Ep #6: Social Security Claiming

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We hear a lot of people say they want to turn on their social security as soon as possible in order to capitalize on the benefits while they are still available. So today, Tammy and Micah are discussing the misconceptions that lead to this idea, as well as the history of the system and how changes tend to happen. Listen in to hear about the tools you can use to plan your retirement income and recommendations for making the right decisions in this area. Tammy and Micah break down how to look at your social security as an investment and weigh the benefits and drawbacks of starting earlier with your retirement benefits.

Listen to the Full Episode:

What You’ll Learn In Today’s Episode:

  • How our dependence on social insurance affects us today.
  • The importance of taking the emotion out of retirement planning.
  • How changes are always made when it comes to benefits.
  • The most important question to ask when trying to decide when to start social security benefits.
  • How to best plan for your retirement income.
  • The tax implications of early retirement.
  • How to look at your benefits as an investment.
  • Why suspending benefits may be a good option.

Ideas Worth Sharing:

Over the history of the system, any time congress has needed to make a significant change, they have always—not sometimes—grandfathered in those changes. Click To Tweet Money gets emotional, so it’s really important when we do our retirement planning to almost have dispassionate planning, which means looking at the facts logically. Click To Tweet If you’re eligible for social security, it’s not going away, so don’t worry about that. Click To Tweet

You can spend. You can save. What is the right thing to do? Federal benefits, thrifts, savings plans, too. You can save your own way, with help from Micah and Tammy. You can save your own way, save your own way…

Micah Shilanski:  Well, welcome back to the Plan Your Federal Retirement Podcast. I am your coach, Micah Shilanski, and with me as always is the amazing Tammy Flanagan. Tammy, how are you doing ma’am?

Tammy Flanagan:        Hey, Micah, I’m doing great. Good to be here again for another episode of our retirement planning podcast.

Micah Shilanski:  Yeah. We have some exciting things to go through and to talk about today. We hope everyone is doing really well. And we wanted to kind of jump into a topic that we get a lot of questions about and there’s a lot of opinions out about this one as well. And I think we’re going to talk about it in a context that sometimes gets missed because, Tammy, sometimes I think with federal employees when we’re planning our retirement, you get caught up in the aspect what is everyone else talk about? Non-federal employees, right? What does everyone else talking about? How much money do I need to retire? What are all these different things that I need to look at? And you start going down this path and making decisions, but you need to almost step back and say, “Hey, look, I’m a little different than most other retirees that are going for retirement. Because when I retire, I’m going to have a pension. I’m going to have healthcare. I’m going to have these things, which now makes me make decisions slightly differently than the average American.”

Tammy Flanagan:        That’s right, Micah. And the employees in the government under FERS, which is most of our audience, they do have three different sources of income to draw from, besides Social Security, they have a government pension, they have proceeds from their TSP account. And to me, that gives them a lot of flexibility when it comes to making decisions on both, when to claim Social Security and how to use the money that’s in their TSP account.

So I almost think of the two of those, Social Security and TSP being on a seesaw. So you might be taking more of one while you let the other one kind of percolate a little bit, or you might do it the other way around, or some people do them both at the same time. They’re kind of even-steven, where I draw from everything all at once. So the question becomes what should you do or what should you think about before you start to enact the plan to start either claiming Social Security or taking money from your savings?

Micah Shilanski:  Yep. Now there’s a couple of things that get in this and let’s talk about that first, Tammy. When we’re talking about claiming Social Security, one of the things I hear a lot more when I’m doing presentations and teaching classes versus on one-on-one clients. But one of the things I hear a lot when doing is that people say, “Micah, I’m going to turn my Social Security on right away because I want to get while the gettin’s good. And before they take it away, I want that income started so I always get it and it never goes away.” What are your thoughts on that?

Tammy Flanagan:        Yeah, I hear that as well. I hear people saying I’m going to take it so that nobody else will get it or so that they don’t shut it off. And my feeling about that is and I basis on historical evidence, Social Security has been around since 1935 and as a country, we’ve become very dependent on social insurance. And it is a form of insurance, it insures against the loss of income due to death, disability, and retirement. And Social Security has-

Micah Shilanski:  Old age, Social Security, and disability system, right?

Tammy Flanagan:        Insurance, right. OASDI. And then FICA, Federal Insurance Contributions Act. So if you don’t think it’s insurance, you might want to look at those acronyms again. But anyway, so thinking back over the history of the system, many times Congress has needed to make a change, a significant change. They’ve always, always, never, not sometimes, but always grandfathered in those changes. And I don’t think the future changes that are going to probably happen in our lifetime will be any different. I do think that you’ll see some type of a grandfather clause or whatever you want to call that, that Social Security benefits as of this date are people born in this year will be affected and those people born prior to that year will be unaffected by those changes.

And the way they’ve kind of protected people who are already receiving benefits is to say that these changes will not affect anyone who is already either eligible or soon to be eligible to receive them. So the theory that I’m going to get it while the gettin’s good because it’s going to go away would only be valid if I was 22 years old and I still have my whole career ahead of me. But if I’m 62 years old or even 58 years old, it’s very unlikely that Congress will just all of a sudden disband Social Security and take it away from the whole country. That’s just not practical. We’re too dependent on social insurance as a country. So it can’t just disappear.

Micah Shilanski:  Yeah. And I think this is one of those things that money gets emotional, right? It is a very emotional topic. And so it’s really important when we do our retirement planning to almost have dispassionate planning, right? Which means what are the facts? What are the things that we need to look at and look at this as logically as we best can. So when you go to claim Social Security, we have a lot of different options, right? Because you get to choose between 62 and 70 years young in order to turn on your Social Security. This is normal, Social Security, not widow benefits or widower benefits that we’re going to be talking about. And so we have that nice range that’s going to be there.

And if you turn Social Security on what I’m going to define as early, which is before your FRA, your full retirement age, just like with most things, if we turn things on early, it comes with a penalty. And if we wait until later, so to 70, kind of max it out, it comes with a bonus, right? We get that 8% per year growth in our Social Security if we let our Social Security differ and grow. So we have this spectrum that we need to choose from between that 62 and 70 about what is the best time to turn that Social Security on.

Tammy Flanagan:        But Micah, you know what you can’t change?

Micah Shilanski:  What’s that?

Tammy Flanagan:        You can’t change the end date.

Micah Shilanski:  That’s right.

Tammy Flanagan:        So that means that we’re either going to get a smaller check for more years, or we’re going to get a bigger check for less years because that end date is going to stay the same regardless of when we started. Now, I guess the problem I see is that we don’t know the end date. So if we knew we’re going to live to be 99 years old, then of course we would all wait until we were 70 to claim Social Security. But we don’t know that. Some of us are going to die before we get our first check. Some of us will live in 81. We just don’t know.

So I think the two fallacies, I think that we can dispel today is number one, that if you’re eligible for Social Security, it’s not going away, so don’t worry about that. And number two, we don’t have to worry about the break-even so much as I think a more important question is, do we need the money? Do we need money more now, do we need the money more later? So how do we help somebody or how would somebody decide if they should go ahead and take it now and get the smaller check or do they have the means to delay it so that for the rest of their life and possibly under the life of a spouse, that benefit check can be a thousand dollars a month more? So we’re not just talking about 20 bucks. The difference between age 62 and 70 can be well over a thousand dollars a month for many, many people.

Micah Shilanski:  It’s huge. And Tammy, just, as you said, and we’ll talk about this in a little bit, that directly affects the survivor benefits, right? The widow or widower benefits that if you pass away, what is your spouse able to claim? And when you turn your benefit on, if you turn it on sooner at a lower amount, that reduces how much your spouse can claim when you pass away. That has a big effect. So I like what you said, don’t worry about the breakeven because I agree, I think it’s a bit of a futile point to look at because are we really going to plan on dying to make sure we hit that break-even number? No, we’re not, right? So let’s not plan for that.

You plan number one for cash flow. What money do you need coming in? Now, the tool that I love to plan for cashflow is what we call our retirement income timeline, where we draw out, where’s your income going to come from in retirement, right? What’s your gross? How much do you want coming in? And where is that going to come from? How much is your pension going to be? How much can you take from your TSP? How much can you take from Social Security, et cetera? And we talk about that a little bit in our previous podcast and we have a lot of information on our website about this, but that’s going to be a key thing to do.

Now, if it becomes a choice where you’re in a position that you don’t have to turn Social Security on right away to make retirement work, but you get to choose when would be the best time, now what I like to do is I like to spin that a little bit and make this an investment question almost like when we were talking about longterm care, right? The best thing when you’re looking at longterm care is to have something to compare it to because when we’re looking at one thing at a time, it makes it really hard to make a decision. It’s the same thing with Social Security. So let’s compare it to something else. Take Social Security and look at it from an investment rate of return and compare it to the rest of your investments.

So, for example, let’s say you hit your FRA, your full retirement age, and let’s say that 66, right? Because that’ll be a lot of our audience. So at 66 you can claim your full Social Security with no penalty. Okay. Awesome. Well, if you delay, that means your Social Security will grow by a guaranteed 8% every single year until you’re 70 years young. Tammy, what investments are out there that a federal employee can get access to that is going to guarantee to grow 8% every year by the US government?

Tammy Flanagan:        Nothing.

Micah Shilanski:  Nothing. Right. And if you have one, please tell me, I would love to know. There’s nothing, right? The G fund, I’m going to pick on the TSP real fast. The TSP is a great tool. The G fund is a phenomenal fund and it is not even close to 8%. And I cannot imagine in the next decade, it’s going to be even more close that. We don’t know, but we know today, it is not even close to that number. So if we look at it from an investment standpoint, then we can say, well, it might make a lot of sense to delay that Social Security for a few years, maybe not until 70, maybe just to 68. Because now you’re getting a 16% increase just by waiting those two years. And again, it’s guaranteed by the US government.

Tammy Flanagan:        Right. And I think the other thing to keep in mind is to know that if you do delay it and you only live a few more years, well, you still got that bigger check for those few years. But if I lived to be 90, or 92, or even 89, that’s going to come in so much more handy during those years. Because in many cases, when somebody gets to be 85 or 90 years old, they’ve already thought that was the end of the road so they kind of planned out their investment withdrawals to live to be the next 30 years. So I think that Social Security, the fact that it never runs out, it lasts as long as you do is a real safety net for someone as they move into the later years of life to help them cover whatever it is, whether it’s medical expenses, whether it’s still living their life.

Micah Shilanski:  Tammy, another thing that I see kind of happen, and I see this a lot with the FERS supplement as well, is federal employees, again, you guys have a phenomenal ability to retire early, so generally, retirement is defined as 65. Federal employees, most of you are able to retire well before that, which is great. You have a wonderful benefits set and you’re kind of savers. We put more money in that TSP, which is great. But if you retire under a full retirement, under 62 with the feds, you get that first supplement, right? That extra check that’s coming in a portion if you will, is to make up from not getting your Social Security check. Well, that is subject to an earnings limitation and so is your Social Security if you turn it on early, early before your full retirement age, right?

So your full retirement age is again, between 65 and 67, depending on when you were born, if you turn Social Security on before that you’re subject to an earnings limitation. If you go and get a job or you’re self-employed and you have more than, I’m going to round, more than $18,000 a year coming in, for every $2 you make above that, they’re going to take $1 of your Social Security away. Or your supplement, if you’re getting your supplement at the same time, the same rules work. And Tammy, one of the things that I see with a lot of people is that when they retire young, they’re not done. Okay. They might be done with federal service, right? They might be ready for that next chapter, but now they get excited about something else.

They make a transition somewhere else. And now all of a sudden they get a job, they get income and they forget they can turn off their Social Security, which is a phenomenal planning tool, right? They forget they can turn it off. They forget they can potentially later suspend it and now all of a sudden they got the Social Security income coming in. They got a part-time job income coming in, now they got to pay back that Social Security income. So this is another reason you may want to delay turning that Social Security on early.

Tammy Flanagan:        Right. You can only stop your Social Security once in your lifetime and it has to be within the first 12 months of claiming it. So let’s say that I claimed my Social Security at 62 because I think I’m done working and then all of a sudden, six months later, I go back and I start making above that earnings limit amount, so I could stop it so I don’t have to pay it back, and then I can start earning those additional benefits by delaying it. So you do have that option once. And then you also mentioned that you can suspend it. So if I reach my full retirement age, when there’s no longer an earnings test, but maybe I do want to take advantage of those 8% per year growth amounts, I could suspend benefits starting at my full retirement age and earn that 8% growth every year until I’m 70. So that’s another option people have, that sometimes we’re not aware of.

Micah Shilanski:  So, Tammy, just to go through that real quick and I don’t want to get too much into numbers, especially on a podcast, it’s hard to keep track of, but let’s make it super easy. Let’s say I was 62 and I turned on that $1,000 a month income coming in. And let’s say, I kept that going for four years until I was 66. And at 66, my FRA, you’re now saying that I can suspend that benefit. I could choose to stop that income coming in. Now that $1,000, let’s not worry about inflation, now that $1,000 is going to grow by 8% until I turn it back on?

Tammy Flanagan:        That’s right. That’s right, so it’s an option.

Micah Shilanski:  That’s a great deal.

Tammy Flanagan:        Yeah, it definitely is an option. Now, on the other hand, Micah, there are reasons why some people should take their benefits sooner than later. For instance, I have a cousin who was a late bloomer, so he got married when he was 50 and had his first child when he was 51 and had another one where he was 54. So at age 62, he’s got two young children. So he stopped working at 62. He retired from his job as a welder and both him and his two children can all collect Social Security benefits based on his work record. So even if he could afford to delay it, the fact that he’s no longer working and he has children who will be able to claim benefits on his work record until they’re 18, makes sense for him to go ahead and take the benefit early. So sometimes we have to think of it both ways.

Micah Shilanski:  And that’s why it’s good to have a good understanding of the rule set that’s there. Not all of these exceptions we’re going to talk about are going to apply to you, but maybe one of them will so we got to understand that broad concept of it. I love it. Let’s throw in another one that’s talking about delaying Social Security, right? Because more often than not, I see a reason to delay it versus started early working with clients. But one of the other reasons that I like to do it is tax planning, right? I can’t get away from a podcast that I’m talking taxes in some concept. But tax planning is so important in here. And one of the things with tax planning, you want to make sure you’re paying every dime that you owe to the IRS. But let’s not leave them a tip, right? Let’s make sure we don’t do that.

So this is how we look at our tax planning with clients. And one of the things that we do with a decent amount of our clients is we delay our Social Security. And what we’re doing is we’re actually drawing down our IRAs. We’re drawing down our other investments because at 72, now based under the new Secure Act that passed in 2019, at 72, you’re now subject to your RMBs, required minimum distributions. So most of the time with our clients, if they turn Social Security on and they delayed IRAs, they’re going to come up with these big, what are called RMDs, required minimum distributions. That at 72, they now have to take out more money out of their retirement accounts, which kicks them into a higher tax bracket, so they end up paying more taxes over their lifetime.

Social security is a little bit of a tax-qualified investment because you don’t have to pay taxes on all of the money that you receive from Social Security, just 85%, right? But not all of it. And so what we do is sometimes we’re really delaying that Social Security to 70, and maybe we’re living off the IRA’s early, or maybe we’re doing Roth conversions, which is a great planning tool to do while we’re delaying Social Security. Taking a little bit more money out, now I’m paying taxes on it, but now I’m building a big tax-free buffer that when I get later in my years if taxes go up, if I have a medical need, if these other things, I now have this tax-free bucket that I can access in my planning. That could be a really good tool to use.

Tammy Flanagan:        Yeah, I agree, Micah. I think that’s something that the flexibility of having a retirement savings account and having a pension gives federal employees a leg up on being able to take advantage of a strategy like you just outlined. I think that’s definitely something worth thinking about and worth considering as you’re doing your longterm planning for your retirement.

Micah Shilanski:  So let’s make a little transition, Tammy, if that’s okay, and let’s talk about spousal benefits. We touched on it a little bit earlier, but how do spousal benefits work with Social Security?

Tammy Flanagan:        Yeah. So a lot of people maybe today in 2020, wonder about this because when we go back to 1935, if you were a woman and you were married, chances are you worked at home, so you were dependent financially on your husband. In fact, in the early days of Social Security, this used to be called a dependent wife’s benefit. But today we still have this same thing. It’s not a wife’s benefit so to speak, it can be a husband or a wife. Whereas one spouse is the so-called breadwinner of the family and the other spouse is more financially dependent, so that breadwinner spouse can provide not only benefits based on their work record for themselves but also some of that benefit they’ve earned for themselves can be an additional benefit payable to the spouse.

So like you were saying, let’s go with your $1,000 a month example, but let’s say that it’s $1,000 a month at my full retirement age, so that’s my Social Security benefit. I’m married and let’s say my spouse didn’t work much outside the home, so then I’ll have hardly any, maybe don’t have any Social Security, they can get 50% or another $500 a month based on my work record paid to them. So if they’re also the full retirement age, between the two of us, we’re getting $1,500 a month in Social Security.

Now, when you compare that to FERS or the FERS’s pension benefit, it doesn’t work like that. When I retire from the government, my first benefit is my first benefit. The only way my spouse receives anything from FERS is if I die first. So with Social Security, it’s a benefit while both spouses are living. And then if one spouse predeceases the other, the surviving spouse can take over the higher benefit between the two married couple. So it’s a little bit more complicated, I guess, then FERS but it does provide that additional source of income for a spouse who maybe doesn’t have much of their own Social Security.

Micah Shilanski:  I like that and I want to draw out a key point if I may, Tammy, that you just said. The surviving spouse can take over the higher of the two incomes. That means they don’t get both checks. They only get one. So in this example, that family was getting $1,500 a month, a thousand for one, 500 for the spouse, that $1,500 between both of them. When one of them dies, whichever one, they’re only going to get that higher of the two income, that $1,000 a month. So this becomes, again, leads into that survivor benefits question, when do you claim Social Security can have an effect.

Now, this could be a reason to also claim Social Security early, believe it or not. Because let’s say you have a spouse that didn’t work that much outside of the home. Let’s take my wife and I, she worked a little bit outside of the home. She has a Social Security earnings record, et cetera, but then she stays at home and she takes care of the kids. So I like to say she has a full-time job, right? I have the part-time job. So she stays at home and she takes care of the kids and she does those things.

Well, when we go to file Social Security, many years in the future, this could be a great time for her to apply for her benefit at 62 under her own earnings record, because she’s going to get some income. And then by the time that we’re both are my full retirement age, I can turn on mine, then she gets half of mine, which is higher than her earnings record. So if you have a spouse that had a lower earnings record, you may want to turn that on right away at 62 and then move to a spousal benefit at the FRA, full retirement age.

Tammy Flanagan:        Right. You’re deemed to claim both. So in your case, let’s say your wife claims her own benefit because you haven’t filed yet, then she’ll get her reduced amount or whatever amount she’s entitled to. But later down the road, whether it’s five years later or eight years later, and you claim yours, now it’s going to increase hers if the spousal amount is more than she was already getting for herself. Yeah. The other thing I wanted to mention, Micah is a former spouse, because a lot of people don’t realize that there are benefits payable to your former spouse in many cases. I remember one of my best friends growing up, she got married at a little young age, and then her marriage ended up in divorce, which just so happened was right after their 10th anniversary. They had this wonderful second honeymoon, went off to San Francisco, spent this long weekend, came back and she was just, I mean, it was like, “Oh, I’ve met the best guy. And he’s just been perfect, 10 years.”

Well, six months later he left, then he was off with another woman. So it was a sad ending. But trying to cheer up my friend, I said, “Carol, at least you made it 10 years.” And she goes, “Well, what’s so great about that?” And I said, “Because the fact that you were married to him for 10 years, even though your marriage ended in divorce, you’re eligible as his spouse, even though you’re no longer married for Social Security.” So that was when she was in her 30s, fast forward she’s now in her 60s. So she reminded me of that conversation recently and she said, “Remember, you told me that I can collect benefits on my ex-husband’s work record?” And I said, “Yeah.” So when she turned 62, she filed for Social Security on her work record, as well as on her ex-spouse.

Well, it ended up because at age 62, it’s a reduced amount and the spousal benefit is also a reduced amount, that her own benefit is higher than the one here and for her. So for right now, she’s just collecting her own. But they kept a record of her entitlement to his benefit because if later down the road, his death should be reported, his full benefit amount is significantly higher than her earned benefit. So even though she’s not collecting spousal benefits because of the relationship between hers and his son, someday she may actually get a higher widow’s benefit based on his. And the fact that she’s now over 60 years old, even if she should remarry, which she never did, but if she would remarry, she could still claim a widow’s benefit based on her ex-husband, because she waited until after age 60 to remarry. So there was a whole nother set of rules that relate to exes when it comes to Social Security. And none of that needs to be in a divorce decree, it’s just by law that they’re entitled.

Micah Shilanski:  That is correct. And Social Security will share that information with you, by the way, if you can claim on an ex, what that earning record would be. So that is something that you do have access to. I’ve never seen it online. We’ve always had to contact the Social Security Administration office to get that. And it’s interesting, you brought up the point that you were deemed to file both, and I guess I’ve never waited. Whenever we’ve had a spouse claim theirs and then later go on a spouse’s record, we’ve always been proactive contacting the Social Security Administration to get it switched. So I don’t know if it automatically switches over or not.

Tammy Flanagan:        Well, whenever you file, so let’s say that your spouse files early and then later on you come in and file, it’s still going to be on record that they’ve already filed on their own account. And if it ends up the spousal benefit’s higher, that’s going to come out in your application because one of the questions they ask you is, are you married or do you have a former spouse? So it will come out in that application, especially if you do the application online because the questions are always the same. If you go into the office for an interview, I think they’ve standardized that more than it used to be so you shouldn’t have any trouble finding out your entitlement, but always make sure you ask.

Micah Shilanski:  And I always prefer to do this online whenever we’re helping clients, just from a times’ sake that’s there. Rarely, we cannot file online because something will be off in your record that we’ll have to contact the Social Security Administration for. But other than that, and that’s one of the homework assignments I would love you guys to go and do, is go set up an online access to socialsecurity.gov, ssa.gov, even if you’re not eligible.

One of the things, Tammy, that we’ve seen from a fraud perspective that’s come out is people did not have Social Security accounts, and fraudsters, nothing better to do with their time, were finding out that people were turning 62, were applying for Social Security online for their benefits and getting the money sent to their bank account. So one of the ways to help prevent that is to create a Social Security account early. It makes it harder for someone to set one up or fraudulently get into yours. So not only should you get a Social Security account set up so you can see your statements and earning record, et cetera, at least once a year, but you should also do it from the aspect of making sure other people cannot access your account.

Tammy Flanagan:        Right? Yes, that’s very true. I talked to some Social Security internal affairs folks, and they said the exact same thing, that it’s very important for everyone to set up a, they call it a My Social Security Account, which is the online access to your earnings record. You can use the calculators there. So throughout your lifetime, that can come in handy and help you as another tool for planning your future.

Micah Shilanski:  I like it. So another thing I wanted to touch on real fast, and we won’t spend too much time on it, but the windfall elimination provision and the government pension offset. And there’s a little note on your Social Security statement that says, “Hey, you may not be eligible to get everything you’ve claimed or everything that’s reflected on this statement because of these two things.” And the windfall elimination provision and the government pension offset, really what those are talking about is that if you have paid into a retirement system that does not pay into Social Security, then your Social Security may be reduced. For example, CSRS, or a railroad retirement, or potentially a state retirement system. It’s out there. Those are all examples of pension systems that did not or may not have paid into Social Security.

FERS is not an example of that. If you’re in the FERS retirement system, you are paying into Social Security. So if you’ve just been a pure FERS employees or maybe worked in the private sector, and then as a FERS, the windfall elimination provision and the government pension offset probably will not affect you. Because it again, was only affected those getting a pension from someone that did not pay into Social Security.

Tammy Flanagan:        That’s right. And the other thing I hear on this that’s not true is that some people think that the military folks are exempt from Social Security, and that’s just simply not true. Yeah. So military has paid into Social Security since 1957. So not all the way back to 1935, but Congress covered active duty military folks on their pay, their military pay since the ’50s. So if you served in the military, that was covered by Social Security. If you’re a federal employee, you’re covered under FERS. You’re paying into Social Security, just like anybody else who works. So the Social Security system for federal employees is really no different then the Social Security that you would pay into if you work for a financial planning firm, or if you worked for DuPont Chemical Company or whoever you might work for in this country. So it’s all one and the same.

Micah Shilanski:  Right. So really important things that’s going to be out there. Of course, this podcast, we went about action items for you to improve your retirement. And I’m going to kick it off, we just talked about it before but your first action item is, go to My Social Security, ssa.gov, set up an account and get online access to your Social Security statement.

Tammy Flanagan:        Yep. And find out what you’re supposed to be getting when you’re 62, 67, and 70. So at least you’re aware in today’s dollars, what those benefits might add to your other retirement income because that way you can start planning for how much you need to save.

Micah Shilanski:  Yep. And I would say, when you get that online access, look at that, look at your statement, make sure your earnings are being accurately reported. It’s more rare now because so many things are online, but every now and again, I still find an error in someone’s earning record, that it did not accurately get reflected to Social Security or Social Security did not accurately reflect it in your record. I don’t know what that is, but you want to look at that and make sure you’re getting credit for the taxes that you were paying in the system.

Tammy Flanagan:        That’s right.

Micah Shilanski:  And then the third homework assignment if you haven’t done it already, go create your own retirement income timeline. Really important, right? This is going to help answer so many questions for you, including when should you take Social Security and not, right? Do you turn it on early? Do we wait? What’s the difference?

Tammy Flanagan:        Yeah. I use a series of questions in my classes to help people think about that when it comes to claiming Social Security. And the first question I would ask is, am I still working? So that goes back to the earnings test. So if I’m still working and I’m 62, I’m probably not going to claim Social Security. So the second question is, okay, so I’m not working, do I need the money? So if I have other sources of income, if I’m going to work part-time, if I have a pension, if I can take money from other sources, maybe I don’t need the Social Security. So that’s leaning towards delaying the benefit. So number one, am I working? Number two, do I need money? Number three, how long am I going to live? Well, we don’t know that, but we may have a feel for that based on family history, based on health concerns, based on any number of factors.

So if for instance, if I know that I’ve got a life-threatening illness, then I’ll probably go ahead and file for Social Security because I don’t know the future. But on the other hand, if my mother is still living in 97 and my dad passed away at 93 and a half, then I’ve got some longevity on my side. That’s another factor that would move me towards living longer or delaying the benefit. And then the last question I always ask people to think about is, is there anyone else depending on you for income? Are you married? Do you have children who are still young? So you have to think in terms of not just your own entitlement, but the entire family’s entitlement to Social Security. So are you still working? Do you need the money? How long will you live, and who else is depending on you? And those questions might help you create some of that timeline that we were talking about. So those are some things you might want to ponder as you’re thinking about what to do about claiming your Social Security.

Micah Shilanski:  Yeah. I’m just saying, those are great questions. We’re going to throw it right on our website. So, planyourfederalretirement.com/six is how you can find more information on this podcast. And, Tammy, will just throw those questions up on the side if that’s okay for people to have access to.

Tammy Flanagan:        Sure. Absolutely.

Micah Shilanski:  All right. Perfect. Well, we hope you guys really enjoyed this podcast. Keep the suggestions and topics coming. We would love to hear more comments from you, please. So you can jump on our website again, planyourfederalretirement.com/6 and not only get more information about the podcast that’s going on, some more support information on what we talked about, but you can leave us a comment and we’d love to know more and have you share it with your friends. And until next time, happy planning.

Hey, before you go, a few notes from our attorneys. Opinions expressed herein are solely those of Shilanski & Associates, Incorporated, unless otherwise specifically cited. Material presented is believed to be from reliable sources, and no representations are made by our firm as to other parties, informational accuracy, or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant, or legal counsel prior to implementation.

Content provided herein is for informational purposes only and should not be used or construed as investment advice or recommendation regarding the purchase or sale of any security. There is no guarantee that any forward-looking statements or opinions provided will prove to be correct. Securities investing involves risk, including the potential loss of principle. There is no assurance that any investment plan or strategy will be successful.

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