Episode 16: Mastering the Art of Social Security and Retirement with Elaine Simmons
May 15, 2024Episode 16
Jacob Gold, Michael Cochell and Kelvin Gold
Unlock the secrets of a financially stable retirement with the help of Elaine Simmons, a seasoned Social Security Administration virtuoso with 34 years under her belt, as she joins us to demystify the complexities of Social Security. Get ready to learn why your approach to Social Security should rival the care you give to managing a multi-million dollar asset and how to avoid the emotional pitfalls that could jeopardize your golden years. Elaine doesn't just bring her expertise to the table; she brings actionable strategies for couples, insights on the often misunderstood implications of early benefit claims, and the undeniable reasons why integrating this pillar of retirement into your financial plan is non-negotiable.
This episode isn't just about making the most out of Social Security; it's a clarion call to proactively engage with the future of the system itself. As we navigate the turbulent waters of reform, understanding the implications for personal investment and the broader economy becomes paramount. Elaine Simmons doesn't shy away from tough topics like altering the earnings test or adjusting the full retirement age. She empowers you to personalize your retirement strategy, challenges the over-reliance on the break-even point, and underscores the weight of spousal benefits in your planning efforts. By the end of our discussion, you'll have the confidence to challenge misconceptions, the knowledge to seek quality advice, and the conviction to take control of your retirement destiny.
Unlock the secrets of a financially stable retirement with the help of Elaine Simmons, a seasoned Social Security Administration virtuoso with 34 years under her belt, as she joins us to demystify the complexities of Social Security. Get ready to learn why your approach to Social Security should rival the care you give to managing a multi-million dollar asset and how to avoid the emotional pitfalls that could jeopardize your golden years. Elaine doesn't just bring her expertise to the table; she brings actionable strategies for couples, insights on the often misunderstood implications of early benefit claims, and the undeniable reasons why integrating this pillar of retirement into your financial plan is non-negotiable.
This episode isn't just about making the most out of Social Security; it's a clarion call to proactively engage with the future of the system itself. As we navigate the turbulent waters of reform, understanding the implications for personal investment and the broader economy becomes paramount. Elaine Simmons doesn't shy away from tough topics like altering the earnings test or adjusting the full retirement age. She empowers you to personalize your retirement strategy, challenges the over-reliance on the break-even point, and underscores the weight of spousal benefits in your planning efforts. By the end of our discussion, you'll have the confidence to challenge misconceptions, the knowledge to seek quality advice, and the conviction to take control of your retirement destiny.
Speaker 1:
You are listening to Finance Roundtable, a podcast focused on demystifying money. The hosts, professor Jacob Gold, michael Koschel and Kelvin Gold, will educate and entertain you in all areas related to money. Sit back, relax and enjoy the show.
Speaker 2:
Hello everybody, this is Professor Gold, and welcome to the newest episode of the Finance Roundtable podcast. Today we're going to discuss something that is paramount to a successful retirement. No, we're not going to be talking about day trading or selling stock short. We're going to be talking about Social Security and all the important decisions that people need to make in order to maximize that income for life. A little background on Social Security. This year, more than 50 million Americans will collect nearly $614 billion in Social Security benefits. Currently, nine out of 10 individuals age 65 and older receive benefits, and two-thirds of these individuals have Social Security that represents more than 50% of their income. So, of course, if 50% of your income is going to be driven by how you choose your Social Security distribution, that's a very important concept to fully understand.
Speaker 2:
We have a very special guest today. We have Elaine Simmons here. Thank you, elaine, for joining us today. We really appreciate it. Elaine spent 34 plus years working for the Social Security Administration. She was constantly promoted within the agency during that time and spent time in 11 different offices in the southeast of our country. Upon her retirement in 2010, elaine started her own consulting firm and today she travels the country talking to individuals about Social Security and the strategy to choose the best benefit based on their situation. Elaine, welcome to the program.
Speaker 3:
Thank you so much. It truly is a pleasure being with you guys today.
Speaker 2:
It's a pleasure having you here. This is maybe the third or fourth time we've been able to speak, yes, and each and every time we've had our clients present and you're famous within our clientele. Everyone knows Elaine from Social Security and I'm so excited to introduce you to our podcast episode today. So thank you for making the time to come with us. Thank you, yeah, absolutely. Well, I do have a couple of questions that I think were quite paramount to individual situation. I would say every week, Mike, you might agree to this every week we have clients ask us about social security.
Speaker 2:
I was in a meeting just before this podcast episode and I had my client ask me about social security and different strategies, and so I think that our audience today will get a lot from this. But my first question for you is what, in your opinion, are three of the biggest mistakes that people make when they are strategizing around Social Security?
Speaker 3:
Okay, I think the number one issue honestly with Social Security is that none of us are making an informed decision. Retirement for us is the second or third career in life, 25 to 30 years. We're really not taking the time to understand what the law says. We're making decisions based on what we think the law says or what someone told us. And I always tell you your friends are always wrong, but never in doubt.
Speaker 1:
They'll give you the worst possible advice.
Speaker 3:
We're not taking ownership. The other part we look at it as real money because it is the foundation of income, but I don't think we really see it as real money, because today it's not hard to come up with $5,000 to over $8,500 a month in social security benefits from a couple. I want you to take a step back and look at these benefits from the asset value. That's as if you saved another $1.5 to $2.5 million at a 4% rate of withdrawal. I'm Irish honey. I am not going to be frivolous with that kind of money, that's right. I'm going to look at that as a diversification of my assets and, quite frankly, I'm not going to make a decision without talking to you and pulling all of this in together. So I think that's the biggest mistake we're not making informed decisions. We're making a decision based on what we think the loss is, and we're not really. No matter what we say, we're not looking at it as real money. We're not.
Speaker 2:
That's a really good point. I think many people they make this decision based on emotion.
Speaker 3:
It is. It's an extremely emotional decision and it's usually driven by the concept I have worked, I paid into this system. I want my money back, rather than turning it around and looking at it as that investment account. That's pretty darn big for us.
Speaker 4:
Yeah, that's a great point. It's something that you shared, Elaine is out of sight, out of mind, because you don't see it going into an account, a statement that you're looking at on a consistent basis Contributions, if you will, towards your future benefit. So it's out of sight, out of mind, but if you look at it the way you just shared, it puts some hard facts to it.
Speaker 3:
It does and you're looking at it. You really ought to look at it. This is not just retirement. You're buying disability insurance. Years ago and I haven't checked this recently, but statistics said three out of 10 people would become disabled before age 62. You're buying disability insurance. Young people die every day. You're buying insurance that provides an income for your family, for those children until they're age 18, that provides a widow's benefit, and always keep in mind this money amount is the foundation of income quote. That's not tied to the market and has built in inflationary adjustments. I love the idea that 50 to 70 percent of my retirement income. If we go through a market correction and I've got good planning, I'm okay. I can sleep at night.
Speaker 2:
Yeah, it's not going to get affected by a market and you're exactly right that that cost of living adjustment is extremely powerful for individuals.
Speaker 3:
I do remember my dad applied for benefits at 65. He died at 90 and a half. My mother died four years later. My mother's widow's benefit was double what my dad's benefit was at 65. Because I'm the one daddy talked to about money, I pay attention to things like that. So never discount the value of inflationary adjustments in our lifetime. It's true. It's true Absolutely.
Speaker 2:
Another question I have for you is. This question is around choosing the right age to start collecting benefits. So a couple of numbers here. The maximum benefit at 62 in 2024 is $2,710. The maximum benefit at full retirement age is $3,822 and the maximum benefit at 70 is $4,873. Now there's about a 55% difference between that 62 number and that 70 number. Can you share with us examples of when taking early retirement at 62 might make sense and when delaying Social Security to 70 might make sense?
Speaker 3:
Okay, I can, because with Social Security planning, especially for couples, there's a wonderful Southern expression that says there are two nickels in a dime, honey. I might be the five cents and you might be the nickel, but I have ownership interest in that too. I think the one with the higher 70 amount ought to be talking with you early in the game, separating when I plan to retire from when I plan to take social security benefits. Create a bucket of assets, spend that money. I should wait till 70, if I'm the one with a higher amount, because you might outlive me 10 to 15 years. Please don't make a decision based on a break-even point. Oh my gosh, it's not all about you. You might be dead at 82. But, honey, if I outlive you 15 years and you lock in that 62 amount for my widow's benefit, I will snatch you out of the grave and kill you one more time that is going to be ugly, it is.
Speaker 3:
So look at this together Now. I am rarely an advocate of someone taking a reduced benefit. Notice I said rarely, but I'll tell you a situation. I talked with a couple recently. They're both 62. They've both retired. They've got his 70 amount is the higher amount. I want him to wait till 70. I want that widow, the widower, to have that $4,800 a month as the foundation of income for the rest of her life. I've explained the nuances in between. If someone dies unexpectedly, I don't want to maximize that other spouse's benefit because the successful plan is maximizing the widow's benefit or widower.
Speaker 3:
Sometimes, you guys do outlive us Not at all. But in that case I suggested the woman take her benefit at 62. And they said but wait a minute. So-and-so told us she should wait till full retirement age. I said well, you both retired. We want you to wait till 70 because we think one of you has a 50% chance of living to your 90s If she takes her benefit now at 62, that's less money we spend down on assets which means a higher success rate of him waiting.
Speaker 3:
But then I also have a quirky way of looking at it. I'll say, okay, if she waits until 67, that's a bet against longevity as a couple.
Speaker 4:
Now.
Speaker 3:
I need you both to live to be 79 and 81. I look around and I look at people 79 and 81, and generally both of them are not still standing and the big misconception that she takes her benefit early will reduce her widow's benefit down the line. That's never been true. Kind of a quirky little thing, isn't it? Yeah, yeah, but when you talk people through that, they're like, oh my gosh we never thought about it that way. It does, and it gives us a successful plan. So I think every situation is so important it should be addressed individually, so rarely.
Speaker 1:
Rarely.
Speaker 3:
But there will come a time. Sure, I'm always going to find you the money to go be wild and woolly Always.
Speaker 2:
Absolutely.
Speaker 4:
That's important.
Speaker 2:
Mike, do you have a question on your end?
Speaker 4:
Yeah, Comments to that Excellent scenario. It's so individualized and one of the comments that you made earlier was informed decisions and that's a critical, critical piece. I've learned that multiple times that you've been kind enough to come out and speak with our clients either at lunch or dinner event, and I think the repetitiveness is so important. It's so complex. I read an article that there's what 2700 rules now tied to Social Security. It makes me think about the complexity of our tax system and how, over the years it's become more complex and it takes a repetitiveness to really catch on.
Speaker 4:
You're not going to remember everything. It's nearly impossible. So I've learned each time I've taken different notes, and some of these individuals or households decide okay, we're going to retire in a year from now, let's start looking into this. But I found that it takes years to really get a feel for it. Talk to a number of different people, have a number of different resources, and so my question lies to her Would you have maybe two or three resources that you may recommend for an individual or household to start that adventure, if you will kindly put?
Speaker 3:
Yeah.
Speaker 4:
I think that might help to guide others.
Speaker 3:
All right, and you know social security. We hear about all the rules and regulations and how complex it is. Now remember I came to work for the agency 48, 49 years ago, back in the days you had to memorize these regulations and pass competency exams, and we did. Social Security is not a complex program. It is detailed because it is designed for Social Security to pay you all the benefits you are potentially entitled to.
Speaker 3:
Okay, that's why you've got the details. Unfortunately, misinformation has always been so horrendous and everyone is a self-proclaimed Social Security expert yeah, social Security expert now I joke about it. But I say, if you guys would quit lying about my program, I could tell you everything you need to know in 30 minutes, okay, and you would make that informed decision. So I had someone reach out to me recently and said you told me this, but, elaine, I went online and I saw a YouTube video that told me this how do I know you're right? I said well, let me just give you the regulations. I'm right. Misinformation We've got to be ever so careful.
Speaker 3:
The Social Security website is the best source of information, but you're reading it based on what you want it to say. You're using the wrong terminology. We're getting real flip in our conversations today with people. Social security is not one to be flipped with. I frankly think if you're working with a financial advisor, we need to have this conversation no later than age 59. If you're planning to stop working at 55, we need to start talking two years before that, because you stopping work early changes the rules of the game. You can lose insured status for disability changes your benefit amounts.
Speaker 3:
I think we need to be planning and that way you've got your questions and your answers. Now, if you're not working with a financial advisor and there are plenty of people who are not, who just are trying to make the best decision they can I want you to look at the basics of Social Security. I want you to look at it as real money. I want you to ask questions. Ask questions of social security, you know, and sometimes you may get some incorrect or incomplete answers. Keep digging. Be careful the people you talk with, because I talk with people all the time who are trying to tell me what the loss is.
Speaker 4:
And.
Speaker 3:
I'll always have to say now, bless your heart, back up, back up. That was wrong, that's never been true, and then take ownership. And if there's something you're not really really sure about, then by golly I'm the first one to say reach out to your congressperson and let them know. I am dealing with the local social security offices and I'm getting three different answers. Can you help me with this?
Speaker 4:
Yeah.
Speaker 3:
Because that's available for everyone. Now, my congressman may not appreciate that, but I'm the first one to say we're all public servants. We've got to help people with this.
Speaker 4:
Thank you for that. Thank you, I love the part of ownership and you're exactly right and it takes time. I like to recommend three to five years prior to making a decision, just to start. That, because everything feels foreign at first, but then all of a sudden you gain some clarity as you move forward. So thank you for that, I appreciate that, and now I always say 59.
Speaker 3:
You guys have heard me say this, because I have jokingly said I can always find a dead ex-spouse somewhere. That can change what we're doing in this. So, that's why I pick that age. Okay, thank you.
Speaker 2:
That's great. My next question is we all know that the Social Security Trust Fund will be depleted in 2041, leaving $780 covered for every $1,000 in scheduled benefits. What adjustments or changes do you think need to be made in order to try to fill in that gap of that?
Speaker 3:
deficiency, all right and I think the most important thing. On the statement it says if we don't make changes. But you see, people don't realize that they have not made major changes to this program since the 83 amendments. The Greenspan Commission, I'm not living up to the rules of the game. I ought to be dropping dead any time now. My goodness, the changes are minor, very minor and, as we talked earlier, I'm not a fan of raising full retirement age. I'm not. I'm a big fan of changing the earnings test and maybe saying, okay, your full retirement age is 67, but if you apply for benefits before 70, there's a lower earnings test for you. Leave retirement age alone, okay, but change the formula for the future benefits. The last time we changed the formula was in 83.
Speaker 3:
I had the job back then when you calculated the benefit amounts manually. We grandfather it in based on date of birth and basically that reduces future benefits. Maybe $100, $150 a month based on your life expectancy, because if I'm going to live to be 90, you guys are going to live into your 100s. My goodness, change the quarters of coverage. I remember when we needed less than 40 quarters of coverage. We haven't changed that, the concept that paying into this system 10 years to give you a benefit for life. That's not enough skin in the game. Anyone under age 50, under age 55 ought to be paying in 15 to 20 years to have a benefit. 20 to 40 years Think about that.
Speaker 3:
But the absolute best resource for the solvency issue with Social Security is the Retirement Center at Boston College. Google that Now you'll have two references there. For the person who wants the easy reference type in the Social Security Fix-It book 55 pages stick figure in color, five to ten lines per page in big print. What are the changes? Minor For the person who really wants to understand this type in 2023. Social Security Trustees Report. Don't read the report. It'll put you under the table.
Speaker 4:
You'll never come out again.
Speaker 3:
But read the commentary Raising the tax. The last time the Social Security tax was raised was forever. In three days the changes are minor. It's just that Congress, all through history, since day one, has always waited to the last minute. Now it breaks my heart when I hear people say I'm not going to count on Social Security because that's when we make foolish decisions. Have you thought about the economic impact if those benefits were not payable on jobs?
Speaker 1:
on rent.
Speaker 3:
It would be horrendous Take ownership of that solvency issue. We need to make those changes, it's true.
Speaker 2:
Okay, yeah, no, it's very true and for all of our audiences. It can be complicated for individuals.
Speaker 2:
It can be, and that's where Michael and I can come into play. So if a client of ours or an individual has questions about social security how to calculate it for themselves, how to ingrain that within their overall retirement plan we would encourage them to reach out to us and we can dive deeper into that conversation. And then, every once in a while, we get just the wonderful opportunity of having such a great expert in this field. And, elaine, I've met a lot of people that talk about social security, that have a lot of great experience, but no one says it clearer than you, no one makes it more enjoyable.
Speaker 2:
I mean, whether it's your, your southern accent or your jokes that you throw in there it's just I listen to you talk and it's I can get caught up into your stories and it just makes sense. And so we're so grateful and so honored to have you on the podcast to just sprinkle a little wisdom within people's mindset of don't just go forward with what feels good. Run the numbers, look at the big picture, recognize your life expectancy and come up with a plan that is applicable for you, not because what your barber said or your neighbor said Don't buy into the noise that's out there.
Speaker 2:
Get educated, ask questions and run the math. Would you say that that's a good path for people to take.
Speaker 3:
I want to be careful on run the math, okay, because I'm not a fan of the break-even point at all. I'm part of a women's group and, oh my gosh, social security became a topic. It was an occasion of sin for me.
Speaker 3:
I had to step back because all of them were talking about the break-even point. That does not fly for my generation. The break-even point 48 years ago was easy Social security benefits were not taxable. We had just introduced the concept of inflationary adjustments. We had no idea of what that would look like in a lifetime. But the biggest thing is you were planning what if you died. You made it all about you. You never factored in your spouse the widow's benefit. I think we ought to look at this and truly plan what if?
Speaker 3:
I live, not what if I die? I'm Irish, I'll tell you you're dead, it doesn't matter. But if you live, this could be critical. Have a smart plan, take the money and run. It doesn't fly. All we have to do is look at my parents' generation and say it did not work for them. So when you run the numbers, run the numbers with your advisor looking at your other assets. As that diversification of assets, please take care of the widow, the widower, please. That's critical, okay.
Speaker 2:
Mike, any last words?
Speaker 4:
Yeah, I'll comment. One of the most important thoughts I got from hearing you speak is almost retraining the individual's thought process about it, and the misinformation takes control many times, especially these days. There's so many avenues and resources that might not be quality, so a lot of what I'm hearing and being reminded about hence the repetitive each time I've heard you speak with either our podcast listeners or our clients it's that you get something from it, so it's rethinking the way we think about it.
Speaker 3:
It's probably a very critical piece.
Speaker 4:
So that's a lot of what I got, so thank you for that.
Speaker 3:
I appreciate it. I think it is. I think we've got to look at it differently. And you go one person at a time and then work with them, and then they share with their friends and slowly we will change all the misconceptions with the program so thank you, that's a wonderful place to end this.
Speaker 2:
We really appreciate your wisdom and I think that you are a public servant. You are really preaching the Social Security Gospel out there and those there and those that are listening, those that take that information in, you're positively affecting not only their lives but also the generations to follow, because it's creating more stability for that family.
Speaker 3:
So thank you for the service that you give us all. It is truly, it is a pleasure and it honestly is an honor to do what I do. I love it.
Speaker 2:
That's a great way of looking at it. Okay, thank you, elaine. Thank you. Thank you everybody for joining us. Stay tuned for next month's podcast episode. Thank you.
Speaker 1:
Thank you for listening to Finance Roundtable. Make sure to check out our episodes at wwwfinanceroundtablepodcastcom. We also encourage you to explore wwwjacobgoldcom to find articles, research videos and more from Jacob Gold and Associates Inc. If you have a question for the show, please email Jacob at jacob at jacobgoldcom.
Speaker 2:
Jacob Gold and Michael Koschel are financial advisors offering securities and advisory services through Cetera Advisor Networks LLC, doing insurance business in California as CFGAN Insurance Agency LLC, Member, FINRA SIPC, a broker dealer and registered investment advisor. Cetera is under separate ownership from any other named entity. Jacobs California Insurance License 0E55425. Michaels California Insurance License 0K90130. The views depicted in this material are for information purpose only and are not necessarily those of Cetera Advisor Network. They should not be considered specific advice or recommendations for any individual. Neither Cetera Advisor Networks nor any of its representatives may give legal or tax advice. Kelvin Gold is a marketing associate. Registered address is 14850 North Scottsdale Road, Suite 255, Scottsdale, AZ 85254.
