 37.7? I think last time I looked at you, Charlie, that's a lot of numbers. Eventually we've got to do something to get that that down.
00;26;30;24 - 00;26;54;03
Unknown
Rule number one is cutting expenses. But the majority of federal spending, I want to say like 75% is defense, Social Security and Medicare. Okay. Right. So the other 25%, which is all the other stuff, I don't even know if there's enough. We can cut. Yeah. To to bring that deficit down, to make it eliminate or make it reasonable.
00;26;54;05 - 00;27;20;16
Unknown
They're going to have to raise taxes eventually somewhere. Right. And so the the big thing is there's steps and strategies you can take now to ensure that if they raise taxes and they double it. Right. And it's 40%, instead of having to pay 17,000 and tax just for 50,000, you're saying. Yeah, yeah. Just on Social Security, just on Social Security.
00;27;20;19 - 00;27;42;12
Unknown
If you have separate buckets to pull from to help control your taxes. Yeah, you can at least reduce the taxes in some cases. Eliminate. Yeah. And we've been able to do I don't want to go too far into this but. Right. You know there's one one there's one tool you can use that never causes taxation anywhere, never raises provisional income.
00;27;42;14 - 00;28;07;09
Unknown
And it's a distribution from a Roth IRA. So the big thing as you diversify, your, your assets, right, to reduce risk, to be able to make it through a retirement, you want to have, diversify your tax, taxable and taxable investment accounts. Right? Right. Retirement accounts never been taxed. Every dollar that comes in your IRA for one K 4 or 3 B.
00;28;07;09 - 00;28;30;04
Unknown
Yep yep. Tax deferred. Yeah yeah. Tax deferred. Got a tax break for putting it in. The second you know, a broke just a brokerage account. So you, you have 100,000 and you buy Tesla stock and, you only pay taxes moving forward on the growth of the profits. Yeah, yeah. Capital. Capital gains, short or long term or long term?
00;28;30;04 - 00;28;48;21
Unknown
What? You can pay 0% long term capital gains tax. Base, depending on your income level. We're and I could dive into that. Yeah. But the third bucket is having a tax free bucket, which is our Roth money. Amen. Right. Also, it could can be considered like an HSA, because that that money grows in there tax free.
00;28;48;21 - 00;29;06;17
Unknown
And as long as it's used for medical expenses, you don't pay taxes on it. So if you have all these tools available, you want to make sure that you have a little bit of in each of the categories, to help you later. Yeah, absolutely. And so I mean, we do a huge, huge, huge Roth conversion planning.
00;29;06;19 - 00;29;25;09
Unknown
And, you know, there's all these great things about a Roth. But the number one thing is it helps you control taxes. Yeah. And I, I couldn't agree with that more. And it's funny because you know to your point and you know, tax planning is like, you know, at least from the families I've sat down with, like I never read an article on this or a white paper.
00;29;25;16 - 00;29;43;01
Unknown
But like, out of all the people I've sat down with, you know, we've given thousands of second opinions, right? Yeah. And to your point, we can't work with everybody. That's okay. Right. And kind of like your, your your, you know, your your client I'll say, but really just helped on Social Security and you weren't even managing any money for you're just helping her out to be a good person.
00;29;43;03 - 00;30;05;12
Unknown
But when it comes to taxes, it's the number one at least in my experience. Under number one, under planned area of retirement. Why? You know, raise your hand if you like talking about taxes. Well, there's not a lot of folks who are going to raise their hand to that. And so, you know, again, if that's you, you don't have a tax plan, you don't have a Social Security plan.
00;30;05;14 - 00;30;23;11
Unknown
Reach out. These are the things that we're going to provide to you. There's not going to be strings attached, just like Brad was talking about. This is about education. This is about doing your due diligence. And again, you know, you got to trust your heart. But for us, it's always like, hey, you want to you got to work with people who have your best interests, who are true fiduciary.
00;30;23;13 - 00;30;43;13
Unknown
Correct. You know, not everyone is ready at the time that we sit down with them. You know, people are starting to, like, plan a little earlier and, and, you know, it's always make sense to get a second opinion. It doesn't matter if you've been if it's your brother that's managing your assets. There's two phases. There's the accumulation phase and the distribution phase of life.
00;30;43;13 - 00;31;04;01
Unknown
They work in opposite ways. It always makes sense to get a second opinion to make sure you're on the right track. Absolutely. And it's funny because like, I literally I started laughing when you just said get a second opinion. My, my parents, I'm obviously their financial advisor. Right. Well, they're coming at night and they're meeting with me, and you just never told me, right?
00;31;04;04 - 00;31;22;27
Unknown
But, even my parents, you know, when I first started talking to them, I did their whole plan. They were teachers, right? Didn't have a million bucks. Luckily, I had a great pension. Right. And all that stuff. But, when I sat down them, I told my go, hey, man, I go get another opinion. Like, don't you know, even though I'm your son and I know, like, you know, we're going to work together and you want Alex to do it.
00;31;22;27 - 00;31;38;03
Unknown
And you know, I'm always going to do right by you kind of to your point earlier, treat everybody like your mother, right? Yeah. I encouraged them to do it. You know, it's education. You know, it's a good thing to get education. You're never going to be hurting. The education piece when it comes to these topics. Yeah.
00;31;38;03 - 00;31;57;26
Unknown
No. And it just made me think, like last, not last night, two nights ago, I had an appointment. Gentleman came in, and it was a third appointment. And I asked if he had any questions, and he didn't have any questions, so I said, when should when when does it make sense to start the process? And he, you know, we got this, like, look on his face.
00;31;57;26 - 00;32;19;02
Unknown
He goes, he knows this is a big step for me. Yeah. And I said, I don't take that lightly. I mean, this is a hard thing to do. Right? And I said, you don't know me from Adam. And, but this is this is how this is how I work. I was I basically was like, I look at every situation like, it's my mom and dad.
00;32;19;04 - 00;32;39;04
Unknown
Yeah. And if I cannot say, I would recommend this for my mom and dad, it does not get recommended. Right? And I said, you know, we've been around a long time. We've been in it was in Brighton, our office, and I said, we just, we've been here for years. And I said, I promise you, I'm going to look out for you in your best interest.
00;32;39;04 - 00;32;54;20
Unknown
And he he said, you're he goes, yeah, I know. He goes. He goes, all right, let's get it. Let's get it going and do it. Yeah. And he's going to retire. He might retire next year. So we'll see. And you probably helped him come to that idea that that was okay. Yeah. No a lot of times I gotta give permission.
00;32;54;20 - 00;33;13;08
Unknown
Yeah. For people to reach my okay Brad my okay. You know, my dad, I was just on the phone with earlier. I mean, he's he's been pushing off retirement and he knows I've told him a million times that you're going to be good. It's. But still. Yeah, that's that. And that all he's done his whole life is work and safe.
00;33;13;08 - 00;33;31;25
Unknown
Yeah, yeah. We're safe. That's it. Right? Right now he's going to have to do that safe, right. And not work. And there's something. And I was talking about this in a in a prior podcast. But like the psychology right. And the emotion that's attached to like, hey, it's no longer growing, I'm going to turn on I hopefully still grows if you do a job right.
00;33;32;00 - 00;33;49;05
Unknown
But you know that that taking out of it is a whole nother component people don't think about. Yeah. And so let me ask you a question, Brad, because, you know, when we talk about Social Security, you know, we talked about the taxation. And basically what you're saying is, listen, if you're married filing jointly, if you're a single filer, there's there's different thresholds and whatnot.
00;33;49;12 - 00;34;12;27
Unknown
But you're under 32,000 of that provisional income. It's tax free, 32 to 44, 50% of your Social Security benefit is now taxable income up to. Yeah. So once it goes up okay, the scale this goes up. And then once you hit $44,000 of income, they're saying hey now 85% of the benefit is taxable income. Right now going to Social Security.
00;34;12;27 - 00;34;36;22
Unknown
Would you be able to point out, you know, are there any myths? Are there any incorrect pieces of information that you regularly hear that you think would be important to let the audience just kind of hear some of those? Yeah. So one of them is, you know, clickbait right now and there's millions of articles that come out every year that say Social Security is running out of money, right, right.
00;34;36;24 - 00;34;59;17
Unknown
Which it without changes, right. They will run out of money and benefits will have to be cut. But Social Security is always been a system of the people current workers are paying, the current retirees. So everyone that I hear that it's, the Congress and the government has stolen the money from Social Security. That is not the case either.
00;34;59;17 - 00;35;22;20
Unknown
The, the the trillions that are in the trust fund. Still, what is it like three point some Treasury points I'm trying is actually, invested in Treasury. So when interest rates went up like this stuff, it actually made money. Right. And so it makes money every year, to go into it. But the reason we're having a problem with it is we're having less kids.
00;35;22;20 - 00;35;45;27
Unknown
Baby boomers had less kids. The largest transfer of wealth is going to be happening over the next 20 years. Yeah, because baby boomers are getting older and passing away, and it's money to go on the next generation. And right now for I want to say it's like 2.2 people are paying into Social Security for every recipient. Right. So it's a little thin.
00;35;45;27 - 00;36;08;03
Unknown
Yeah. And then they're saying that what is it, 2033 or 2034 2034. Now it's 2035. They say the trust fund is going to run out of money, without any changes, and that they'll only be enough to pay, 70 and, you know, but seven, three or something like that, like, it's like 75 to 79% of the current benefits.
00;36;08;04 - 00;36;29;13
Unknown
Right? Now and that's all the way through 2090. Okay. So there's, there's some life on that thing. Yeah. And that it would have to be cut more. So what do you think's going to change. So they got to make changes to have that not happen. Yeah. So what's been kicked around. So Warren Buffett everyone knows who that one of the greatest investors of all time Berkshire Hathaway.
00;36;29;13 - 00;36;49;08
Unknown
He, penned a letter to a publication. I can't remember which one a few years back and said, I'm 100% confident they will get Social Security system fixed. Here's three things that they could do that would fix it for a very long time. Number one is raising for retirement age, right? Yeah. Which has been done in the past.
00;36;49;11 - 00;37;10;07
Unknown
Right. It used to be 65. Yeah. Right. And then they changed it to 66 and ten months. 66 and eight months. 67 is most people now. Yeah. And so they've made changes in the past. That's number one. We're living longer. Right. Has it wasn't designed to last 30 years. You know what I'm saying. It was not because when Social Security started what 1935, 1935.
00;37;10;07 - 00;37;34;15
Unknown
Yeah. And people weren't living as long as they are. Life expectancy. Yeah. 35 was like 58 years old or something. You couldn't start benefits till 65. So it was it was designed to be for those people who lived longer than life expectancy. Right now it's drastically changed along the way. So what, you know, really quickly, if they if they extend okay, we're going to we're going to raise full retirement age.
00;37;34;18 - 00;37;52;09
Unknown
Do you think they do something like okay, so today you could claim at 62 early. Do you think they'll mess with that early benefit number two I it's possible but I don't it hasn't really been thrown around. So what are they saying for full retirement age we moved from 67 to it would be gradual. So like maybe we would be 60.
00;37;52;12 - 00;38;16;05
Unknown
A then it goes 60 to 19 70s. Okay. But gradually over time, if you're 55 and older now you'd be protected. Right. There's laws. House resolution 32 was passed in March. 99. It's a protects those during retirement and retired are their Social security benefits. House resolution 32. Yeah. Yeah. And that and that's the one that basically is protecting our Social Security.
00;38;16;07 - 00;38;35;20
Unknown
Yeah. And that's the one people would care about who are worried about that. Yeah. So that's the first thing. Push back full retirement age. What else did buffet number two is increasingly amount that we we pay in and our employer's paying to Social Security. So right now it's we pay 62 and our employer pays 62. If you're self-employed, you pay 12 for that plus Medicare.
00;38;35;23 - 00;39;00;11
Unknown
And he said raise it up from 6.2 to 7.55%. But not all at once. Gradually over time, a little here, a little here, a little here, a little here, a little here. So it doesn't it doesn't it's not a big hit. Right, right. And just on that note, like for me, this is my personal opinion. How I look at that is if I had to pick because this is what we got to pick, you know, there's a problem.
00;39;00;11 - 00;39;18;29
Unknown
Something has to happen. If we had to pick. Hey, would I prefer my folks who are retired on a fixed income to pay to either get less or pay more in tax, or me who's working have income coming in. And again, I'm. You got to pick a poison. I would sign up for me all day. I'm not on a fixed income.
00;39;18;29 - 00;39;42;12
Unknown
I'm on my earning. And that's what they're talking about. Hey, we're going to raise taxes on employers and employees who are still working. Correct? Exactly. I mean, someone's got to do it right now. We can work longer, right? So yeah. So gradually increase it. And then the third thing is, getting rid of the earnings limit. So right now on the first 167,000 that you earn, that 6.2% is paid.
00;39;42;14 - 00;40;02;02
Unknown
Now above that is it is not zero. It goes to zero zero. It goes to zero. And Warren Buffett said something about, you know, having a threshold above 400,000, it would be would have to pay back and do it again. I say, well, why give the 160 to 400,000 above that? Not everybody just do it above the number.
00;40;02;02 - 00;40;19;08
Unknown
Yeah, yeah. Because like, think about it like this. Like I always joke around when I talk about this with clients. I'm like, think about it. You know, Detroit Lions fan obviously. Go Lions. But the Jared Goff he backs that bad boy out in his first paycheck. You know. Yeah. These guys are making $40 million a year.
00;40;19;13 - 00;40;43;07
Unknown
And your point of view that hey if you took that same 6.2% and you ran that from the 163, 165 grand up to that number, that solves the math. Yeah, it's I mean, the the combination of those three are kids, kids, kids, great, great great grandkids would wouldn't even have to worry about it. Right. You know, so so hopefully the sooner they do it, the better.
00;40;43;07 - 00;41;02;04
Unknown
But yeah. You know anything government. You know how that works. So it'll probably happen at the 25th hour. Yeah. They shut down. Yeah. Yeah. Right. And then so let me ask you another question. So okay. So number one, they're going to play with the the full retirement age number. Yeah. Number two increased taxation on the workforce.
00;41;02;04 - 00;41;24;09
Unknown
Yeah. Number three basically play with the earning their earnings limit. Earnings on it. Yep. Now one I've heard get thrown around. And this one I don't want to say scares me. But I think is one that that that is fearful some for a lot of families especially families who are in higher net worth have have you gone into heard anything about this like conversation around means testing.
00;41;24;12 - 00;41;44;17
Unknown
What's your take on that. So I don't think that that I, you know well my opinion is that they're not going to do the means testing I agree with because you pay into Social Security, right. It's not we didn't pay into it then that's a different story. But if we're paying into it then we have a right. Do you earn that benefit?
00;41;44;17 - 00;42;05;11
Unknown
And then there's already a cap on the amount you can get. Right. And so and people are going to get back way more than what they've paid in. Right. So people are like, well, you know, if you look at the numbers of what you paid in, you're going to get like ten times more back, right? And so, I don't think they'll do the means testing only because people have paid and maybe they'll adjust the taxation on it a little bit.
00;42;05;12 - 00;42;24;27
Unknown
Yeah. If anything. Yeah. I don't think they'll take benefits away. And I appreciate that. I always like to get your opinion on this stuff because like for me, just to let everybody know means testing is like where it came up as I was talking to a client about Fafsa, right. And they did a Fafsa application. They're like, why is the government drilling me through Fafsa on how much I'm worth and how much on this on my Fafsa?
00;42;25;00 - 00;42;45;26
Unknown
If you have too much money, they're saying, hey, you don't really need it. And maybe this person over here who doesn't have as much money or net worth, etc., etc. needs the benefit for college, right? Right. To your point, Fafsa different. You're not paying in your whole life. No, it's it's it's a loan for college. It's not a benefit you've been paying into for ten, 20, 30 years.
00;42;45;26 - 00;43;06;02
Unknown
Yeah. You're right. It's different. To your point, I, I don't think I filled out a fast file for my daughter. You know, we're just paying for college, right? I, I think though she if she fills it out, it's, for scholarships too, though I found out, so. Yeah, I don't know. Yeah. Yeah. I just want to get your take your pulse on.
00;43;06;02 - 00;43;28;13
Unknown
This thing is closer than, you know, 99.9 guys I talked to, I don't I don't think people for one, the largest voting population. Right now are retirees. Right. And people nearing retirement, they're not going to shoot themselves if they. Yeah that's a good point right. Yeah that's a great point. That's political suicide to do something like that.
00;43;28;13 - 00;43;46;01
Unknown
Yeah. And there's much better ways of doing things. Yeah I totally agree with that. So I think that at this point I don't think there's going to be a means testing. But, you know, actually people can donate their Social Security back. Really. People do it? No. Yeah. I swear I've never actually met somebody who did that.
00;43;46;01 - 00;44;17;06
Unknown
Yeah, I've never met someone, but I've heard, I think it was from, the guys at the NSA. Okay. Yeah. That's crazy. I did not even know you can. You can donate your Social Security back to the party. Back to that time. No kidding. Okay, now kind of wrapping things up. Any, you know, best practices, nuggets that you would, you would get out there that you think would be important around social secure that people are thinking of or know a rule or a myth or, you know, anything that kind of jumps out the biggest thing is you want to just make sure if you haven't started taking shows, Social Security, just check your earnings
00;44;17;06 - 00;44;36;27
Unknown
history. Because if there's a, if it's incorrect, if there is a missing year, it could affect your benefits. Absolutely. Right. So you want to check that every year, the sooner you catch it, Social Security Administration will actually if it's early on, they'll, they'll do all the research and everything that's needed to get it corrected.
00;44;37;00 - 00;44;57;25
Unknown
If it's after like three years, you have to do all the research to get it corrected. Oh, right. That's good information because you want to make sure you catch it because most people don't have, pay stubs from ten years ago. Right? Right, right. I mean, they say keep stuff for seven years. And so where you would get that information, you go to ssa.gov.
00;44;57;25 - 00;45;18;01
Unknown
Yeah. And you would set up an online log in. And then you can log in and pull your most recent statement. Yeah. And one thing to just say like just from again I know Brad knows this, but just to say it, you know, think about it. If you're out there listening the one of the most fraudulent things that takes place is fake Social Security websites, for the Social Security Administration.
00;45;18;04 - 00;45;42;20
Unknown
Why? What's the first thing they're asking you? Your social Security number. Right. So make sure it is ssa.gov. Yeah. And they'll never social security is never going to call and ask for it. Yeah. Don't give it to anybody over the phone for the record. Absolutely. Anything else I this is good. And I know there's so many people out there who are worried.
00;45;42;20 - 00;46;08;08
Unknown
Your thing is, is just making sure that you, figure out the best way how your how Social security, best fits in your situation. At least have someone talk to someone that knows how Social Security works and how it can incorporate with their own their overall plan. Yeah, because if you take benefits after one year, it's irrevocable. You can't make changes, right?
00;46;08;08 - 00;46;29;28
Unknown
So say you're 62, take benefits. At 63.5, you say, wait a second, maybe I shouldn't have it early. Well, you're locked in. You're stuck. Yeah, right. But if you take benefits, you have a year to pay back benefits. And it's not like you never took them. Okay, so that's your do over. Yeah. You get 12 months. You got to pay all the money back.
00;46;29;28 - 00;46;56;05
Unknown
Yeah. So you just want to make sure it's the right decision for your situation of what can take it. That's right. Right. And you make sure you get it right upfront. Talk to a professional again I'm going to encourage everybody out there. If you don't have this please reach out with us. Engage with us. Again, whether it's a comment, you know, through social media, whether it's a message through social media, whether it's an email to Brad directly, you know, we we are here, we want to educate you.
00;46;56;07 - 00;47;18;00
Unknown
Brad. Thank you for coming on today, man. You are the the wealth of information on Social Security. You know, it's, I know sometimes I laugh about it, but it's just because I've done it so much. Yeah, and I understand how it all works together. Experience matters. Experience is a huge thing. And, Yeah. No problem. I get people calling all the time, asking questions, all their advisors and stuff, which is great.
00;47;18;00 - 00;47;37;18
Unknown
I don't mind doing it at all. Yeah. And again, on that, if you have a simple question again, reach out. That's what we're here for. Social Security hacks with Bradley Van. I mean, you can probably start your own podcast on that on Social Security forever. But hey, hopefully you enjoyed today's episode. Real world retirement. We hope you're enjoying this journey and learn some good stuff.
00;47;37;25 - 00;47;55;14
Unknown
Don't forget to follow engage with us. And, episode six. Brad, thanks again. And, we'll see you next time on Real World Retirement. Thank you so much and have a great day.
00;47;55;17 - 00;48;04;01
Unknown
If. 2744.