I am planning for retirement and have been watching Dave Ramsey, the Money Guys and any other videos with similar content for some time. I must say that your videos are more informative, relevant and focused than any others (the other ones are fine for what they set out to do, but for me your content is the most clear-headed).
Its quiet interesting how we reject the reality of our situation and expect to be able to observe it, control it and even change it. I used to be financially depressed until I read a book that made me realized that the secret to making a million is making better investments.
What I think everyone need is an adviser, who can help you get in and out of any investment at any time and you'd sure be in Profit. With this I feel anyone can basically achieve financial freedom.
Credits to *ROCH DUNGCA-SCHREIBER,* she saw me through the process. You can glance her name up on the internet and verify her yourself. she has years of financial market experience!
Wow, for someone who started out his career not making a whole lot but having been close to max for a few years I'm surprised I'm only about $200 less than these numbers. Slow and steady does pay off!
Thank you Mr Schmidt, you have answered all the questions I have about SS as I am approaching retirement age. I like the way you explain things, you are such a good teacher.
Thanks for the video Schmidt. Social Security is so convoluted it helps us ham and eggers to understand it a little more when you make a side comment about a subject. Only with Social Security is your birthday not your birthday if you want to collect on your birthday at full retirement age.
I'll be at FRA in a couple of months and just filed for SS benefits. I ran the numbers. Based on what SS tells me, the break-even point for waiting until I'm 70 vs applying now, would be when I'm 83 years old. But when I took into account the time value of money, the break-even point would be at age 91. That's why I applied now.
If I’m not mistaken the time value of money is irrelevant here because as he mentioned inflationary adjustments are made on the adjusted base amount. FRA = 3,113 70= 3,895 Difference = $782 Just assume 6% inflation adjustment 3,113 x 1.06 = 3,299.78 3,895 x 1.06 = 4,128.70 Difference = $828.92 So the difference gap widens for each compounded inflationary adjustment. So pretty sure the break even is still 83 years old not 91 and it is possible it’s even later than this based on how SS income may be taxed. If one waits to 70 then a portion may be taxed. Also as vid mentions if the main SS person waits to 70 then the spouse gets nothing extra for waiting the 3 years. I’m 56 and still trying to figure out what is best. I’m leaning towards FRA 67 myself and my wife at this point.
Great information keeping everyone informed on making the best choices on when you decide for yourself when you can collect your benefits and your safe to put you social security to work in your chosen time to retire out. This podcast is at the time about a month ago. In choosing to put in for my benefits 50 years of working was enough for me at age 63. I've treated my benefits as investment capital. Since the social security treats this program as taxable income. I took some time out stopped working now decided to add to my retirement war chest by picking and choosing who I will work for. Its nice to come back work the way I want to not to have to be strapped to a job the way it was before. In working 50 years using my social security payments now allows me make more money not having to live on these payments. Keep up your work helping others by informing others on social security changes and how it works. Knowledge is power. Again great job. Joel Curtis Alm
It’s a great feeling isn’t it. I am a little over 90% of max. I retired last year at 67 and with home and vehicles paid for it is a nice check along with a pension. Being retired we save a bunch not driving to work. Now I am a gardener in the summer and the days are 18 hours long now. Enjoy your retirement.
Well, that maximum payment might be coming down a little bit soon if you are white and go up a little bit if you are minority. Sure wish we had a little bit more control of the tax money that does into this system and or that it was a little more fair. Still , I understand that we need a retirement system for p;eople who refuse to save for retirement. However, these people need to be told that this system isnt meant to be your only source of retirement income. Giveing people more tax benefits for saving certainly would help.
I think I’d like to get the minimum social security payment and invest my own retirement. As a CPA I laughed at my last audit when the IRS agent imposed some employment tax on a client and then said, “look at all the social security credit they’ll get”. Spoken like a true bureaucrat. I’d prefer to depend on me and not Uncle Sam.
Would have been good to discuss the spousal death benefit and the impact of waiting. Unlike the living spouse benefit the spousal death benefit is increased by postponing past 62, past FRA and further up to 70.
I started putting money into SS when I was 15. I retired 10 years ago at 62. The stock market has averaged a little over 10% return for the last 50 years. Now take all of the money you put into SS and use the 10% number. I would be a multi millionaire. I wish I could have opted out of SS all those years.
I had some time on my hands, so I did a spreadsheet based upon a work record starting in 1964 and ending in 2011. I used maximum earnings for each year. For return I used the Dow Jones annual return for each year from 1965 to 2012. Total employee contributions were $134,708 and employee plus employer were $269.417 (note these aren't real, because there have been years where the employee and employer contribution rates were credited by Congressional action). The total return for employee only I got was $413K employee only and $826K for employee and employer. This was a quick and dirty, but I suspect it is in the range. It's not millions of dollars. If i hazard a guess that the future rate of return + inflation is 5%, you are looking at an annual withdrawal starting at $20,600 employee only and $41,200 employee/employer. Note: those DJ figures don't include dividends, so the numbers would be higher, but they could be lower due to fees.
A 10% rate of return every year would get one to 1.6 million with maximum earnings, so the theoretical figure is sound. Unfortunately the stock market never has worked on an average. Even using annual Dow Jones returns is too macro to show what might have been. The PIA still would make the breakeven about 126 (778 months). That’s assuming cola increases would match the return on investment - otherwise you’d never run out of money. Needless to say, I love doing these calculations, so thanks.
That's all fine and good until the stock market crashes a month before you plan to retire. The reason that soc sec is valuable the way it is is because it not subject to the whims of the stock market. It's a guaranteed payment every month that will never go down and that's a good thing. Also, the average person is not interested in nor skilled in managing money int he stock market. So most would screw up their savings and retire broke. In my opinion, soc sec is setup exactly as it should be. That said, I'd be OK with people opting out on an individual basis, with no expectation of being bailed out if they lose everything.
I get about $41,000 in SS per year. At a 4% withdrawal rate I would need about $1,025,000 in savings to fund that. Yeah, one could have invested the SS contributions over the last decades, but I don’t fret about that.
My mother was receiving Social security but Wells Fargo close her account, the reason she is living with me in Tijuana and WF policy to have a USA address she has dementia.What to do ?
Thanks for the research and breaking down the information. Scenario: Wife already drawing Social Security at Full retirement age. Hubby has option to draw on spousal SS benefits when he turns 62 and will be receiving 32% of wife's benefits. When hubby reaches FRA at 67, can he get HIS Own FULL benefit?..
Yes. He simply applies for his own benefits and gives up the spouse's benefit. But this benefit is not available to anyone born after 1955. Congress faded it out.
Having SS income is good, but I have retirement money in a 401k, IRA, and Roth IRA. Also what needs to be calculated at retirement is how much you can keep from the tax man. My first 34K is of income (SS and retirement). is tax free. As carry no CC, mortgage, loan debs 34K can go a long way. If need to additional funds I can still remain tax free as I will withdraw from my Roth IRA as those funds are tax free.
How do the rules change if divorced (married over 10 years)? I am younger. Will I get more if he waits until 70 or retires earlier (he probably made more since I took care of my aging parents the last 10 years)? How do I find out that information if we do not communicate & live out of state from one another? I do have his ss #.
Really appreciate all the info you share so it's all not such a mystery. Would you happen to know the way disability amounts are determined as well? Thanks so much.
Keep in mind that more per month does not equal more total and that less per month does not mean less total. The only way anyone can know for sure is to know, in advance, when you are going to die. The reason you get more per month at 70 is because you are going to draw the money for a shorter period of time. Just the opposite is true if you take the money early. You will get less per month but will draw the money for a longer period of time. You have to live past 80 before waiting for the high payment at age 70 pays off.
The benefit is so relatively small after the second bend point ($6,002 in 2021) that it doesn’t seem worth the extra work. If you have the money saved early retirement makes sense to me.
@@robertd9850 social security inflation adjusts each years earnings. Then they take your 35 highest earning years add that together and divide by 420 months. The bend points are at $996 and then $6002. They multiple $996 times 90%. And the next $5,006 times 32%. Anything above that is multiplied by 15%. So someone who earned an average of $6;000 per month over 35 years would earn a Monthly Social Security benefit of $2,497 ($896+$1601) someone who earned an average of $9,000 per month would only earn an additional $450 per month in social security benefits or $2,947 ($896+$1,601+$450) All of these assume you do not take social security until full retirement age which is moving 2 months higher each year until those born in 1960 will need to be 67 in order to claim their full amount. I know this is a rather long explanation. Thanks for listening.
@@gerald4027 that is for disability . Retirement uses the top 35 years. Please don’t talk to the people at Social Security. They are clueless bureaucrats, one and all.
Great channel! If I take my Social Security at 63, and my husband takes his later on when he turns 70, can I switch from my (smaller) Social Security amount to the spousal benefit (after he files), or am I locked into mine for good?
I have a question. Can a spouse start to collect on there own SS at age 62 and then switch to 1/2 of there husbands SS at full retirement age 67. Also what number are they using for the 50% of there spouse? Is it his full number at 67 or the number he gets when he filed, lets say 63?
I have almost the same question. My wife was on disability and converted to social security at 62. I haven't started collecting yet, but am hoping that when I do, she can convert to collecting based on my years of hard work.
I worked 31 years so no max for me. I was going to wait until FRA but decided to take it at 63. It probably makes sense to delay as the difference for waiting is basically like buying a cheap cola annuity. But most men in my family lived pretty much to the average lifespan of males so I decided to go ahead and take it. I hope I'm regretting my when I'm in my 90's. ;)
My wife retired at age 62 on her SS contributions. I retired at 66 on my SS contributions. Did I do something wrong by not changing her to spousal benefit whwn I retired. And can I correct it? Thanks.
Two questions…1. It was my understanding that there is a “max family benefit” that a family could receive? In 2021 it is $5,343. Wouldn’t that come into play if you “maxed” your individual benefit and your spouse received 50% of your benefit? 2. If you actually qualify for more then the max benefit from SS ($3,895 in 2021) before you reach the age of 70, would it be prudent to take that amount before you reach 70? And following that decision up, as the max individual amount goes up each year, would your amount go up with that increased max (if you qualified for more) or once you take it is it fixed and only increased by the COLA amount?
There is a max family benefit, but it would take more than just a spousal benefit to get there. An example would be if your family qualified child benefits for any dependent under the age of 18 in addition to spousal benefits (my situation ;) ) There is a separate "Max Family Benefit" formula on the SSA website to calculate what your individual Max Family Benefit would be. It is calculated off what your Full Retirement benefit (for most people, what you would receive at 67)
@@Devonarsenault1 If the max family benefit is $5,343 in 2021 and the max individual benefit in 2021 is $3,895 which would mean a 50% spousal benefit would be $1,947.50. $3,895 + $1,947.50 = $5,842.50 which is greater than $5,343 by $499.50 per month. So unless I am not understanding this my original question stands. I would also appreciate anyone who knows the answer to my second question. Thanks!
Just to be clear . If I file this year at age 62. I will get the reduced rate. When my wife files for spousal benefits four years from now when she turns 62. She will get 32.5% of my max benefits that I would have received if I started collecting at 66 and 10 months?
If we "assume" that it's Federal ($7.25) and that the AIME is constant looking back 35 years, then your AIME is $7.25*40*52/12 = $1256. The bend point PIA computation for FRA is 0.9*996 + 0.32* ($1256-$996) + 0.15*$0 = $979/month so at 70, it would be 24% more, at ~$1214/month Kinda sucks, but then if you spent your entire life making minimum wage maybe it's not a big change once you account for no longer paying FICA taxes or any state/federal taxes at all.
@@stuartclubb4302 If you learned to live on minimum wage pay for your entire life, then living on $979/month should be doable. The working wage of $1256/month is before taxes and other deductions.
How is this different from the figures provided at the Social Security website when you set up an account. Once you set up an account, they provide your complete Social Security income history, SS taxes paid, etc.
I’m not much worried about the maximum amount. More concerned with the new minimum amounts being proposed by our government officials. I might need to take an early retirement because I’m not finding work. But the early payments are almost a joke. You think they will lower early retirement to age 55? I believe Biden had mentioned this at one time.
My God, I hope not! Social Security is already on shaky ground. Besides, lowering it to 55 would mean taking even more of a haircut on your benefits. If you lose 30% for five years, how much for 12 years? 70, 80%?
@@carolyncarter2615 that’s not any better. Medicare is in worse financial shape than Social Security. If they do anything, they could lower the Medicare age to 62. That’s when a lot of people start Social Security.
I was not aware that the government had increased the amount of income subject to Social Security. I swear it stopped at $118,000 not that long ago. Now it is $143,000 and climbing.
Without doing the math, it just strikes me that the amount I have paid into the system will likely be massively more than what I will take out, especially if you calculate for compounding returns, but that's a whole other ball of wax. I don't know if it was a mistake for our government to mandate this system, but it really is a miserable system in my humble opinion. I have had to fund my own retirement in spite of it for the pittance that it pays out.
If the money paid in by myself and employers were invested I’d be a multi millionaire. I Was was maxing out at 28 yo in 1981 ( in six months that year)and most years since then. It pisses me off people can get SSI because for just about anything. When I applied for SS I had to go to the office. I followed a young lady in and she was walking normal until she got to the building and pulled out a collapsible cane and started limping.
Indeed. When you consider that on W2 not only are you paying in 6.2% but your employer is paying that too. That's almost the 15% that most advisors will suggest from day one to have a comfortable retirement. But that's why the bend-points exist so that those at the bottom get more, and those in the middle and top only get a 15% contribution so the rest goes to those at the bottom. Isn't American communism (from each according to his ability, to each according to his need) grand?
@scott offord yeah, for those of us with the means, we invest apart from the money they deduct each month out of sheer necessity. The system I guess is something, anything for those who did not earn much in their working years and still need some form of income in their final years. It's a depressing system.
@@Chris_at_Home I'm convinced the SSI thing is a racket and people are defrauding the govt. When I was in the military one of my older mentors told me, "If there's a game to play, people will play it." In other words, don't expect honesty if it means less of a payout.
Nope MJA. Not true. If you live to the current expected maximum age expectancy, you will collect MUCH MORE than what you put in. Example: you earn an average of 100K/year for 35 years = $6K x 35 = $210K (your contribution). Let’s say that puts you in the maximum collection range of social security, about $3K/month or $36K/year. Let’s assume you live to a moderate old age of 80 years and you collect $36K/year x 24 = $864K. Remember SS is not dependent upon your ability to wisely invest this money throughout your lifetime. It is not dependent upon the ups and downs of the stock market, it is more like a GOLDEN, no load, no fee, annuity fund that guarantees you a return for the rest of your life. I’m thinking you might have skipped a couple of math classes in high school.
What if both spouses are also primary filers? Do both spouses get primary PLUS spousal benefits? Single filers are screwed; they're essentially subsidizing other filers' spouses.
Are your spousal benefits based on them not working or are you saying that if they worked too they wouldn't get what they contributed, but instead would be limited to the percentages you mentioned?
If I have 35 years at max SS pay in and now are making a salary below max SS pay in will my SS be reduced every year I work longer paying below SS max .
Probably, I maxed out for most of my last 35 years on contributions. I missed the max SS benefit by close to $300. I started paying in at 14 yo and retired at 67 a year past my full retirement age. As long as they keep it solvent it is a pretty retirement even without other monies. I guess paying in all that money over the years paid off.
Yes,but the SSA told me that SS is based of the best 10 years worked.mine will be $1264 at 62,$1450 at 65,$1750 at 67 and then there is tax.Looks like I will be working until i kick the bucket or make toast in the bathtub.
@@johnscott2746 So I guess that it’s the same when my income is lower because I moved out of Silicon Valley where I was making six figures. I didn’t think of that before I moved.
@@lauraz2896 yes, what they do is they look at all of the wages that you paid FICA taxes on for your whole life. They use the average wage index for the year you turn 60 to adjust all of your previous earnings to inflation. Any wages after 60 are taken at face value. Then they pick out the highest 35 years and use those to figure your benefit.
You might have mentioned children. They pay for them as well until they turn 19 or out of high school, whichever comes first. It can be quite significant. Granted, most people over 62 don't have children that young, but some do. I know first hand.
A little known benefit: If you have a child under 16, not only does she/he get a benefit, but a caretaker gets a benefit. I collected a benefit for my son. My wife who was not eligible for SS got an additional benefit for being his caretaker. I found the ss personal did not even know about this benefit, I had to go to a supervisor. The benefit is about one-half of the SS recipient. If I didn't have a wife or she already had her own benefit someone else could collect it. Works with adopted kids too. Caretaker benefit ends when child turns 16.
Is the amount that Social Security states each year on how much you would expect at full retirement accurate? My statement said about $1700 and I've never earned more than $30,000 at the max.
It gets more accurate as you age. SSA uses AIME to determine your earnings for that year. At 50, mine is about $600 under what I get when I do the AIME calculations with the bend points.
If each spouse has worked and paid into social security, at retirement age both spouses are eligible to file for social security benefits and receive their own monthly payment. So if we use Schmidts example of an average social security monthly benefit being $3113.00 -each of you receive that amount per month. My husband retired at 67 and began receiving his monthly benefit. I retired 6 years later at age 67 and now I am receiving my monthly social security benefit as well, which is based on my own social security account. *If your spouse was born before 1955, she can collect an amount equal to 50% of your social security payment once you file for benefits, and then when she hits retirement age, she switches over to her own account and draws her own monthly amount based on her social security earnings. The IRS fazed out this benefit which is why there is an age limit and doesn’t apply to spouses born after 1955.
How exactly does social security work? Is there a big account somewhere where your SST are stored for use by you in the future? Or does it go into a big pot that everyone pulls from? And if so how do they keep it solvent?
I started to draw from SS at 65 to pay for my medicare and at the time they gave me the 66 yr old amount. I have continued to work full time throughout and because I have continued to pay into SS, somehow increasing the value of my benefit, out of nowhere they sent me a deposit of over $6K saying i was underpaid for the 3 yrs I was getting SS benefits. I am now 67, still working full time so will my benefit continue to increase as long as I continue to work?
Yes, it will increase but you should also be getting a penalty for too much earned income - they will eventually catch up with you if they haven't already.
First off, thank you. Quick question......let's say my spouse is 5 years older than me. I take SS at 62. Would my spouse get the amount at the 67 year mark, or would my spouse be held back to the 62 year amount because I'm 5 years older than her?
from what i understand you are asking...you take ss at 62 and get 500 a month. you spouse waits till they are 67, if your benefit is higher than their amount then their amount is raised to half of your amount. in this example your spouse would get 250. if your spouse benefit is higher than the 500 you get monthly then your benefit will raise to half of whatever their amount is. example: your 500 will raise to 1000 when your spouse benefit is 2000 a month. making your combined 3000 a month. clear as mud yet? if i have not answered correctly i am sorry, just ignore this.
Starting my retirement process at 65 1/2 taking S.S. short of 66 and 4 months. I'm amazed by your numbers of compensation. Are my yearly estimates from S.S. wrong? Is your 3 thousand really 22 Hundred?
@@gerald4027 disability is based on your best ten years. Retirement benefits are based on your best 35 years after your wages before age 60 have been indexed (adjusted) for inflation. This is a perfect example of why you should never ask the people at the Social Security office ANYTHING. They are clueless bureaucrats, one and all. You are much better off contacting a fee only financial advisor who can crunch the numbers for you and give you a personalized report outlining your options.
May I ask a question that was not addressed in this video? My husband is seven years older than me and will be 66 in August. He plans on working full-time until he’s 70 as he loves his job. At 62 should I apply for his spousal benefits? At what age do I switch over to my own benefits ? I am an independent business owner and have no intention of retiring until 70 or older. Thank you for being such a wealth of knowledge and sharing it with us.
The earlier you apply, the less you will get. I filed at 63 bc I haven't worked in years, would take 10 years to catch up, not worth it, and my husband is working until 70, will file at that time. Contact your local SS office and go through every detail.
Here’s my question I started receiving SSDI 10 years ago I’m only 44 years old right now my kids are drawing off my benefit I receive $1200 for myself per month each one of my kids receives 560 what happens when I reach 62 what would I actually be getting the reason I receive so much more and Social Security benefits or SSDI is because I am blind
I am confused so we need at least 40 credit points and 35 years or either or? Are the numbers you listed based on 35 years or 40 points or both? Thank you so much 💓
You need at least 40 credits (10 years of work history) but SS uses your best 35 years as the basis for your payment so if you only worked 10 years you will get 0’s for remaining 25 years and your payment will be much smaller.
Why don't you just give us the formula that social security uses to calculate your monthly payments? Just replace the variables with actual numbers and "voila", you have the amount.
Social Security indexes (adjusts) all of your wages before the age of 60 to inflation. Any wages after 60 are taken at face value. Then they pick out your highest 35 years. They add them all together and divide by 420. That’s the number of months in 35 years. This gives your average indexed monthly earnings. Also known as the AIME. The formula they have uses your AIME to determine your benefit. The formula has what are called “bend points”. Your particular bend points are set in the year you turn 62. So if you are turning 62 this year, the bend points would be $996 and $6002. The way it works is they apply the bend points to your AIME. For example: if your AIME is $4000. The first $996 is counted at 90%. Then next $3004 would be counted at 32% If you had an AIME over $6002, then anything over $6002 would be counted at 15%. So, $996 times 90% =$896. $3004 times 32% = $961. Add them together and this gives your full retirement age benefit of $1857. If you take it early before your full retirement age, they penalize you. I hope this helps. Best wishes.
@@johnscott2746 I love your answer, because that’s how I often answer these questions. People have looked at me funny when I ask to see their Social Security Statement and look at the earnings rather than 62, FRA, and age 70 amount. I have used a spreadsheet for years to calculate AIME. I can plug in any number they want for their future earnings to get a better figure than the estimate SSA provides.
So, if I file @ 67, having been my own contributor, I would get $3117 And my spouse filing @ 67, having been her own contributor, she would get what? $3117? So $6234/mo
Is the most a spouse can receive in SS -her earned earnings or 32.5% of her spouses benefit, whichever is greater? Or does she earn her SS and 32.5% of spouses income?
If the spouse waits until full retirement age to file, the SSA will figure it both ways. Giving her either the benefit she has earned or 50% of her spouses benefit. If she collects at 62, they will deduct from her benefit due to collecting early.
I meet the 35 years but plan to work another 5 years. I'm at the peak of my earnings level and figured that substituting these next 5 years with 5 from earlier in my career would make a big difference in the payout. However working the 5 yrs vs. retiring today showed only a very small increase in my payout on the SSA calculator. This applied to retiring at 62, 67, and 70. Something to consider if you think the extra work will make a difference.
Yes, but you seem to be dismissing the difference between a monthly SS payment (now) and what your monthly earnings are for those five years (while SS is deferred).
@@nattymo7835 you seem to be confusing retirement with collecting Social Security. As the person who posted noted, the benefit of replacing lower paying years with higher years is very little. Which is a good reason to go ahead and retire and simply wait to collect Social Security. Nothing says you have to start Social Security the second that you retire. I retired at 61 and am waiting until I turn 70 to collect.
@@johnscott2746 I'm not confusing them, and I suppose that's a valid point, but you are now focusing on the wrong thing and over-looking something else. LET: G= "gross income (before taxes)" W= "income from working" S= "income from social security (SSI)" K= "income from a 401k and all other investments and interest" y= "the year when income is collected" Scenario A= "start SSI the moment W=0" Scenario B= "defer SSI five years after W=0" THEN: G[y] = W[y] + S[y] + K[y] I think a fair assumption is that before most people "retire," K=S=0 and W>0. After they retire, W=0, K>0, and S>0. But as you point out, what if S=0 for some deferred amount of time after W=0? That's fine, but the original poster (OP) made a point of saying that he will continue working for five more years. The point is that it is erroneous to compare S[2026,A] versus S[2026,B], because the other factors are not being held constant. After adjusting all dollar values for the time value of money (TVM), the comparison should be: G[2021,A] versus G[2021,B] G[2022,A] versus G[2022,B] G[2023,A] versus G[2023,B] G[2024,A] versus G[2024,B] G[2025,A] versus G[2025,B] G[2026,A] versus G[2026,B] ... and also the sum of A's for all years versus the sum of B's for all years. Actually, the best way is to calculate your expected lifespan, then sum every G[x,A] and compare that to the sum of every G[x,B]. Adjust the expected lifespan and play out the sums too, by scenario. As a generalization, my intuition tells me that it would be better to defer (a portion of) K rather than defer S. What I mean is that if your goal is to extract the TVM-adjusted maximum dollars and leave the TVM-adjusted maximum estate to your heirs, you probably should start collecting SSI sooner rather than later, even though you are not obligated to do so.
@@nattymo7835 I appreciate the in depth analysis but I have two comments. First of all, your “intuition “ is very likely wrong. We live in a marvelous world that doubles in knowledge every three years. Life spans keep expanding and you (and everyone else) are probably going to live a LOT longer than you think. Waiting to collect Social Security is a guaranteed way to get a huge return on investment. And as long as you are not spending yourself broke waiting to collect, you will (probably, again) leave your heirs a larger legacy. By the way, you are the third person I have been in communication with who is planning their retirement around how much they can leave their kids. I don’t get it. My kids have more money and education than I do. Every one of them wants me to spend every penny! The second thing is SSI is NOT Social Security. SSI stands for supplemental Security income. It is a special fund for disabled or elderly poor people who have limited income and assets.
If my spouse takes the spousal benefit, what happens to their total SS payment if I die? If my spouse takes her own SS account payments, what happens to her total SS payments if I die?
I'm a bit confused. I downloaded my statement from MySSA two weeks ago (mid-June), and it has all three of my payments (62, FRA, and 67) as being a little bit higher than what was shown here. Is there something else that could affect it?
Slight correction: I'm 63, so it gives me the payment at 63, not at 62. Still, the statement shows numbers that are above the max in the video. Not sure how, but I won't complain.
@@steve82608 He is doing these calculations based upon someone retiring 2021. Your full retirement age isn’t until you reach. 66 years and 8 months, so you will have a couple more years of higher earnings, which will increase your PIA.
@@blucy10 - Thanks, but I think that isn't quite it. I retired early, so SSA doesn't show any more years of earnings in my projection, as far as I can tell. However, your reply reminded me that my projected payments may include some estimated COL adjustments between now and FRA / age 70, so maybe that's it.
@@steve82608 That’s why I always do calculations based upon the earnings record and not the estimate SSA provides. Using a 10 key and Excel, it takes me less than a minute to put in the earnings, and I get a number closer to the PIA.
I took time off to raise my child. I am now 61 yrs. I have 27 years of reported working and have the required 40 credits. You mentioned I must have 35 yrs to get full benefits. Anyone know what that means?
What Natty mo said. So every year you keep working will replace one of those zeros with something not zero. And you know from the kid's grades how much damage a zero can do to an average.
@@krg9942 take heart! If you are 61, then working at ANYTHING for 8 years will give you a full work record and put you at 69! The credits for delaying will give you a big boost and you will have a much larger check for the rest of your life.
The SS formula is calculated using 35 years of earnings. If you didn't work for 8 years (example) during the last 35 years, those 8 years are plugged into the formula with a value of $0 for each of the 8 years... this is one factor that materially affects the final payout. The other factor that materially affects the final payout is the amount of money that you earned (and paid SS taxes on) over the course of the last 35 years (the higher the better). In simple terms... if you didn't work for all of the last 35 years, *and* did not pay in heavy-duty SS taxes for a significant number of those years... do not expect to receive heavy-duty SS payments.
@@asaintinwaiting yes but it’s not the LAST 35 years. They pick out the highest 35 years after indexing your earnings before age 60 to inflation. Might be the last 35, but might not.
How does the spousal benefit work if the spouse also has 35 years of employment and both are the same age? Does the spouse still receive the spousal benefit along with their own benefit?
I don’t think it’s added together but you get to choose whichever is higher yours, or the percentage of your spouses. BUT CONSULT A TAX PROFESSIONAL INCASE I’M AN IDIOT.
Seven years ago I retired from the railroad at age 60...I worked 36 years and only one time made more than the maximum amount...My pension is $4,100 a month and if I was married her benefit would be 50% of that...Social Security is a joke.
I am planning for retirement and have been watching Dave Ramsey, the Money Guys and any other videos with similar content for some time. I must say that your videos are more informative, relevant and focused than any others (the other ones are fine for what they set out to do, but for me your content is the most clear-headed).
Thanks for noticing!
Dave Ramsey is a nut.
Its quiet interesting how we reject the reality of our situation and expect to be able to observe it, control it and even change it. I used to be financially depressed until I read a book that made me realized that the secret to making a million is making better investments.
What I think everyone need is an adviser, who can help you get in and out of any investment at any time and you'd sure be in Profit. With this I feel anyone can basically achieve financial freedom.
Credits to *ROCH DUNGCA-SCHREIBER,* she saw me through the process. You can glance her name up on the internet and verify her yourself. she has years of financial market experience!
*ROCHELLE DUNGCA-SCHREIBER,* That's whom i work with
You can glance her name up on the internet and verify her yourself. she has years of financial market experience!!!
All spam, this is
Wow, for someone who started out his career not making a whole lot but having been close to max for a few years I'm surprised I'm only about $200 less than these numbers. Slow and steady does pay off!
You're the man! No one does or communicates it better than you.
Thank you Mr Schmidt, you have answered all the questions I have about SS as I am approaching retirement age. I like the way you explain things, you are such a good teacher.
Thanks for the video Schmidt. Social Security is so convoluted it helps us ham and eggers to understand it a little more when you make a side comment about a subject. Only with Social Security is your birthday not your birthday if you want to collect on your birthday at full retirement age.
I'll be at FRA in a couple of months and just filed for SS benefits. I ran the numbers. Based on what SS tells me, the break-even point for waiting until I'm 70 vs applying now, would be when I'm 83 years old. But when I took into account the time value of money, the break-even point would be at age 91. That's why I applied now.
@Tony Po.I will have to commit a federal crime because I wont make enough money of social security.
If I’m not mistaken the time value of money is irrelevant here because as he mentioned inflationary adjustments are made on the adjusted base amount.
FRA = 3,113
70= 3,895
Difference = $782
Just assume 6% inflation adjustment
3,113 x 1.06 = 3,299.78
3,895 x 1.06 = 4,128.70
Difference = $828.92
So the difference gap widens for each compounded inflationary adjustment.
So pretty sure the break even is still 83 years old not 91 and it is possible it’s even later than this based on how SS income may be taxed.
If one waits to 70 then a portion may be taxed.
Also as vid mentions if the main SS person waits to 70 then the spouse gets nothing extra for waiting the 3 years.
I’m 56 and still trying to figure out what is best. I’m leaning towards FRA 67 myself and my wife at this point.
Great information keeping everyone informed on making the best choices on when you decide for yourself when you can collect your benefits and your safe to put you social security to work in your chosen time to retire out.
This podcast is at the time about a month ago. In choosing to put in for my benefits 50 years of working was enough for me at age 63.
I've treated my benefits as investment capital. Since the social security treats this program as taxable income. I took some time out stopped working now decided to add to my retirement war chest by picking and choosing who I will work for.
Its nice to come back work the way I want to not to have to be strapped to a job the way it was before. In working 50 years using my social security payments now allows me make more money not having to live on these payments.
Keep up your work helping others by informing others on social security changes and how it works. Knowledge is power. Again great job.
Joel Curtis Alm
Thanks Joel.
My wife has projected benefits in excess of the spousal benefit - what is the maximum benefit in each of the 3 age categories?
Thank you!! I was just looking at my statement today and was wondering about this very topic. We appreciate your channel!
Thank you!
You have the best SS videos.
I’m busting my body working until close to FRA now. Looked up my upcoming benefit and probably within 10 percent of the max. I’ve been very lucky.
It’s a great feeling isn’t it. I am a little over 90% of max. I retired last year at 67 and with home and vehicles paid for it is a nice check along with a pension. Being retired we save a bunch not driving to work. Now I am a gardener in the summer and the days are 18 hours long now. Enjoy your retirement.
Well, that maximum payment might be coming down a little bit soon if you are white and go up a little bit if you are minority.
Sure wish we had a little bit more control of the tax money that does into this system and or that it was a little more fair. Still , I understand that we need a retirement system for p;eople who refuse to save for retirement. However, these people need to be told that this system isnt meant to be your only source of retirement income.
Giveing people more tax benefits for saving certainly would help.
I want a large check not a small check. Most of us should wait until we are 70. Federal welfare is one nice thing about getting older.
I think I’d like to get the minimum social security payment and invest my own retirement. As a CPA I laughed at my last audit when the IRS agent imposed some employment tax on a client and then said, “look at all the social security credit they’ll get”. Spoken like a true bureaucrat. I’d prefer to depend on me and not Uncle Sam.
Would have been good to discuss the spousal death benefit and the impact of waiting. Unlike the living spouse benefit the spousal death benefit is increased by postponing past 62, past FRA and further up to 70.
I started putting money into SS when I was 15. I retired 10 years ago at 62. The stock market has averaged a little over 10% return for the last 50 years. Now take all of the money you put into SS and use the 10% number. I would be a multi millionaire. I wish I could have opted out of SS all those years.
I had some time on my hands, so I did a spreadsheet based upon a work record starting in 1964 and ending in 2011. I used maximum earnings for each year. For return I used the Dow Jones annual return for each year from 1965 to 2012. Total employee contributions were $134,708 and employee plus employer were $269.417 (note these aren't real, because there have been years where the employee and employer contribution rates were credited by Congressional action). The total return for employee only I got was $413K employee only and $826K for employee and employer. This was a quick and dirty, but I suspect it is in the range. It's not millions of dollars. If i hazard a guess that the future rate of return + inflation is 5%, you are looking at an annual withdrawal starting at $20,600 employee only and $41,200 employee/employer. Note: those DJ figures don't include dividends, so the numbers would be higher, but they could be lower due to fees.
@@blucy10 of course I exaggerated the total return. I actually can up with about $1.4 million. I can earn that much from SS if I live to be 110.
A 10% rate of return every year would get one to 1.6 million with maximum earnings, so the theoretical figure is sound. Unfortunately the stock market never has worked on an average. Even using annual Dow Jones returns is too macro to show what might have been. The PIA still would make the breakeven about 126 (778 months). That’s assuming cola increases would match the return on investment - otherwise you’d never run out of money. Needless to say, I love doing these calculations, so thanks.
Amen! Let me opt out!
That's all fine and good until the stock market crashes a month before you plan to retire. The reason that soc sec is valuable the way it is is because it not subject to the whims of the stock market. It's a guaranteed payment every month that will never go down and that's a good thing. Also, the average person is not interested in nor skilled in managing money int he stock market. So most would screw up their savings and retire broke. In my opinion, soc sec is setup exactly as it should be. That said, I'd be OK with people opting out on an individual basis, with no expectation of being bailed out if they lose everything.
I appreciate your channel, thank you.
Thank you!
Thanks information , we need good information !
This answered a lot of my questions about SS. I’m feeling a bit better about retirement although I have time to retire.
supposed to get $3703 at FRA but it's a few years from now, about 25 months. Based on COLA increases it should go up I think. been working since 1978.
Thanks for all the great info!
Thanks for the kind words!
Fantastic content and information! Thank you!!!
Wow, I retired at 62 and I'm not far off from my maximum. On top of that my FERS annuity is more than my S.S. payment. Not a bad deal.
Love your channel thanks for straight forward info
Thanks for making these!!
I get about $41,000 in SS per year. At a 4% withdrawal rate I would need about $1,025,000 in savings to fund that. Yeah, one could have invested the SS contributions over the last decades, but I don’t fret about that.
Very helpful! Thank you!
Thanks so much. Tina
If you can not make it off of social security. Commit a federal crime.3 hots and a cot.
My mother was receiving Social security but Wells Fargo close her account, the reason she is living with me in Tijuana and WF policy to have a USA address she has dementia.What to do ?
Thanks for the research and breaking down the information.
Scenario: Wife already drawing Social Security at Full retirement age. Hubby has option to draw on spousal SS benefits when he turns 62 and will be receiving 32% of wife's benefits. When hubby reaches FRA at 67, can he get HIS Own FULL benefit?..
Yes. He simply applies for his own benefits and gives up the spouse's benefit. But this benefit is not available to anyone born after 1955. Congress faded it out.
@@j.t.4299 thank you for answering my question.
Having SS income is good, but I have retirement money in a 401k, IRA, and Roth IRA. Also what needs to be calculated at retirement is how much you can keep from the tax man. My first 34K is of income (SS and retirement). is tax free. As carry no CC, mortgage, loan debs 34K can go a long way. If need to additional funds I can still remain tax free as I will withdraw from my Roth IRA as those funds are tax free.
Very informative!!
How do the rules change if divorced (married over 10 years)? I am younger. Will I get more if he waits until 70 or retires earlier (he probably made more since I took care of my aging parents the last 10 years)? How do I find out that information if we do not communicate & live out of state from one another? I do have his ss #.
I'm waiting to file at age 70, so I'll receive a little more than $3600 per month. The IRS has the formula on its website.
Really appreciate all the info you share so it's all not such a mystery. Would you happen to know the way disability amounts are determined as well? Thanks so much.
Keep in mind that more per month does not equal more total and that less per month does not mean less total. The only way anyone can know for sure is to know, in advance, when you are going to die. The reason you get more per month at 70 is because you are going to draw the money for a shorter period of time. Just the opposite is true if you take the money early. You will get less per month but will draw the money for a longer period of time. You have to live past 80 before waiting for the high payment at age 70 pays off.
The benefit is so relatively small after the second bend point ($6,002 in 2021) that it doesn’t seem worth the extra work. If you have the money saved early retirement makes sense to me.
Good point Jim.
What is a bend point?
@@robertd9850 social security inflation adjusts each years earnings. Then they take your 35 highest earning years add that together and divide by 420 months. The bend points are at $996 and then $6002. They multiple $996 times 90%. And the next $5,006 times 32%. Anything above that is multiplied by 15%. So someone who earned an average of $6;000 per month over 35 years would earn a Monthly Social Security benefit of $2,497 ($896+$1601) someone who earned an average of $9,000 per month would only earn an additional $450 per month in social security benefits or $2,947 ($896+$1,601+$450) All of these assume you do not take social security until full retirement age which is moving 2 months higher each year until those born in 1960 will need to be 67 in order to claim their full amount. I know this is a rather long explanation. Thanks for listening.
@@jimjensen9139 Thanks for the explanation. It's government so it has to be needlessly complicated.
Im looking for a list of the maximum payout on social security since 1970 my earnings list doesnt tell me exactly what I want to know...
Seniors don't need a COLA. This money should be used to support the great people of the Ukraine.
very good info thank you
My pleasure.
@@HolySchmidt.SSA told me it is based off of the best 10 years?
@@gerald4027 that is for disability . Retirement uses the top 35 years. Please don’t talk to the people at Social Security. They are clueless bureaucrats, one and all.
Great channel!
If I take my Social Security at 63, and my husband takes his later on when he turns 70, can I switch from my (smaller) Social Security amount to the spousal benefit (after he files), or am I locked into mine for good?
No that is the one instance where you can never take the greater amount. I thoroughly checked with SS on this.
I have a question. Can a spouse start to collect on there own SS at age 62 and then switch to 1/2 of there husbands SS at full retirement age 67. Also what number are they using for the 50% of there spouse? Is it his full number at 67 or the number he gets when he filed, lets say 63?
I have almost the same question. My wife was on disability and converted to social security at 62. I haven't started collecting yet, but am hoping that when I do, she can convert to collecting based on my years of hard work.
We appreciate you!!!!!!! : >
I worked 31 years so no max for me. I was going to wait until FRA but decided to take it at 63. It probably makes sense to delay as the difference for waiting is basically like buying a cheap cola annuity. But most men in my family lived pretty much to the average lifespan of males so I decided to go ahead and take it. I hope I'm regretting my when I'm in my 90's. ;)
Nice outlook!
What is the max total for a family with primary, spouse, and adult dependent child who receives SSDI on the primary’s record?
My wife retired at age 62 on her SS contributions. I retired at 66 on my SS contributions. Did I do something wrong by not changing her to spousal benefit whwn I retired. And can I correct it? Thanks.
Seniors don't need a COLA. This money should be used to support the great people of the Ukraine.
Two questions…1. It was my understanding that there is a “max family benefit” that a family could receive? In 2021 it is $5,343. Wouldn’t that come into play if you “maxed” your individual benefit and your spouse received 50% of your benefit?
2. If you actually qualify for more then the max benefit from SS ($3,895 in 2021) before you reach the age of 70, would it be prudent to take that amount before you reach 70? And following that decision up, as the max individual amount goes up each year, would your amount go up with that increased max (if you qualified for more) or once you take it is it fixed and only increased by the COLA amount?
There is a max family benefit, but it would take more than just a spousal benefit to get there. An example would be if your family qualified child benefits for any dependent under the age of 18 in addition to spousal benefits (my situation ;) )
There is a separate "Max Family Benefit" formula on the SSA website to calculate what your individual Max Family Benefit would be. It is calculated off what your Full Retirement benefit (for most people, what you would receive at 67)
@@Devonarsenault1 If the max family benefit is $5,343 in 2021 and the max individual benefit in 2021 is $3,895 which would mean a 50% spousal benefit would be $1,947.50.
$3,895 + $1,947.50 = $5,842.50 which is greater than $5,343 by $499.50 per month. So unless I am not understanding this my original question stands.
I would also appreciate anyone who knows the answer to my second question. Thanks!
Just to be clear . If I file this year at age 62. I will get the reduced rate. When my wife files for spousal benefits four years from now when she turns 62. She will get 32.5% of my max benefits that I would have received if I started collecting at 66 and 10 months?
That is correct
My last job ended July 2016. Do I need to let SOCIAL SECURITY OFFICE KNOW or is it on file ?
Great video but depressing as to my own SSN. I guess I will continue to subscribe.😏
does my wife have to work X years to get spousal benefit?
An interesting video would be what would be your SS benefit if you worked full time at minimum wage for 35 years.
If we "assume" that it's Federal ($7.25) and that the AIME is constant looking back 35 years, then your AIME is $7.25*40*52/12 = $1256.
The bend point PIA computation for FRA is 0.9*996 + 0.32* ($1256-$996) + 0.15*$0 = $979/month
so at 70, it would be 24% more, at ~$1214/month
Kinda sucks, but then if you spent your entire life making minimum wage maybe it's not a big change once you account for no longer paying FICA taxes or any state/federal taxes at all.
@@stuartclubb4302 it would also be $685 at age 62, which would suck enormously.
@@johnscott2746 Indeed it would. But so would a lifetime of making minimum wage for some 50 years (from 17 to 67).
@@stuartclubb4302 If you learned to live on minimum wage pay for your entire life, then living on $979/month should be doable. The working wage of $1256/month is before taxes and other deductions.
How is this different from the figures provided at the Social Security website when you set up an account. Once you set up an account, they provide your complete Social Security income history, SS taxes paid, etc.
Ok good to know👍😎
I’m not much worried about the maximum amount. More concerned with the new minimum amounts being proposed by our government officials. I might need to take an early retirement because I’m not finding work. But the early payments are almost a joke. You think they will lower early retirement to age 55? I believe Biden had mentioned this at one time.
My God, I hope not! Social Security is already on shaky ground. Besides, lowering it to 55 would mean taking even more of a haircut on your benefits. If you lose 30% for five years, how much for 12 years? 70, 80%?
It's the Medicare age from the current 65 to 55 is what Biden is proposing, not lowering the Social Security retirement age to 55.
@@carolyncarter2615 that’s not any better. Medicare is in worse financial shape than Social Security. If they do anything, they could lower the Medicare age to 62. That’s when a lot of people start Social Security.
A killing spree for 20 days will lessen the population and that will help social security.
@@johnscott2746 It would be advantageous for Medicare B, healthier people in the insurance pool. I don't know about A
I was not aware that the government had increased the amount of income subject to Social Security. I swear it stopped at $118,000 not that long ago. Now it is $143,000 and climbing.
The max has increased each year 23 out of the past 25 tax years. As of 2023, it's up to $160,200.
Without doing the math, it just strikes me that the amount I have paid into the system will likely be massively more than what I will take out, especially if you calculate for compounding returns, but that's a whole other ball of wax. I don't know if it was a mistake for our government to mandate this system, but it really is a miserable system in my humble opinion. I have had to fund my own retirement in spite of it for the pittance that it pays out.
If the money paid in by myself and employers were invested I’d be a multi millionaire. I Was was maxing out at 28 yo in 1981 ( in six months that year)and most years since then. It pisses me off people can get SSI because for just about anything. When I applied for SS I had to go to the office. I followed a young lady in and she was walking normal until she got to the building and pulled out a collapsible cane and started limping.
Indeed. When you consider that on W2 not only are you paying in 6.2% but your employer is paying that too. That's almost the 15% that most advisors will suggest from day one to have a comfortable retirement. But that's why the bend-points exist so that those at the bottom get more, and those in the middle and top only get a 15% contribution so the rest goes to those at the bottom. Isn't American communism (from each according to his ability, to each according to his need) grand?
@scott offord yeah, for those of us with the means, we invest apart from the money they deduct each month out of sheer necessity. The system I guess is something, anything for those who did not earn much in their working years and still need some form of income in their final years. It's a depressing system.
@@Chris_at_Home I'm convinced the SSI thing is a racket and people are defrauding the govt. When I was in the military one of my older mentors told me, "If there's a game to play, people will play it." In other words, don't expect honesty if it means less of a payout.
Nope MJA. Not true. If you live to the current expected maximum age expectancy, you will collect MUCH MORE than what you put in.
Example: you earn an average of 100K/year for 35 years = $6K x 35 = $210K (your contribution). Let’s say that puts you in the maximum collection range of social security, about $3K/month or $36K/year. Let’s assume you live to a moderate old age of 80 years and you collect $36K/year x 24 = $864K.
Remember SS is not dependent upon your ability to wisely invest this money throughout your lifetime. It is not dependent upon the ups and downs of the stock market, it is more like a GOLDEN, no load, no fee, annuity fund that guarantees you a return for the rest of your life.
I’m thinking you might have skipped a couple of math classes in high school.
Is it mandatory for your spouse to take a spousal benefit?
I am 63 divorced after 20 years. Do I have to wait for my ex to turn 62 too file for a percent of his SS
What if both spouses are also primary filers? Do both spouses get primary PLUS spousal benefits? Single filers are screwed; they're essentially subsidizing other filers' spouses.
Are your spousal benefits based on them not working or are you saying that if they worked too they wouldn't get what they contributed, but instead would be limited to the percentages you mentioned?
They would take the higher of the spousal benefit (discussed) or their own benefit.
If I have 35 years at max SS pay in and now are making a salary below max SS pay in will my SS be reduced every year I work longer paying below SS max .
Probably, I maxed out for most of my last 35 years on contributions. I missed the max SS benefit by close to $300. I started paying in at 14 yo and retired at 67 a year past my full retirement age. As long as they keep it solvent it is a pretty retirement even without other monies. I guess paying in all that money over the years paid off.
No, because payments are based on your highest 35 years of earnings.
If your income starts to diminish as you near retirement, doesn't this mean your SS benefits also diminish being as they are being averaged?
Yes,but the SSA told me that SS is based of the best 10 years worked.mine will be $1264 at 62,$1450 at 65,$1750 at 67 and then there is tax.Looks like I will be working until i kick the bucket or make toast in the bathtub.
@@gerald4027 no, retirement benefits are based on your best 35 years after indexing your wages before 60 to inflation.
@@johnscott2746 So I guess that it’s the same when my income is lower because I moved out of Silicon Valley where I was making six figures. I didn’t think of that before I moved.
@@lauraz2896 yes, what they do is they look at all of the wages that you paid FICA taxes on for your whole life. They use the average wage index for the year you turn 60 to adjust all of your previous earnings to inflation. Any wages after 60 are taken at face value. Then they pick out the highest 35 years and use those to figure your benefit.
You might have mentioned children. They pay for them as well until they turn 19 or out of high school, whichever comes first. It can be quite significant. Granted, most people over 62 don't have children that young, but some do. I know first hand.
A little known benefit: If you have a child under 16, not only does she/he get a benefit, but a caretaker gets a benefit. I collected a benefit for my son. My wife who was not eligible for SS got an additional benefit for being his caretaker. I found the ss personal did not even know about this benefit, I had to go to a supervisor. The benefit is about one-half of the SS recipient. If I didn't have a wife or she already had her own benefit someone else could collect it. Works with adopted kids too. Caretaker benefit ends when child turns 16.
Is the amount that Social Security states each year on how much you would expect at full retirement accurate? My statement said about $1700 and I've never earned more than $30,000 at the max.
It gets more accurate as you age. SSA uses AIME to determine your earnings for that year. At 50, mine is about $600 under what I get when I do the AIME calculations with the bend points.
If you file for Soc.Sec. It can and will be taken through Inflation then Hyperinflation.
Why can’t my spouse get her individual benefit? If it’s more than the 32% of my SS benefit?
If each spouse has worked and paid into social security, at retirement age both spouses are eligible to file for social security benefits and receive their own monthly payment. So if we use Schmidts example of an average social security monthly benefit being $3113.00 -each of you receive that amount per month. My husband retired at 67 and began receiving his monthly benefit. I retired 6 years later at age 67 and now I am receiving my monthly social security benefit as well, which is based on my own social security account.
*If your spouse was born before 1955, she can collect an amount equal to 50% of your social security payment once you file for benefits, and then when she hits retirement age, she switches over to her own account and draws her own monthly amount based on her social security earnings. The IRS fazed out this benefit which is why there is an age limit and doesn’t apply to spouses born after 1955.
My wife started collecting at 62. If I retire at 67 does she get 50% of my social security benefits?
How exactly does social security work? Is there a big account somewhere where your SST are stored for use by you in the future? Or does it go into a big pot that everyone pulls from? And if so how do they keep it solvent?
It gets spent by the US Congress. The government then issues bonds to cover the SS payments.
@@bcast9978 It is an insurance pool that is invested in US Bonds, first.
Spouse must qualify! Many ways Not to qualify.
I started to draw from SS at 65 to pay for my medicare and at the time they gave me the 66 yr old amount. I have continued to work full time throughout and because I have continued to pay into SS, somehow increasing the value of my benefit, out of nowhere they sent me a deposit of over $6K saying i was underpaid for the 3 yrs I was getting SS benefits. I am now 67, still working full time so will my benefit continue to increase as long as I continue to work?
Yes, it will increase but you should also be getting a penalty for too much earned income - they will eventually catch up with you if they haven't already.
First off, thank you. Quick question......let's say my spouse is 5 years older than me. I take SS at 62. Would my spouse get the amount at the 67 year mark, or would my spouse be held back to the 62 year amount because I'm 5 years older than her?
from what i understand you are asking...you take ss at 62 and get 500 a month. you spouse waits till they are 67, if your benefit is higher than their amount then their amount is raised to half of your amount. in this example your spouse would get 250. if your spouse benefit is higher than the 500 you get monthly then your benefit will raise to half of whatever their amount is. example: your 500 will raise to 1000 when your spouse benefit is 2000 a month. making your combined 3000 a month. clear as mud yet? if i have not answered correctly i am sorry, just ignore this.
Starting my retirement process at 65 1/2 taking S.S. short of 66 and 4 months. I'm amazed by your numbers of compensation. Are my yearly estimates from S.S. wrong? Is your 3 thousand really 22 Hundred?
I believe he was giving the max you could get.
At 62 what’s the minimum I can get from SS ? Thanks , great info
62? Wait until you are 70 to collect!
$0
Thanks
Is the social security payment you listed based on someone making $140k per year for the last 10 years of them working?
Social Security is based on your highest 35 years of indexed earnings. He is figuring this video on someone maxing out every year for those 35 years.
@@johnscott2746.SSA told me it is based off your 10 best years.
@@gerald4027 disability is based on your best ten years. Retirement benefits are based on your best 35 years after your wages before age 60 have been indexed (adjusted) for inflation.
This is a perfect example of why you should never ask the people at the Social Security office ANYTHING. They are clueless bureaucrats, one and all. You are much better off contacting a fee only financial advisor who can crunch the numbers for you and give you a personalized report outlining your options.
Wait until you are 70 to collect your Federal welfare check. At 70 my SS benefit will only be $4,328. Who can live on that???
May I ask a question that was not addressed in this video? My husband is seven years older than me and will be 66 in August. He plans on working full-time until he’s 70 as he loves his job. At 62 should I apply for his spousal benefits? At what age do I switch over to my own benefits ? I am an independent business owner and have no intention of retiring until 70 or older. Thank you for being such a wealth of knowledge and sharing it with us.
I don’t think you can until he files for his own SS but I could be wrong.
The earlier you apply, the less you will get. I filed at 63 bc I haven't worked in years, would take 10 years to catch up, not worth it, and my husband is working until 70, will file at that time. Contact your local SS office and go through every detail.
What if you are SELF EMPLOYED and PAY BOTH SIDES?
Only the employee side affects your benefit.
What happens when a female spouse never worked, or paid into SS? Thanks
She will get 50% of spousal benefit at FRA.
What a great country!
All of my retirement ages are higher than in this video but a couple hundred dollars.
i worked 45 years and at 62 it much less then you said...maybe i did not make that much in my 45 years?...thank you!
The video was about the MAXIMUM you can get. Most people won’t have that.
Bill Schmidt hêre approves.
What if on SS disability ?
Here’s my question I started receiving SSDI 10 years ago I’m only 44 years old right now my kids are drawing off my benefit I receive $1200 for myself per month each one of my kids receives 560 what happens when I reach 62 what would I actually be getting the reason I receive so much more and Social Security benefits or SSDI is because I am blind
Thanks for the video!
Question: with inflation moving up rapidly now, how will that affect social security checks?
Maybe you could do a video on this
Good idea. Love it!
What about MINIMUM? Do you think $300 a month it's OK?
I retired 3 years ago at 67, I'm only collecting $2800/mo. Why?
@David Watson no. Social Security is based on your covered earnings that you paid FICA taxes on. It is not based on what you paid in.
I am confused so we need at least 40 credit points and 35 years or either or?
Are the numbers you listed based on 35 years or 40 points or both?
Thank you so much 💓
You need at least 40 credits (10 years of work history) but SS uses your best 35 years as the basis for your payment so if you only worked 10 years you will get 0’s for remaining 25 years and your payment will be much smaller.
@@HolySchmidt Thank you so much for your kind reply!
Why don't you just give us the formula that social security uses to calculate your monthly payments? Just replace the variables with actual numbers and "voila", you have the amount.
Social Security indexes (adjusts) all of your wages before the age of 60 to inflation. Any wages after 60 are taken at face value. Then they pick out your highest 35 years. They add them all together and divide by 420. That’s the number of months in 35 years. This gives your average indexed monthly earnings. Also known as the AIME. The formula they have uses your AIME to determine your benefit. The formula has what are called “bend points”. Your particular bend points are set in the year you turn 62. So if you are turning 62 this year, the bend points would be $996 and $6002. The way it works is they apply the bend points to your AIME. For example: if your AIME is $4000. The first $996 is counted at 90%. Then next $3004 would be counted at 32% If you had an AIME over $6002, then anything over $6002 would be counted at 15%. So, $996 times 90% =$896. $3004 times 32% = $961. Add them together and this gives your full retirement age benefit of $1857. If you take it early before your full retirement age, they penalize you. I hope this helps. Best wishes.
Why don’t you just look up your expected benefits on the social security website.
@@johnscott2746 I love your answer, because that’s how I often answer these questions. People have looked at me funny when I ask to see their Social Security Statement and look at the earnings rather than 62, FRA, and age 70 amount. I have used a spreadsheet for years to calculate AIME. I can plug in any number they want for their future earnings to get a better figure than the estimate SSA provides.
Sorry, just getting to this, so ignore my request to cover spousal sharing!!
So, if I file @ 67, having been my own contributor, I would get $3117
And my spouse filing @ 67, having been her own contributor, she would get what? $3117?
So $6234/mo
Is the most a spouse can receive in SS -her earned earnings or 32.5% of her spouses benefit, whichever is greater? Or does she earn her SS and 32.5% of spouses income?
If the spouse waits until full retirement age to file, the SSA will figure it both ways. Giving her either the benefit she has earned or 50% of her spouses benefit. If she collects at 62, they will deduct from her benefit due to collecting early.
Please do this for divorced spouses.
from what i understand its the same for divorced, if you were married for over 10 years.
I meet the 35 years but plan to work another 5 years. I'm at the peak of my earnings level and figured that substituting these next 5 years with 5 from earlier in my career would make a big difference in the payout. However working the 5 yrs vs. retiring today showed only a very small increase in my payout on the SSA calculator. This applied to retiring at 62, 67, and 70. Something to consider if you think the extra work will make a difference.
Yes, but you seem to be dismissing the difference between a monthly SS payment (now) and what your monthly earnings are for those five years (while SS is deferred).
That 15% bend point is a big demotivator.
@@nattymo7835 you seem to be confusing retirement with collecting Social Security. As the person who posted noted, the benefit of replacing lower paying years with higher years is very little. Which is a good reason to go ahead and retire and simply wait to collect Social Security. Nothing says you have to start Social Security the second that you retire. I retired at 61 and am waiting until I turn 70 to collect.
@@johnscott2746
I'm not confusing them, and I suppose that's a valid point, but you are now focusing on the wrong thing and over-looking something else.
LET:
G= "gross income (before taxes)"
W= "income from working"
S= "income from social security (SSI)"
K= "income from a 401k and all other investments and interest"
y= "the year when income is collected"
Scenario A= "start SSI the moment W=0"
Scenario B= "defer SSI five years after W=0"
THEN:
G[y] = W[y] + S[y] + K[y]
I think a fair assumption is that before most people "retire," K=S=0 and W>0. After they retire, W=0, K>0, and S>0.
But as you point out, what if S=0 for some deferred amount of time after W=0?
That's fine, but the original poster (OP) made a point of saying that he will continue working for five more years.
The point is that it is erroneous to compare S[2026,A] versus S[2026,B], because the other factors are not being held constant.
After adjusting all dollar values for the time value of money (TVM), the comparison should be:
G[2021,A] versus G[2021,B]
G[2022,A] versus G[2022,B]
G[2023,A] versus G[2023,B]
G[2024,A] versus G[2024,B]
G[2025,A] versus G[2025,B]
G[2026,A] versus G[2026,B]
... and also the sum of A's for all years versus the sum of B's for all years.
Actually, the best way is to calculate your expected lifespan, then sum every G[x,A] and compare that to the sum of every G[x,B]. Adjust the expected lifespan and play out the sums too, by scenario.
As a generalization, my intuition tells me that it would be better to defer (a portion of) K rather than defer S. What I mean is that if your goal is to extract the TVM-adjusted maximum dollars and leave the TVM-adjusted maximum estate to your heirs, you probably should start collecting SSI sooner rather than later, even though you are not obligated to do so.
@@nattymo7835 I appreciate the in depth analysis but I have two comments. First of all, your “intuition “ is very likely wrong. We live in a marvelous world that doubles in knowledge every three years. Life spans keep expanding and you (and everyone else) are probably going to live a LOT longer than you think. Waiting to collect Social Security is a guaranteed way to get a huge return on investment. And as long as you are not spending yourself broke waiting to collect, you will (probably, again) leave your heirs a larger legacy. By the way, you are the third person I have been in communication with who is planning their retirement around how much they can leave their kids. I don’t get it. My kids have more money and education than I do. Every one of them wants me to spend every penny!
The second thing is SSI is NOT Social Security. SSI stands for supplemental Security income. It is a special fund for disabled or elderly poor people who have limited income and assets.
If my spouse takes the spousal benefit, what happens to their total SS payment if I die? If my spouse takes her own SS account payments, what happens to her total SS payments if I die?
I'm a bit confused. I downloaded my statement from MySSA two weeks ago (mid-June), and it has all three of my payments (62, FRA, and 67) as being a little bit higher than what was shown here. Is there something else that could affect it?
Slight correction: I'm 63, so it gives me the payment at 63, not at 62. Still, the statement shows numbers that are above the max in the video. Not sure how, but I won't complain.
@@steve82608 He is doing these calculations based upon someone retiring 2021. Your full retirement age isn’t until you reach. 66 years and 8 months, so you will have a couple more years of higher earnings, which will increase your PIA.
@@blucy10 - Thanks, but I think that isn't quite it. I retired early, so SSA doesn't show any more years of earnings in my projection, as far as I can tell. However, your reply reminded me that my projected payments may include some estimated COL adjustments between now and FRA / age 70, so maybe that's it.
@@steve82608 That’s why I always do calculations based upon the earnings record and not the estimate SSA provides. Using a 10 key and Excel, it takes me less than a minute to put in the earnings, and I get a number closer to the PIA.
Thanks for this. One question: if I don’t take SS until 67 but my spouse started at 62, what happens then?
Contact your local SS office and they will tell you.
I took time off to raise my child. I am now 61 yrs. I have 27 years of reported working and have the required 40 credits. You mentioned I must have 35 yrs to get full benefits. Anyone know what that means?
You have eight zeroes to fill in a 35-year work history.
What Natty mo said. So every year you keep working will replace one of those zeros with something not zero. And you know from the kid's grades how much damage a zero can do to an average.
@@krg9942 take heart! If you are 61, then working at ANYTHING for 8 years will give you a full work record and put you at 69! The credits for delaying will give you a big boost and you will have a much larger check for the rest of your life.
The SS formula is calculated using 35 years of earnings. If you didn't work for 8 years (example) during the last 35 years, those 8 years are plugged into the formula with a value of $0 for each of the 8 years... this is one factor that materially affects the final payout. The other factor that materially affects the final payout is the amount of money that you earned (and paid SS taxes on) over the course of the last 35 years (the higher the better). In simple terms... if you didn't work for all of the last 35 years, *and* did not pay in heavy-duty SS taxes for a significant number of those years... do not expect to receive heavy-duty SS payments.
@@asaintinwaiting yes but it’s not the LAST 35 years. They pick out the highest 35 years after indexing your earnings before age 60 to inflation. Might be the last 35, but might not.
How does the spousal benefit work if the spouse also has 35 years of employment and both are the same age? Does the spouse still receive the spousal benefit along with their own benefit?
I don’t think it’s added together but you get to choose whichever is higher yours, or the percentage of your spouses. BUT CONSULT A TAX PROFESSIONAL INCASE I’M AN IDIOT.
No they don't. They collect their own until one passes away. Then they can collect the one that pays the most.
How would it be if I got a divorce and we collected separately?
I THINK you can collect benefits from your ex if you were wife #1 AND married for at least 10 years. Someone, correct me if i’m wrong.
@@debbiesavage7107 thanks for that comment. Glad I got rid of her before 10 years.😀👍
Seven years ago I retired from the railroad at age 60...I worked 36 years and only one time made more than the maximum amount...My pension is $4,100 a month and if I was married her benefit would be 50% of that...Social Security is a joke.