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Social Security's BIG CHANGES! Final 2022 COLA and 4 More Changes | Your Retirement Authority - YouTube
Channel: Mark Singer CFP Your Retirement Guide
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historic there's no other way to put it
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the recent social security cost of
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living adjustment increase is the
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biggest in 39 years and i want to share
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that with you along with several other
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big changes to social security
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and i also want to share to you maybe a
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little bit of a
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negative impact as a result of the
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social security cost of living increase
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but before we get there
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subscribe to my channel i have over 30
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years of experience i want to share with
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you
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and i want you to get the wisdom from
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the conversations i have with my clients
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so you can make better informed
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decisions so these are very interesting
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times
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for those of you who are relying upon
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social security for year over year to
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get those increases to keep up with
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inflation
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these have been very trying times
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because the reality is over the past 15
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years
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the social security cost of living
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adjustments have hovered
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on average somewhere around one and a
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half percent
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but we've seen
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real inflation go up for those who were
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retired at a higher level
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much due to the health care inflation
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that we are all seeing so we've really
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been dependent not only upon the social
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security increases but for many of us
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the interest that we have been earning
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on our bonds or fixed income
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and with the almost
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zero interest rates that we're getting
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on fixed income and bonds of late it's
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been a very trying time so
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this couldn't have come
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at a better time so let's step back for
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a moment and sort of split it into two
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different viewers if you will for those
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of you who are collecting social
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security
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you rely upon
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that fixed income and the annual
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increase hopefully
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that you get so that you can continue to
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pursue
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your retirement dreams
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and
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the cost of living is the way you get
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the increase now
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as i mentioned it hasn't been a large
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increase over the past 15 years on
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average but the reality is it's been
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more than those who have been getting
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most
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pensions
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because the pension is fixed when they
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retire
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and typically has no cost of living
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adjustment so even though it's just been
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nominal for social security the reality
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is
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social security is very valuable in that
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there is
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a cost of living adjustment now for
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those who have yet to take social
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security
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what we know
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is that
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we can get delayed credits
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from social security at a rate of eight
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percent per year take a look at my video
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and you'll see more about that
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but many don't realize
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they also get the eight percent plus
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any cost of living
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increases and
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historically what the social security
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administrative trustees have said
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looking forward is that you can sort of
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plan for about a two and a half percent
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cost of living increase
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over the next many years so if you think
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about it in that way certainly no
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guarantees right but you can sort of
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plan for
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somewhere between an 8 and 10
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increase for each year you delay well
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this cost of living increase
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may change
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the year you take now social security if
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you were on the cusp of thinking about
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taking it
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next year now there are 567
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different claiming strategies
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and in my latest book don't outlive your
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money in retirement i devote the entire
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second chapter to social security and
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the questions surrounding it so go up to
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my banner
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click on free chapter
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will get you the free chapter plus
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frequently asked questions and some
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worksheets so you'll have more clarity
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on how you can make the right choice and
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not leave tens
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maybe even hundreds of thousands of
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dollars of lifetime income behind
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for your household so this is a really
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big decision and this cost of living
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increases is going to be very impactful
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for many mostly positive but stick
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around i have a negative to share with
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you at the very end as a result of this
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cost of living increase but so much of
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it is about the planning right it's not
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just social security and which one you
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take but you have to coordinate this
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with other income portfolio income
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required minimum distribution at age 72.
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what income do you need where is it
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coming from so remember
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this topic very important
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planning
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even more so
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so let's take a look at the five big
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changes for 2022
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with regards to social security so the
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first big change and this is what we've
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been waiting for right
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inflation is back which has been sort of
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bad news for a lot of people in terms of
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what they're paying for things but as
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i've said on this channel before there's
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a silver lining here
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and that's with regards to the cost of
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living increase we were expecting
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upcoming for the year 2022.
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so to step back for just a moment
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the way that social security calculates
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the next year's cost of living
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adjustment is based on the cpiw
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index
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and if you take a look at this chart
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i'll share this with you so the social
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security administration looks at the
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third quarter numbers year over year for
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the cpiw and as you can see here it's
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the third quarter july
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august and september and they take the
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average the average of that index was
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253.412
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then they took a look at this year's
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average of the three numbers and they
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came up with 268.421
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[Music]
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and that's where they come up with the
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fact that year over year
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we got a 5.9
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increase for cost of living looking
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forward to 2022.
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that's great news again
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reflecting upon the income that we get
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from our portfolios particularly the
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bond area or fixed income area where
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it's been very challenging where
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interest rates are near zero maybe a
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little bit more than that but then we
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get taxed on it this 5.9
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the biggest increase since 1982
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is really very welcome news the second
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big change is in regards to the average
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benefits that people are going to be
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receiving so let me take you to my
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screen again so as you can see here
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going from
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2021 to
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2022 for all retired workers the number
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goes from
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1565 dollars up to 1
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657
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on a monthly basis
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if you're a couple with both collecting
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social security we move upwards to
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2753 per month from 2599
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if you're a survivor
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post the age of 60.
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it moves up to
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1553. from 1467.
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and let's take a look at disability
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benefits also which are impacted
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on a positive basis that number moves up
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to one thousand three hundred and fifty
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eight dollars all of that is good news
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if you're dependent upon this income but
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again wait to the last point because i i
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think we have something we have to
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ponder as a result of this
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so the third element
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the third big change is the amount you
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have to earn for one credit so let's
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digress for just a moment here okay
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basic
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social security knowledge
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you have to have 40 quarters in order to
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be eligible to collect social security
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which for most people is 10 years if you
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work all of the 10 years however it's
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the top 35 years that they count towards
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your
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benefit and then the calculation they
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have within it
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but you have to earn a certain amount in
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each quarter in order to get that credit
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so let's take a look at what they've
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done so as you can see here in 2021 you
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needed to earn 1 470
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to earn one credit
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now you must earn 1510.
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the fourth big change is with regards to
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maximum
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taxable
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earnings so in 2021 the maximum that you
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could be taxed on in terms of your
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income was 142
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hundred dollars
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that number for 2022 has been moved
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upwards to 147
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000
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so the impact to you is this
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for a self-employed individual it's a
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520
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additional tax if you're a w-2 employee
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it's a 260 dollar additional tax
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the fifth and final change is with
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regards to your earnings limit now what
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is that we in reference to so if you're
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collecting social security at age 62 but
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not yet full retirement age whatever
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that is for you somewhere between 66 and
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67 depending upon when you were born
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then there will be an offset
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of the social security benefits that
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you're receiving depending upon how much
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you're going to earn that year as you
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can see in 2020 that limit was eighteen
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thousand two hundred and forty dollars
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for two thousand twenty one it was
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eighteen thousand nine hundred and sixty
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dollars
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and in 2022 it will be 19
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560
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so anything you earn above that number
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for next year there will be some offset
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remember you will get
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that back in a pro-rated fashion once
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you start collecting your social
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security now i did mention to you there
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may be one negative impact that we have
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to think about as a result of this
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historic 5.9 increase
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and that's with regards to liquidity
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of social security and whether or not
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social security is going to go bankrupt
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well in essence the trustees have said
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in their report that
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we have enough money to pay 100 percent
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of the guaranteed benefits up until
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about the year 2034-35
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with this
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increase
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for the cost of living of 5.9 percent
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some reports have come out that said
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that that may come back down to the year
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2033 now remember that doesn't mean
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social security is going bankrupt it
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just means that if we do not make any
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changes at all with regards to how
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social security is funded or we pay it
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out
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that only about 80 percent of the 100
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guaranteed benefits will be able to be
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paid if it's my professional opinion
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certainly no guarantees it's just the
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way congress and washington work we'll
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address this as we get closer and be
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able to kick the can down the road a
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little bit
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i'm not really concerned because at this
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point we're celebrating the fact that
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we've got our 5.9 increase
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for more information on social security
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check out our playlist
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[Music]
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you
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