Ken Moraif 0:00
Hello everyone, and welcome to the Retirement Planners of America Podcast. In this episode, we’re going to be talking about Social Security. And let me tell you something, planning for Social Security is super important because of two things and maybe more. But one of them is, if you don’t do it right, you could find yourself having your Social Security tax at 85% yes, you heard me right, 85% and if you don’t do it right, you could also leave money on the table. If you leave even $100 a month on the table, and you live 30 years, that’s 10s of 1000s of dollars that you left on the table. Social Security is extremely important. We’re gonna talk about how to plan for it in this episode of the Retirement Planners of America podcast, Retirement Planners of America. Rpoa.com

Hello everyone. I’m Ken Moraif, founder and CEO of Retirement Planners of America. Thank you for watching and listening. Hope this finds you healthy, wealthy and wise. And in this episode, we’re going to be talking about kind of the general strategies when you do your social security planning, and for most of our clients, outside of their investments, it is the single largest source of income they have. And doing it right is extremely important in our view. And joining me is my sidekick, the Jeremy, former the artist formerly known as JerBear. I’m not letting that go. Apparently, not at some point I won’t find it funny anymore, right until I do. Yeah, so okay, I almost call you Jerbear, but I’m not going to do that. I’m going to call you Jeremy. Jeremy, Thanks for being with me today. See you. I hope all is well.

Jeremy Thornton
All is wonderful. I appreciate it. How about yourself?

Ken Moraif
I’m doing great. You know, I’m really excited about doing this today, because, you know, when it comes to social security, it is so complicated. You know, in fact, the Social Security website says that there are over 9200 combinations of how and when you can take Social Security, that seems a little much. It’s a lot, yeah, and so I don’t know how the average person you know, who you know, it’s complicated for me, and I’ve been doing this for, I don’t want to say how long, and, you know, I don’t know how somebody who just is about to become of Social Security age can even get through it. In fact, you know, I joke on our on our mark alert videos and other places, that if there was a goal, if there was an Olympics for complexity, Social Security would win the gold every single time. Handset, I mean, it wouldn’t be close. Yeah, they’d be better than Phelps. They’d have like, 30 gold medals in a row, or whatever it is, you know, over the years, because it is so incredibly complex. And I cannot emphasize, and this is self serving to say, but I cannot emphasize strongly enough how important it is if you’re getting ready to make decisions about when and how to take Social Security that you talk to somebody that is trained in that Yeah, and you know, and again, self serving. But in our firm, our retirement planners, we train them, we certify them to make sure that they’re up to speed on all of that. It’s super important, because you don’t want to leave money on the table.

Jeremy Thornton 3:05
Absolutely not just being complicated, the changes that happen almost every year very difficult to keep track of if you’re living a normal life that doesn’t involve that, right?

Ken Moraif 3:16
You mean, you don’t spend all your time keeping up with Social Security tax law changes.

Jeremy Thornton 3:19
You know, I was put it on my, my list of hobbies to pick up. I just haven’t gotten around to it yet.

Ken Moraif 3:26
Okay, well, okay, I can see how maybe you could procrastinate that. Yeah, I mean, and you’re right, it’s like playing 3d chess, because, you know, once you get it down and you think you’ve got it, then they change the laws, or they change the ages, or they change something about it. And when they do that, then everything else is scrambled, right? And so you gotta, you gotta be up to speed on that too, yeah. And so, yeah.

Jeremy Thornton 3:50
Alright. Well, today, I think we’re gonna have five kind of strategies or ideas, or kind of a broad approximations of what to really think about and consider, yeah, when, when planning for this?

Ken Moraif 4:04
Yeah. And, you know, I just have to say that, you know, most shows, you know, they wouldn’t give you five, right? No, they’d give you me maybe three. Yeah, if you’re lucky, you might get all the way to four. But on this show, we give you the full monty, we’re gonna give you five. Isn’t that incredible, ladies and gentlemen, five. So yes, so what’s the first one you want me to talk about?

Jeremy Thornton 4:32
Right? So, so the first one that I really want to kind of dive into?

Ken Moraif 4:36
Well, actually, yeah, yeah, go ahead. We should understand, sorry to jump all over you, yeah, but I am the host, so I can do that. We should establish the ground rules, right, right. Okay, so let’s, let’s do that.

Jeremy Thornton 4:45
Yes. So first of all is there is a full retirement age to be considered. So my question is, if there is a full retirement age, are there other age brackets.

Ken Moraif 4:59
Other ages. Yeah. Yeah, yeah, there are. So, you know, there are three. I’ll call them milestones on the journey, on the social security when you’re going to take Social Security journey, okay, the first time that you can take Social Security is at age 62 Okay, so when you turn 62 you can start taking it. Then, now you don’t have to you can wait, right? And you can wait until what’s called your full retirement age. And for sake of today’s show, I’m going to just say that that’s age 66 right? Okay, so whenever I say 66 yours may be 67 it may be 66 in six months, you know, depending on which when you were born, right? Your full retirement age is, could be different, right? So for sake of ease and keeping it simple, I’m just going to use 66 so let’s say your full retirement age is age 66 Okay, so you can start at 62 you can wait till you’re 66 or you can wait till you’re 70. Oh, okay. Now if you start taking it before age 66 your full retirement age, then you’re penalized for doing that right. And so they reduce the amount that you get. And that’s a very important consideration, because it’s permanent. So if you start when you’re 62 you’re going to get about 80% of what you would have if you had taken it when you were 66 and so the amount that you start with, it’s going to get a cost of living adjustment over time, but you’re starting with that smaller number, and it’s permanent, okay, so you have to be careful if you’re going to take it before your full retirement age. All right, so now you got your full retirement age now because they want to keep the Social Security fund from going bankrupt, right? It’s good goal. They also have incentives for you to wait even longer than age 66 your full retirement age, okay? So they say that you can actually wait till you’re 70. And if you do that, then what happens is that every year that you wait, they’re going to increase the amount of your benefit by 8% okay, so if you wait from your full retirement age, if, assuming 66 and you wait those full four years, 8% per year is 32% so when you’re 70 years old, you’re you’re required, your benefit will be 32% higher than when it was At age 66 interesting. So they incent you to wait, yeah, now, once you get past age 70, there are no more increases. And therefore there is no reason that I can think of that I’m not seeing there may be one, right? That’s my compliance officer is talking to my there could be one unknown that nobody knows about, reason why, but barring that, yes, at age 70, you should take it then, because if you wait after that, you’re just you’re just not getting money that is owed to you, right? You’ve paid into the system. This should be paid to you, right? So those are the three major milestone from an age standpoint, times when you should take Social Security.

Jeremy Thornton 8:05
Okay, so thinking about that 8% incentive increase post full retirement age, does that 8% is it based off of the base amount that you would have at full retirement age, or does it compound based on what year you have. So said 8% on top of year one, two, and three.

Ken Moraif 8:25
Okay, so Jeremy, forgive me for doing this, but that was a stupid question.

Jeremy Thornton
Oh,

Ken Moraif
Let me ask it back to you this way. Okay, if it’s compounded, would you get more or less social security?

Jeremy Thornton
You would get more.

Ken Moraif
And do they want to give you more or less?

Jeremy Thornton 8:39
The government is always wanting to give us more, aren’t they?

Ken Moraif
No, they want to give you less.

Jeremy Thornton
Ohhh!

Ken Moraif 8:45
They would not know it’s not compounded. No, no, it’s not compounded before you even ask the question, you should have known the answer. They do not compound it. It’s based on how much you should have you were going to get when you’re 66 and then they just it’s 8%

Jeremy Thornton
Ok that makes sense.

Ken Moraif
There’s no compounding. Yeah, that would be really good,

Jeremy THornton
Right!

Ken Moraif
So start with they don’t want to give you anything.

Jeremy Thornton 9:03
Right, correct, right? Yeah, they want to keep everything right Absolutely.

Ken Moraif 9:07
Once you know that, then probably the answer flows from there. So I’m sorry, there are no stupid questions. There’s only learning,

Jeremy Thornton
Right.

Ken Moraif
I retract.

Jeremy Thornton 9:15
Well I had a good learning lesson today. Okay, great. So that’s number one. We have to set the ground rules. What are those age brackets?

Ken Moraif
Yeah.

Jeremy Thornton
And there’s a chart for that. And you know, they’ll let you know what it is. Social Security will let you know what it is. But it’s, it’s not, even that’s not easy. It’s like, depending on the month of the year, sometimes,

Ken Moraif
Right.

Jeremy Thornton
It’s, it’s, so anyway, age brackets, depending on what you say,

Ken Moraif 9:43
Yeah, you’re right, because, you know, you could take it. You could start when you’re 62 and a half, or 66 and a half, or, you know, 67 you know, and all of those things are going to impact how much you’re going to get in terms of your benefit. Because it’s all calculated. The good news is they calculate it for you,

Jeremy Thornton
Yeah.

Ken Moraif
And. You know, the if there’s one website that the government has that is really very, very good, it’s the Social Security website, yeah, it’s truly very, very good, yeah, ssa.gov, if you go there, you know, you can, you can see all your work history. You can see all kinds of information. You can forecast how much social security you’ll get if you do this or that, it’s really, you know, a very well done website. I have to say, yeah, yeah. A few things that the government does well, if you ask me.

Jeremy Thornton 10:29
They’ll lay it out pretty clearly for you. Even if it is complicated, it’s clear,

Ken Moraif
yes

Jeremy Thornton
Yeah. I’m guessing they’re more than willing. If you call them, they’ll answer any questions you have, right?

Ken Moraif 10:40
You know, yes. So there’s two ways that if you have questions about Social Security. One is that you can go to the Social Security office, and the other is you can call them on the phone, and the third is you can go online. And in my experience, and I love I’m not disparaging anybody here, but in my experience, the people on the phone are not as knowledgeable as the people in the actual Social Security offices. I’ve had many, many clients over the years. You know, they call the number, they talk to somebody, and then that person says something diametrically opposed to what I told them, right? And what clients have to understand is that I am never wrong. I don’t make mistakes, right? So if they call Social Security and then Social Security says something I that was, you know, not what I said, Right?

Jeremy Thornton 11:30
They’re wrong, right? Well, they need better training from you.

Ken Moraif 11:33
That goes without saying. So, so what I recommend is, okay, if you need a tiebreaker here, right? You got two different opinions, right? Go to the office. Yeah, you know, go in person and talk to somebody. Those people are well trained. The ones that are in the offices themselves, the ones on the phone. There’s hundreds of thousands of them. I don’t even know how many there are, yeah, I don’t know how well trained they are, but yeah. So I would recommend, if you’re really on the horns of that is, go talk to the in the office itself. They tend to give better answers. But, you know, again, self serving. Talk to somebody who’s trained in it, yes, had practice and experience, and they might be able to help you as well

Jeremy Thornton 12:05
Absolutely love that. Okay, so first one, age brackets, certain ages you can get the full one, certain ages you get a benefit from from withholding until a later age. Love that. Second one, number two is longevity expectations, how long do you think you’re going to live? Yeah, how is that affected?

Ken Moraif 12:28
Well, you know, the interesting thing about Social Security and what you’re going to get, the benefits you’re going to be paid, is that regardless of when you start, the total dollars you’re going to get by the time you reach your life expectancy are calculated to be the same. Okay? So if you start when you’re 62 you’re gonna get a smaller amount, right, because they’re gonna pay you over a longer period of time, right? You start when you’re 70, they’re paying you a higher amount because they’re gonna pay you for a shorter period of time, right? We’re human beings after all, right? And we are mortal, so the dollars are the same. The thing is, though, you know, how quickly do you get them? Yeah, so if you start when you’re 66 versus if you start when you’re 70, you’re giving up four years of benefits, right? And that can be a significant amount. So starting at age 70 with that higher amount needs to catch up with what you gave up. Yes, and the number of years that it takes to catch up. If you don’t live long enough, you won’t catch up. Yes. So you’re so your life expectancy, your longevity, is an a very important consideration when you’re deciding when you’re going to take it, because if you wait till you’re 70, and God forbid you die when you’re 73 right? Well, you got three years worth that you gave up four. So you left a lot of money on the table, right? Because the extra amount did not cover the amount that you left. So taking into account how long you’re gonna live, I was talking to a client, you know, he’s got an 87 year old mom, and she’s out there mowing the lawn in 100 degree. So he goes, I’m gonna live a long time. Yeah, you know, so if, if you’ve got, you know, a genetic pool that you’re gonna live a long time? Yeah, you may want to wait till you’re 70, but if not, you may want to start sooner. So how long you’re going to live is an extremely important part. And again, it’s all you know. Nobody knows for sure before, but you want to make an educated guess as to, you know how long you’re gonna live, because that’s part of the consideration, right? Because the break even point, like I said, you need to live long enough to get past that break even point, if you’re gonna wait, if you’re gonna delay when you start, absolutely,

Jeremy Thornton 14:35
yeah, no, that’s and that’s gonna change for every single person in the individual thing, which is, again, part of the considerations in the 9000 different

Ken Moraif 14:44
combinations. Yeah, you know, unfortunately, there is no one size fits all. You know, you should take it when you’re 62 take it when you’re 66 take it when you say, well, there isn’t one size fits all, and that’s when you’re 70, right? When you turn 70, it doesn’t matter who you are, taste, yes, right? If you waited that long. Do it, yes. But other than that one, there is no, you know, rule of thumb for everyone, yeah. And so depending on, you know, the first factor here, we’re talking about all five of them. But the first one is, you know, your longevity, long you can live? Yeah, absolutely. It’s a hard question to answer, but you can look, you can make some sort of a guess about that,

Jeremy Thornton 15:19
sure. And if you’re still working, you know that obviously is gonna kind of come into play. So the third thing that I think we should talk about is, what is your personal right now, financial situation, and what do you forecast it to be?

Ken Moraif 15:37
Yeah, yeah, that’s true. So you know, generally speaking, it is not a good idea to take, to take Social Security when you’re 62 because, you know, like I said before, you’re going to get a far lower amount. And it’s permanent. You know, once you made that decision, you can’t go back and change your mind. And it’s like, was that game show, or is that your final answer, yes, you know. And there was a millionaire Who Wants to Be a Millionaire, right? Yes. Is this your final answer? Yes, yes, wrong, yeah. And now you’ve left, you know, you should have done that. Oh my gosh. So, yeah, so, so taking it early, generally speaking, is not a good idea. However, having said that, if you need the money, that overrides everything, right? You know. So if you need the money, then you should take it. But as we talked about a minute ago, if your life expectancy, you know, let’s say you are 62 and you’re looking at, you know, what your life expectancy is, and hopefully you don’t have a condition or something. But maybe, if that’s the case, then you may want to start when you’re 62 even though, generally speaking, taking it at 62 is not a good idea. Yeah, right. So that’s one consideration. The other thing, like you said, is your financial situation, from the standpoint of, are you working or not? We’ll talk later about how the IRS wants to tax 85% of your Social Security benefits, and then they also have a clawback thing that they do. So if you’re working and you have income coming in, then you may not want to take it before age 66 right? Okay, or your full retirement age, because if you take it before your full retirement age, they take back $1 for every $2 that you make over their threshold. So it is possible, if you make enough that you start you say, I want to get my Social Security. And they say, Well, based on how much you’re making, you’re not going to get any of it. But guess what you did? You locked in that your starting point for nothing when you could have waited and got those 8% increases. Yeah, right. So if you’re working and you have an income coming in over certain thresholds, it’s important that you take that into account, because it may not make sense for you to collect social security, you may want to wait. The other thing, also from a financial standpoint, that you want to think about waiting, is that there is a part of social security which is a death benefit portion of it. Okay? So in other words, upon your death, your spouse gets can get Social Security right, and they can get theirs or yours, whichever is the higher, right? So when is yours going to be the highest it can be when you’re 70. So if you’re doing estate planning and you want to leave the most amount of benefit income to your spouse after your death, then you may want to wait till you’re 70. Yeah. So there’s a lot of your financial situation is going to have a large impact on the decision as to when and how you’re gonna take Social Security.

Jeremy Thornton 18:24
There’s no doubt, right? Yeah? And just like we talked earlier, if you need the money, you need the money,

Ken Moraif 18:28
yeah? And we have clients that you know, for, you know, a variety of reasons, they take 162 now. We also have clients are very paranoid about the future, yeah? And they’re like, they’re going to tax the heck yeah, out of social security in the future, or they’re going to means test it, you know, I’m not going to get it, you know, I’m in a high bracket. And they’re going to say, You know what, you don’t need that money. These other people need it more than you, and so we’re going to not even pay it to anybody that makes more than, you know, $90,000 a year or something. And they’re like, I’m going to take it now, while the getting is good, yeah, and I don’t know, wait till I’m 70, I may not even get it at all. In that case, I’ll never catch up. Right, right? So, you know, there is that consideration also, and that is, you know, what’s Social Security gonna look like? You know, 10 years from now, 20 years from now, that’s hard to predict, but we’ve had clients that have said, You know what? I know, waiting till 70 is better, yeah, but I’m going to take it now, because I don’t know what it’s going to look like when I’m 70, and I don’t want to take that chance. And like I said, they pay you the same amount over your life expectancy. Yes, yeah, the pool is the same amount, right? Right? So it’s not like you’re harming yourself by taking it early, right? It’s if you live past that break even point, yes, that that’s where you know you would have been better served to wait.

Jeremy Thornton 19:40
Gotcha Okay, yeah, that makes sense. And we kind of dove into our fourth point, which was spousal and survivor benefits. Yeah. Okay, so is there anything else you can have expand on that? You know, the survivor gets the higher of the two of their spouse, right?

Ken Moraif 19:56
So, so let’s say that your your spouse. Is the lower income earner, right? So let’s say that their spouse, your spouse, their social security, is $1,000 and yours, because you were the higher income earner, is $3,000 okay? So upon your death, your spouse can choose to get the 1000 or the 3000 right? Now, obviously they’ll take the 3000 so if you want to do some planning for your spouse, then you need to start thinking about, how do I maximize that? Which then that would then say, okay, you know, I’m going to forego getting it earlier, because I want to maximize that. And so there needs to be reasons for you doing that, right? The other thing also, when it comes to spouses, is that your spouse also has the choice of getting their own social security or half of theirs. This is something that many people get surprised when they hear. Okay, so let’s use the example I was just using. Let’s say that your Social Security is $3,000 and now your spouse is going to be eligible to get Social Security, and they’re trying to decide whether they should take their own or yours or half of yours. They have a choice of half of yours. So if your spouse is $1,000 you make 3000 half of yours is 1500 right? So you want to take the 1500 not the 1000, right? Okay, so that’s something that, and it does not reduce the amount you’re used to. You still, they don’t actually take half of yours, no, right? You still get your 3000 Yes. And now your spouse, I’m gonna say my spouse. Is she? Okay? Get a gender in here, so she will get 1500 right, against my 3000 horse, even though, on paper, hers was $1,000 yes, because that was based on her earnings record, that’s what she would have gotten. Now, for this to work, I have to started taking yes after my full retirement age, yes. And she needs to be at her full retirement age to get the full 50% but if you if she takes it early, she gets a reduced amount. There are some, you know nuances in there, but generally speaking, if you do it properly, you can have the higher earning spouse’s Social Security 3000 right? And the other spouse who is lower can get 1500 so combined, you can get 4500 in the example I’m using, right. Okay, so the strategies as to when and how you do that, right? Are extremely important. Yeah, right, so, and there are some strategies around that. The thing also then that comes into play is longevity. We’re talking about before. How long is your spouse gonna live, you know? And what are the things you should be considering there as well. So it’s not just you, it’s also your spouse, yeah, and that’s where the 9200 different combinations. It’s wild. It’s truly wild. It is. It’s amazing. It’s a gold medal complexity performance. I have to say, Yeah, nailed the landing, yeah. Well, if you’re taking to consider stuck, all these stuck, that stuck, that landing, yeah,

Jeremy Thornton 22:56
there’s no way it couldn’t be this complicated. I don’t think there’s a way to make it super simple anyway, if you’re taking

Ken Moraif 23:04
all these No, I mean, yeah, it’s like, yeah.

Jeremy Thornton 23:08
And in with that. So kind of to talk about the survivor. So you have the main breadwinner, 3000 spouse has 1000 they take half. They both reach full retirement age. The breadwinner is earning the 3000 she’s getting 1500 she gets 1500 when she reaches that full retirement age, if the main breadwinner passes before the survivor, the survivor then will get 3000 correct? They would be able to go for 1500 to 3000 they take over the other person. That’s right. So,

Ken Moraif 23:41
so she can go from 1500 to the 3000 and upon death, yeah. Okay, I just wanted to keep in mind it went from 4500 right, both alive, to 3000 3000 right? But the surviving spouse can get the higher amount of theirs, or the one that their spouse was getting, okay, yeah, yeah.

Jeremy Thornton 24:00
I just wanted to put that in there as another complicator, another thing, another consideration, yes,

Ken Moraif 24:05
absolutely. Since it’s and that’s one that a lot of people don’t know, it’s a I love when I tell somebody about that, because they didn’t know. Yeah, you know, when you tell somebody you thought you were gonna get 1000 but no, yeah, yeah, you’re gonna get 1500 Yeah, boy, they leap across the desk and hug you when you tell them that, that’s one of my favorite times. And then when I do that,

Jeremy Thornton 24:25
yeah, absolutely. Okay. So that was number four. We’ll go to number five now. And these are, what are the kind of tax implications of Social Security? Because obviously, everything is taxed. If you’re getting it from the

Ken Moraif 24:41
government, it’s gonna be they’re gonna get there. That’s right, yeah, cut death and taxes. So, yeah, so social security is not tax free. Well, it depends on who you are, but for most people, it’s not tax free. So they have this thing. So there’s two ways that they can take back your Social Security, okay, one of them. I call the clawback provision. I don’t know if that’s an official term, but this one I’ve always used, and basically that is, if you start collecting, if you start getting your benefits before your full retirement age, right? And in our example, we’re saying it’s 66 so if you get your if you start Social Security before you’re 66 and you’re working, if you earn more than certain thresholds, then they start taking back from your Social Security, you could lose all of it. Okay, so you have to be aware of that. That’s one thing. Now, that wasn’t bad enough. They got another thing, you know, they got the belt and suspenders on the tax thing, you know, if they don’t get you with this one, they’re gonna get you the other. So the other one is that they will tax your Social Security benefits. Okay, so there’s this thing called your provisional income. Okay, so the provisional income is what they use to determine whether they are going to tax your Social Security benefits or not and how much. Okay, so basically, what they do is they, if you look on your tax return and you look at the bottom of the page, it says your adjusted gross income, yes, okay, your adjusted gross income at the bottom of that page includes all the dividends, the interest, the capital gains, you know, any income you have from working, et cetera. So you just add it all up, and that gives you your adjusted gross income. What you add to that is all of your tax free income. So if you have tax free investments, like municipal bonds or something like that, you have to add that in. So what they’re doing here is they’re backdooring, taxing you on tax free investments, right, which is kind of clever, right? You know, I have to say they’re, they’re, they’re pretty clever. You know, when I, when I, when I see all these things, I’m like, Man, that’s genius, yeah,

Jeremy Thornton 26:36
yeah. When they’re trying to get money, they can be pretty spot on. Yeah,

Ken Moraif 26:42
I shouldn’t admire our adversary, but, you know, you have to have a healthy respect for these people. You know, the one thing I can say about the IRS, they’re not stupid, right? Okay, they may not be like, likable, necessarily, but they’re not stupid anyway. So yeah, so you add all your tax free income to it, and that will give you now your provisional income, and then, based on how much that is, there are certain thresholds where what will happen is they could tax up to 85% of your Social Security benefits if you exceed that threshold. And it’s not very high, so a lot of people could reach that without being aware. And so if they if that happens, then 85% of your Social Security benefits become taxable. Now I need to be careful here, because when people hear that, they think the IRS is going to take away 85% of your social security right? That’s not what’s going to happen. So again, I’ll just use simple numbers. Let’s say that your Social Security benefits are going to be $10,000 a year. 85% of that will become taxable income, yes, so $8,500 of that will be added to all your other taxable income, yes, to give you your total taxable income, and then you pay tax on that, right? Okay, so they’re gonna tax 85% of your Social Security. They’re not gonna confiscate 85% right? Because sometimes people misunderstood, well, they’re gonna take 85% No, no, no. Taking 85% as taxes, right, right? Yeah, it actually sounds better. They’re only gonna tax 85% shoot, I thought they’re gonna take all. They’re gonna take away 85 it’s still bad, right? Yeah, absolutely, it didn’t become better. No, well, it is better, but it’s still bad. Yeah, so how do you, how do you avoid that? Yes, okay, how do you mitigate against that? Well, it’s not easy, you know, because the threshold is not that high, and therefore it’s not easy. But there are some strategies that you can use. Okay, okay. So for example, if much of your money, your income, is coming from a Roth IRA, under current law, that tax free income you’re getting from the Roth does not count in the taxable in the tax free income that I said, you have to add on Yes, and I say under current law, because there’s a lot of money in Roth IRAs. And I have a sneaking suspicion they’re going to say, yeah, those distributions are tax free, but we’re going to backdoor you, because we’re going to make it taxable on your Social Security. Didn’t know we’re going to do that. Hahaha. So that, I think, is a possibility, but it is not the current law. But basically, so any income you get from your Roth IRA would not be causing taxation on your Social Security. The other thing you can do is you can invest in deferred vehicles. Okay, so again, IRAs are really good thing to invest in, because you don’t pay taxes until you take the money out. It doesn’t count against your provisional income until you do that. So the longer you leave it in. Annuities are a good place. You know, tax deferred annuities, the gains, the interest, the dividends that you earn in those they do not, they do not count towards your provisional income. Cash Value build up of life insurance, you know, if you have that and your cash value is growing, does not count towards your provisional income. So if you’re, if you’re close to that threshold, there are some planning opportunities where you can how you invest, yeah, can not affect. Your adjusted gross income or reduce it. And if that’s the case, then maybe we can get you, you know, below the threshold where that 85% tax kicks in. So there are some planning opportunities there. They’re relatively limited. I don’t want to set, you know, too high expectations here, but, but for certain people, there is that opportunity.

Jeremy Thornton 30:19
Yeah, yeah, that’s a wonderful point. Is not, there’s not one shoe that’s going to fit every everybody. There’s not one size fits all for any of this. And so it’s super important to talk to somebody that knows what the current laws are, somebody that has done it before, has experience and can speak intelligently about that yes kind of deal, and vetting that person is super important,

Ken Moraif 30:47
yeah. And the thing about it also is that, again, there are no rules of thumb cast in stone. You know, this is how you do it. And so a lot of it involves making educated guesses about the future. You know you’re talking about how long you’re going to live. You know, what’s your income going to be, what are the tax laws going to be? You know, you’re making assumptions about the future, and depending on the assumptions that you put into your equation, it’s going to give you a different answer. So, you know, talking to somebody who can walk you through the different things you should be thinking about, and then organizing those in such a place you say, okay, based on all that, this is a set of assumptions that I think are the most realistic. And then based on that, I’m going to decide when and how I’m going to take my Social Security absolutely and then there are also, you know, the complexities of this, all those different combinations, which is that if you’re married, you know, the difference in your ages is important, the difference in your income is important, and the difference in your life expectancy is important. Yeah. So those three things need to be taken into account also and thrown into the mix to figure out when and how to take Social Security. So that’s how you get to the 9200

Jeremy Thornton 32:01
combinations. Yeah, we got there very quickly, yeah. And which

Ken Moraif 32:05
one’s right for you? Yeah, I don’t know. Yeah. The only way I can know is if I sit down with you and we walk through it and figure it

Jeremy Thornton 32:13
out. Absolutely awesome. Well, I appreciate you. Well, thank you

Ken Moraif 32:17
so ladies and gentlemen, I you know, if there’s one thing that I have spent my career trying to do, and that is to make people understand how complex social security really is. So I actually have a secret goal in this podcast, in this video, and that is, I hope I confused the heck out of you, because the more confused you are, the more you understand. It’s important that you sit down with somebody who knows what they’re doing in this area and that can help you with it, because you know, number one, you could get taxed at that 85% number two, if you don’t do it properly, think about if you leave $100 on the table, you pick the wrong strategy for you, and your benefits are $100 less per month, right? That’s $1,200 a year, and you live 30 years, think about how much money that is, okay, $36,000 that you left on the table because you didn’t do proper planning. It’s huge, and it can be even way more than that. We’ve seen people that have made mistakes and it’s cost them, you know, three or $400 a month. So doing it right and talking to somebody that can help you make the best assumptions we think is super important. And like to invite you to go to our website and check us out. We have lots of other podcasts and videos about Social Security. Subscribe to this one like us. And also make sure we also have a weekly market alert video that we do, and it talks about, you know, what we think the markets are going to do, inflation, interest rates, the stock market, the bond market, and it’s all catered to those of you who are over 50, who are retired or retiring soon, and it’s at no charge, so go subscribe to that as well. So again, thank you for watching. Thank you for listening. I hope we’ve made all this boring financial stuff entertaining for you. We want to have more fun than a human being is allowed to have when talking about all this boring financial stuff, and I hope you did that today. So again, thanks for watching, and we’ll Talk soon, Retirement Planners of America, rpoa.com, you