PODCAST 78: When is the Best Time to Turn On Social Security Benefits?

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Below is a transcription of the Ask Gregory Podcast 78 – When is the Best Time to Turn On Social Security Benefits?

Hey welcome. I’m your host Gregory Ricks a financial advisor here to answer your questions and help you win with your money.

On today’s episode of the Ask Gregory Podcast, Gregory is joined by Nicholas Rohde, a wealth advisor here at Gregory Ricks & Associates The Total Wealth Authority. On this episode of the podcast, Gregory and Nicholas are going to discuss all things Social Security, how do you apply? What age do you need to be what documents may you may need and more. We also have a complimentary download waiting for you on this topic. If you go to gregoryricks.com/podcast 78. Again, that is gregoryricks.com/podcast 78

I just want to talk to you about Social Security, how to file benefits. And when you should, I’ve got an article here by Tom Margenau and he spent basically his working life working for the Social Security Administration. And now he writes articles about that. So I’m referencing some of his information here how Social Security eligibility date is always a month, and not a day. For example, let’s say you were born on January 28 1956. And you want your benefits to start at full retirement age, the full retirement age for people born in 1956 is 66, and four months. So you’ll reach full retirement age on May 28, of 2022. But on the day you reach fra isn’t really an issue, it’s the month, that is the key. In other words, your eligibility date isn’t May 28 of 2022, it’s May of 2022, the Social Security Administration recommends that you file three months before your eligibility date. So if you wanted your benefits to start in May, you would start the ball rolling sometime in February as an example.

So and he goes on to say he used to advise people that there are really no need to rush because most social security retirement claims are very simple. And the SSA processed them in literally a matter of days. So in the past, he would have told people whose eligibility date is May that they could even wait until April, if they wanted, and there would be a very good chance to get their first check. That would show up on time. But the pandemic, you know, this COVID has kind of disrupted things. And, you know, not only on your car buying but you know, clothing, and yeah, it’s impacted Social Security Administration. So he’s, he said he’s heard from readers that report to him about delays and either getting through to SSA in the first place or in getting their benefits started. So he goes on that as motto for the time being is better be safe than sorry. So file your Social Security claim three months before your first eligibility mods so that you get your check on time.

Now, once you contact SSA, you’ve established what they call a protective filing date. And your rights to your benefits are guaranteed from that month going forward. Even if you lose track, you made that first call. So you’ve kind of like stamp, that filing date, even if you kind of are slow getting back to them. It’s retro to that. So for example, let’s say you wanted your benefits to start in January of 2022. But for whatever reason you didn’t get around to filing your claim until January 25. Even though your claim might not finish processing until sometime in February or even March. With these COVID times you’ll be paid back to January see where I’m coming from with that filing date established. So when when to file about three months ahead of time would be ideal. So now let’s tackle how to file probably 90% of us have rather straightforward social security claims. That means you’re just filing for your own social security benefits. In that case, you’re recommended to Fall online at social security.gov. It’s simple and easy to upset, he did it a few years back, and it probably took him all about half an hour to finish the process. So check out the website and see how easy it is. But if you have a scenario that you think might be complicated, like trying to get a combination of retirement and spousal benefits, then you should probably do that in person. So one of the things you should start by calling and I will give you the number to set up a this is a call to set up a phone interview, you’re not going to get answers questions, you know, answers to your questions on this initial call, but call SSA at, here’s the phone number 807 721 to one, three, that’s 807, seven, to 1213 to set up that phone interview, and according to SSS website, and in office appointments to file so security benefits are not being offered at this time. And I don’t I get notifications from administration’s out there. But you know, if it’s simple, I’d want to get at least connected to a filing date. And when you get on the phone with them, you can find out what offices are open in your area. And if you’re filing for widows benefits, that must be done by phone claims for widows benefits cannot be done on line. That’s because there may be filing options a widow has that are more easily explained by talking to someone in person rather than online, it can be a little bit complicated. And social security is a big part of what we do at our firm and doing analysis. And once since I always want to make sure you’re prepared in a way that you ask the right questions. And we can give you a heads up on what those answers should be. And if they differ, or there’s a gray area, you’re kind of knowing what to expect.

 

So let’s jump to the calls. We’ve got Tommy, kill Mississippi, how can we help you Tommy?

Oh, yes, sir, I was wanting to pay and more on my social security because I was off work for some time. And I had a disability claim and found out what I would be eligible for. And I said like those 845. And they told me they said, Well, if you can work, it’d be better for you to go back to work and pay more into it. And then you’d have more when you come out. And like that advice, but I don’t I’m trying to pay more into it. Now that I’m back at work. But our work doesn’t have a form or anything to where we can put more money back into it.

Well, Social Security is a tax based on it’s a percentage of your wages. And part of this has to do with work credits, or quarterly, you’re credited quarterly with time put in. And you know, Social Security is based on your best 35 years. And for example, if you’ve worked 30 years, it’s going to be those 30 years of credits, and the other five are zeros. And then they average it out and they average it mindfully over your working life. So there’s not a way to hey, let me send Social Security a couple $1,000. It doesn’t work that way. It’s based on your working credit, because there’s three tiers to it, as well. And the first tier are low income, and they’re protected the most you know, so for example, I’m just going to do rounding here to simplify it. But if you know your income averaged 1000 a month, you’re getting 90% replacement of that. But for the average worker, the Social Security’s really probably replacing roughly about 40% of their wages, it’s never replacement of income. And so when you’re looking at disability benefits, it also has to do it. And once again, it’s complicated, but I’ll simplify it also kind of has to do with how much you’ve worked over the past 10 years. There have effect impacts the eligibility of those benefits, it would get that call from time to time because people all of a sudden will need to utilize benefits or disability or Social Security and is like how, how, how can I put more in it’s really easy work because it’s it’s based on taxes your employer pays some of that you pay some of that if you’re self employed say Schedule C. Biz proprietor then you’re kind of pay in both sides of that, yourself, people tend to want to avoid that. You know, there’s people that work for state entities that don’t participate in social security. And they think, Oh, that’s pretty good, because they don’t get that taken out of their check. But when you go to retire, you don’t have any work credits. And you need 40 quarters, about 10 years of work, kind of get your eligibility, but social security is based on your best 35 years. So if you’re working this use your 40 Year 40th year to work, you’re replacing lower years, more likely. And they average that. And there’s three tiers of how those computations, go on benefits that are paid out. So essentially, for average workers, so security’s designed to replace about 40% of your current income. So that’s why you need to save and you need to have sources of income because I, here’s my challenge, is there retirement without income, I say there is not let you get a ticket and cut wood and live up in Northwest forests or something up there and good with the bow and arrow, I guess you won’t need income there. But there’s no retirement without income. Nicholas, you had a couple of thoughts regarding the caller.

Yeah, so with Social Security, one of the biggest things we’ve seen is in Gregory has talked about this on the show many times, you know, if you have not signed up for that your own login on ssa.gov, you should absolutely do that, not only just to stop it from someone else, trying to pretend to be you and make their own account for you. But you can actually view your earnings records. And if you look at your earning record, you can actually see, did my employer report my earnings correctly? So the last call warning, you know, is there any way to pay more into the system? Yes, of course, working longer, deferring longer, you’re getting more in. But you also want to make sure that your earnings are reported correctly. And when you log in to ssa.gov. And this is something I’ll admit it, I got messed up trying to make my first login because it does ask you many specific questions. So we think it’s handy to have a credit report with you when you first registered with ssa.gov. They asked you things like you bought a car in May of 1994. Who would you buy it with? Was it you know, the bank? Was it a dealership, so it’s handy to have a credit report with you when you go to register. But when you register, you can look at your earnings history. And if it’s incorrect, you absolutely want to take steps to get that fixed, because that could hurt your benefit and make you have a lower benefit for the future. And in Gregory, we find that it is three years, three months and 15 days.

 

Yeah, somehow I was thinking it was to my mind shifted a number there. But you do have a little bit of time to do that. And for young people. You need to have an awareness of what’s going on and make sure you’re getting proper credit. Because after that, what, three years and a few months, you can’t go back and correct that. And we’ve actually had callers over the show on the show and paths over the years we’ve had a few callers call in because we gave this information and they’re like, they look at a Social Security statement all sudden, my number my future numbers gone down and they get to looking in because on the Social Security statement, it shows how many how much credit you’ve got each year and said, yeah, the import there was an error there. And she wasn’t properly credited. This was an example of one of several calls and then went back and got that correct, because it was it has impacted benefits because they’re forward looking based upon what you’re recently earning because they expect that to continue. So I think that’s real important in doing so. So did goes I was reading owner. Next part we’re going to talk about but did you speak about, you know, when you call when you go online to set that up? It’s kind of like a quiz pop quiz. And I found that quiz before you got to know some stuff about what you’re going on financially. You know, you know, it’s kind of like who’s servicing your house? No. And that you could get that wrong. Why? Because they sold it to another servicer. Stacy, my wife hates that. It’s like we’ve got a mortgage that we did a little while back. And it’s like change. It’s its own its third servicer And so what her annoyance is because of auto banking to pay that make life easier is like that. Like, I’ve got to change that again. So it’s kind of annoying. But you got to know that the past the pop quiz, so they’re basically pulling information from your credit bureau. So if you have a complicated one lot going on, you might want to print out a copy of your credit report. So you can pass the quiz or kind of know, you know, your history of who. And it might be that, that Chevy Camaro you bought five years ago who financed that or how much was the payment?

And there are some trick questions one time when I logged in, and the answer was none of the above for every question. And that was correct. It was completely trying to throw you all out. Sure it is you trying to log in?

I have to admit, I flunked my first test because I didn’t know that information together. And I, I kind of have a lot going on. So yeah, there was no way I plus I have others handle a lot of things for me. And, and my wife’s a part of that, but maybe she should have sat down with well, she did but not that first time and I had to do it again.

They’re in the the official authorized by federal law website to pull that free report. Is that annual credit report.com. So that’s not one of the ones you have to pay for it as the official one authorized, you’re allowed one free report per year per agency to help you when you sign up for ssa.gov.

Okay, what when you go to file for your benefits, we’re going to pick back up on that right here. What documents do you need to file for Social Security benefits? Well, Tom says it’s it depends on the kind of benefit you are trying to get. Think of it this way, you usually have to provide some evidence to support your eligibility for your benefits. For example, if it’s a retirement claim, you need to prove that you’re old enough to qualify. To do that you’ll need a birth certificate. If you’re filing for spousal benefits, you’ll need to own spousal benefits, you’ll need to not only prove your age, but to show that you are married to that person whose Social Security record you are applying. So that would be the marriage certificate. If you’re divorced, you’d need to provide your divorce papers. If you want to apply for widows benefits in addition to proving your age, and marriage, you also need a death certificate. In all cases, Social Security wants to see original copies of these documents or copies that are certified by the record issuer one document you don’t need. You know what that is Nicholas, the one document you do not need for social security. Your Social Security card? Yeah, the most obvious and also the most confused?

Yeah, yeah. There are people that panic like, like, I can’t find my social security card. I actually still have my original one. Could I put my hands on it today? No, but I probably could. Tomorrow.

Thanks, everyone, for tuning into this week’s episode of the Ask Gregory Podcast. We’d like to give a big thank you to our guests Nicholas Rhode for joining us on this episode. And don’t forget we have a complimentary download waiting for you on this topic. If you go to gregoryricks.com/podcast78. Again, that is gregoryricks.com/podcast78

Yeah, if you’re needing help on something like investment planning, estate planning, you know the guided planning system that we use income planning, just start with a 15 minute conversation (504) 832-9200 gregoryricks.com

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