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Welcome to How to Retire on Time, a show that answers your retirement questions. Say goodbye to the oversimplified advice you've heard hundreds of times. This show is about getting into the nitty-gritty so you can make better decisions as you prepare for retirement. Text your questions to 913-363-1234 and we'll feature them on the show. Don't forget to grab a copy of the book, How to Retire on Time, or check out our resources by going to www.retireontime.com.
Welcome to How to Retire On Time, a show that answers your retirement questions. My name is Mike Decker, founder of Kedrick Wealth, and joining me in the studio today is Mr. David Franson. David, thanks for being here.
David:Hello.
Mike:Get your questions answered on our show by texting them to (913) 363-1234. Again, that number (913) 363-1234. David, let's dive in.
David:Hey, Mike. How do you prepare for Social Security potentially going away? Talk about fear based mongering. Yes. I feel like we've been hearing about this for, like, decades.
David:Oh my gosh.
Mike:Well, in in the Social Security statement, it says that by 2033 or 2034, that Social Security Trust Fund is expected to run out, and that we'll need to take cuts on Social Security. And then you've got people using political lines and argumentative stuff and clickbait crap that gets people scared to death. Most Americans qualify for Social Security. Many Americans depend on Social Security as the majority of their income because they were unable to save enough for retirement. That's not a criticism.
Mike:Life is hard. Sometimes people just were not able to save as much, and so they're grateful that Social Security was there to help them be able to enter into retirement, whether it's full time or part time retirement. For other people that were very wealthy, they were able to create a lot of their wealth. They still want their Social Security. They still want these benefits, and so everyone unanimously is upset by these claims.
Mike:Yeah. Here's the problem. Most people that are talking about this are creating conclusions not based on the evidence actually provided. Let me explain. Social Security is not going bankrupt.
Mike:They might have a 18 to 20% reduction of benefits because the trust fund is being depleted, and the trust fund typically handles or pays for 20 to 18% of the current benefits being received. As in FICA tax, you know, the tax that we all pay when we work? Yeah. Takes care of the majority of the benefits. So if the trust fund goes completely out, then around 80% of the benefits would be sustained by the current workforce.
David:So, like, I get paid thank you very much, Mike, too, for me getting paid, but when when I get
Mike:paid You're welcome to have a paycheck. Yes. Thank you for your services.
David:Yeah. You're welcome. Beneficial here. So when that does withheld from my check, it's going like straight to current benefits. Is that right?
David:Is
Mike:that what
David:you're saying?
Mike:Think of any business. You have your inflows, and you have your outflows. Every year, Social Security receives inflow from the FICA tax. Yeah. Every year, it receives outflows of it paying Social Security benefits.
Mike:And then the other part too is the middle class isn't dying. It's just shrinking by a percentage. More people today than ever before are making 6 figures, more than 6 figures, significantly more than 6 figures. As more and more jobs in the middle class have left, more people have gotten more technical degrees such as well, like, there's lot of electricians and plumbers, which are quote, unquote middle class. I don't know about that because a lot of plumbers I know, a lot of electricians I know make good 6 figures.
Mike:They make good money. They became savvy business owners. You've got the tech industry where you're making $2.03, $400,000 a year. That didn't exist way back when. So the upper class, quote, quote, based on these antiquated thresholds, continues to expand greatly.
Mike:As you make more money, there's more money that could go into Social Security. Now currently, the FICA limit is a 168,000 based on twenty twenty five numbers, but they could just get rid of the limit, and just whatever you make, you're gonna put some funds into FICA, and that would have a great resolution for these potential Social Security problems. I mean, there's so many ways that you could solve Social Security, but is Social Security going away is a it's a fear based statement to get people anxious, and then typically, it's to sell an annuity. Well, Social Security might go away, so let's guarantee your income with this other alternative. Buy this annuity, guarantee it for life, and you're fine.
Mike:Or if Social Security goes away, this rider will increase. Okay. Hold the phone. Insurance companies aren't charities. Social Security isn't going away.
Mike:There just may be a reduction, and you can plan around the reduction in so many different ways. You can plan around the reduction by putting all your assets in the stock bond fund portfolio using the 4% rule. You can plan for the reduction with a dividend portfolio and just make a slight adjustment to the portfolio if it were to happen. You can make with the rental real estate, you can make an adjustment to it. Even with annuities, you can make an adjustment with it.
Mike:You can plan around these things, but let's stop losing sleep over the idea that Social Security is gonna go bankrupt. The only way Social Security goes completely bankrupt is that if everyone stops working. That's never going to happen.
David:Yeah. I wouldn't think so.
Mike:People have to earn a living.
David:Right.
Mike:So let's put things into proper context and understand Social Security is going to be around in perpetuity as long as The United States exists, as long as people are earning wages, they're paying into FICA tax. They're paying into Social Security. And as it goes in, it then goes out to beneficiaries of Social Security. So let's define things as they are.
David:That's all the time we've got for the show today. If you enjoyed the show, consider subscribing to it wherever you get your podcasts. Just search for how to retire on time. Discover if your portfolio is built to weather flat market cycles or if you're missing tax minimization opportunities that you may not even know exist. Explore strategies that may be able to help you lower your overall risk while potentially increasing your overall growth and lifestyle flexibility.
David:This
Mike:is not your ordinary financial analysis. Learn more about Your Wealth Analysis and what it could do for you regardless of your age, asset, or target retirement date, go to www.yourwealthanalysis.com today to learn more and get started.