Age 70 has been the gold standard for drawing from Social Security. But is that the magic number for you?
On Cincinnati Edition, we discuss how to determine when to start taking your benefit. We look at tips for calculating your "break even" point and some of the factors seniors must weigh when deciding whether to draw early.
Guests:
- Gina Slayton, wealth advisor, Bartlett Wealth Management
- Max Richtman, president, National Committee to Preserve Social Security and Medicare
The advice on this show is meant to be general in nature and should not replace consulting a financial planner.
A full transcript of this conversation is below.
Beginning at noon, call 513-419-7100 or email talk@wvxu.org to have your voice heard on this topic. You can catch a recorded replay at 8 p.m.
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This episode was transcribed using a combination of AI speech recognition and human editors and has been lightly edited for clarity. It may contain errors. Please check the corresponding audio before quoting in print.
You've probably heard it's best to wait until age 70 to start collecting Social Security, but not everyone can afford to do that. So how do you decide what makes sense for you? This is Cincinnati Edition on WVXU I'm Lucy May, joining me now to discuss how to how to determine when to start taking your benefits Are Bartlett Wealth Management wealth advisor Gina Slayton, thanks for being here, Gina. And president of the National Committee to Preserve Social Security and Medicare Max, Richtman. Welcome back. And a note for our listeners, the advice on this show is meant to be general in nature and should not replace consulting a financial planner. Max, I just mentioned the standard advice is to wait to collect social security until you're 70. Why 70?
Max Richtman: Well, your benefits will be increased beyond full retirement age for every year, and that's 67 for almost everybody now that based on a law that was passed in the early 80s, but at age 70, once you reach that milestone, your benefits will not continue to increase. So that's the maximum, and after that, it wouldn't impact the size of your benefits at age 70.
And what's the government's reasoning there? Max? Why? Why have those benefits increase at age 70 instead of 67 or 68 or some other age.
Max Richtman: Well, the longer the way the structure of the program is set up, if you, if you retire, if you retire before start claiming before your full retirement age. And as I said, that's six, that's 67 for almost everybody now, your benefits are reduced. Your monthly benefits will be reduced, and that's a number you're stuck with forever if you wait till your full retirement age, 67 that's the that's the benefit, that base. That's the base. And we can get into this in a minute. It goes up a little bit every year based on a cost of living adjustment. And then when you reach age 70, your benefit size of your monthly benefit will stop to be stopped being increased. So you know, you at the introduction, you made, really, you made a statement that I concur in completely, and that is, if you can wait to start collecting benefits, you're better off. Your benefit will be larger than if you claim early or at full retirement age if you wait until age 70. Some people can't do that. They have bills they've got to pay, and they have to start collecting sooner. But as a general proposition, if you if you can wait, you're going to be better off in the long run. That doesn't apply to everybody. But as a general statement, I think it's pretty accurate.
What kind of difference can that make for people? I know there's a lot of variation here, but, but how big a difference?
Max Richtman: There's a lot of variation, and it depends on the size of your benefit and to begin with, but it's substantial. If you, if you claim Social Security before your full retirement age, your monthly benefit could be reduced up to 30% that's an average again, and that's your monthly benefit, and that's what you're going to be getting as long as you're alive, as long as you're a beneficiary. On the other hand, if you if you delay that and wait until you're 70, your monthly benefit will be increased around 8% again, that's an average depends on what your benefit, your benefit is, but it's about 8% so you know that's a considerable difference, 30% reduction, 8% increase, if You wait till, if you wait until you're 70.
Okay, I want to get our other guest in this conversation. We have Gina Slayton, a wealth advisor with Bartlett Wealth Management here in the studio with us. Gina, I that 30% that sounds like a lot of money. How do you talk with people that you're sitting down with to help them? Aside, is that 30% something that I need to give up, I mean, that that can amount, I would imagine, to a significant portion of the benefits that in terms of the actual dollar amount that people are going to get?
Gina Slayton: Yeah, Lucy, it's a very nuanced conversation. I think it depends on the family circumstances, obviously, the health of the individuals claiming the benefit, as well as the other assets they may have access to. So we agree with Max the vast majority of our clients. Do we try to wait until that age 70? Definitely wait until the full retirement age, if you can. We do understand that there are different circumstances. Though, there are clients who maybe have health issues that you know have run the numbers, and we can get into this as well, but there's often a break even age of when you understand, if I do start claiming my benefit early, I do understand that there is a permanent reduction in my monthly benefit, but maybe I don't have quite as much longevity is as some other folks do, so claiming early might make sense when we talk about that break even age, it often is in your late 70s or early 80s. So that's something to think about. Think about your family risk and coordinate as a household. Many, many of our clients are married, and so there's understanding what each individual benefit is based on their own working history. But there's also spousal benefits, which is about 50% of the higher workers primary insurance amount at full retirement age. I know there's some jargon there, but there is also access to spousal benefits if one of the spouses has never worked, or if they have a much lower working history, earning history, and so their benefit on their own record might be quite low, but maybe their spousal benefit, which is just 50% of their spouses, that might actually be a higher benefit. So coordination of benefit as a household and understanding the nuance of each individual circumstance is very important.
So many factors to consider. We're talking about when to start taking Social Security and the factors to consider. Can you talk a little bit more about that kind of help walk through what that is and how to even make that calculation right?
Gina Slayton: If you're taking earlier than age 70, you're getting that benefit for more months. Then obviously, if you wait, it's just the simple fact there, so you can model out what you're receiving as a lump sum, not just in a month by month or one year, but really a cumulative effect of the benefits that are coming into your household and you're able to use and then, as Max mentioned, if you wait every single year past that full retirement age, you're getting an Increase in your benefit of 8% per year, and also that inflation factor is added on top of that every year. So you can see the numbers of, obviously, if you're taking earlier, that's that's income into your household. But if you wait, you get that additional benefit of the 8% on your benefit, plus inflation, plus inflation adjustments as well. So once you look on a cumulative basis, you can understand, okay, I have received this much from the starting point. Whether that's 62 and again, this is monthly. You don't have to either choose your benefit at age 6267 or 70. There's a lot of decision that goes into where that might be, where you might fall on the spectrum in between. So when you take that from a global view, oftentimes, if you think you have some longevity and might live past the age in your late 70s or early 80s, it does pay to wait. And there are other factors too, such as the survivor benefit is important as well.
Yeah, so is there? It sounds complicated to me, but, you know, I was a journalism major, so that explains a lot. But is there a simple formula that people can calculate this break even point on their own? Is this one of those things where you should find, you know, either a financial advisor or some kind of online calculator to really figure out what that is for you individually.
Gina Slayton: There are many online calculators that can help. Obviously, if you have your own wealth advisor, this should be conversations that you're having annually, making sure that you understand if you're reaching a decision point. Okay, maybe I'm reaching age 62 or I'm close to that full retirement age of age 67 for most people run these calculations. If you're doing it yourself, you can have the spreadsheet in Excel, or you can go on to some of those online calculators, whether that be on the IRS website, AARP has some calculators as well, but it will be different for each household.
Okay, well, we do have some calls. Callers on the line. Hi, Julia, thanks so much for calling. What's your question or comment?
Caller: Hi, I have a comment. I retired at 64 and I had a decent retirement plan, so I decided to take my Social Security, I think it was 66 so that I would not be depleting my 401K retirement plan, and I thought that was the best thing for me, and so far so good.
Oh, that's an interesting perspective. Thanks so much Julia. What do you think about that Max? Is that something you've heard for from a lot of folks that, hey, I'm going to use Social Security?
Max Richtman: That is something I've heard, and I think it goes really in concert with your other guest was talking about, you know, it's, it's, it has to be approached in a holistic manner. Whether you're, you have to look at, I think, your your health, your longevity. Expectations based on maybe a family history, the economic needs that you have and and for it's different for everybody. You know, I do a lot of town hall meetings around the country with our membership. And, you know, that's a very common question, when, when should I claim? And it's really, it is a completely individual decisions. The other your other guests mentioned the inflation factor, and I think that's really important to to be considered in making the decision of when to start claiming Social Security. Everybody who's on Social Security knows the term Cola, cost of living adjustment. That's the inflation factor that was mentioned that that is one of the beauties, really, of social security. It has a built in inflation adjustment based on the changes in inflation year to year. We don't think it's enough. We think the formula is flawed for determining the cola three out of the last 12 years, the cola was zero because we heard from the Bureau of Labor Statistics that there was no inflation in those three years. You know, that's not the way seniors feel it and and you know, at the same time, it's important that there that be considered, because the cola, the adjustment from year to year, and its average, 234, percent, and a couple of years ago was about 8% that is built into the base. So the larger your your benefit is, your monthly benefit, the larger the increase will be based on whatever the percentage is for that year. So that the COLA is another factor that needs to be considered, because it does affect the monthly benefit amount.
Yeah, thank you for that. Max and Gina, am I correct? Is that, what is the cola this year? Is it 2.8%. Okay, that's correct. 2.8% increase. Okay, super well, we have another caller on the line. Let's hear from Kevin. Hi, Kevin, thanks for calling. What is your question or comment?
Caller: Oh, I just wanted to clarify a point, if I think I got it, but when you wait until 70, past your full retirement age, you're getting an increase of 8% per year. Okay, as a matter of fact, if you claim mid year, let's say claim it's 68 and a half. I understanding is that you get incremental credit for each month you wait. You don't have to wait for a whole year. You can claim it's 68 and a half, and you'll get part of that 8% for that year.
Gina Slayton: That's correct. Yes, we often advise clients, if it makes sense, can you just wait six months and see how your household finances feel because you are getting credit for that part year of the benefit that you wait to claim?
Okay, great. Well, thanks, Kevin, appreciate your call, and that's a great point to clarify. We appreciate that. We have a couple of email comments too, but first we are going to take a quick break, and we'll continue this conversation after that and later in the program, new tax advice for the new year. This is Cincinnati Edition.
You're listening to Cincinnati Edition on WVXU, I'm Lucy May. We're back with our discussion about when to start collecting Social Security benefits and the factors to consider. My guests are Bartlett Wealth Management wealth advisor Gina Slayton and president of the National Committee to Preserve Social Security and Medicare Max Richtman. The advice offered here is general in nature, and should not replace consulting with a financial advisor. We've got a number of emails that have come in. We heard from Joe. Joe writes, I took my Social Security at 62 I was concerned that there could be rule changes like means testing, etc, that might impact the access to my money, plus I'd have to live to 78 point 75 years old to make it worth waiting, given my family history, I elected to cash out early. What about those rules changes? Gina is that something you hear from clients like, what are politics going to be?
Gina Slayton: Financial Advisors get that joke quite a bit. I'll claim, if Social Security is still there. Now I do want to address that, because there are obviously news about the solvency of the Social Security Trust Fund. We get these dates that come out annually. Now we estimate that the Social Security Trust Fund might run out in 2033 or 2032 depending on how you make that calculation, or where you're looking. And that sounds quite scary. What that does mean, though, is that Congress Social Security can still pay out anywhere from 75 to 80% of benefits if they do nothing. Now we very much anticipate that Congress will act. They do have to act in order to change social security, and because it still is a few years out, oftentimes, Congress waits until the last minute. As your other guest, Max, mentioned, the last time Social Security had an overhaul was back in the 80s. So it has been quite a while again, this will probably come down to the wire. So I do understand the fear that some might want to claim early in order to have some of that benefit. But what we're seeing, and what we're hearing from a lot of those researchers out there is that Congress will act, and there might just be some differences in how benefits are taxed, how workers are taxed. And there's a lot of ways that this can be fixed, but it's not as if social security goes to zero at that date. We'll have to, unfortunately, wait and see what some of those nuances do determine to be,
Yeah, Max, do you want to weigh in on that?
Max Richtman: Yes, I definitely want to weigh in. Some people are considering claiming early because they are concerned about the future of the program. You know, as I mentioned earlier, I've done many town hall meetings with our members and usually with members of Congress. Only this year have people posed the question, should I claim early because the program, the program's future, is in jeopardy, and and Gina is right, the program is not going to be broke, even if Congress doesn't do anything to fix the shortfall in about 2033 2034 there will be, there would be a reduction in benefits of about 20 a little over 20% I agree with Gina completely. Congress will step up to the plate. It may it may be at the very last minute, like in the early 80s. I think the solvency was about six months before Congress moved to change the change benefits bring in more revenue. It was a complicated package that delayed Colas for, I think, six months, raised the age from 65 to 67 but it all came together, really, at the very last minute, and I hope that doesn't happen now. We've got probably seven, eight years, nine years, maybe to for Congress to step up and correct the problem so that full benefits can be paid beyond 2034 and I think they will. I, you know, I work with a lot of members of Congress. It would be very difficult for a member of Congress to go back home and have a town, town hall meeting and tell constituents I didn't do my job, and so your benefits are going to be cut by over 20% I don't think that will happen. I agree with Gina that Congress will act. And I think claiming early because you're worried about the future of the program is not a good reason there. There are good reasons to claim early or or at least not wait till 70. But I think worrying about the future of the program is really not a good reason. And I have to say, some of the some of the politics that have been referred to, you know, really, I think, are designed to scare people. And you know, some of the myths about the programs that it's broke, it's bankrupt, it won't be there. That has added to the concern that a lot of people have. And I think that's unfortunate.
We have a number of emails to get through, so I want to read these. We got an email from Nicholas who writes, How can someone check their amount of Social Security they will get? Gina, isn't that it that's on the website, right? Can you do that on the Social Security Administration's website?
Gina Slayton: You should go to ssa.gov/myaccount, and you can sign in. There is an identification verification process, which can take a little bit, so we recommend doing that as early as possible, while you're still in your working years, and you're able to verify what they're using as your wage base, as your earnings, and how that would project into your own benefit. So there's a lot that can be done on the website Social Security used to send out these information packets every year, not so much anymore. They're very, very much moving to the digital format. So it can be very helpful to go online. There are even more calculators once you get into your own website, because you can use your own earnings history to understand your benefit.
Okay, we also got an email from Linda, who writes, My husband is already retired after a good career, and he collects Social Security. I would like to retire myself in a few years, and I saved less in Social Security because I was a mom. My question is, if I claim that 50% of the Social Security he has earned, does he lose half of what he's getting now, we don't live together, so I can see that being a conflict. Gina, Can you clear that up? Is that 50% spousal benefit that you were talking about? Is that while the spouse is alive, or is that after death? How does that work?
Gina Slayton: If I understand the question correctly, they're still married, and her spouse is already claiming his own retirement benefit. So yes, if she is of age 62 again, it would help if she were to wait till her full retirement age, which is likely age 67 that would be 50% of what her spouse is claiming, and he would not receive a reduction, because he's getting the benefit on his own earnings history, and then she's receiving a spousal benefit.
So if they're still married and they're both still alive, they can make that work.
Gina Slayton: There's some nuance there, but as I understand it, yes.
And we got a comment from Steve in Oakley. He writes, a factor to be considered in applying and collecting Social Security is the impact of Medicare in the total package. Planning healthcare is something that everybody's thinking about these days. Is that right Max?
Max Richtman: Absolutely you know if you are enrolled in Medicare and the vast majority of seniors are your premium. Your monthly premium is taken right out of your Social Security check. Your check is reduced by by that amount. So it is definitely another consideration in when you claim. If you are you know, you may be 65 and eligible for Medicare. You may be working and have. Have qualified insurance with an employer and not claim Medicare. So in general, you will not be penalized when you do start claiming and having to have to pay a higher monthly premium. But that is and that's another variable you know as obviously, Gina has been immersed in this for for a while, because she does understand that there are, as she said, a lot of nuances, and this is another one. Are you on Medicare? What is your what? What is your premium? Or are you are you collecting? Are you getting private insurance through an employer. So all of these things have to be considered and there, there is not one answer for everybody. It varies tremendously person to person.
Okay, one more question from Lois, I'm going to ask you this one Gina. Lois emails, is there any benefit to waiting past 70 years old, file for Social Security. Is there any benefit there Gina?
Gina Slayton: No, that's one of the easy questions about Social Security. Please file at age 70.
Okay, if you can wait that long, wait that long and then do it. We got an email from Karen, who writes, I retired two years ago, and they are still taking extra deductions for IRRMA, I don't know what that means. Gina is shaking her head so, nodding. So you know what that means, where I understand for one year why that is calculated. I don't understand why they took two years back. I feel like I'm penalized for retiring. Now my income is much less, and I could really use those full benefits, Gina, can you briefly explain if that's possible? What is IRRMA?
Gina Slayton: Yes, this is called Irma, the income related monthly adjustment account. This is related to Medicare, but because this all comes out of one check, she's seeing this as a reduction in her net amount that comes into so this happens when slightly higher earners reach certain thresholds, and they have to pay more in their premium on Medicare, whether it's Part B or Part D, there's some additional premiums there for higher earners. So what the Social Security does is they actually look back two years before on your tax return, from two years ago, simply because so many people file extensions, and there's a bit of delay in the data. The Social Security does have to look two years back. There is an ability to work with your CPA, your accountant if you have an exception, an exemption for retirement. So that might be something to look into. But yes, unfortunately, there is a two year look back. So it might take a year or two to fall off if you're not proactive and you do not qualify for an exemption.
Okay, one more email. This is from Scott, once you start drawing from your Social Security, can you then stop it and continue later and increase the amount in the long term that you get? Or once you start, is it final, and you can't stop?
Gina Slayton: Your decision is usually final. There is once in a lifetime where you can say, oops, I didn't mean to qualify or claim this benefit. Can we undo this? But it has to be within that first year, and you do have to pay back the benefits.
Well, this has been fascinating. I've been talking with Bartlett Wealth Management, wealth advisor, Gina Slayton, and President of the National Committee to Preserve Social Security and Medicare Max Richtman.