Let's say you need Social Security to be a part of your income. You may want to consider either filing it and retiring when you file it or delaying it for a partially higher benefit. Welcome to the Retire On Time podcast. I'm Mike Decker with David Fransen. We're gonna answer your retirement questions.

Just submit them to (913) 363-1234. Just text that number, and we'll feature them on the show. As always, remember this is not financial advice. David, what do we got here?

Hey, Mike. Should I take Social Security early and invest it instead of waiting for a higher benefit?

It depends on your intention of those funds. Simply put, if you're looking for yourself as income, like, let's say you need Social Security to be a part of your income Mhmm. You may want to consider either filing it and retiring when you file it or delaying it for a partially higher benefit. K? So Social Security like, for those who have 500,000 or less safe for retirement, there's a good chance Social Security is a large part of their retirement plan or income source.

Therefore, it might make sense to work until 70 years old and then file Mhmm. Just because you need a higher benefit to survive.

Alright. Okay.

K? Now for those that have $2.03, $5,000,000, for example, you might not even need Social Security. Mhmm. But let's say you're working and you just enjoy your work. Yeah.

Well, you don't wanna file before full retirement age. Usually, it's 67 years old for most people because if you're earning w two income or ten ninety nine income and you file for Social Security, there's a reduction of your benefits. It's it's just inefficient.

So wait until 67 years old, and you might say, well, you know, but I could have a higher benefit. I could, you know, file for benefit early and reinvest it. What do I want? If you want your money to go to legacy purposes, and you say, well, I don't need the money from 67 to 70 years old. I don't need that much of a bump for my income stream.

There you can you can have multiple six figures if you just take your income from Social Security at 67, 68, 69 years old, just take it and reinvest it into the market and never touch it. You get to pass those assets on basically tax free, assuming your estate is not $12,000,000 or whatever the estate

Tax exemption is. But you can pass it over, right, tax free because they will get the after tax or the brokerage account stock with a step up in basis. That's a fancy way of saying they inherit the stock and they don't pay the capital gains tax. They're gonna get a new entry level point.

Starts at zero. That is their basis, whatever the value of the portfolio is.

If you're moving the Amazon stock over to them at x rate or you bought SPY or VOO, whatever the the the prices Uh-huh. Upon date of death or thereabouts, those rules can change. That's roughly what their basis is or what they'll pay capital gains on.

That's a very tax efficient way for legacy. Totally. And so if you don't really need the extra income, you have enough, and you're like, I might as well just give it. I wanna give it to the kids. I wanna give it to Terry.

I wanna do something with it. Mhmm. You could take it and invest it and then gift it away as you see fit Because brokerage funds are not subject to RMDs. Brokerage funds aren't you're not forced to be taxed on it. Oh.

I mean, you're gonna get taxed on the dividends, but the S and P five hundred barely pays a dividend anyway. Russell two thousand doesn't really pay a dividend much anyway, and those are fancy terms of just these are indexes people like. Yeah. They're popular indexes. You could do whatever index you want.

Alright. You can pick whatever ETF you want. But but the point is there's you have to define the purpose of your money. Do you want Social Security to be more focused on income for yourself? And if so, then you're gonna plan it in one way.

If you don't need the boost or the bump in Social Security or it's kind of just a nice to have, but you could retire on your own, your intentions are for legacy purposes, you're concerned about longevity. Any of those reasons might cause you to wanna file earlier and just put it in the market, call it good.

And when you do put Social Security income into the market, it goes into a taxable brokerage account.

Right? Yeah. Just don't ever sell it.

Oh, okay.

And then it's a non tax issue.

Because you can't put it in an IRA of any kind. No. Yes. Just to clarify.

I mean, I guess so if you were working

If you were working and your income was below a certain threshold, you could qualify to do, like, Roth contribution catch ups because you're taking the money.

Okay. Right.

Right. Technically, and you're earning w two income, and you're past 67 years old, so you're past full retirement age

You could put in a Roth Oh. If you meet all of the different requirements.

Right. Right. Right. So check on this, everybody out there in YouTube land.

Well, just make sure you've got your i's dotted and t's crossed. You're gonna pay taxes on your Social Security benefit.

Yeah. Okay.

You can put it into a Roth if you qualify for

I mean, it's a contribution.

But you have to be working. Ah. Yes. And and you can't work, earn a thousand dollars, and then put it all put $7,000 or whatever you want into a Roth. There are rules around this, but that is something that some people will do.

Okay. Alright. Alright. But in so in general, aside from that situation, it's probably mostly likely gonna go in a brokerage.

Yeah. It usually ends up in a brokerage account

Which is fine. Yeah. Nothing wrong with that. So that yeah. I think that's the Social Security bit.

Just know everyone's different. Right. We've got retireontime.com, the Social Security Optimizer, is a great way that you can actually run these reports. You can go in there and click around and, you know, invest option and click, you know, if I do this or that or the other, what could it look like? It's just hypotheticals.

You know, it's not we're not promising anything here. We're just saying if this, it could be this based on these averages.

Yeah. It's good to have an awareness of the possibilities.

Yep. Try it out. Retireontime.com, Social Security Planner Optimizer, you know. It's it's right there in the resources. Love it.

Hope you enjoyed the video. If you enjoyed it, make sure to tell a friend, leave a rating, or subscribing to us wherever you get your podcast and or on YouTube. For the best experience, it's on YouTube, and you better believe it. We are gonna be casting more instructional videos, case studies, and so much more on the on YouTube. So just I almost said the YouTube.

On YouTube, just go to youtube.com and look for the show How to Retire On Time. It'll pop right up. Thank you for spending your time, your most precious asset with us today. If you need any help, just go to retireontime.com and click talk with a planner at the top of the page, and we'll be able to help you. Take care.