Medicare School Daily
The team at MedicareSchool.com led by Marvin Musick answers REAL Medicare questions from our callers, and help bring clarity to the VERY confusing Medicare System.
Medicare School Daily
The 4 Social Security mistakes that REDUCE benefits
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One Social Security decision can follow you for the rest of your retirement.
In today’s Medicare Daily Show, we’re talking about the mistakes that quietly shrink people’s checks, often before they even realize what happened. We’ll cover why claiming age matters, how working while collecting can affect your benefits, and why married couples need to think beyond just their own monthly check.
Before you claim, make sure you understand what could reduce your benefit and what decisions may be harder to fix later.
Call in with your questions! We look forward to providing some clarity.
Over $1.6 trillion every year is spent on Social Security benefits, meaning people that are getting a Social Security check. There are four mistakes that you can make that can actually limit the amount of your Social Security check. And so we're gonna talk about that. And you're gonna learn how what those mistakes are and how to avoid that because we all want the biggest Social Security check we can get. Welcome to Medicare School Daily. My name is Josh Music. This is my dad, Marvin Music. And whether you're just starting Medicare, you're just starting Social Security or just retiring, this is the place for you to come and learn how to not make all any mistakes. We want you to be clear and understand all of your options as it relates to Medicare and Social Security. Just a moment, you're gonna learn about these four big mistakes as it as it relates to Social Security and increasing your check size. But if you have a question, if you have a question about Medicare or Social Security, I want to encourage you to call in. This is your opportunity to talk to my dad, Marvin Music, the leading expert on these subjects. You can call in Monday to Thursday, 11 a.m. to noon Central Time, uh 833-824-2004, 833-824-2004. Don't let your questions go unanswered. Get them answered so you don't make a mistake that impacts you for years to come. So, Dad, let's talk about these four mistakes.
SPEAKER_00All right, let's do it. So I want to address uh these four uh issues, and really uh there's no uh you know importance here one or the other. They're all important, but so I'm just gonna start by talking about uh the first issue that will definitely reduce your Social Security benefit is if you do not have 35 years of of taxes paid into the Social Security system. 35 years. Um and the reason for that is because when they calculate what your Social Security benefit is going to be, they're gonna take the top 35 years. So if you've only worked 25 years, you're gonna have 10 years worth of zeros. Okay. So if people can, we like to see uh them be able to work the 35 years, that just increases their benefit. Because what they'll do is they'll take your top 35 years, they uh apply an index to bring up, you know, to inflate those numbers to make sure that your, you know, money you made 25 years ago is brought to current dollars, so they'll inflate that up. Uh and uh once they've done that, that establishes what we refer to as our lifetime earnings. And then they take our lifetime earnings um and they divide that by 420 months, there's the first 35 years, uh, and that's B 420 months, and that gives us what is called the average index monthly earnings. And that number then is applied to bin points, what then determines uh what is referred to as our primary insurance amount, which is our uh Social Security benefit at our full retirement age. All right. So I'm just trying to say top 35 years is what they're gonna use. So if you can uh put in those uh full 35 years, that's definitely gonna increase your benefit. If you can't, it's certainly gonna be the last. Number two, uh any time that we decide that we're gonna file before our full retirement age, that is also going to reduce permanently our Social Security benefit. So let me say it again. So if we decide I'm gonna take my Social Security before I hit full retirement age, which for most people right now is 67, uh anyone born from 1960 thereafter has a full retirement age of 67. And so if we take before that, uh for every month we take early, we lose a half a percent, which means we're gonna lose uh about six percent every year that we take before our full retirement age, and that is gonna be a permanent reduction. So that's number two. Number three, uh, if you decide that you are going to continue to work and you're uh going to take your Social Security benefits before you uh start, before you hit your full retirement age month and year, uh then again, now you're gonna be subject to uh uh what we uh call the earnings test, which means that uh you can only make so much money if you take your Social Security benefits before your full retirement age. And so the way that system works is we actually have two numbers. Uh one number we call the low earnings test, the other one is the high earnings test. So if you decide to take social security benefits and you keep working uh from 62 up until the year before you turn your full retirement age, you can only make this year $24,480. Not much money, about $2,000 a month. So uh uh for every uh $2 I make above that limit, basically $2,000 a month, they're gonna reduce my Social Security benefit by a dollar. So that's uh the penalty uh if we take early. Now, if we decide to take our uh benefits uh the uh early, but it's the year that we turn our full retirement age, let's say my full retirement age is July uh of this year, uh, and I hit that full retirement age, uh then I don't have to worry about my earnings test. But from uh January to June in my example, if I'm still working, uh that limit this year is $65,160. So I can make a lot more money, but I still have the earnings test. And so for every $3 I make above that, they reduce my benefit by a dollar. And so we have these two different earnings tests amount um and it changes the year return full retirement age. But once we hit full retirement age that month and that year, uh no longer can we be penalized, there's no withholding, uh, we can make a million dollars a year and it will have no impact upon our Social Security benefit. Okay, so that's the third thing that can reduce it is if you continue to work and you're not yet full retirement age. Lastly, uh would be if a person decides that um uh they are uh going to um uh take their benefit, let's say at full retirement age. We know we have no earnings test, we know that we did uh uh not take any kind of reduction uh by taking our benefit at full retirement age, but let's suppose that we are concerned about our spouse. Uh maybe our spouse has never worked, or they worked minim minimally and they've had no um uh uh you know Social Security uh you know the the they paid enough into the system to really get a nice benefit. So if you're concerned about that, what you may want to consider doing is waiting to take your own benefit until 870, uh. Because from 867 to 70, we can grow that account 24 percent uh more. So we can uh you know grow it sizably. And then if we take it 870, what that does is that locks in our spouse that is younger, the spouse that has very little or no Social Security benefits of their own, then uh when we pass away, if if indeed uh you know they outlive us, which is uh very likely, especially if it's a female and they're younger, uh then you've locked in for them a higher benefit because they will get 100 percent of whatever you're taking or whatever you're eligible for when you pass away. That's my plan. Um my wife has very little social security on her own, raised kids, all that. And so uh I plan to wait to age 70, grow that account to its max so that uh when I take, I've maxed it out for my own benefit, but even if I don't live long enough to really see uh you know that the benefit of that, uh my wife is younger and then she's gonna get that that greater benefit. It could be for many, many years. So again, this is a strategy that we can use if you have a spouse uh that has very little of their own and you really don't have to have your social security, I would continue to grow that until 870 and then turn it on. Helps you, helps them as well. All right, so those are the four ways. And again, this is a huge decision. And if this is something that you uh want some additional information about, uh of course we're financial planners, so we help people uh make the social security decisions all the time. So again, if you have any uh further help about that, just give us a call. We'd be delighted to give our opinion and give you some uh you know really good, unbiased advice about this very, very important decision.
SPEAKER_04Let's talk to Barbara in Colorado. Barbara, welcome to Medicare School Daily. Sorry, the phone uh didn't click over. Welcome to Medicare School Daily. What questions do you have for us?
SPEAKER_01Oh yeah, I just was on hold.
SPEAKER_04Yeah.
SPEAKER_01This is Bad or Barbara.
SPEAKER_04Yes, yeah.
SPEAKER_01And I was calling about the stacking of Medicare with um Medicaid. Um, and um right now I have uh what's called buy-in Medicaid, or in the state of Colorado, it's called working adults with disability.
SPEAKER_04Okay.
SPEAKER_01So I'm still a few years out from um getting Medicare, but I am thinking ahead. So I thought I'd call the ask the question.
SPEAKER_00Sure, sounds good. Let me ask you this, Barbara. Um by the way, good to talk to you. What is your spin down? How much do you have to spend out of your pocket before Medicaid uh will kick in? If anything, I just I'd like to start there.
SPEAKER_01I'm not quite sure on what that is going to be. Okay. As a matter of fact, I'm just starting this whole process. Okay, how much do you have to pay?
unknownYeah.
SPEAKER_01Right now, oh I see you're saying right now, you know, I just I just have buy-in Medicaid. I I'm a working adult and I work full-time, but I don't, I'm not using anything out of my company um uh buy-in program. But for Medicaid, I pay about um $130 a month.
SPEAKER_00Okay, very good.
SPEAKER_01That includes everything, then you know, no co-pays and no extras for um medication.
SPEAKER_00Okay, all right, that sounds good. Well, right now where you're setting is wonderful. $130, uh uh that uh all you have to be out of pocket, you know, that's awesome. That's what you know, fifteen hundred dollars a year uh out of pocket, the Medicaid's gonna cover. So what I think's going to happen is as you approach let me ask you this first. Uh are you're not by chance uh like in the process of applying for disability, would that be correct?
SPEAKER_01You know, I don't have the full-on disability like the SSI and the SSD. You do not okay, and I I do not, um, but I was considered the working adult with disability, so I was able to qualify, and I also have sex and eight hours, with the buy-in Medicaid. Okay. Um, but not for the full-on disability.
SPEAKER_00Okay, okay, sounds good. So let let's just let's just for now assume that you're not going to get uh approval for any kind of social security disability. If you um uh uh were on social disability, uh then uh 24 months later uh uh you would begin your Medicare. So that would be at age 63. But again, that's not you. So let me uh uh address this as though you're not gonna get on Social Security disability, so you're gonna wait until 65 to start your Medicare. And then what would happen is uh uh they will reevaluate your Medicaid uh program once you're 65, because then Medicaid would move uh to the second payer position. So in four years, um yeah, they'll evaluate that. Uh I'm assuming do you already have have you worked for at least um uh 40 quarters, meaning have you worked at least 10 years? You have those? Okay, good, good. So I'm at four quarters. Okay, at sixty-five then uh you will uh they'll reevaluate your Medicaid eligibility. And so what what could happen is that uh this uh this buy-in uh program you are in is probably going to be adjusted uh and it may go to zero. Uh but again, they will establish that Medicaid eligibility. So let's assume that you get 100 percent Medicaid coverage where you don't have to spend any of your own money. Then what you will normally do in that scenario is you're going to get what is called uh uh an MAPD plan that stands for Medicare Advantage uh with the prescription drug coverage. And it is a we refer to it as a dual eligible, which means you have Medicare and Medicaid, and they have some phenomenal uh Medicare Advantage plans for people in that in your situation. Uh so that's probably what's gonna happen at 65. You'll get a special needs plan for people that are dual eligible Medicare and Medicaid, and they truly are very, very attractive. And the reason is because not only is Medicare gonna cover some of the expenses, but also Medicaid will. And then you'll have a private health insurance company that will coordinate all those benefits for you. So you really are in a very good position. Uh but the but the same money you're spending now is not necessarily gonna be what you're gonna spend once you go on Medicare. Okay, that that's gonna be adjusted. Alrighty?
SPEAKER_01Yes.
SPEAKER_00Okay.
SPEAKER_01I totally understand that. And then um so the most likely they'll direct you toward that dual program versus like a straight-on regular A and B program and federal program.
SPEAKER_00You got it. You got it. Yeah, and they and they really are designed for your situation, and most people love them.
SPEAKER_04I'd probably say probably around 64 and a half. When do you turn 65? Like what's the month? Oh, I guess it's it's July. June? June, yeah, June. So I would say probably sometime in like April of the year you turn 65. I reach out to us or somebody like us and let us see what those plans look like. They're gonna be different than they are, you know, four years from now. Um, so that's yeah, I am aware of that.
SPEAKER_01Yeah, yeah.
SPEAKER_04So, and we'd love to help you. So, yeah, I'd say anytime March or April, uh, just call in, we'll get her done. Do you have our number that you can save?
SPEAKER_01I have it right here in front of me, the 833.
SPEAKER_04That's that's the call into our live show. If you want to call into our office and schedule an appointment with somebody that can actually like compare all the plans with you, let me give you that number.
SPEAKER_01Okay. It's let me yeah, I'm gonna write that down.
SPEAKER_04Yeah, and you can just save it in your phone as Medicare School or whatever. Um, it's 800-782-6676. 800-782-6676. And when you call in, you're gonna be talking to somebody here in the U.S. Our office is in Kansas City, uh, so we're uh not not too far from you. Uh, and everyone's been trained by Marvin. Uh you know, we have a high a lot of training, a lot of ongoing training. Three times a week we do additional training. And then you're also, I think the cool thing is you're you're assigned a dedicated client care manager. And this is somebody who, if you lose your ID cards, if you have a billing issue, a claim issue, if you lose your Medicaid status, if you decide to move from uh Colorado to to California, whatever it is that comes up along life's way, we're here for you. You have one person you can talk to. So you're not just signing up with a faceless 800 number that, you know, who knows what it's gonna be next time you call in. Yeah.
SPEAKER_00So and the beautiful thing also, Barbara, uh there's no cost to use us. So uh we'll do everything that we do totally free for you. Yeah. Uh fortunately, we don't have to work for free, but we're not paid by you. We're paid by the insurance companies. So there's no extra cost to you whatsoever. So, you know, it whether to use us or somebody else, use a broker, because we really do uh kind of have your back, we have your best interests in mind. We can approach this whole topic very unbiased. Uh we're able to truly help you, and so we'd be delighted to serve you in the future. Okay?
SPEAKER_01Thank you. And let me just double check that number again. 800 782 6676.
SPEAKER_04You got it. All right.
SPEAKER_01Thank you. And then and the and the choice of also to stay in the federal program with the Medicaid program is potentially still an option, or are they gonna make me go into the Medicare Advantage program and and what would that pros and cons be between the federal program and the advantage program?
SPEAKER_00Okay, well, they're not gonna make you do that. I will just tell you, I've I've been doing this 17 years, and I've never seen a scenario where I think that that having A and B and Medicaid is the secondary payer is better than being on an advantage plan. Yeah, you're just gonna have more options. Now, I don't think uh Medicare and Medicaid combination is terrible coverage, but you're gonna get so much more uh options and benefits uh that uh just the original Medicare system, Medicaid is not gonna provide for you. So I think dual eligible plans are truly awesome. I I do. So I think that's gonna be in your best interest. And and again, we got a couple years before you have to make that decision, but if you're making that decision today, I would tell you 100% uh go on a dual eligible plan.
SPEAKER_01Thank you so much for clarifying that and thank you for your time today, and thank you for your um straightforward shooting from the heck.
SPEAKER_00Yes, sir. Yes, ma'am. Good talk to you. Thank you. Hello, Tom. Um uh welcome to uh our program today. Uh glad to talk with you. What kind of questions uh can we address with you today?
SPEAKER_02Hello, thanks for taking my call. Really appreciate the show. Um I am a uh I'm 64 years old. I'm turning 65 this year. I'm a retired uh first responder from a county government, and uh I've oh and I've had my insurance through that government. Well, when I turn 65, they have a Medicare Advantage plan that they automatically will put you on. So all along my intention was to go on to reject that, go on regular Medicare, and then get a supplement and plan. That was my plan all along. Well, it so happens, my wife, she's a dependent on my plan and on my regular health care plan, and if I reject that from the county, she is no longer eligible to receive health care from the county. So, in essence, I have to go on the Medicare Advantage. Luckily, my wife is only one year younger than I am, so exactly one year actually, so uh by a few days. So, my question is my plan is to possibly go on the Medicare Advantage. It's a United Healthcare PPO plan, um and in order to for her to have her health care, and then at one year, and I'm just not sure how the one-year trial write period works. If I could come off of that, I'm also a cancer patient uh that I've been dealing with for uh about three years now, and um most of all my cancer is all uh cared for under the World Trade Center Health Program. It's 9-11 related. So the the treatments that I get are usually a Johns Hopkins, and I know they don't take Medicare advantage. That other plan, the the World Trade Center plan, does take care of it. Uh however, you know, it's a little concerning if you need certain tests or whatever to qualify, you know, at what point, you know. Can I come off of that one-year trial at any point during that year to go on Medicare and to get a supplement plan without medical underwriting?
SPEAKER_00Yes, sir. You can. I want to clarify something. Tom, I I think that your your your your thinking is very correct. Uh I don't blame you for going on advantage plan uh during that year period because you don't want your wife to have to uh go out and search for other insurance. Uh it's a it's available, marketplace plans and those kind of things, but probably you know more than you didn't want to spend. So I think you're you're thinking correctly. So what I would do then is you have the full 12 months. So during the month of August of uh 2027, uh you're going to um uh exercise your trial right uh to return back to original Medicare, get your supplemental plan that you want, as well as a drug plan, and all that then would go into effect 9-1 of 2027, the same time your wife is going to go on Medicare. So you can do this, sir. Um uh now I will tell you this. Now I want to clarify something. You th you can for sure, but if someone else is in this same predicament, we have to keep in mind that when we come off of advantage plans and we terminate those voluntarily, and that's what we're talking about. Uh if we terminate them voluntarily and we do this beyond a year, then you do have to medically qualify. But because you're doing a voluntary termination within that trial right, you're gonna be fined to do this. In other words, there will be no underwriting for you whatsoever, but you gotta do it during the month of August. And frankly, you could you could even do it during the month of July for an effective date of nine one. You don't have to wait to August. Uh but what we would do if you work with us, we'd love to serve you, is we what we would do is we would submit your prescription drug plan during the month of August. Uh and that's what kicks out your uh your uh advantage plan and so that you can go you know have everything uh you know newly covered 9-1. If that make does that make sense to you?
SPEAKER_02Yes, so I wouldn't have to do anything with the county as far as canceling my plan next August, my Medicare Advantage plan. Uh uh just by doing the plan D, that will automatically do it.
SPEAKER_00That yeah, I'm that's the exactly the way the system works. Now that being said, I still would would talk to the county about that, say here's here's what I'm doing. Uh but but internally you can only be on one drug plan at a time, and so your uh Medicare Advantage plan has prescription drug uh uh coverage included. So that's why it kicks it out. Again, it's still a call to the county to say, here's what's happening, just in case there's something else that you would need to, you know, to let them know about. Uh we'll have people that are on uh you know maybe they're federal employees. Uh and so what's happening is they actually have money coming out of their their annuity check every month to cover their premiums. So we certainly want them to fill a form out to make sure that there's no money coming out of of their check. Gotcha. You see, so I'm saying if if if if your advantage plan is totally free to you and there's no, you know, nothing monetarily involved, I think it the system will work it through. But I'm I'm still you know cautious. I I'm still gonna notify them, letting them know exactly what you're doing. But you can do this for sure. Okay?
SPEAKER_02Okay. Yep. All right. So that my other question was gonna be I already signed up last week for my part A and my part B. Uh-huh. Uh so as far as part D, I do because I I I read somewhere along the line if you don't sign up for your B and your D, you could be penalized on it. As long as I'm going into something, I don't need to sign up for the D until I refuse the Medicare.
SPEAKER_00Absolutely. Yeah, because your your your Part D plan is embedded within your advantage plan. It's already included. Gotcha. And it's credible coverage, of course. So no, you don't have to do a thing. Okay. Yeah. So what's going to happen is you know, when you go to the doctor after 9 1, uh you're going to be giving them your advantage card, uh, your A and B. B card is not going to be used. You put it in, you know, put it in the drawer, put it in storage uh uh you know for the future. But we do have to be enrolled in A and B to get the advantage plan. So you everything you've done is is accurate. You've you've done a great job. Okay. Okay.
SPEAKER_02All right. Uh I I greatly appreciate it. I I wasn't exactly sure about that trial by right, and and you know, I I definitely don't want to go through medical underwriting because I know with what I have to do. Yeah, your cancer qualifies. Yeah, that'd be an issue.
SPEAKER_00And the reason you have that full 12-month trial right is because you're starting your A and B and your advantage plan uh on your 65th birth month. So anyone in that scenario has the trial right. Uh sometimes people uh let's say they take A only and then they work two more years and they have a different A and B date, then they're not necessarily gonna have a trial right, but you do. So you're you're sitting well, sir. Okay. Okay? Okay, great. All right, Tom. Hey, hey, thanks for listening to our show. Appreciate the show. Yep, absolutely. Thanks for calling in today. Good talk to you, sir. Bye. Take care, Bye. All right, we're gonna go to Ronnie now in South Carolina. Hello, Ronnie. Well welcome to our show. Good to good to have you today. What kind of questions uh can we address for you? I've got a Social Security question. All right, ask away, sir.
SPEAKER_03So I plan to work full-time until the age of 70 and start drawing my social security benefits at the age of 68. My wife, who is five years younger, plans to start her benefits at 62. Now I'm working until the age of 70, uh, mostly to maintain our insurance since I'm covering both of us. That way she will be 65 at that time. Yes, sir. Um, my wife and I filed jointly. I would like to know what is the maximum income we can make before being taxed on our social security benefits. And keep in mind, I will be at full retirement age, but she will not be. So how does that affect us?
SPEAKER_00Okay. All right. So so uh when it comes to how much of your Social Security benefit will be taxable, um, there's a formula, and if you want to write this down, uh this is called there's it's called a couple different things. Uh Ronnie, it's uh called provisional income, and sometimes it's called combined income. Provisional income and combined income. So here's the formula. Uh when we when we're and again, this is totally to determine how much of our Social Security benefits will be subject to taxes. So what you do is you take your um uh uh what we call the modified adjusted gross income, modified adjusted gross income, and that is your AGI plus any tax exempt interest. So if you and your wife invest in municipal bonds, uh you are not having to pay income taxes on the interest that you get from those municipal bonds. Maybe state, but definitely no federal, but they still require that we report our uh tax exempt interest on our 1040, and that is on line 2A. Here's my point. We're gonna take line 11, that's AGI plus line 2A. Okay, then what we're gonna do is you're gonna take your Social Security benefit, whatever that is, let's say it's $4,000 a month, and half of that then, um $2,000, uh so that would be uh on an annual basis. So we take $2,000 a month in my example, times 12, we got $24,000 in Social Security benefit. So the point is uh AGI plus line 2A plus uh half of your Social Security income. All right? And so again, this is this is just going to be uh you know your Social Security amount to determine this, not your wife's Social Security. But you all do file the joint return, so it is gonna be that combined income uh on your tax return AGI. So it's not your AGI, it's both of your AGI uh plus uh both your line 2A. Are you clear so far?
unknownYes.
SPEAKER_00Okay, very good. So we're gonna take that number and then we're gonna put it to a chart. And here's the chart. This is this would be this would be different for someone that's single, uh, but for a married filing joint return, what happens is this. If that uh if if that number we just talked about is going to be $32,000 or less, $32,000 or less, which probably is not, but if it was, then zero of your Social Security would be subject to taxes. Zero. Okay? Now, anything above thirty-two thousand up to forty-four thousand, that amount, fifty percent of that amount is now gonna be subject to uh your Social Security uh uh benefit will be subject to uh income taxes. So that's from thirty-two uh to forty-four. Uh so that's basically uh you know that's that that's twelve thousand dollars. So anything above thirty-two up to forty-four, uh, that twelve thousand, then uh that is gonna be subject to Social Security taxes. So that's you know, clearly six thousand dollars. So then anything above the forty-four thousand dollar amount, uh uh anything above that now, eighty-five percent of uh your Social Security benefit is now gonna be subject to taxes. So the first thirty-two thousand, zero. The next thirty-two to forty-four, fifty percent of that of whatever is in that bracket will be subject to Social Security, I mean income taxes. Anything above forty-four, uh, now it's gonna be eighty-five percent of that amount. Okay? So that's the formula to determine how much of your Social Security taxes, um, how much of your Social Security income will be subject to income taxes. So no one pays uh taxes on all their Social Security, but but but some portion could be 50 percent, some some could be 85. And again, I'm not saying that those 50 percent and 85 percent are your are your are your tax brackets. That's how much of your Social Security benefit will be subject then to whatever tax bracket you fall into. Did that make sense to you, sir?
SPEAKER_03So it doesn't matter. Yes, sir. And it doesn't so it doesn't matter if you are full retirement age or not, nothing applies.
SPEAKER_00Nothing to do with it at all. It only has to do with provisional income. That's it. Okay? Yeah.
SPEAKER_03What matters is that's where I was getting myself.
SPEAKER_00Yeah, Ronnie, well, and it's confusing. But here's what here the only thing that matters when it comes to taking our benefits before or after full retirement age is are we still working? Because if we're still working and we're drawing Social Security before full retirement age, then we're subject to what's called the earnings test. Okay, and that does matter. But if it is someone like you uh is gonna wait until your uh full retirement age or beyond, you can make a million dollars a year and it has no impact upon uh your Social Security benefit. Now, it's gonna have an impact upon how much of your Social Security is subject to taxes, but it has nothing to do with the benefit itself. Now, your wife, she's gonna start at 62, and what's gonna happen? Well, she's gonna take a reduction. She's gonna lose about 30 percent of her full retirement age benefit. So let's say at her full retirement age, she's she's eligible for $3,000 a month, but she takes five years early. Well, then she's gonna lose uh 30% of that. So she's gonna get a $900 reduction in benefit, and that's a permanent reduction. And sometimes that's fine. People want to take the Social Security when they're first eligible, go for it. But again, every year we take early, we lose six percent on average. Make sense?
SPEAKER_03Okay, yes, sir. And so my follow-up question was leading to that. So because of my income, she's gonna draw half of mine. So can she do that starting at age 63 when she would like to start? Or will she be penalized though that okay?
SPEAKER_00So the half does not penalty. No, here's here's now now the half is where we start. So let's just say that uh that she were to wait to her full retirement age to draw her spousal benefit. That spousal benefit will be 50% of what you were eligible for at your full retirement age. Okay, not when you're not how much you're taking, I don't care if you took early late, doesn't matter. It uh her 50% benefit is tied to your full retirement age benefit. But if she takes her own um uh you know spousal benefit, she's also gonna be penalized. In fact, it's a steeper penalty for spousal uh taking spousal early than it is when we take our own early. Uh it's actually 9.375 percent for the first three years, and then the next two years are five percent. I mean, it's it's a hefty penalty. Uh I'm not you know encouraging you or discouraging you. You you all decide what you want to do, you know, from your own cash flow. Uh but but what will happen is she's gonna lose, well let's see, nine point three seven five percent three years, so that's about what, twenty-eight percent. She's gonna lose about thirty-eight percent. So they'll take your full retirement age benefit, and if she takes that at sixty-two, she's gonna have a thirty about a thirty-eight percent reduction. So it's it's it's steep. That spousal is definitely is steep. Um but again, if she was to sixty-three, it would be, you know, thirty-three percent. Uh but the nine point three seven five percent, that's the real that's the real kicker, those first three years. Uh so for her, that would be taking it uh at sixty-four, sixty-five, or sixty-six. She's gonna lose nine point three seven five percent every one of those years. That's why you gotta think that through. Plus, if she's still working, uh I don't know if she is or isn't, but she if she's still working, again, she's gonna be subject to the earnings test. She can only make so much money. Okay.
SPEAKER_03Yes. And she's not working, so it sounds like to me, um she probably just needs to wait until she's 67 or whatever it will be at that time, I guess.
SPEAKER_00And and the and Ronnie, that could be true. Let me share one more thing. Um uh of course I'm assuming you all been married more than a year. Yes. Okay, so what happens is in order for her to even take spousal benefits, you have to be taking your uh your benefit. It didn't used to be that way, but now in the new system, which has been you know the last few years, so you have to be able to you have to be taking social security before she can draw that spousal benefit. She's not eligible until you do. Okay?
SPEAKER_03Right. Yeah. And that's why when I turned 68, she was going to start. Good. Uh but I I need to work till 70 in order to cover her on her Medicare because she's not working. Uh-huh. Right. Yeah. And then the insurance runs through me.
SPEAKER_00Yeah, another thing you may want to consider um is if you didn't really have to have the money at 68, if you did allow your account to continue to grow to age 70, uh, the the benefit of that is, of course, you'll, you know, you're going to get 16% more. That's nice. But the other benefit is that if you pass away before her, which you probably will statistically, uh, then she is going to get a hundred percent of whatever your benefit is when you pass away. So if you wait to age 70 and you grew that account, that helps her. And frankly, that's exactly what I'm going to do. My wife is younger than me. She has very little Social Security. So I'm going to go, I'm going to wait to 70. If I can, you know, if cash flow makes that possible. Right. So again, if someone doesn't have that, doesn't have to have the cash to make ends meet, then hey, wait to 870. It'll help your wife. Okay.
SPEAKER_03Okay. You just answered everything for me. Well, I I appreciate it, and I watch the show often and I enjoy watching it.
SPEAKER_00Good. Well, I appreciate it. Hey, we're we're uh really a joy to talk to you today. Thanks so much for calling in. Thank you. Yep, see ya. Thank you. Bye-bye. Bye.
SPEAKER_04If you have a plan G and maybe you want to consider switching to a plan N, join us on Monday and you're gonna learn how that process works, why somebody would do that, how much money you can save by going from a plan G to a plan N, because it is a good opportunity for people who want to save some premium dollars. So we'll see you Monday talking about all of this, and you will learn if it's right for you.