Understanding Social Security Benefits with Adria Rosebrock

🎙️ Have you ever wondered about that chunk of your paycheck that is taken out and given to Social Security? What exactly is Social Security and when can you expect to see some of that money come back to you? Have you considered what role Social Security can play when planning for retirement?

✨ This conversation is a must-listen for anyone who has ever paid into Social Security. It is a critical element of retirement planning and offering financial support during your later years. However, navigating its complexities requires careful consideration and strategic planning. With the right guidance, you can maximize your benefits and secure a more financially stable future.

 💡 In this episode, our host Kelly Augspurger is joined by Adria Rosebrock, a certified financial planner and director of wealth management operations and training at Hamilton Capital. Adria provides an insightful, comprehensive guide to navigating Social Security benefits and how they fit into your retirement planning strategy.

In this episode they covered:

🔹 Overview of Social Security

🔹 Claiming Social Security Benefits at Different Ages

🔹 Considerations for Claiming at Age 62

🔹 Full Retirement Age Benefits (66-67)

🔹 Claiming Social Security at Age 70

🔹 Income Spoilers (Penalties)

🔹 Strategies for Widows and Widowers

🔹 Strategies for Divorced Individuals

🔹 Changes and Future of Social Security

🔹 Planning Advice for Social Security

📽️ To watch this episode: https://youtu.be/O6NG3xlRTxU

Hamilton Capital and Steadfast Insurance are separate and unaffiliated companies.   All information is provided solely for convenience, educational, and informational purposes only.

🔗 For more information about Adria Rosebrock and Hamilton Capital, please visit:

📲 https://hamiltoncapital.com

📲 https://www.linkedin.com/company/hamilton-capital-management/

📲 https://www.linkedin.com/in/adriarosebrock

#SocialSecurity #KellyAugspurger #AdriaRosebrock #WealthManagement #HamiltonCapital #SteadfastCarePlanning

For additional information about Kelly, check her out on Linkedin or www.SteadfastAgents.com.

To explore your options for long-term care insurance, click here.

Steadfast Care Planning podcast is made possible by Steadfast Insurance LLC,
Certification in Long Term Care, and AMADA Senior Care Columbus.

Come back next time for more helpful guidance!

Chapters

• 0:10 Introduction
• 0:46 A brief overview of what Social Security is and how people can qualify for these benefits.
• 1:20 When might it make sense to claim benefits at different ages?
• 2:16 When can you start taking benefits? And what's the latest you can start taking benefits?
• 2:52 For those that do want to take benefits at age 62, when might it make sense to do that?
• 5:08 The CLTC Commercial
• 5:35 What about full retirement age of 70? When might it make sense to do that?
• 7:34 Other reasons when we start looking at full retirement age to claim Social Security benefits.
• 8:52 Where do you see most Americans in that age range? When do you see most people take their Social Security benefits?
• 9:40 Many variables to consider, health and wealth and family situation.
• 9:58 What are some Social Security income spoilers, or penalties.
• 10:50 Non covered position, positions where Social Security taxes were not taken out and therefore the elegibilty of those employees for Social Security benefits is affected.
• 12:07 Encouraging everyone to work with a financial professional that can really guide them through understanding their entire financial picture.
• 12:46 Retirement strategies for widows, or widowers.
• 14:03 What about divorced people. What about strategies for them? What do they need to consider?
• 15:19 AMADA Senior Care Commercial
• 15:51 How often does Social Security change the rules, or change the requirements? Is this like every year things kind of change, or every few years?
• 16:59 What do you think the future of Social Security will look like? Is it going away? Are we going to possibly see some adjustments, some changes? Is it going to stay the same? What do you think, just in your professional opinion?
• 19:23 Final advice on how people can plan to live well.
• 20:54 Where can people find out more information about Adria and Hamilton Capital and how they help people?

Transcript

Kelly Augspurger [00:00:02]:
Hey, everyone. Welcome to Steadfast Care Planning, where we plan for care to live well. I'm Kelly Augspurger, long-term care insurance specialist, and your guide. With me today is Adria Rosebrock, certified financial planner and director of wealth management operations and training at Hamilton Capital. Welcome, Adria. Thanks for being here.

Adria Rosebrock [00:00:20]:
Hi, Kelly. Thanks for having me.

Kelly Augspurger [00:00:22]:
Today we are going to be talking about Social Security, a very big topic when it comes to retirement planning, and a really big piece of the puzzle that needs to be addressed. So, Adria, I'm so glad you're here to walk us through this since you are an expert in this area. Can we jump right in?

Adria Rosebrock [00:00:38]:
Absolutely. Let's get started.

Kelly Augspurger [00:00:40]:
Okay, cool. So first off, give us a brief overview of what Social Security is and how people can qualify for these benefits.

Adria Rosebrock [00:00:48]:
That's a big picture. Social Security is a government program that was designed to provide financial security for Americans. While most of us think of it just for retirement benefits, it also does provide financial benefits to those who are sick and unable to work and also to those who lose family members. But as you mentioned, today we're really gonna be focusing in on those folks who are retired who are age 62 or over.

Kelly Augspurger [00:01:13]:
Right. Okay, good big picture. When might it make sense to claim benefits at different ages? We're gonna talk about a couple different ages, Adria. And I know there are a lot of variables here, so we just probably wanna preface this by saying Adria is not offering specific recommendations for you, the listener. Right? I mean, these are generalizations. You do need to consider lots of different things within your own plan.

Kelly Augspurger [00:01:36]:
So what she's going to be advising on is going to be very specific to each individual. Is there anything you want to add to that, Adria?

Adria Rosebrock [00:01:44]:
Absolutely. You know, the media, there's so much information out there, and really what we want to encourage every person is to really look at what's unique to their situation and work with a professional that can understand their whole holistic view. What's right for you might not be what's right for your neighbor or your coworker as we're really focusing in on the best plan for yourself.

Kelly Augspurger [00:02:06]:
Right. Okay, perfect. But when we do consider taking benefits at different ages and tell us, Adria, when can you start taking benefits? And what's the latest you can start taking benefits?

Adria Rosebrock [00:02:15]:
Yeah, great question. So the earliest that one can start taking retirement benefits is age 62. And retirees have the ability to delay taking that benefit all the way to age 70. Now, the government's not going to make you take it at age 70. But there's no benefit to delaying beyond that. What really happens in between that is if you start at age 62, you get a little bit less benefit. Theoretically, you get that for a longer period of time, and then for those people who wait until age 70, they're going to get a higher benefit because theoretically they should get that for a shorter period of time.

Kelly Augspurger [00:02:47]:
Makes sense. So for those that do want to take benefits at age 62, when might it make sense to do that?

Adria Rosebrock [00:02:53]:
Great question. So those who want to start at age 62, one of the first things we want to think about are, what are the other resources that you have? Taking it just for the sake of taking it is probably not the right decision. First thing we're going to think about as an advisor is, do you have earned income? Are you still working? And if you are, we're likely going to suggest is that you delay that benefit beyond age 62.

Kelly Augspurger [00:03:16]:
Okay.

Adria Rosebrock [00:03:17]:
The reason being is there is a penalty. If you start that benefit at age 62 is a reduction in benefit. But Social Security also says, "Do you have earned income?" And if you do, and it's over $22,320 in 2024, you're actually going to start to reduce your benefit. For example, maybe someone, if you're earning $50,000, most of your Social Security benefit would be eliminated. So that's one of the biggest factors we look at is, do you have earned income, or not? Now, if you don't, it's a reason why it might make sense for you to go ahead and start that benefit at age 62. That means you likely no longer have any guaranteed sources of income coming in. The days of pensions are behind us. And so you're now you're looking at living off of that 401k, those IRA's, all those investments that you've worked really long and hard for.

Adria Rosebrock [00:04:04]:
And so starting Social Security age 62 can be a nice way to supplement taking some of those withdrawals out of those other assets that you save and can help to reduce those withdrawal rates, which we think about as being very important as financial advisors and provide that baseline, steady income for you. Another reason sometimes that we suggest that someone might want to start at age 62 is if they meet that I don't have earned income anymore, or their earned income is low, then we might want to think about, are there other people in their household that could qualify for a benefit on their record? An example of that would be maybe they have a high school child that's under age 18 or 19. Well, that child would then also receive a benefit equal to 50% of their full retirement age amount. This can be a huge change in the household's finances. By being able to start that benefit early can answer a lot of questions, like how do we pay for college? Or how do we pay for groceries even?

Kelly Augspurger [00:05:02]:
Right? Yeah, just the basics. Okay. The Steadfast Care Planning podcast is sponsored by the Certification for Long-Term Care CLTC, an in depth training program that gives financial advisors the education and tools they need to discuss extended care planning with their clients. Look for the CLTC designation when choosing an advisor. If you're looking to become a CLTC, enroll in their masterclass and enter "Kelly" in the coupon code field for $200 off. And then Adria. What about full retirement age of 70? When might it make sense to do that?

Adria Rosebrock [00:05:35]:
So full retirement age is actually going to be either 66 to age 67, depending on the year that you were born. For most folks now, if you're born after 1960, or later, your full retirement age is going to be 67, and that's an important age. When you're talking about Social Security benefit, everything's going to be based around your full retirement age amount. That's kind of your baseline benefit that you'll receive from Social Security without a penalty. There'll be no reduction in benefit, but you also don't get a bonus benefit at that point in time. But that's where all calculations are going to be based around is that full retirement age.

Kelly Augspurger [00:06:09]:
Okay.

Adria Rosebrock [00:06:10]:
And so when we think about that full retirement age is kind of a trigger where some of the earnings limit goes away. So this is a time when maybe you are still working, but you still need additional income. You could start your Social Security benefit and you don't have that earnings limitation of $22,320 anymore, but that's a big reason that we're looking at that age so closely. Other reasons would be you need additional income because maybe you stepped back in your career instead of working as hard and grinding it out and putting in as many hours. Maybe you went down to part time employment, something to give you a little bit more work life balance. But that income's likely not the same as what it was when you were working full time. And so Social Security could be a nice supplement to providing that additional income that you might need to meet all of your expenses and needs.

Adria Rosebrock [00:06:56]:
Another reason might be instead of wanting to take those withdrawals out of that 401k, or those IRA's, those other investments that you've worked really hard for and saved really hard for, we have a saying in our offices that your Social Security check, you really can only leave that to one person. But your assets, the things that you've worked hard for and saved and sacrificed along the way, those are benefits that you can leave to other people. You can leave those to the people you love and the causes that you're passionate about. Your Social Security check really can only be left to yourself. And there's some spousal benefits there.

Kelly Augspurger [00:07:29]:
Great point.

Adria Rosebrock [00:07:30]:
So some other reasons when we start looking at full retirement age is perhaps you have a spouse that has worked, or hasn't worked as much as you. They might be eligible for a spousal benefit on your record. They'll be equal to half of your full retirement age amount if they're full retirement age also. So maybe they took some time out of the workforce for several years, maybe to raise those kids. Their benefit might be a lot smaller than your benefit. And by you starting yours, it opens up your record for them to get that spousal benefit.

Kelly Augspurger [00:08:00]:
Okay.

Adria Rosebrock [00:08:01]:
And then similarly, we think about children. Maybe you have children that are age 18 or 19, or under that age and still in high school. This could be an excellent opportunity to start benefits for yourself. And again, it will provide that 50% benefit to your child. Opens up a lot of possibilities, again, for whether we need to pay for college education, or just pay for groceries. And then another thing that we look at when we think about maybe a full retirement age is if you potentially have a child that was permanently disabled prior to age 22, they also would be eligible for a benefit on your record.

Kelly Augspurger [00:08:35]:
Okay.

Adria Rosebrock [00:08:36]:
So full retirement age just opens up a lot of possibilities where some of the penalties, the spoilers go away. And now we have other people who are eligible to claim maybe a benefit off of your record.

Kelly Augspurger [00:08:48]:
Okay. Adria, where do you see most Americans in that age range? When do you see most people take their Social Security benefits?

Adria Rosebrock [00:08:57]:
It really is dependent on every client's situation. We want to look at what are all their resources that they have available and then think about what's the best way to utilize all the resources available to them and what's right. Again, this goes back to what's right for your neighbor might not be right for you, you might be really healthy, and it might make more sense for you to wait to take yours at full retirement age, or even maybe at age 70. But maybe your neighbor's not as healthy. Maybe they have a chronic illness, or something that is going to shorten their life expectancy. And that might be a reason also to start it at age 62, or at least at full retirement age if they're still working.

Kelly Augspurger [00:09:36]:
So many variables to consider, health and wealth and family situation. Who's in your household? Who are you responsible for? What do you have in your finances and how healthy are you? These are all things that we need to consider when taking the Social Security benefits. So you said income spoilers, Adria. So those are penalties, right? What are some Social Security income spoilers, or penalties that you're talking about?

Adria Rosebrock [00:09:59]:
Yeah. So we've talked about that one. And the biggest one that comes into play for most Americans is going to be the earned income limit. And so that is going to be that $22,320 in 2024 if you're under full retirement age. And then that amount does go up the year that you turn full retirement age, it goes up to, let me see if I have the numbers near me, $59,520. So that could make sense. Maybe that year someone's retiring, they turn full retirement age in July and they're ready to, "You know what? I'm ready to retire in May. I want to enjoy the summer and get all the good weather in."

Adria Rosebrock [00:10:34]:
They can start that benefit a little early and not have that earnings limit as low. Another one that comes up, especially for folks that are in Ohio, and that's here where we are at Hamilton Capital, are folks that maybe worked in what we call a non covered position. So that would be someone that worked for the state of Ohio and maybe has what we call an Ohio public employee retirement system pension, or a state teacher retirement system pension. In Ohio, those folks don't pay into Social Security. And so therefore, there are some, what we call income spoilers, or some penalties for them to start benefits. And one's going to be the windfall elimination provision, and that's going to alter the formula that Social Security uses to calculate their benefit and reduces that down slightly. And then the other part of that would be the government pension offset, and that's going to reduce their spousal benefit by two thirds of their government pension. So there's things to be really aware of.

Adria Rosebrock [00:11:30]:
Ohio is one of the states that has that. Other states that have that include California, Connecticut, Illinois, Maine, Massachusetts, and Texas are other states that have those non covered pensions. And then some of the folks that were employed by the federal government prior to 1983, they might be on the old, what we call the civil service retirement system, and they also didn't pay into Social Security. So just things to be really mindful of. There's nothing worse than expecting something and then not receiving it.

Kelly Augspurger [00:11:59]:
Oh, my goodness, right? That would be a complete shocker. You think you're going to get X amount of dollars in retirement, and lo and behold, you've got this penalty over here that you had no idea about. Which is why it's really important to work with a financial professional to really help guide you through this process and understand what you're eligible for and what you're not and really working through all the details, right?

Adria Rosebrock [00:12:19]:
Absolutely.

Kelly Augspurger [00:12:20]:
Yeah.

Adria Rosebrock [00:12:20]:
I highly encourage everyone to work with a financial professional that can really guide them through, understand their entire financial picture, as you were talking about. Someone that you're comfortable talking to about your health, your entire family situation, and someone that will help devise the best plan for you in context of everything else that's happening in your life.

Kelly Augspurger [00:12:40]:
Well said. Well, what about strategies for widows, or widowers, Adria? I would imagine there's some specific things that maybe they need to address or think about in their financial plan with Social Security. So what are some of those strategies?

Adria Rosebrock [00:12:54]:
Widowers, they do have some unique situations they need to think about. And the first one is if you lose your spouse early in life, you want to be really thoughtful about if you remarry, remarriage prior to age 60 can impact your benefits. Also, widows or widowers have the ability to start their benefit, their survivor benefit, as early as age 60. And the reduction amounts a little bit different than on the retirement side, really designed to help provide that supplemental income that someone in that situation might need a little bit sooner. Things to be aware of as a widow or a widower is, it may make sense to start your survivor benefit around full retirement age, or early, and then at age 70, switch to your own benefit that would allow your own retirement benefit to grow. And again, these are just unique things that you might not know on your own and unfortunately, the Social Security office, cannot provide advice. They can give you the facts, but they can't tell you what's best for your situation.

Adria Rosebrock [00:13:51]:
And so really working with that professional that understands the ins and outs is going to be most beneficial to you.

Kelly Augspurger [00:13:57]:
Okay, good to know. What about divorced people, Adria? What about strategies for them? What do they need to consider?

Adria Rosebrock [00:14:03]:
Oh, yes, divorce. Sadly, it happens more and more frequently. And some things to just be mindful of is just because you're divorced doesn't mean you can't receive a spousal benefit. In fact, you can still receive a spousal benefit as a divorcee. Things to be mindful of, you have to be at least age 62 to get that benefit. And your ex-spouse has to be that same age also, or older. So rates of divorce is on the rise, as we're aware. And something to be just mindful of and planning through that time for yourself is that you will still be eligible for a spousal benefit, potentially.

Adria Rosebrock [00:14:37]:
But divorce typically has to be for two years, or later, to independently file for that spousal benefit.

Kelly Augspurger [00:14:43]:
Okay.

Adria Rosebrock [00:14:43]:
Otherwise, your ex-spouse does need to be receiving that benefit also to receive that. Other things to keep in mind is that remarriage can change those benefits that could be for the better, or for the worse. So just something to consider in your entire financial situation.

Kelly Augspurger [00:14:58]:
Okay. All the more reason to work with a financial professional so they can guide you through all this. You know, as people are listening, hopefully your heads aren't spinning. I know there's so many considerations here, but it really is such a personal, customized decision on what you need to do. You know, each person is different. The Steadfast Care Planning podcast is sponsored by AMADA Senior Care. AMADA provides complimentary consultation with a senior care advisor to find the right care. From in-home caregiving to community care, as well as long-term care insurance, claim advocacy, and unique support partnerships for financial advisors to address family transitions and generational retention. To learn more, visit www.SteadfastWithAmada.com. Now, Adria, how often does Social Security change the rules, or change the requirements? Is this like every year things kind of change, or every few years? What have you seen?

Adria Rosebrock [00:15:57]:
They don't make a lot of changes to the system very often. So there was so a big change in 2015 that limited some of the ability to do some what we call "restricted applications," which just said, "Hey, Social Security, don't pay me on my record, pay me on someone else's." They did a big change in 2015 around that. Prior to that, one of the biggest changes was in 1983, and that was when we saw the retirement age changes take place and we saw the taxes begin to increase over a period of time. Generally, it's not good for them to be making big, swift changes in Social Security from year to year. Things that you can expect to see is that your benefit once you start receiving it, does have a COLA or "cost of living adjustment" on it that's according to the consumer Price index.

Kelly Augspurger [00:16:42]:
Okay.

Adria Rosebrock [00:16:44]:
But otherwise, not big shifts that will take place. It's typically not in the best interest to take away benefits from people once they start receiving them.

Kelly Augspurger [00:16:53]:
I know there's a lot of talk about the future of Social Security, and some people are really nervous. So Adria, and I know you don't know, right? You don't know exactly what's going to happen to it, but, and you don't have that magic eight ball, but what do you think the future of Social Security will look like? Is it going away? Are we going to possibly see some adjustments, some changes? Is it going to stay the same? What do you think, just in your professional opinion?

Adria Rosebrock [00:17:17]:
Yeah, great question. And like you said, I don't have a crystal ball, but if I did, things that I would think of that are more likely to happen than less likely, is that Social Security is likely not to go away. Think about the number of Americans who are currently receiving benefits from Social Security, and if all of a sudden that income stopped, how would that impact our economy? How would that impact families? How would that impact voter turnout? And I think that's one of the things you have to think about, is that Congress, ultimately, they like to get reelected. And if they do something that impacts a lot of voters, it upsets them and hurts them, they're less likely to revote for you. So what's more likely to happen are going to be more of those subtle changes to the system and less likely around the folks that are currently receiving benefits that could impact folks receiving benefits. Can't guarantee anything, but if I were to kind of look ahead, I think we're going to see more changes like we saw in 1983, and that was when we saw the retirement age change, full retirement age change from 65 to the 66, 66 and 2, 4, 6, 8, 10 months all the way up to age 67. So we're likely to see something like that again.

Kelly Augspurger [00:18:27]:
Okay.

Adria Rosebrock [00:18:28]:
Other things that we might see are maybe an increase in taxes, or the wage base that we pay taxes, Social Security taxes on, or we could see a modification of how benefits are calculated, but most likely we're not going to see a major shift and that benefits would go completely away. And like you said, it's on the minds of Americans, it's in the media, it's in the news all the time. Even if no action is taken right now, I do want to point out that Social Security can still pay out 83% of promised benefits, which I realize no one wants a 17% pay cut.

Kelly Augspurger [00:19:02]:
Right.

Adria Rosebrock [00:19:02]:
But again, the likeliness of it going completely away, pretty unlikely.

Kelly Augspurger [00:19:07]:
Okay, well, that gives, I'm sure a lot of people just a little breath of air, like, "Okay, we can kind of relax a little bit and hopefully continue to receive those benefits." It just might change maybe for us, right? We just might not be able to retire as early as maybe we had hoped and still receiving those Social Security benefits. So thanks for that little boost of confidence, Adria. Any final advice on how people can plan to live well?

Adria Rosebrock [00:19:33]:
Well, you know, as you think about your life and Social Security, things I'd encourage everyone to do is set up your Social Security account, go out to www.SSA.gov and set up your, "My Social Security" account. Review your statement regularly. Make sure your earnings record is accurately reported every year. Check that frequently. They don't mail those statements like they used to, so make sure you're checking that. Make sure you're working with a financial professional that is well versed in the subject of Social Security and someone ultimately, you're most comfortable with sharing information about your wealth, your health, and your entire family financial situation.

Kelly Augspurger [00:20:06]:
Good advice, Adria. If there are mistakes on that record, how would you go about getting that rectified?

Adria Rosebrock [00:20:12]:
There's not as likely to be mistakes on those records anymore given how electronically we filed information with employers. However, if you do see a mistake, what they recommend is that you contact your local Social Security office and you'll need to provide documentation, proof of income, and then they'll be able to adjust that record. So an example of that is if your W2 said you made $50,000 and on your Social Security statement is showing that your bearings was $5,000, somewhere someone missed a zero, we forget a zero. We want to make sure that gets fixed because that would impact then your projected retirement benefit.

Kelly Augspurger [00:20:47]:
Okay, very good. Well, Adria, where can people find out more information about you and Hamilton Capital and how you help people?

Adria Rosebrock [00:20:54]:
So information can be found on our website at www.HamiltonCapital.com, and then you can also follow us on LinkedIn, and you can personally follow me on LinkedIn on our team bio page.

Kelly Augspurger [00:21:04]:
Well, Adria, thank you so much for your time and your expertise today. Really appreciate having you on to talk about Social Security. Getting into some of the nitty gritty. If you do have any questions, please feel free to reach out to Hamilton Capital, or Adria, and hopefully she can kind of point you in the right direction. Again, thanks so much, Adria. Have a great day.

Adria Rosebrock [00:21:23]:
Thank you, Kelly.

Kelly Augspurger [00:21:24]:
Take care. Bye.