Are you getting close to retirement? Have you been wondering what to do about social security?
Is there a right way to take the money?
In this podcast, Dave Denniston talks about what’s been happening with social security and how it effects you. He breaks it down by age and what each person should be thinking about.
– Why people have been file and suspending. Is this something you should do (or can do)?
– The strategy that he made sure his parents used (but isn’t available much longer for those over 61 years old)
– How people younger than 60 should think about social security and the three strategies that are still available to them
(Note: I outsource transcription efforts, please forgive in advance any grammatical errors. I just simply don’t have time to review it all)
Hey this is Dave Denniston welcome back to the freedom formula for Physicians podcast. Look, it`s alive, it`s alive, it`s moving it`s alive.
Welcome to the freedom formula for physicians podcast with all about slashing your debt and taxes and creating a liberated lifestyle. And now, your host, with the love of fantasy books and funk and the hatred of running more than three miles; Dave Denniston.
Alright everyone. Well welcome back so glad to have you. Here in this episode of the freedom formula for Physicians podcast we are going to be talking to our physician friends here who are getting closer to retirement. In case you didn’t hear back about 4-5 months ago I did a podcast on how social security was changing. There is this thing called file on suspend which is very soon going to be going away.
So if you are age 66 or older, if you are not yet collecting benefits you definitely want to look at file on suspend by April 30th 2016. Now what is this? Basically what happens is you file for a benefit but then you suspend it. Now why the heck would you want to do this? Basically what it allows you to do is to allow a spouse or another dependent to collect benefits based off of your record and then you can do the same with your spouse so it`s like you are getting money for your benefit without actually having to declare your benefit. So it`s huge.
Now what`s going to happen is after April 30, 2016 that the collection of spousal independent benefit are going to require the primary filer to collect them and forgo delayed retirement credit. So you are not going to mail the max out on your social security like you have been in the past. Is like free man being thrown at you guys so it`s definitely something to take advantage of. Now on top of all of that there use to be a lump sum payment for suspended benefits. As a matter of fact what I was telling my own parents to do and they did this because they filed early for my mom.
So my dad actually just retired in 2015 and with my mum she`s been in poor health over all so she`s been with breast cancer over time, she`s had a few scares so I advised my mum when she turned over 63 let`s start collecting your social security. And so mum started collecting social security and then as dad got closer and closer to retirement I said dad, as I found out about this strategy you could file and take your spousal benefits after mum`s were delaying on taking your own social security.
So this was so awesome because he was getting an extra 600-700 dollars a month without having to tap into his own. So mum`s getting 1400-1500 a month, Dad was getting some 50 offers meanwhile his own social security has been getting higher and high as a matter of fact he is not 70 yet he is going to be here in about a year. And then at that point then he will collect his maximum social security locking in that higher amount which for bread winners in the family like my dad has been that is going to ensure that my mum has the highest possible income should my dad pass away before she does. So it`s free money. We love free money. We want to take advantage of that opportunity.
Now, for everyone else there is two other different strategies. If you are married, your age 62 or older by the end of 2015 and you were not collecting benefits you might want to take a look at the restricted application strategy. And that`s just what I was referring to. So basically you can file for spousal benefits now here is what`s interesting you guys about spousal benefits and social security.
Did you know that you don’t actually have had to work for both parties of a couple? So for example let`s say that my mum didn’t work but my dad did. Or my mum actually still could get this spousal benefit up to 50% of my dad`s income even if she didn’t work. So as I was just talking about. You can halve your spousal benefit while delaying your individual benefit.
Now to maximize a survival benefit you want to do what my dad just did. Which is to delay, delay, delay. But this has restricted, application has now changed so those who are younger than 62 years old by the end of 2015 will no longer have the ability to restrict the application of spousal benefit and receive their delayed retirement credits so what my dad did is no longer going to be possible.
So bottom line, those of us who are younger than 62 all these cool stuff that my folks have done and other people have done like file and suspend as well as the restricted application are not going to be available but if you are over 62 this is something that you absolutely want to look at. So here is what I want you to do guys, evaluate your eligibility to file this so again you have to have been born before 54, you can`t be yet collecting social security, you have to be at least ??, you have to be eligible for spousal benefits.
So number three. What if you were born after 1953 which probably the majority of people listening to this podcast have been. Well what we have to do now you guys we really have to consider our priorities. Now obviously if you file priority fuller time who knows what that`s going to be in future but for right now that`s about 67 years old for most of us. We want to delay as much as possible because that’s going to help us maximize our benefits. Now another thing you might want to think about still is to maximize your survival benefits to protect your spouse.
So it may make sense that if someone is in poor health as it was the case of my folks then you can still collect early on one spouse and delay early on the other. And basically you want to focus on the breadwinner, you want to focus on life expectancy, you want to think about these different possible strategies. Now here is something else that you guys may not be aware of with social security and the way that things work.
When one spouse dies you are going to lose one of your social security incomes. You get to keep the higher of the two. So husband and wife, wife was getting 3000 dollars a month husband was getting 2000 dollars a month and husband passes she is going to lose that 2000 dollars a month that husband was getting from social security, she will only keep 3000. So you want to consider maximizing social security consider the life expectancy.
How long did your mum live, how long did your dad live, is your health similar or different, how would you compare the two. I think bottom line you guys at the end of the day the longer that we`ve worked the better. However, getting financial freedom I want to encourage everyone pay off your debts. Get debt free as soon as possible because then you have freedom. You can be in medicine or not. Maybe you end up doing for three years some expert witnessing or you do some other fun stuff; maybe you have a whole new business, maybe you have an information business, or you are selling courses and helping people achieve better health outcomes.
Doing that rather than just being a physician. So I’d encourage you to think about having multiple streams of income. This way you can delay on social security planning, ?? we don’t know where it`s going to be, I can tell you that based on current projections that even if the social security fund runs out of money with current taxes even in about 15-20 years there is still going to be enough to pay 60-70% of the current benefits. So I think we can still count on social security being there but perhaps ages will get a crisp perhaps taxes will go up.
Right now there is a cap on social security taxes up to 120000 dollars a year so anything you are currently making above a 120 grand in your regular paycheck you are not having to pay social security taxes on. It could very well be the case that cap goes away. Medicare has no cap on it but social security does. So we will see what happens, we will make adjustments, we will take a look at social security again down the road but I want to make sure that everyone has this powerful information in their hands as they think about this next year particularly for 62 or older there is some really cool stuff you can still do.
So I would like to hear from you is there something that you consider. Is it something that you think is cool or is something that is boring and you really don’t like it? But either way this powerful information can really make a difference in your lives. I`d like to hear from you what questions do you have about social security or Medicare. What questions do you have about retirement income? How can I better serve you? For the freedom formula for physicians podcast this is Dave Denniston, thank you so much for listening, check back in again soon.
Hey this is Dave Denniston I hope you liked today`s episode. If you did hey please do me a favor and go to iTunes and give this five star review. We have to get those reviews on up so more people can discover how to slash their debt and their taxes and create a liberated lifestyle. As a matter of fact each month I am giving out a price package to one of our viewers for the month. So make sure to go to iTunes right now and place your review. Thanks so much and I will talk to you next time.