馃攳
7 Social Security MISTAKES that Cost THOUSANDS in Retirement - YouTube
Channel: Holy Schmidt!
[0]
in this video i cover the seven most
[1]
common mistakes people make
[3]
with social security they cost them
[5]
thousands of dollars
[6]
in retirement coming up next on holy
[9]
schmidt
[11]
holy schmidt
[14]
social security is a complicated subject
[17]
and knowing what to do
[18]
or more importantly what not to do is
[20]
key to maximizing your social security
[23]
benefits
[24]
this video covers the seven most common
[26]
mistakes in my humble opinion
[28]
that people make with social security
[31]
that prevent them from getting every
[32]
dollar that they're due stick around to
[35]
the end because i'm going to debunk the
[37]
biggest one of them all
[38]
this single mistake alone can cost you
[41]
thousands of dollars
[42]
before we begin please make sure you
[44]
click the like button youtube uses
[46]
the thumbs up as its algorithm trigger
[49]
to drive a video up in the search
[51]
results and i want to help as many
[52]
people as possible
[53]
all right let's get into it mistake
[56]
number seven
[57]
not knowing the earnings limits if
[59]
you're asking yourself what's an
[60]
earnings limit
[61]
pay close attention for the rest of you
[63]
i'm going to make this very simple
[65]
if you haven't reached full retirement
[66]
age and for the sake of this video let's
[68]
say that's age 67
[70]
the ssa will take back a portion of what
[72]
they've given you in retirement benefits
[75]
based on how much income you earn in
[77]
2021 for example
[79]
if this isn't the year that you turn 67
[82]
the ssa will take back one dollar for
[84]
every two dollars that you earn
[85]
in excess of eighteen thousand nine
[87]
hundred and sixty dollars
[89]
for example if you earn forty thousand
[91]
dollars in 2021
[92]
your social security benefits would be
[94]
reduced by ten thousand
[95]
five hundred and twenty dollars that's
[97]
simply forty thousand dollars
[100]
minus eighteen thousand nine hundred and
[101]
sixty dollars divided by two
[104]
in the year that you turn 67 the ssa is
[107]
a little bit more lenient
[108]
you have to repay one dollar for every
[110]
three dollars that you earn in excess of
[112]
fifty thousand
[113]
five hundred and twenty dollars most
[115]
people would rather wait and file for
[116]
social security later and get the higher
[118]
payment
[119]
between five and eight percent depending
[121]
on how many years past
[122]
age 62 you wait then have to give a
[125]
large portion of it back
[126]
the next point is the spousal benefit
[129]
the spouse
[131]
can receive anywhere between thirty two
[132]
and a half percent and fifty percent
[134]
of the primary insureds for retirement
[136]
age payment
[137]
depending on the age of the spouse when
[139]
he or she files what a lot of people
[141]
don't realize
[142]
is that the size of the spousal payment
[143]
isn't tied to
[145]
when the primary earner files for social
[148]
security
[149]
themselves only if they filed for social
[151]
security
[152]
so if they file early or if they file
[154]
late it doesn't matter
[156]
it's entirely based on the age of the
[159]
spouse when he or she
[160]
files for the spousal benefit point
[163]
number five is pretty common
[164]
and that is the we could all die
[166]
tomorrow i'm filing at age 62 mistake
[169]
this is a funny one because the logic is
[171]
actually true
[173]
anybody could die tomorrow but the math
[175]
suggests
[176]
that if you reach age 62 you're going to
[179]
live to age
[180]
82 to 84 depending on if you're a male
[183]
or female
[184]
basically this comes about because
[186]
somebody knows
[187]
someone who passed away early and never
[190]
was able to claim social security
[191]
benefits
[192]
or if they had claimed them they claimed
[194]
them late and only had a few years
[197]
of benefits paid to them and they've
[199]
extrapolated that
[200]
back to themselves and what could happen
[203]
to them we don't actually know when
[204]
we're going to pass
[205]
unfortunately but as i said before if
[207]
you've made it to age
[208]
62 the tape will say that you're likely
[211]
to make it to age 82.
[213]
these people say they're going to live a
[215]
life large and enjoy life
[216]
while they still can rather than worry
[218]
about what might
[219]
happen in the future but i almost always
[223]
get a different answer
[224]
when i ask the question do you think
[226]
you'd feel the same way
[228]
at age 88 as you do at age 62. and just
[231]
going through the math at age 62 you get
[233]
70 percent of what you would receive
[235]
at full retirement age again age 67
[238]
and at age 70 if you wait until age 70
[241]
you get 124 percent
[243]
of what you receive at age 67. this
[246]
means that the recipient receives 43
[248]
more at age 67 than they would at age 62
[252]
and 77 percent more at age 70.
[255]
somewhere in there is the right age for
[258]
you but it may not be
[259]
age 62. i don't get into politics on
[262]
holy schmidt
[263]
it's just not good for business but i
[265]
will point out one of the most common
[267]
erroneous
[268]
comments that are made here on the
[270]
channel is that
[272]
immigrants come to the united states for
[274]
free social security
[276]
that actually can't happen because to
[278]
qualify for social security you need 40
[280]
quarters of earnings during your
[282]
lifetime and those earnings have to be
[284]
the type where you actually pay
[285]
into the social security fund in other
[288]
words they have to take out social
[289]
security taxes
[290]
they don't have to be consecutive
[291]
quarters you could work for three months
[294]
take the next three months off and then
[296]
do the same thing again
[297]
and again and again over 80 quarters but
[300]
you do need 40 quarters that's 10 years
[303]
of work history in order to qualify to
[306]
get a social security check
[307]
also you need to earn a certain minimum
[309]
per quarter
[310]
in 2021 that amount is fourteen hundred
[313]
and seventy dollars
[314]
in a single quarter it's a pretty easy
[317]
number to hit
[318]
so know that if you're not paying into
[319]
social security for forty quarters
[321]
you're going to miss the mark and not
[323]
qualify to receive social security
[325]
so check with the ssa and see what your
[327]
work history looks like you don't want
[328]
to miss it by
[330]
three or six months point number three
[332]
another mistake
[333]
is to think that everybody gets paid the
[335]
same social security payment
[338]
in retirement they don't the ssa
[341]
uses your earnings history and they use
[344]
that to calculate what your social
[345]
security payment
[347]
is going to be and it's based on your
[349]
best 35 years
[351]
the theory is the more you earn the more
[352]
you contributed to social security so
[354]
the more you should get paid
[356]
back from social security when you go
[358]
into retirement
[359]
for most people when they entered the
[361]
workforce they didn't earn very much
[363]
and so their contribution to social
[366]
security would have been
[367]
quite modest as time went on they got
[370]
promoted
[371]
they got raises and they continued to
[373]
earn more this means if you're like most
[375]
people
[375]
your last few years of earnings and your
[377]
contribution to social security during
[379]
those years
[380]
is a lot higher than your first few
[382]
years of earnings and contribution
[384]
so if you retire early you're probably
[386]
leaving a higher payment on the table
[388]
on the flip side if you have 35 good
[390]
years of work history
[392]
behind you and think you're going to
[393]
continue to grow your social security
[395]
payment by working
[397]
part-time that's probably not actually
[400]
true
[400]
remember the ssa takes your best 35
[404]
years
[405]
part-time work after 35 good years
[407]
doesn't change
[408]
the payment at all by the way if you
[410]
don't have 35 years of work history
[412]
the ssa will put zeros in for the
[415]
remaining
[416]
years to get you to 35 and use that as
[418]
your base
[419]
too many of those and your social
[421]
security payment will drop significantly
[424]
if you want to know more about this i
[425]
have a video out on how to calculate
[428]
your social security payment and i'll
[430]
put a link in the description
[432]
by the way i recently signed up for
[434]
instagram i post
[435]
information about social security there
[437]
as well it's different information than
[439]
what you see here it's short it's bite
[441]
size
[441]
it's very quick and easy to consume
[444]
i'd love it if you follow me all you
[446]
need to do is go over to instagram and
[448]
look up
[449]
the underscore schmidt list that's my
[451]
handle
[452]
and it's also called holy schmidt now
[455]
back to the video
[457]
point number two is understanding the
[459]
taxes on social security
[461]
using a calculation called provisional
[463]
income the rules are on taxes and social
[465]
security are quite confusing
[467]
this is because there are actually two
[469]
sets of rules there's the federal rule
[471]
and there are the state rules and people
[474]
often get
[475]
those two confused let's start with an
[477]
easy one let's start with the state
[479]
rules
[479]
currently there are 38 states in this
[481]
country that don't
[483]
charge income tax on social security
[486]
if you live in one of those states
[488]
remember that that doesn't mean the
[490]
federal government doesn't charge income
[491]
tax
[492]
it just means that there's no state tax
[494]
on your
[495]
social security payment this is a big
[497]
point of confusion with people
[499]
and often the source of a surprise bill
[502]
from the irs at the end of your first
[504]
year
[505]
of receiving social security benefits
[508]
also if you don't live in one of those
[509]
38 states
[510]
you might want to consider moving state
[512]
tax
[513]
on social security payments can be
[514]
significant and with 38 states in this
[517]
country willing to
[519]
forgo receiving tax payments on your
[521]
social security benefits
[522]
there might be a better place for you to
[524]
live now federal tax on social security
[528]
the irs can tax up to 85 percent of your
[531]
social
[531]
security payment depending on what your
[534]
provisional income
[535]
is what is provisional income well it's
[538]
the sum of your agi your adjusted gross
[540]
income
[541]
plus municipal bond interest plus
[544]
foreign earnings that are not
[547]
necessarily taxable here in the us
[549]
plus your social security payment 50
[552]
of your social security payment if you
[554]
add all that up and that totals
[557]
more than the provisional income
[558]
thresholds you owe
[561]
the irs tax on a portion of your social
[564]
security payment
[566]
in 2020 the threshold was 32 thousand
[569]
dollars
[570]
for married couples a special note that
[572]
drawing from a
[573]
taxable retirement account like a 401k
[577]
or standard ira does increase your
[580]
adjusted gross income it increases your
[582]
agi
[582]
but withdrawing funds from a roth ira
[585]
which come out
[586]
tax-free does not increase your agi
[590]
if you want to learn more about
[591]
provisional income and how it's
[592]
calculated i've included a link in
[594]
the description for one of my other
[596]
videos which covers this
[597]
in great detail finally the one i told
[600]
you about beginning
[601]
point number one taking the funds at age
[604]
62 and investing them one of my most
[607]
popular videos is entitled
[609]
should you take your social security
[612]
payment
[613]
at age 62 and invest or wait until full
[616]
retirement age
[617]
i recorded this video because there are
[619]
stalwart social security evangelists out
[621]
there who
[622]
swear by the fact that you should take
[624]
your social security
[626]
payment at age 62 and invest it and they
[629]
say you'll
[629]
always come out ahead and they say it
[631]
with conviction so a lot of people
[632]
believe
[633]
what they're saying they almost always
[635]
cite a five percent return
[636]
on the investment and state that if they
[639]
pass away early
[641]
there is an account filled with an
[643]
investment amount that they can pass on
[645]
to their heirs
[646]
usually it's their spouse sometimes it's
[648]
their children so let me take you
[650]
through the math
[651]
you can check it on my website holy
[653]
schmidt dot com
[654]
forward slash 62 invest
[658]
if you took social security at age 62
[661]
the average payment
[662]
at least in 2021 for a 62 year old is
[665]
1189
[667]
at full retirement age in this case age
[669]
67
[671]
the payment is 1789 the difference
[674]
is 609 1180
[677]
a month times 12 months times five years
[680]
earning five percent per annum comes out
[683]
to eighty thousand
[685]
three hundred and sixty one dollars more
[687]
at age 67
[689]
than if the recipient had waited until
[692]
age 67.
[693]
so at age 67 they have 80
[696]
361 dollars sitting in a nest egg
[700]
now assuming you still get five percent
[702]
you can draw down 609 dollars
[705]
per month that's the difference between
[706]
the two payments at age 67
[709]
and come out ahead up until age 82
[713]
years and 10 months by the way the
[716]
actuarial tables say that
[718]
males live to age 82 on average and
[721]
females live to age 84
[723]
on average if they make it to age 62
[726]
so it's about breakeven if you look at
[729]
pure math
[730]
of course some people will live longer
[732]
and some people will live shorter
[734]
but here's the problem at age 62
[738]
if you're not spending your social
[740]
security
[741]
payment how are you going to live are
[743]
you going to work a few more years
[745]
well if so remember the earnings limit
[747]
because if you earn more than eighteen
[749]
thousand nine hundred and sixty dollars
[751]
in 2021
[752]
anyway you're going to have to give a
[754]
portion of that money back
[756]
let's say the answer is no and you're
[757]
just planning on living off of your
[759]
retirement
[760]
savings so you're going to withdraw
[761]
money from your 401k
[763]
remember the last point on provisional
[764]
income taking money from your 401k
[767]
adds to your adjusted gross income and
[770]
also makes your social security
[772]
benefit taxable if it becomes too large
[775]
also remember that these are your
[777]
youngest of your
[778]
retirement years and a lot of people
[780]
want to do things like travel
[782]
in the early stages of retirement and
[784]
the limits set by
[786]
provisional income probably won't let
[788]
you do too much of that
[789]
finally some of the age 62 evangelists
[792]
talk about the time value of money
[794]
but they've got it actually backwards
[796]
let me explain
[797]
they say that the big jumps you get the
[799]
five to eight percent per year increases
[801]
that you get
[802]
aren't really that big because of the
[805]
time value of money
[806]
first let me point out that the five
[808]
percent return that they all cite
[810]
includes the time value of money you
[812]
don't get five percent
[813]
plus a tvm adjustment on top of that
[816]
you sort of get it on your eleven
[818]
hundred and eighty dollars because
[820]
that payment is adjusted every year for
[822]
inflation with something called cola
[824]
that's the cost of living adjustment but
[826]
if you check back
[828]
at age 63 on the payment that you
[830]
receive at 67
[832]
it's not 1789 anymore
[835]
that forecasted payment also goes up
[838]
with a cost of living adjustment
[840]
and the same thing happens at age 64 65
[843]
and 66.
[844]
so unless you're planning on earning a
[845]
higher return a higher return than five
[847]
percent
[848]
and a higher return means higher risk in
[850]
order for this to work you'd have to
[853]
not work past age 62 not draw income
[856]
from
[857]
taxable sources such as a 401k
[860]
not live past 83 and be disciplined
[864]
enough
[865]
during all of that not to spend anything
[868]
that you receive from the ssa oh and the
[870]
five percent return
[871]
in most cases you're gonna have to pay
[873]
taxes on that
[874]
if you'd like to see more of me please
[876]
make sure you click subscribe
[877]
notifications
[878]
i work very hard to get what's happening
[880]
out there in the world of social
[882]
security
[882]
and into here for you and by clicking
[885]
subscribe notifications
[886]
you'll get notified as soon as i post a
[888]
video also check out this video on the
[890]
average net worth
[891]
of a 62 year old some of the numbers are
[894]
quite remarkable
[895]
some not so much this is jeff schmidt
[898]
thanks for watching
Most Recent Videos:
You can go back to the homepage right here: Homepage