Tom Mosley:

Hey, welcome to the Ease into Retirement Show. My name’s Tom Mosley, your host. Today we’re going to talk about what determines my earnings from Social Security because a lot of things go into it, just like every single person has a different Social Security actual number, every single person that I have ever seen has a different Social Security amount, depending on a lot of things. Well, if we’re going to get Social Security, we might as well get as much as we can. So listen closely, I might give you some ideas how you can get the most out of your Social Security because determining what I’m getting is one thing, getting the most out of what I can get is the most important thing. Now, all of us need to go, all of you need to go, if you don’t know what your Social Security numbers are to this point, remember not your number, but the number of the size of the benefit that you’re going to get.

You need to go to a website called www.ssa.gov. Now, make sure and go to .gov because a lot of people have pirated onto that. And if you look at Social Security something, make sure you’re not clicking on an ad that pops up for people who paid to be in front of the real thing you’re looking for. And then you get on there and give them your information and you get an email five times a day forever. So make sure you go to the real website, www.ssa.gov, and there’s a little button on there or you can find it. It says, my Social Security. Hey, that’s your Social Security, exactly what it says. Follow through. Now they’re going to ask you some weird questions. You’re going to think big brothers looking over your shoulder. They’re going to ask you of these five residents street addresses, where have you lived?

And you may have lived there 30 years ago. And so you got to remember, and if you make a mistake on those questions, it’ll kick you off the website for 24 hours seriously, and they come back and they say, well, that’s all for your protection to keep anybody from getting in and pirating your information. And if you think about it, that’s most likely absolutely true, but you need to go in and don’t depend on them mailing anything to us. They’ve said they’re going to start mailing things again, but nobody gets them. You’ve got to go online ssa.gov and get your Social Security account numbers, and you’re going to find out a lot of stuff there. Now, how are they going to start in determining what you get? Well, first of all, they’re going to add up what you’ve paid and the amount you’ve paid in on your top 35 earning years.

This is really important that you understand that. A lot of people retire early and they think, well, I’m going to get that big Social Security number. Well, that big Social Security number on your report sometimes is your full retirement age number 66 or 67. And if you want to retire and you want to start drawing at 62, I’ll show you in just a minute how you’re going to take a real haircut, but you also may take a haircut from your Social Security potential earnings because you haven’t paid in 35 years. Now, I’m not trying to pull one sex over the other or promote one over the other. But let me tell you something, ladies, a lot of ladies, not so much now, but if you rewind about 40 years ago, a lot of ladies took off one, two, three, five, even, nine years to raise the children. And then when the kids went back to school, then they went back into the workforce.

It’s a common thing for people who, for females who are in your sixties to have six, seven, eight, maybe even nine years, where there’s zeros there where you didn’t work. So you need to look at your Social Security numbers that are on your report that you’ll get from ssa.gov to find out how many years have you paid in. And for instance, if you paid in only 32 years, working longer, I know you don’t want to hear this, but working longer may actually increase your Social Security because if you’ve had 32 years of paying, it’ll fill in three zeros if you work three more years, you don’t have to, but I’m just saying, what determines your Social Security? How do we get it the most that we can get? Then you may need to work a little while longer. So let’s decide to turn on Social Security earlier.

You can do that. You can start getting Social Security at age 62, but I just want you to know that if you’re trying to determine your Social Security and you want it to be the most that you can have, if you turn on Social Security, assuming a full retirement age of 66, if you turn on Social Security payments at 62, you’re going to take a 25% haircut. You can wait a year and you can take a 20% haircut, wait another year, take a 13% haircut, you get back up to full retirement age, you get your full retirement age amount. Here’s the good news, if you wait past your full retirement age, if you can wait past your full retirement age, it goes up 8% a year. So you could get significantly more by waiting, but you got to listen to this, you can’t starve yourself.

I had a lady came into the office, this has been about seven or eight years ago now, and she came in, she dropped her stuff on my desk and she started crying. And I said, are you okay? And she said, yeah, but I did my budget last night and I’m $400 underwater. And I said, well, that’s why you’re here, let’s look at it. So we were looking through all of her stuff and I said, how long have you been drawing this $1,400 in Social Security? Because that was what the statement said her amount was. And she says, oh, somebody told me to wait until I’m 70 to draw my Social Security so I can make more money. I told this lady, I said, ma’am, you’re right, you’re $400 under. You could go to Social Security and get 1,400 a month. She said, do you mean I could have a thousand dollars extra?

It was like I pumped life into that lady. So your situation is different than anybody else’s. If you’re working with a financial advisor, you need to get their input. And it’s not just your Social Security, but it’s all the other things that you have that determine how you’re going to get the most out of your Social Security and what you’re going to get. Because turning it on at 62, as you can see, gives you a lot less than turning it on at 70. But here’s a couple of things I want to make sure you understand. You can turn it on at any month. I had one person came in one time and they said, well, I missed 62, so I’ve got to wait till my full retirement age, not so, you can turn it on any month that you want to turn it on.

You just need to make sure, and you need to understand that you’re going to take a haircut before your full retirement age, could be 67 or could be between 66 and 67, and you’re going to get more money by waiting until you’re 70. So working longer and paying in more also may result in significantly more earnings because you’re probably making more now than you were making when you were 20 and 25 and 30 and 35 and you first started paying in. And remember, they take the top 35 earning years. Now they factor those older years, they factor them, they multiply them by something. But still, if you’re really starting to make good money, working another year or two, it could significantly increase what you’re making in Social Security. So you have to keep that in mind. There’s one other thing. I have people come in and they say, well, I’m still working and I’m 70.

It’s happening more and more and more because people enjoy work or they need to work or they want to work or for whatever reason. And they say, since I’m working and I have enough income, I’m not going to turn on my Social Security. Why not? It’s never going to get any better, it’s never going to grow, and they’re never going to mount it up and give it all to you when you turn it on at 73, and they’re never going to tax you on it as much as you’re getting. So go ahead and start your Social Security for sure when you reach the age of 70 because it’s never going to grow and it’s never going to get any better past that other than the normal cost of living raises. So again, what we’re trying to say is what determines my earnings from Social Security, it has to do with how much you’ve paid in, how many years you’ve paid in, a lot of other factors too.

And when you decide to start taking your earnings and when you decide to start drawing your Social Security, all of those things are there. Hey, thanks for listening to the Ease into Retirement Show. And if you like this show, there’s a little icon there, you can click on it, you can subscribe. More importantly, if you know somebody and they say, well, I’m thinking about turning on Social Security, send this to them and let them listen to it. It’ll help them know how they’re going to determine what they’re going to make and look for some of our other episodes that talk about Social Security and other things. We’re there to educate and we’re there to make sure that we build your knowledge regarding financial things. Thanks for listening.