Complex Financial Planning: Social Security! When Should You Claim It?!

Are you planning to take social security but are unsure of when to do so? Misinformation, intricacies, and personal circumstances can make this decision quite complicated. We aim to provide you with the facts and debunk the myths about social security in our latest series surrounding Complex, Simple Questions.

This is episode 1 of a four-part series. In this episode, we spend enormous amount of time dissecting social security. In episode 2, we get in whether or not you should consider a Roth conversion. In episode 3, we address whether it’s okay to retire in a “bad” economy. And in episode 4, we discuss when it’s okay to sell an investment. All simple-sounding questions, but all very complex in detail. Each is unique to your life and circumstances!

For this episode, join us, as we explore fascinating perspectives on this essential topic of social security timing and equip you with the comprehensive understanding needed to make informed decisions about your benefits.

This episode unravels the many aspects of social security - from the government's promises and the reality of the IOU to the impact of changing taxation on your benefits. We discuss the importance of individual circumstances such as age, marital status, and dependents in deciding when to start receiving social security benefits. We'll expose you to industry insights and break down complex topics into digestible chunks.

We'll guide you through understanding your personal situation, health, survivor benefits, cash flow needs, income tax situation, and long-term financial projections when considering when to take social security. By the end of this episode, you'll have gained a solid grip on social security and retirement taxes, empowering you to take control of your financial future. 

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Looking for additional content that can help you get the most from your life? Check out Unleashing Leadership with Travis Maus, premium bonus content from Ditch the Suits Fans, at https://unleashingleadership.buzzsprout.com/

Thanks to our sponsor, S.E.E.D. Planning Group! S.E.E.D. is a fee-only financial planning firm with a fiduciary obligation to put your best interest first. Schedule your free discovery meeting at www.seedpg.com

Ditch the Suits is produced by NQR Media. NQR also produces the One Big Thing Podcast with Steve Campbell.

You can watch all episodes, as well as other great content produced by NQR Media through their YouTube channel at https://youtube.com/@NQRMedia

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Transcript

Speaker 1: 0:08

Welcome to Ditch the Suites, a movement awakening and opportunity for you to start getting more from your money in life. I'm Steve Campbell. With my amazing co-host, Travis Moss, we're going to share industry insights nobody wants you to know about, so buckle up and enjoy the episode. Welcome back to Ditch the Suites, steve Campbell.

Speaker 1: 0:28

Here with Travis Moss, we are going to be starting a brand new series today, really focused around this idea of about complex, simple questions in the world of financial planning, questions that we sometimes throw out there, which we'll get into a question in every episode, that seem very simple but are more complex. There's more under the surface. There's more when you peel back the onion. I know, travis, this is an area that is really near and dear to your heart as a planner, because many times people have good intentions. They ask simple questions to a financial planner, but there's a whole lot more like transformers than meets the eye. In this first one today, we want to talk about a big one that we hear all the time, which is when should I take social security? Why is this considered a complex, simple question?

Speaker 2: 1:13

Let's start out with what complex simplicity actually means. If I were to walk into anybody else's job let's pretend you're a doctor or nurse or a school teacher or an engineer or a bus driver, it doesn't matter I would come in and I would start asking you questions why do you do it like this? You'd say, well, I do it like this because. And then, like a four-year-old, I'd say why is that? Then you'd explain why that was. Then I would say okay, but why is it like that? A lot of times, when we're not initiated, when we don't understand everything behind a question, we think it should just be a really simple answer. Just give me the yes or no here. Is this good for me or is it bad for me? Just like with everybody else's job. Well, it depends. There's a lot of things that you need to consider. To somebody who is very informed, being able to break it down. For somebody else is also very hard, because you could say well, what is there to consider? How could this possibly be a complicated decision? It's like well, what's your vocabulary for my field? How do I even get you to the same level? As far as if I could explain to you using the verbiage that I don't even have to just explain the words that I'm using. If you thought about it like this if you took the back of a piece of paper and you put a dot in the top right-hand corner and then you put a dot in the bottom left-hand corner and then, starting from the middle of the page, you basically just draw a whole bunch of squiggly. You just start scribbling all over the page. Now imagine this as if you're taking a path through the woods, the path you think I'm going to enter one side and I'm going to get out on the other side. That's the left-hand dot going up to the right-hand dot. It feels like it's a straight line, because you can draw a straight line when you're actually in the woods taking a walk. I'll hold up for the screen. I don't know if people can see this, but it looks like a whole bunch of squiggly. You're going all over the place.

Speaker 2: 3:28

The reality is that in order to understand how some of these things work, you need a lot of the back story. You need a lot of basic knowledge, you need a lot of vocabulary, you need a lot of. Why is it like that? Where does that come from? We get trapped sometimes when we're going out there like social security people all the time and say, why don't I take my social security as if it's a five-minute answer or yes or no answer? The question is well, it depends on a lot of factors. This whole series is really about those types of questions. I think we've got questions on Roth conversions, retiring in a bad economy and should you get rid of an investment if it's losing money. It's not a five-minute email type of answer. They're actually quite complicated. Yeah, in each one of these questions when should I take social security?

Speaker 1: 4:22

Should I do a Roth conversion? Should I retire in a bad economy? When should I get rid of an investment? When you actually like, we do go to Google. There are millions upon millions of responses to these questions, which means that there's a lot of people on the internet searching these particular questions. I know that we're going to break it down step by step. I know that we're going to break it down step by step, really focusing on this first one when should I take social security? If you're like, hey, how do I see Travis's squiggly on a piece of paper, do you want to remind you that you can head over to NQR on YouTube and watch along with us? Or you can listen online on your favorite platform, but on NQR media on YouTube you can watch all of these episodes, travis. Simple, complex, simple question when should I take social security? There's a lot of factors and a lot of steps. Where's a good place to start when that question is posed to you?

Speaker 2: 5:15

We've got three steps that we have to work through. First, I want to say this, because you mentioned that we go to Google For those who don't know us. We don't go to Google for the answer for ourselves. The reason why we're going to Google is we're pretending where somebody who doesn't know and we're saying, google, if I didn't know about this, what's the world got to tell me about it? We've said a lot of times for content for our show, because it's easy when you think about these things all day and when you work in this profession and in this field and you're doing it all day, it's easy to take for granted again how complicated something really is and why. It's not as easy as just a two-sentence explanation to somebody or something like that. Again, you're going online and you're Googling the question because you're trying to make a good decision or trying to find help, and are you actually getting the right information, and so that's why we go to Google. So step one is you got to cut out the noise. So, while we're talking about Google and everything like that, there are things that we know, and then there are things that we are afraid of and we really have to be honest with ourselves when we're trying to work through certain concepts is how much do you actually know about something Like I can go out and look at a bridge and I think I can figure out OK, you have to have supports on the bridge. I don't know anything about how much support you actually need or how to pour concrete in water or something like that. So there's a lot more to it than being like every 10 feet. I got to put a post.

Speaker 2: 7:00

We know when we're thinking about social security, we know that the government says that we're entitled to social security. That's a fact. The government says you're entitled, we've taken your tax money and we are promising you a benefit and we don't have to trust the government. But that's an opinion, that's a personal thing. The government has come out and said in society that you live in, so in the actual, real society, you are entitled to social security. That's a fact. We also know in its effect that there's not really a trust fund for Social Security. There's no vault someplace like Scrooge McDuck swimming through the dollars in the coins dating myself cartoons we used to watch when we were little but there's no vault someplace with all this money sitting in it.

Speaker 2: 7:48

Social Security System is basically an IOU. They took the taxes when there were surplus taxes, they gave them to. The government, spent them to issue Treasury bonds. Maybe there's some loose accounting as to how much that they've taken all the time, but basically Social Security is a general obligation to the US government. The government has promised you that they're going to pay you. It's an IOU for the future. You gave me some money today. I give you an IOU for 30 years from now or whatever. That's a fact. That's how it is, that's how the system is, that's how the laws are, that's how it works.

Speaker 2: 8:22

You can again say well, I don't believe that they're going to pay me, but that's a personal opinion, because it's not a fact. It hasn't happened. We also know that government has the ability to tax and change the structure of the program and that they've consistently done that through history. The difference with a pension plan and Social Security is a pension plan well, let's say a pension plan tied to a corporation, a pension plan tied to the corporation. The corporation's got to make good on it and the corporation has to go out and get money to do that With a government.

Speaker 2: 8:58

When they say, hey, you're entitled to Social Security, steve, and you say well geez, they're going to run out of money, how are they possibly going to pay me? Because the government can just raise taxes. They don't have to have your permission and it doesn't have to be an economically good idea. They can just simply raise taxes to give you your Social Security benefit. In fact, that is what they have done over time. They have raised taxes, they have elongated the time period, those people who have to wait until 67 for full retirement they used to be 65. What they basically said and that's basically a tax they said you can't get the full benefit, and really what they're talking about there is not necessarily the amount of money you're getting, but whether or not they're going to tax you if you're over a certain income threshold because you're still working while you're receiving it. They basically created an additional tax to incentivize you to wait longer, because it reduces the burden on the program. At the same time, if you take it earlier, there is some tax mechanism to it. They'll fix the program as they need to, which they have done historically.

Speaker 2: 10:09

Every time we talk about oh my gosh, we're going to run out of money by year 2020. All of a sudden, miraculously run out of money. It's 2030 and that's 2035, because they can change it whenever they feel like it. That's the reality of it. These looming falses, the deadline they're going to be out of money and they're going to take mom and dad. So security, that's false. One of the reasons why that that's out there is it's political One party is going to save it, one party is going to kill it. That's what it all comes down to.

Speaker 2: 10:40

In reality, you can't really take Social Security away in the United States, at least not currently, at least not imminently, would they say. Normally, when they come in and change Social Security, they say you know what? For everybody who wasn't born before 1980, we're going to leave it alone. For everybody born after 1980, here's how we're going to change it. The reason why they do that they got to give you time to adjust. If you got 20 or 30 years before you retire, you can't really complain about it. If you got a year before you retire, if you're already in retirement, you have no chance to recover. It would be a major economic hit. It would really cripple the economy. So they don't do that. They come out and they say, hey, in the long run, this is what we're going to do. Those are facts. That's actually how they handle it.

Speaker 2: 11:27

If we're just looking at history and we're looking at how the program works, we have to understand that, first and foremost, everybody's running around trying to get us all scared about what's happening. Is Social Security going to be there for me? Also, you might have friends and your friends tell you hey, you got to take it early, always take it early or you got to wait as long as you can, you got to get that bigger check Again, it's like. But where are they coming up with those assumptions? Are they coming up with those assumptions based on fact? Do those facts? Are they specific just to them? We'll talk about that, because I don't like this idea that we all have our own truth about things.

Speaker 2: 12:05

But there are situations where facts are unique to us individually. Our situation of facts like you know, I'm 67 years old and a widow right, that's a unique fact to you that belongs to you. Nobody can argue that. That's real right. And so when we look at social security, that's important compared to the person who's 67 and married, or has an adult disabled child, right, it's a completely different fact set that will influence what your decisions are regarding things like social security. So, assuming, let's just pretend that we cut out all the noise and we say look, social security is here. The government says they're going to give it to you. So you're going to take the government at their word that you're going to get it from them, and if it seems like the government doesn't have enough money to do that, the government will do what the government does, which is raise taxes to cover the bill. So, assuming that happens because that's the only thing that you can really plan on, right, because it's there's no precedent for it not happening like that. So let's assume that that's what happens.

Speaker 1: 13:22

And before you even jump into step two, you know we've tried to empower our listeners. If you're new to DTS that we used to work within a financial services industry and we're chained a certain way and now being on the other side is the only plan, or some of that mindset where we've said be leery of professionals that tell you it depends when you ask them a question. And now we're saying when it comes to social security, it depends. The reason that we're saying is because there are a lot of moving parts and there's a lot of planning that has to be involved in it because you want to make sure you get this critical piece of your income correct.

Speaker 1: 13:53

But in our training when we first started in the industry, you know people would come to us as financial advisors and say when should I take social security? There was no financial planning, so you would just look at a statement, pick a number with them and go. So there's a lot of people out there that have also come to professionals wondering when to take this and there's not a lot of thought put into the uniqueness of their situation. And I think it dovetails into what we're going to get into, because when we say it really does depend. We want people to understand the amount of time that goes into making a financial plan that's unique to your life and you don't want somebody who's going to give you just a quick answer. So I think, as you kind of dive into this section about step two, I think it will bring to light when we say it depends why we're saying that, with all the factors that are involved.

Speaker 2: 14:41

Well, we're. We're what you're referencing when you're talking about. When we say it depends on somebody else, does what you're what you're really saying is somebody who is a product salesperson. When they tell you it depends, that's part of the sales pitch, right? What we're doing here is we're just trying to say flat out this is how it works, right? So when we're talking about financial advice in general, or financial guidance or financial education, everything depends, everything depends on the situation, right? When you're talking about financial products and you're dealing with somebody who gets paid a commission to sell you something, now you're dealing with somebody who it depends as a pivot to the next product, you know, and and it's normally based on some kind of emotional driving type of perspective. So so I think that there's a nuance in the delivery of the depends that I think you're referencing there.

Speaker 2: 15:34

So, but so step two is did depends portion. It's understanding an individual's personal situation, and so here's kind of where I would start with that. There's there's like five points here to make there's health, there's survivor benefits, there's cash flow needs, there's income tax situation and then there's long term financial projections, kind of in no particular order here. But let's start with health. If you are looking at claiming social security or you're getting close. The first question I have, as well as there, anything that is that is going on with your health that could shorten your life expectancy. You know the people in the government. They're not silly about this, so they figure out how much money you've paid into social security over the years and then they actually early calculate it. So that's a mathematical process to give you essentially the exact same economic benefit by the end of life expectancy whether you start at 62, 63, 64, 65, 65, 66, 67, assuming consistent income taxes and all that kind of stuff, right? So there's other ways that you could manipulate that and get more out of it. They're just talking about the shared pile of money that's got your name on it, and so it's really a life expectancy thing.

Speaker 2: 16:48

The first and foremost Is there something that could cause you to have a shorter life expectancy than average? And if there's something that could do that, well, you have less time to collect the money. So the longer you wait, the longer you have to live to recoup all the money that you've left in the program. Well, if you diet 70, you would have been better off taking it early.

Speaker 2: 17:11

So sometimes people don't like to talk about their health and it's like look, if you've had three strokes and have diabetes and you're 62, you might consider taking it early Because good chance is that you're not going to live to life expectancy. I mean, that's the reality of it and you might be wrong. Some people I know people have had four different cancers and strokes and they're still alive in their 80s. But I think that if you get diagnosed with some fairly serious diseases early in life, I think that you can make a reasonable conclusion that you could err on the side of saying let's take more money up front so that we get to enjoy it, because we may not be around long enough to enjoy it in our 80s and 90s, or at least not around and physically active and able to enjoy and get as much fulfillment out of it as we would if we were taken early.

Speaker 1: 18:03

And I just appreciate what you just said, because I think that's the value of really having an advocate in your corner that is going to talk through those things with you. You don't want somebody who's going to skirt around and not talk about those issues. So I think just bringing that to the table that understand your unique health situation, that's something that you have to talk about, no matter if it's hard for you or what you need to have those kind of conversations. We're going to stop right there to hear a word about our sponsor. We're here to help you get the most money in life as host of this show.

Speaker 1: 18:32

But that doesn't just happen. You need good financial planners that have your best interests in mind, and that's why we want to take a moment to talk about Seed Planning Group. Seed Planning Group is a fee-only financial planning firm that has a fiduciary obligation to put you as a consumer's best interest first. If you're not sure if they're the right fit for you, we would encourage you to head over to seedpgcom. That's seedpgcom. Fill out the contact us form and schedule your free discovery meeting, because you could be one good decision away from getting the most from your money in life.

Speaker 2: 19:03

Yeah, and that's sometimes, especially when you're dealing with planners who are like friends or family members those are hard conversations to have. Or if you're dealing with somebody who's just worried about selling you stuff. They're afraid of ticking you off, and you know what the job of a planner is. To say it like it is Look, none of us are living forever. We're all dying. I mean, that's the reality. The question is, when do we check out? And for some of us, we're not as blessed with as good a health as others, and so it's just being honest.

Speaker 2: 19:34

The next step is survivorship benefits, and survivorship benefits is really about understanding how social security works and if you will be financially okay if you lose some benefits because you or your spouse are, you know, predestined each other. So you know you don't. Some people have actually had. They think that they get their spouse's social security and their social security if their spouse passes away or they have another thought about they could. Well, that's their money. This is our money. Listen, if each you and your spouse put $500 a month in the middle to pay the mortgage payment or to pay the grocery bill or pay the utilities and you lose the $500 a month, well, you're going to have to figure out how to make up to $500 a month. The question is is if you lose your spouse's income, what happens? And that's where you have to really understand how social security benefits actually work for the survivors. So it's generally, basically, if you, the simple answer is is it's the larger of the two benefits that you get to keep. So if you have a spouse who gets $2,000 a month and a spouse who gets $3,000, well, the spouse who gets the $3,000, you're probably going to step up into theirs.

Speaker 2: 20:50

However, there's when did you start your social security? That comes into play, because let's say that the spouse who's getting $3,000 a month, well, it doesn't matter. When they started, well, yeah, so let's say they started taking there's a full retirement age and that was the max benefit. That's the actual benefit that is inherited by the spouse making $2,000 a month. However, it's then reduced in case that spouse took it early. So if that spouse took social security, let's say, at age 62, they're going to get the 62 prorated portion of that $3,000. So essentially, they're probably going to still be around $2,000 a month. I mean, that's the math is going to come pretty close to that. I mean they may jump up a couple hundred, but they're not going to get that full $3,000.

Speaker 2: 21:33

So you have to understand each of the spouses. This is a packaged deal when you're married, which benefits you're taking and when you take them because you could actually leave your spouse and die your straights because you didn't take them right. We all have situations sometimes where we have a spouse that's got some bad health and so we tell them you probably should take that early because you're not very, very unlikely to outlive your healthier spouse. And then the healthier spouse who had the lower income. A lot of people say why don't I just take that early? You know, because it's a small amount doesn't matter. Well, because, let's say, the spouse that was not as healthy, they had a much bigger benefit. So we want to push the healthier spouses who had a lower benefit as far out as we can. So if the unhealthy spouse passes away that bigger benefit, more of that is actually captured for the healthy spouse with the longevity. So we just want to be really smart about how those things work. Right there you can see, almost every couple is going to be very different.

Speaker 1: 22:41

Can we park there for one second? Because even being in this industry and just understanding how that works, that could be a significant, life-altering change. If you were told through family, friends or through a blog post that you're just going to get whatever your spouse had and there's no financial plan and you're banking on that, talk about almost an $800,000 net cash flow that's gone. That you were banking on through the level of planning that somebody could map out for you, building in what if scenarios. We hope none of this ever happens, but let's start to look at you know, what could happen in these situations and how could that affect you.

Speaker 1: 23:18

That second part that you just said, with the healthier spouse waiting because they would get the upper side of the pro rate that value alone in this conversation, versus just winging in it and let's just take the largest number or taking it early. There's extreme value. So we hope that, as you're listening or watching this with us, that you're starting to go. Okay, I didn't know that. If that causes you to pause right there, that's a win. So why don't you keep going? I think we got three more that are left here.

Speaker 2: 23:46

And that also gets you to some of these online calculators. The calculators are not sophisticated. They cannot think of all the what if? Scenarios, and that's why dealing with somebody who's got some experience in this it's going to slow you down. Who's going to? Who understands the complexities and is going to be able to explain them to you in a way that you can understand? I'm going fast here. Normally we'd break this down differently, but for the sake of time, we're kind of going a little bit fast here.

Speaker 2: 24:09

But it is quite complicated all the contingencies you have to think about. Then you have cash flow needs. So do you need the money or are you just going to put it in savings? I've literally seen people they take social security and they just put it in savings, and so you put it in savings and it's making you know one, two percent interest instead of deferring it and getting a. You know your six. I forget exactly what the annual amount is, but the annual increase on it, right, the compounding growth on it. So you're missing out on that. For what reason? Just because I like having the money in my savings account. Well, that's fine.

Speaker 2: 24:47

If you need the money in your savings account, maybe you don't have a lot of other cash and it gives you a chance to accumulate some cash. But to do it just to have money sitting there not making any interest, that's kind of self-defeating. Unless, again, maybe you have a terminal illness or an illness that's going to shorten your life and you're saying, well, I should get as much money out of the system as possible. Okay, I can understand that, but I've seen people do it the other way. They're just, they're hoarding money and it's, like you know, bite off your nose despite your face type of thing.

Speaker 2: 25:14

And so the first question is is do you actually need additional cash flow? And if you don't need additional cash flow, probably there's other things you could do. We talk about raw conversions and tax plan all that stuff all the time you do you do when you trigger social security for a lot of people there is taxes that are going to at least federal taxes. You're going to be doing at least a portion of it and you know you have to consider the taxes too and your lifetime of taxes and what's the best way to kind of move money through your tax brackets over time. So cash flow is really important.

Speaker 1: 25:51

Yeah, I mean I think I've been in some of these meetings, you know, looking at the financial projections and just being a fly on the wall, and it really is incredible to see people's level of both intrigue and appreciation when maybe they came in kind of dead set or figuring they were going to go in one direction, whether it be social security or any part of their financial life, any tool.

Speaker 1: 26:13

Hey, here's what we think we want to do. And then a planner who's proactively put the numbers to work, projected them out, done risk assessments, tax assessments says I know this was your thought, but let's just show you what happens if we do it a different way and all of a sudden, either their risk score looks better or they make more money at the end of the projection, or just they start to understand. I think what people miss is the like aha moments of like I know why we're doing what we're doing, like versus just this is just what you do, and I think what you're starting to hit on with cash flow and survivorship, hopefully, is those light bulb moments of this is a huge piece Like you want to get this part right. So I think in these last few points to to leave and bring it home.

Speaker 2: 26:55

Well, we get them, we've got income taxes. You have to understand how the income taxes on those security works. So for most of the clients we work with, they have other assets right, and so they may have a situation early in retirement where there's no income taxes and will trigger an income tax situation on purpose to take advantage of the low income tax and will pay some future tax bills today so that they'll be smaller, basically. But you got to understand that Social Security is not taxed the same way as like retirement accounts, the most that they're going to tax those securities up to 85% of the benefits and it's only federally taxed. In most states there's I think that there are a couple that tax it. But like if you're in New York, where we're from, or if you're in Tennessee where there's no state income taxes, it's not taxed as part of your, your income, it's completely state tax free. So if you were to take $30,000 of your retirement account because you needed to live on, you're going to pay federal income taxes on that and in most states some form of state income taxes, right, some states you don't actually have to pay that or you get a big exclusion. But there's there, you got to check that tax. Basically there may be a tax on that, guaranteed it will be 15% more in income taxes and you would have paid on the Social Security, because the most you can tax on Social Security is up to 85% of the value. Retirement account. 100% of the money coming out is going to be taxed at the federal level. Right Again, you could have standard deductions on stuff against it, but just assuming that they're both in a tax situation. So you need less money then to pay your bills if you're taking it from Social Security versus your retirement account. And that that's really important to think about. Because when you're looking at long term, if you're saying, look, I could save. Let's say that you save $2,000, $3,000 year in income taxes because of what you're doing. Well, if I told you right now you could, you know, put $3,000 a year into an account and in 20 years you'll have half a million dollars, you'd be like that's great, I want to do it. Same idea, same exact idea. It's just like figure out, you know how the taxes work and then we have long term financial projections. So the re that, one of the ways you figure out the survivorship needs, the cash flow needs, the income tax needs is a good long term financial projection, because you have to understand how your dynamics are going to change as you get older.

Speaker 2: 29:11

If you have a million dollar IRA or two or three million dollar IRA we have clients like this and you don't take any money out of your retirement or your IRA, you just I'm going to leave it in there, or maybe it's a four. Okay, whatever it is, you just leave the money in there. You may be in a lower tax situation right now. That's wonderful. So you say I don't want to take any money out because I don't want to pay any taxes. Well, remember, the IRS pushed or the Congress, I guess, pushed back the RMD date. I have to start taking money out much younger now. It's going to end up being all the way to 75 people an hour, 73 years old, I think, where they got to take it out Right. So it's indexing up as you're getting older.

Speaker 2: 29:54

If you look at the tax bill that you're creating, when you look at your million dollar IRA, you see a million dollars.

Speaker 2: 30:02

And I look at your million dollar IRA, I see 700,000.

Speaker 2: 30:06

Because I know that there's an IOU to the government.

Speaker 2: 30:08

Some of that money that's probably going to help pay the Social Security in the future right.

Speaker 2: 30:13

But so there's an IOU that's in there too.

Speaker 2: 30:17

When you understand how to control that IOU by understanding what's going to happen in the next 15, 20, 30 years based on the way that you invest and all your expenses and how you're spending money and stuff like that and some variability in situation like what happens if your expenses go up and stuff like that right, if you understand that tax bill that's coming, it's going to help you make a much better decision on should you use Social Security, should you use your retirement accounts.

Speaker 2: 30:45

It's going to help you make a much better decision on whether or not you need to worry about survivorship benefits for your spouse, right. How close are you going to be at the end to running out of money, right? Or how intense is inflation going to get on you? That type of thing that's going to help you decide do I take the benefit now and live it up, or do I got to delay this for a while so that I can make sure that if my spouse kicks, you know I've got some extra money to pay the bills? But those are the five things that you really you have to consider and you have to consider them really in detail and everybody's going to have a different mix of those. So that's really going to drive for most people a very individualized approach. And then we have step three, steve.

Speaker 1: 31:29

Well, and before we jump into step three, I think what I love about what you just said is so, travis, you're telling us that, instead of being reactive all the time till what's happening with you, your money, the world, the economy, where you're getting tax bills, you didn't know we're coming or you were hit with something you couldn't foretell. What you just did is you showed that you can be proactive through planning to get out ahead of some of these things. Think about what a complete different experience that is of just always opening a bill and saying, like darn, we owe this money versus hey, we know we owe this money now because we're going to pay less down the road, and to us, that's an important value of ours. So I just think, as we get into more of these episodes, what we are trying to do is showing that this can be exciting when you start to take ownership in the driver seat, of what's happening, and social security is not a small decision. So why don't you hit us with step three as we bring this one to a close?

Speaker 2: 32:24

Yeah. So step three is pulling this together and we've mentioned a little bit of this, so it's going to be a little bit of a repeat, but then we'll emphasize why that's important. But we're going to put the pieces together based on the needs of you and your spouse. So your own personal situation where you individually, if there is no spouse, and just because a simple projection shows that you're going to get more from social security if you take it at a certain time, that is normally the wrong reason to make your decision. In reality, when you talk about inflation and everything, the difference between taking social security at one age over another one, normally, once you account for tax brackets and everything in inflation, is a very small amount of money. So for people who are really scraping and trying to make it day to day, it's a huge decision for you. For people who have some assets, who are going to be dealing with RMDs and all those other issues, it's going to be less of a. The money driving a component is probably going to be less, and I say that because you've also got to live life, and so there's some people back to the beginning part, when we were talking about clearing the noise. There's some people that are just going to say look, man, I am too stressed about losing my social security or not getting what I put in. It's just, I go to breakfast with the guys every Saturday morning and I'm afraid of what's coming down the road for the country and that I won't have that benefit. I won't be able to get the most out of it. Listen, if that's your concern, if that's what's ingrained in your brain, it's there, it's already taken up residence. It is not worth having a stroke, worrying about it so that maybe and this goes back to that projection maybe you get an extra $28,000 by the time you're 95 years old, right? So you leave your kids a million 28,000 instead of a million. It doesn't matter at that point, right? You're going to kill yourself early with the stress of it.

Speaker 2: 34:20

So, if you're one of those folks that is at the point, though, where that stress is really digging its claws into you and you're really worried about it, and there's listen, I can preach this stuff and it's not going to change. You, don't fight it then, right? I mean, you need a planner to say look, is this a really bad decision? Right, this caused you to be homeless at some point. And that's for people who are a bit tighter with the finances, you know, who don't have as much room, but for, like, a lot of people that we're dealing with, it's not like that, and so the question there is is what is it worth to give up financially to not have the stress Right, and we always think about risk, of the risk of losing money.

Speaker 2: 35:04

Well, there's also the risk of not being able to compartmentalize some of this stuff and, like I said, creating a major health issue down the road for yourself. So I just we have to have room to say you know, not every decision has to be about dollars and cents and what's in my bank account right now, right. Some of it is is look, in case I go first, I need my spouse to be taken care of, so we're going to go without a few extra bucks now to make sure she's taken care of it. Some of it is is like we sit around the table every day and we're really concerned about where things are going. It's really stressing us out. We need to pile up as much money as we can, and you know you have to make decisions that are going to also help you sleep at night.

Speaker 1: 35:54

Yeah, I think what you're talking about is just having informed decisions, and if you tracked with us for the last 34 minutes here, this episode was not one minute long. When should you take social security? Here's when you should take it. We just spent 34 minutes describing all the various considerations, and I think what you just did was a powerful summary that if you, as a client of a professional or whatever it may be, have all the information at your fingertips, you've done steps one through five, that Travis just laid out for you. You know everything and at the end of the day, you just still are afraid and it's in your best interest to just do it. You know, you feel this right. That's an empowering conversation too, but what's happening is there's a lot of people trying to make decisions without a lot of information. That's costing them in the long run Because, like you said, it might have gone down to the survivorship benefit and not understanding how that works. You get any one of those five things heading in the right direction. You're in the driver's seat If you get all five of those working in the right direction. So what can you do? Use this information, go back and listen a second time through. Share this with a friend. There's probably a lot of people in your age group.

Speaker 1: 36:58

If this episode resonated that this could also impacts or share it with them, don't forget to subscribe to Ditch the Suit Street out to Chavis and I through DitchTheSuitscom. But let me give you a little precursor. We got three more episodes in this. Complex, simple questions we're gonna look at should I do a Roth conversion? Huge question that people are asking. Should I retire in a bad economy? Should I just keep working? And then the last one should I get rid of an investment that's losing me money? So you're not gonna miss these three episodes, but thanks for giving us the time on Ditch the Suit, where we hope to get you the most from your money life. We'll see you next time.