Wealth from Wisdom

9 Common Social Security Assumptions That Could Cost You a Small Fortune!

May 20, 2017
Wealth from Wisdom
9 Common Social Security Assumptions That Could Cost You a Small Fortune!
Chapters
Wealth from Wisdom
9 Common Social Security Assumptions That Could Cost You a Small Fortune!
May 20, 2017
Carson Wealth
Show Notes Transcript

Let’s set the record straight on several common social security assumptions that could cost thousands of dollars in retirement. Join Ron and Paul as they tackle some of the most common incorrect assumptions people make about Social Security.

Speaker 1:
0:00
Okay. And here's the legal Mumbo jumbo, the opinions, forced and welfare wisdom with Ron Carson or for general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged. I may not be invested into directly investing involves risk including possible loss of principle. No strategy is your success or protects from loss. Past performance is no guarantee of future results. Advisory Services offered through Cwm LLC, an sec registered investment advisor,
Speaker 2:
0:30
mark it hit another old time. Records as much as $10 billion in social security benefits go unclaimed every single year. Federal Reserve announced that they will raise interest rates by 203 the skyrocketing cost of healthcare and retirement could now run 350,000 planning for retirement today is a whole new ball game. It's loaded with challenges, obstacles, and trap doors that you can do this and we can be your guide. Welcome to wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson. Straightforward and objective advice and how you could make your money go further in retirement. And now here's your host Ron Carson. People make all kinds of assumptions about planning for retirement. We see this every single day here at Carson Group of with our partners across the country, you'll, some of them are minor and trivial, some of them are way off base and literally could be financially devastating. And some of the biggest assumptions that we see that are incorrect really revolve around the biggest component of most people's income.
Speaker 2:
1:33
And that's, you guessed it, social security benefits. I know we talk about it a lot here on wealth from wisdom, but it's one of those things that man, if you don't get it right, it's such a, there's so much $10 billion left every year on the table and if you're not careful, there's a lot of things, minor things that could cost you tens of thousands of dollars and they're innocent assumptions about what you may believe is, or is it true about social security? And if you get it wrong, you're the one that's going to be impacted. So my question is, what assumptions are you making or have you already made and are they the right assumptions? Because we see this all the time. Paul people come in and they believe something and it's not necessarily true, especially for them personally, and it could have a really a big impact on your retirement.
Speaker 2:
2:23
So today Paul and I are going to talk about nine common assumptions that we hear all the time here at the Carson grew up from all of our partners around the country and just we're going to set the record straight and tell you really valuable information that can help you maximize your social security benefits and get every penny that's rightly yours. And Paul, this was one of those, you know, it's a hot button for a lot of people. I remember early on in my career that I thought, well, I'm never going to get it, and I don't think about it, but I have to admit, even for me, I look at all the money I've put in over the years and I get where this mentality starts to come from. It's like, well, dog gone it. I want to get, I want to get what it's coming to me.
Speaker 2:
3:08
And I've paid in a lot of money. I don't want to get, get it back. So I'm up. We all want credit, right? We, we see it coming out of, uh, paychecks all, all of our lives. And you don't have to be throwing away money. And what I think about it is, yeah, we've talked about it several times here on the show run, but I think about it, how many people get together for coffee with their friends on Saturday morning? Or maybe it's cocktails with their friends on Friday night. And social security comes up frequently and it's part of the conversation. And what's fascinating to me is people believe everything they hear from their friends, even though they're friends aren't experts about the situation. It's funny you bring that up because I grew up on a farm just north of Omaha, and I remember going to the coffee shop farmers, by the way, I love Ya.
Speaker 2:
3:49
But they are, um, how do I say this politically correct? Let's just say that they consume gallons of coffee and talk about a lot of things that are not true. Opinionated. They are, they're the worlds of 40 on their opinion, which is great. Right? Most of them were small business owners. But I remember hearing, I'm talking about, I mean I think a lot of my influence was probably about farmers being so cynical about our government and especially social security. That's I was ever going to be around. And they're doing this and they're doing that. And uh, and so you do, you get to believing, especially when someone was a lot older than you, that, that, that those facts or in fact facts. And in fact, they just cure something and they repeat it or they read something and they repeat it and it's not true.
Speaker 2:
4:31
So today we're going to set the record straight. And one I heard repeatedly as a kid is social security is running out of money. It's like, wow. Yeah, I remember to, this one did actually happen. I remember I was a saver. I saved all my money. And there was a, uh, a news piece about inflation and inflation was high in the 70s. And it said, if you have a dollar and so many years, I don't remember the timeframe, it's going to be worth a dime. And I ran. I said to my mom, I says this possible. She said, no, that could never happen. But it did happen. Right? My money all shrank even though it was in my piggy bank, not earning anything. So, but let's talk about social security running out. According to research and the Montley fool, social security trust funds, I've been running a surplus every year since 1982 surpluses are likely to stop around 2019 at which point social security system can rely on incoming interest payments to make up the deficit for a little while. And some estimates, these are government estimates say that the funds going to be likely depleted by 2034 now, to sets a record really straight, there isn't really any money there. They took that a long time ago. But there are IOUs in the social security trust fund. Yeah, and I, and Ron, I mean I was sharing on a prior show that I went onto the website and buy like any of you can and I highly recommend you do because you
Speaker 3:
5:58
can get your list of benefits and it's gonna tell you exactly where you stand, but that doesn't mean it's going to tell you what you should do, but they're very clear on there that in the 2000 thirties that there's going to be a percentage available. But I think you and I are on the same page here. Maybe our listeners are too. Um, I can't imagine a politician being in there in the early 2000 thirties and going to let this happen. I mean, they wanted them to be known as their legacy as a president or Congress, people who paid their hard earned money for 30 40 years or more of their life that can't get it back. That's going to be a political nightmare
Speaker 2:
6:33
for those people. No. One of the things I've observed in my 52 short years on this earth is that as Americans, we let things go right to the brink. And then we deal with it. We're pretty creative, bring a lot of ingenuity to it and we fixed, we fix stuff. It happens. So I agree with you, we're going to solve it. But here's something that that I think is interesting. Um, well first of all, social security administration says if no changes are made by 2034 that can only afford to pay 75% of the benefits. But the bigger deal is, and matter of fact, our, I want to say congratulations to Kelsey Rui. Today's her nine year anniversary with the firm is our HR director. And we were, I was laughing with the right before we came in for the show that you're 9% away through your career here at Carson Group.
Speaker 2:
7:24
And she goes, I hope so. I go, yeah, cause that means you get to, you get to be here, you get to choose to be here for a hundred years. But I'm not kidding. I mean, and I may be on the low side because this, what kind of applications with this have the social security. If people start living for a hundred or 200 years, which is inevitable. It's not. It's not. If it's going to happen, it's happening and it's probably going to happen much sooner than we're thinking. You know, it took the estimates for the human genome to be mapped back in and you know, I'm trying to remember what year it was, maybe like 1997 98 somewhere in there. Is that right? Andrew? Andrew runs are really produced our show and Andrew does an incredible job. He's so good memory. Right? And they said it would take 15 years and around eight to $10 billion, I believe it was a number.
Speaker 2:
8:18
And I remember like, wow, this is incredible. It can it really be done. And seven years into it they had mapped 1% and so they're like, well, this is a huge bus, is going to take 700 years. And they had spent like $8 billion. They finished it in 13 years and they come in under budget, whatever the budget was. They were under budget and I by a lot, but under budget, massively under time, you know, for those kinds of projects. And they said they were confident all along they said because you know, all the time it took to get to the one made the rest of it easy. And that's where we are with biotechnology and really we're a flashpoint. We're in the eve of a flashpoint with technology that's going to be exciting. I mean we hear about disruption. I think most people think of disruption is a negative.
Speaker 2:
9:07
It just means you got to relocate things. You can't continue to do things the way you've always done them. You've got to have to change. Quit defending what to know and embracing the unknown comes back to social security and planning. It's like this is a piece, but this is a piece that could have dramatic ramifications depending upon how long people live. Yeah, that's all Ron. It makes me think about actually conversation earlier this week where the family, uh, they put together a personalized game plan. They know exactly what they're doing. They worked hard throughout their career. And so now they're taking a paycheck out of their portfolio and they've got a plan and they're taking x amount. And he actually called us earlier this week, Ron and said, hey, I know I'm taking, you know, mid thirties, uh, out of my portfolio per year from you guys. Um, but I'm not drawn upon social security yet.
Speaker 2:
9:50
65 years old. And he said, well, hey, wouldn't it just be better if I just started taking social security then I don't have to take out of my portfolio? And he said, wouldn't it be better for you to Paul? I said, no, it doesn't matter what's better for me, it's what's best for you. But we ran his social security analysis again this week form Ron, and I just want to share for you if he waits two more years, like we want them to, if he lives to 90, this could be over $500,000 more to him over his lifetime. Incremental additional benefits. So that's what the advice is waiting for two years. How many people say, oh, by the way, you just threw away half a million dollars. Yeah. And so it was that eyeopening thing. And he said, well, Fall Paul. First two things. One, the fact that you put my interest in front of yours, but two that you helped me realize being patient and you helped me stop making an irrational or [inaudible] he called it an emotional decision related to social security just to try to get something now versus waiting two years and getting the benefit that comes along with it.
Speaker 2:
10:49
No, I mean that, that's big, right? I mean those are not tiny benefits that we're talking about there. That's what he wanted. But he wanted to make it an emotional based decision. Don't look at the numbers and then help make the right calculated decision with a planner. Well, this may shock you, but even if you've made just a little bit of money throughout your career, you've probably contributed a fortune. And this is what gets both of us, Paul, into the system over the last several decades. And for some people you're contributing even a lot more than that. And that's money that could go a long way. And retirement, as we've talking about today, claiming those benefits, it's just full of red tape bureaucracy and how many clients get incorrect information directly from the social security and it really makes our tax code looks simple and a lot of ways.
Speaker 2:
11:34
But if you make like right there, one little mistake you just talked about $500,000 in benefits lost just because you weren't taking the time to really think about it because we've had people come in and say, why did you take the strategy? Well someone said we should. They really run and optimize what this meant you. We've got a customized report that we can put together, customize it just for you and I'll show you three things, just precisely how and when to claim your benefit to how to pay fewer taxes cause tax ramifications are big here. And then three, are you eligible for any other benefits you may not even be aware of? And it does take time to put these customized analysis together. We can't do it for everyone, but if you've saved at least a hundred thousand for retirement, be one of the first callers that gets us complimentary. Customized social security analysis at eight eight eight four one nine to 85 13 that's eight eight (841) 900-8513 it's your money. Don't miss out. (888) 419-8513 what assumptions have you made about claiming benefits coming up? Next, we're going to continue to talk about the nine most common assumptions that could cost you a fortune if you don't get them right. I'm Ron Carson with my cohost Paul.
Speaker 4:
12:48
Awesome. He's a published author and has been featured in Forbes, investment news, the Wall Street Journal, CNBC, and more. Now back to wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson. Welcome back. I'm Ron Carson and
Speaker 2:
13:07
with my cohost Paul West, and thanks for joining us on wealth from wisdom. Well, people make all kinds of assumptions about claiming their social security benefits. And sometimes those assumptions because they're wrong, costs you a fortune because what happens is they trigger a series of other events, expenses that just are needless because you made a bad short term decision or and misinformed decisions. So what assumptions are you making about social security as a possible that you either have made a bad decision or about to make a big mistake? You need to get the facts. And that's why we're setting the record straight on the nine common assumptions about claiming social security and how this can benefit you. And assumption number two, we talked about social security run out of money. Um, we're going to figure it out and it's probably what we figured out. Any way that people think it's going to be figured out today.
Speaker 2:
14:04
But number two, the money you painted the system is the money you receive, you receive later. And you know, just a fact here. Taxes from all paychecks that people are currently paying our pool and then they're paid out. That's why they call it a transfer payment. So your contributions are supporting other people and then once you retire they'll pay in and you'll really get their benefits depending upon how much money's in there and give you a stat here back in 1960 the amount of workers to beneficiaries those five to one. Now you've heard these stats all over the place, right? Then there was [inaudible] about 73 million workers supporting close to 14 million beneficiaries as of 2013 it was just 2.8 per. That means 163 worker supporting 57 million beneficiaries and get this and you've heard it, but I'm going to say it again. I was expected to be 2.1 by 2035 and you heard it first.
Speaker 2:
15:03
Maybe here on wealth from wisdom, they're way off. I think it's not even gonna be close. Those ratios are going to be even because people are going to start living or to flashpoint. We're getting close to people living a lot, lot longer. It's an important piece, but I think we're going to read some stats here in a little bit about what percentage most people rely on social security to be. And I think you mentally prepare for it to be a much smaller percentage than maybe originally thought I had her and I'm just going to rephrase it. So it went from a five to one to two to one. And its potential is going to go lower than that. Yes. Yeah. I don't have to be much of a man. I've matician to figure that out. That's not going to work. And so we better figure out ways to make changes to that or um, but I also don't want people to think like, don't make a run on the bank in terms of your B go turn your sole security on now.
Speaker 2:
15:54
Because that is equally a dangerous mistake because you're leaving so many chips on the table there. And I agree. I mean, especially if you're getting close. I mean, if you're in the throes now of getting to make decisions, I think you're in really good shape if you're younger, you know, I think that's where you have to start preparing for something a lot different than having it be, you know, 30 or 40% of your retirement. Here's a myth. Everyone contributes equally to social security. So someone contributing earning 127,217 and someone earning 5 million will pay the same tax. Now a lot of people think that's unfair because obviously a much smaller percentage of the person making 5 million versus a person making 127 two and then it's estimated 71% of the trust fund short fall could be wiped out by eliminating the earnings cap. Now this is probably, I think, and I happened to where it doesn't matter how much you make, it's just the fact of numbers.
Speaker 2:
16:58
There's going to be, and this is where planning with taxes and some other things that you can do in structuring, especially if you're a small business owner, um, w how much is earned income versus dividend income. And some other things you can do and planning around that. Yeah. Right. I think about one in five people as soon as they can. I mean, as soon as the door opens at age 62, I hit the on button and begin that. And for some of them that may be absolutely the right decision based on where they are and what it is in life. But I mean, when we run analysis reports for most people it's not now they're all in different scenarios and situations, but the most important thing is you need to sit down face to face with someone to put this together. It makes me think about earlier, earlier this week, um, I was out in Cincinnati and visiting with some people, you know, on behalf wealth from wisdom and as we're sitting there, all these phone calls and conversations I have with people over the phone.
Speaker 2:
17:56
But then you sit down and you get to learn more from them face to face and what people are willing to disclose and you can see the emotion from them and vice versa. They can see the emotion from me. That's a great decision. You're making, you know, Mr and Mrs. Smith or Whoa, Whoa, Whoa, you better slow down. This is not what you should do. And that really pays off. And what's amazing to me is people's ability to disclose to you when you sit down face to face, Ron, it's so important. I know the next generation really, a lot of times they don't prefer that I have and we're fine with that. We have a lot of digital relationships sometimes we've never met our clients, but I just, I still am a traditionalist. I love, they grown up on the farm, sit down, have a cup of coffee or even a glass of wine occasionally.
Speaker 2:
18:39
Uh, but that belly to belly, getting to know people. There's just, you pick up body language. I mean instinctively to I trust this person. Are they, are they good to work with? I had for all, if you're out there and you have a financial advisor, you've actually not met with them or sit down with them in person. I don't care where they're at. At least do it one time. Get to know the team, you know, that's behind you. And we do a lot of traveling. We have 51 partner firms around the country. Um, and, and we do believe for, for clients that want that we love our personal, we call it belly to belly interaction because you'll learn a lot about each other. Yeah. Hey, by the way, we love our iPads. I mean, so we facetime with a lot of people and that, that is definitely additive.
Speaker 2:
19:21
And I think about how many of you, I watch my own family when there's multigenerations and you have grandparent's generations and you have children, it's great grandchildren. I can't believe how much they use facetime. It is continuous. So don't get rid of the adage. If your advisor is not willing to have a virtual communication with you, they need to step it up and be with the times because that's part of life. Now I guess you're right. The hybrid is like all our morning meeting this morning we had, we had our stakeholders from all over the country and we're all video conferencing and it does feel like you're there. I mean facetiming is amazing. Let's go to the next myth. I'd rather talk about technology, but um, is the other is you're going to get benefits when I'm 65. Now that's true for some people. If you're born 1937 or earlier, it is 65, but those like me born after 1960, it's 67 four.
Speaker 2:
20:15
You can start and if you're in between, it's somewhere between those two numbers. And the other myth is, is your benefits are fixed, but for every year beyond your full retirement age that you delay, and we've talked about this several times, is your value increases by 8% until the age of 70. I don't know, forget the strike that nowhere, nowhere can you get an 8% guaranteed return guaranteed by the US government anywhere in this day. And that I take that option every single day. Yeah. Uh, Hey, I think all day long people ask us what's a good investment? Where's the market going with the current political environment or the current world environment, Ron? And yet you've got something right there, this part of the United States that can help you and be added. And so I think people need to think about that cause they just quickly or blindly make a decision.
Speaker 2:
21:13
And I thought it was fascinating statistic. You and I were looking at that 38% of people incorrectly believe that they can keep switching the hair claiming strategy after making a choice. And that's just not possible. They don't know the rules. So that initial choice, while you can make some changes, but it has to be certain parameters that are a hit, uh, you can't. So you've got to be able to think about how you do that and how you do it effectively. Well, the, yeah, this is a biggie. You're talking about taking the hit the retire early benefits can be about 30% smaller. You think about 30% that that's where you're getting, we just talked about on the first segment, $500,000 Delta between what he could have gotten and what he's getting by just going two years earlier. So really be careful because there's not, it's not symmetrical.
Speaker 2:
22:04
Um, you lose going early. Use a lot more benefits. In that case. You know, early it could have been 15% a year reduction versus an 8% gain, you know, by, by waiting. Yeah, I mean, and the waiting game is a dangerous one. So, uh, it's dangerous in the fact that if you don't look at it correctly, Ron, um, but if you do and you're comfortable with it and you're patient with it, so a lot of people are afraid. They just, they just want to drop it. I don't, I want to get my money, but that's not always the best thing. But I think we've shared this before, those people who have a plan in place perform 110% better than everyone else because they have a plan and they stick and adhere to the plan. What do we see all day long? And we've talked about this in the, in the markets.
Speaker 2:
22:50
I know that's not the theme of today's show, but people that don't stick with a plan perform about 50% because they make trades and they do things when they show up. They don't stick to a process. Ultimately, I do want to talk about, which doesn't directly relate to social security, but it was in the Wall Street Journal this week and it was a really interesting article, was a May 7th, Andrea Fuller was the journalist and it was about fees and expenses and the frustration that she had in reaching out to her financial adviser and trying to get a straight answer on fees and expenses. Um, by the way, there's a chance I just had, I was in DC yesterday and I had a meeting. I'm on the board of the fiduciary institute and we're getting behind a big movement for fee transparency and there's a good chance we're going to get John Bogle here to Omaha this fall out.
Speaker 2:
23:43
I don't know if you were around when I was talking about that and uh, he can travel, right? He's brilliant mind. But, um, really he's really behind I guess. Move it. We coming back, coming up on this next section we're going to talk about mutual fund fees and expenses, um, because that can have a devastating impact on how much you're actually going to get. And if you ever wondered, you know what you're paying in fees and expenses, you know we've got a report that we can run. We can run an analysis for you to show you exactly how much you're paying, not just in fees and expenses with the advisor fee. There's lots of different components because when we come back, we're going to illustrate just how many different answers you can get, how hard it can be. You have to be a forensic accountant to figure this out, but we'll give you a simple report.
Speaker 2:
24:34
Give us a call at (888) 419-8513 the sooner you know, the sooner you can start saving and making better decisions about the expenses you're paying. That's eight eight eight four 90085138884 nine 85 13 we come back on the next segment here. We're going to talk about her frustration and exactly what happened in the different advice she received. I'm Ron Carson. You're listening to wealth from wisdom with my cohost Paul West. He's a published author and he's been featured in Forbes investment news. The Wall Street Journal, CNBC and more now back to wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson. Welcome back. I'm Ron Carson with my cohost Paul West, and you're listening to wealth from wisdom. According to barons, the Carson group is a second ranked independent advisor in the country. In fact, we're one of a handful of advisors have been inducted to the barons, a hall of fame. And the reason why is I believe they believe we're a champion.
Speaker 2:
25:37
It's we are. We put the clients' interest first for the individual investor and you know on wealth from wisdom. Most of our audience is individual investors, but we also have now a lot of financial advisors who are listening. They want to come become more educated and we applaud that. But if you are listening, Andra financial adviser, and if you've always put your clients' interests before your own, no matter what, we should have a conversation about becoming a Carson group partner. We have over 52 partner offices across the country and we're growing every day. This is a movement. This is about being a consumer advocate. Our core values are trust, transparency, accountability, and we never compromise on these values. So if you're interested in never selling product again, not needing a commission, then you could be a good fit for us. Give Lisa sent a Wiki, a call here in Omaha, Nebraska at (402) 810-9881 that's (402) 810-9881 and this leads in perfectly Paul to this Wall Street Journal article this week about why my investment, what's my investment fee of frustrating quest.
Speaker 2:
26:44
And it says our reporter, she had a simple question, but the answers were anything but, so Andrea Fuller said, how, how difficult can it be? All I wanted to know from my financial advisor is, what am I paying in fees? And you know, they went through and, and describe, you know, the, the disclosure and, and all of this and you should have gotten information on it. She goes, no, no, just tell me, you know, what am I paying in fees? And she was interesting in the beginning of the piece, Paul, she's saying, I was growing increasingly ashamed of how little I knew about the workings of my own investment. So I decided to research what fees I paid to invest with my financial advisory company. She goes on to say one of the largest in the U S and I would get the, the, you know, she's working for the Wall Street Journal and she's in data and analysis and her department and she doesn't know and she did go on to say that most of our investments were in mutual funds and exchange traded funds.
Speaker 2:
27:53
And she says, I assume the fee information I was looking for and be readily available in the document sections of the company's website. It goes wrong. Then she called somebody and she told the man, all I want to know is what am I paying for fees. And He, and she says in retrospect it was like asking your spouse how much to voiceover divorce lawyers cost. Great. Great. Feels good. Something I'm very funny and any told her it's $125 flat fee. That's it. And she said, alarm bells went off. And she goes, is that it? That can't be it. And his shirt or it was 125 she goes, right, you don't charge a percentage? And he laughed. She said, and he goes, we would love that. But no, it's only $125 so she was like, you know, he hung up the phone and it can't be because there's a common sense element here, you can't get something for absolutely nothing.
Speaker 2:
28:50
So then she had another conversation and she was then told by somebody else at her account actually did have a fee of 180 or an 85.85% just below 1% but there was no $25 fee. We couldn't, you just look at this to figure this out. And then she thanked him and ask where she could actually verify this online. And they answer was this, he said, I'm not sure, but the information would be in whatever packet we sent you. Now this is a pet peeve of mine. It's like, don't tell me, don't ever tell me. We sit you information and you'll figure it out yourself, which is basically what they're doing. She then received another response from the advisor who normally does schedule her reviews and he came in with different numbers. So here this is a third source. Now it says, no, you're paying 0.85 plus some of the, um, the, the expenses are 0.5.
Speaker 2:
29:50
So then she said, okay, I'm paying 1.35. Then she said, well, that's different information I got earlier than this guy retracts and said, oh, I got that wrong. You're bank 0.55 and so it's 1.4 point is like, Gosh, why? I mean going back to um, you know, uh, newt who actually founded the institute for Fiduciary Standard and, and Jack Bogle, this was why we get so frustrated. It's like, let's just put it out there so people understand, you imagine going to the grocery store and there's a price or there is no prices and they say, you know what, we'll just hit your account when you're not looking. That's what we're going to charge you for your groceries today. How disturbing that would be. You wouldn't even know what you could grab, what kind of impact that's going to have yet. This is an area that there's not, the transparency still isn't anywhere close to what it should be. And that's why we want advisors that are fine. Let's put it all out there. Let's put all the costs and expenses out there so people can make an informed decision. Paul, we just saw the other day where someone thought they were paying just under 1.2, we actually did the analysis. They're paying three and a half percent a year for something they thought they were paying 1.2% for
Speaker 3:
31:00
the challenges around. Most people blindly trust their advisor. So I mean, that article, I've just, I wish people could see us. He was our, the radio. I'm just shaking my head like I can't even believe this happened. Um, and it was even more fascinated, uh, that they said they couldn't send it to them because they were waiting for a client approved piece to send it out. I mean, did they sign something to acknowledge all of this the whole time? So I unfortunately these situations happen. And for all of you out there, make sure you know you're, you're paying, I mean, first your advisers should give you a personalized game plan to, they need to be straight forward with their fees. It doesn't matter if they're low or high, they should be straight forward with them. At least should give you the comfort. You understand what
Speaker 2:
31:41
they are run and what are you getting for those fees. It's not just, it's not in a vacuum. I mean, some firms provide lots of other services, some only do investment management, some do financial planning, some do cashflow analysis. I'm do a state planning here at the Carson Group. We do all of the apples who do tax prep preparation, tax planning. It goes on risk analysis. So there's a lot, you know, what, what am I, what am I paying? What am I getting? It should be straight forward and simple.
Speaker 3:
32:06
Yeah. Well I mean we were just meeting with a family this week, Ron. Um, and they're looking at, you know, coming over to us and working with us. And one of the things they said in our meeting was the value that you offer from your planning and everything else far exceeds what we're getting today. And by the way, there with a Wall Street firm. But here's the part around that really got me was when they said to us, what we really like about you is your straight forward. You told us exactly what the fees were right up front and you didn't have a conflict of interest. So they were with Morgan Stanley and I said, right now we're in some of funds and it's, we don't know if they're making decisions on what's best. Now if the funds are doing great, that's fantastic for them. But if they're not, they don't like the feeling that their advisors then conflicted on whether or not to keep them in that fund. And they said, we love working with firms like yours that are independent now they just, their eyes were blinded before. They didn't know they were shielded. Now when we unshielded them and they can see, he said, wow, this is a big difference. So I think you've got to understand in this article brings light, understand what your pain and also understanding if there's any conflict that your advisor has. I know we've talked about before, but the f word of fiduciary and making sure they truly are a fiduciary and do right.
Speaker 2:
33:16
Or is that your interest? Are Those conflicts Paul? I mean, so there's the fees, it's are getting directly, especially a lot of structured notes have other ways and lending facilities and spreads that they make and other areas and really got to dig deep to figure out what are all those costs. But the conflicts are massive and, and you just want to, you want to be able to get straight forward answer of that says, okay, what am I paying? But also is there incentives maybe not necessarily do what's in my best interest. So you really have to be careful with that. So do you remember getting your first paycheck as a kid? I do. I remember a little concession stand, I'll call it my first pay check where I made a few bucks. I was so excited. I don't think to get any social security out of that, but you know, you probably didn't realize it then, but you've been contributing to social security your entire life.
Speaker 2:
34:06
Right back to that very first official paycheck and in fact between you and your employer contributing up to 12.4% of your annual income, it's a big number, 12.4% and if you add that up over 40 50 plus years, that could make your 401k retirement plan look like chump change. I think most people, Paul, don't calculate the present value of the income streams. We think about it as an asset here at the Carson Group. You should too, but you have to be very conscious about the way you claim those benefits because you could easily be leaving tens of thousands of dollars of benefits on the table. We've got a great report, so social security report, we customize it. It's six pages and it will show you how to optimize and make sense out of something. We make the complicated simple when it comes to this, so if you're in your 50s or 60s this is a must read report. It doesn't cost anything. Be One of the first callers, and we'll get this out to you. Take some effort on our part, but we'll do it. Eight eight eight four nine 85 13 that's eight eight eight four nine 85 13 give us a call. (888) 419-8513 coming up next we're going to talk about how you might potentially reduce or even eliminate some of those taxes on your social security benefits. I'm Ron Carson with my cohost Paul West, and you're listening to often wisdom.
Speaker 4:
35:26
Is it possible you could pick fewer taxes in retirement and keep this money for yourself? You could learn right here and right now, unwelcome wisdom with bear and Taller. Boom. Ron Carson,
Speaker 2:
35:40
welcome back. I'm Ron Carson with my cohost Paul West, and you're listening to wealth from wisdom. If you make a mistake claiming social security, it's going to cost you for sure it's going to cost share and it's going to cost you a lot more than you think in lifetime benefit. In addition to that, it could trigger some other events that could increase your expenses as well. Taxes being one of them and are you making the right assumptions about household security benefits fit into your overall game plan and about your claiming strategy is well, it's possible that you're making the wrong decision and if you make it and don't correct it within 12 months, there's nothing you can do about it. So coming up in this final segment, we're going to continue talking about nine common misconceptions. Going to set the record straight on what to do, what not to do. Last segment we got off topic a little bit talking about the Wall Street Journal audit call on trying to figure out fees, but it all plays into their, it's all the little things done exactly right. Having an amazing impact on what kind of retirement you're going to live. And so these are all necessary things to be thinking about. All the time. It's not the one big thing. It's lots of little things that add up.
Speaker 3:
36:56
Yeah. I mean in everything in life I think about, uh, I coach soccer for my daughter and it's all the little things off it on the field or the little things we coach them through that can make a big difference in the outcome that a game, I mean number one is always effort but two it's getting there and then figuring out what you need to do on the field, your strategy and all those things. But do you slightly turn or do you go run at a hard angle and those types of things. And I think about your financial game plan and we tell everyone you got to make sure you're on the pathway and the pathway can curve. The pathway is not always straight in your financial plan but when you come to this financial pathway point on social security, keep reviewing it. Even if you're not there yet and you're still in your 50s every year, your should, advisors should be going over with you.
Speaker 3:
37:38
Just where are you, what does the numbers look like now? Cause if, if you're not on path, I don't think we're going to share some ideas on ways you can get more benefits now if you're not there yet to make sure, like for example, if you're not looking at your, uh, record every year, what if something's wrong on it? So what does something just, Scott, a mistake was made and we've seen this by the way, Ron, so you gotta make sure you fix those errors ahead of time. That's one big thing you can do. I mean, two is figuring out ways to collect spousal benefits if that comes out there for you. A lot of people forget about that. So that's a very important one. Uh, third divorce. I mean it's, it's an unfortunate reality of the world we live in. But, uh, the, the rules and the benefits really to divorce actually sometimes play better into people's favor, um, than they realize
Speaker 2:
38:22
there. You can imagine how long it may pay you to stay married even in a bad marriage because of the benefits. The old joke going around why source divorced so expensive? Because it's worth, it may not be what you're looking at when you're looking at social security or if it happened a long time. If you go to you and it's way knocked out of your memory, you don't like to think about it. But if you may get benefits, you're not aware of that if it happened over 10 years ago and that's something you need to look at and your planner needs to think through with you. Here's one too. I mean all the time people are like, well, social security benefits aren't taxable, are they? So currently, um, the current guidance really is up to 85% of your benefits might be taxed. So here's a couple rules of thumb.
Speaker 2:
39:04
If your income's between 25 and 34,000 for singles and 32 to 44,004 couples filing jointly, you're going to owe taxes up to 50% of your social security benefits. If your combined income exceeds 34,000 limit for signals, singles and 44 for couples, you're going to owe up to 85% on your benefits. And in addition to that, if you're in Minnesota, North Dakota, Vermont, West Virginia, Colorado, Connecticut, Kansas, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, you get the benefit, not really the luxury of paying state tax on top of this. So I mean, and then if you start working, you may have to give back most of your benefits, social security beneficiaries younger than full retirement age, currently 66 and keep working and earn more than the cap, which is $15,720 lose $1 in benefits for every two they earn over that cap. And at full retirement age, you give up a buck for every three you earn over the much larger cap of $41,880 fee.
Speaker 2:
40:12
Man, those are things, it's like, I thought it was tax free. Might be, you might be, you might be absolutely working for nothing, right? It's not right. It's not tax free. I mean, how many states did you just list off there? Quite a few. 10 a dozen sound like, I mean, think about that. And so every state's got a different state tax rate, but it now if you're getting 4% 10% less, that adds up to, and you may not have a clue. They're so, I think a lot of people just think, oh, that's just money coming in. I don't have to worry about it. And taxes can absolutely have a great impact to you on what happens. Well, I think it's, I mean it's so interesting about, um, social security and what people do, what the holding off on social security benefits as long as possible, as we've talked about today is often the best choice. Only 28% of 61 year olds plan on triggering benefits at 62 and the first become an eligible, this is down sharply from 45% that equates, this is a fidelity study, um, that was asked the same question in 2008, so relatively short period of time. So people are becoming much more educated on that. Also an interesting stat that you know, on the confusion piece of it, 38% of those surveyed incorrectly believe they can easily, they're claiming
Speaker 3:
41:34
strategy after making an initial choice. That's just not true. So if you make a bad choice that goes beyond 12 months, even if you correct within 12 months, you still got to go back and pay back all the benefits. Yeah. So Ron, we get asked frequently, we were doing planning and what's the general rule of thumb? I mean, what is social security supposed to replace in my income for me? And guess what? The answer is not 100% so the system was designed for 40% so that's why the system was designed that way to replace 40% of an average workers wages during their retirement. So don't count on that as a hundred percent now it may have to be for some of you are, you may want it to be, but that's not what the system was designed for. So think about that and your calculation and really mental preparation for your retirement.
Speaker 2:
42:22
Well, here's another one. I mean, uh, about half do not understand that claiming strategy for an ex spouse has no bearing on their own benefit. Those who are married for 10 consecutive years and have remarried are entitled to either have their own or 50% of their former spouse's benefit, whichever is greater once for retirement age is reached and an x can do as they pleased. It makes no difference in their former spouses benefits. So just another thing you need to be aware of, two thirds do not realize they must file for benefits three to four months before receiving the first checks who do not wait till the last minute to claim those benefits. You know, on this show wealth from wisdom, we talk about the most significant issues surrounding your money and your retirement. But you know, nothing ever is going to happen unless you take action. We call it having an Iq implementation quotient.
Speaker 2:
43:16
Oh yeah. When it's uh, when it's all said and done more get southern gets done and you don't want to suffer from that. You want to actually take action and we could be your guide or someone else can be your guy. But the most important thing is is do something about it. Work with a professional. You've heard us talk about the requirements on previous wealth from wisdom shows. It's make sure that they have a CFA, CFP, a CPA, a Jd and insurance specialist. I complete integrated holistic plan to really look at everything you're doing to help you make now only take action, but taking the right action can make all the difference. We've put together our wealth enhancement group, this incredible five step master retirement plan and this takes in all those key components that a comprehensive plan should. And this will not cost you anything. Uh, you've got nothing to lose. And if you would like to schedule an initial analysis, give us a call at (888) 419-8513 that's (888) 419-8513 you've been listening to a wealth from wisdom radio. It's been a great show. Thank you for listening. I'm Ron Carson with my cohost Paul West and we'll see you next week.
Speaker 5:
44:40
Risk, social security, income taxes, estate planning. Every week we talk about how to make your money go further in retirement right here on wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson.
Speaker 1:
44:55
Okay. And here's the legal Mumbo jumbo. The opinions voiced and wealth from wisdom with Rod Carson. Know for general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged, I mean not be invested into directly investing involves risk, including possible loss of principle. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory services offered through CW m l LLC, an SCC registered investment advisor.