This week, I’m joined by fellow North Florida Financial advisor, April Schoen, for a live seminar on Social Security. Over the course of the seminar, we're going to be talking about how social security works, what you need to know around the program, different payment scenarios, and also issues that surround the program. April and I have over 50 years of combined experience in retirement planning and we’ll be using that knowledge today to discuss Social Security with retirement in mind.
We dive deep into how to claim Social Security benefits, as well as:
How and why Social Security was formed
How Social Security is funded today
Where to see your statement to view your current benefits and earnings history
Spousal, widow, and widower benefits
The big changes made in 2015, including restricted application
And more
Mentioned in this episode:
Call the Tallassee Office at 850-562-3000
John’s website: https://johnhcurry.com/
Transcript
April Schoen: Hello, everyone. I'm so glad that you guys could join us today. I'm sitting here with John Curry, author of Preparing for a Secure Retirement. Hello, John.
John Curry: Hi, April. Hello, everyone.
April: And today we're gonna be talking about social security. And we're going to be going into about the program, how does social security work, what you need to know about the program, different claiming strategies, and then also some issues around the program. Before we even get started there. Let you know a little bit about who we are.
My name is April Schoen and as I mentioned, we have John Curry on the call with us today. John and I both are advisors with North Florida Financial. North Florida Financial was started about 50 years ago, and they're headquartered in Tallahassee. That's where John's located. And we've since grown, we've got locations from Jacksonville, all the way over to Louisiana, into Southern Georgia, Alabama, down to Tampa and Orlando. So I'm actually sitting at I'm in Jacksonville today. So I just love this technology, how we can all connect and don't have to all be in the same area. Right, john?
John: Absolutely. As long as the technology is working properly, correct?
April: That's right. We had, we haven't had a couple of issues before with webinars. So fingers crossed all goes well, today, we can only
John: You know, we'll have more issues in the future. That's just the nature of the game. Yeah, just get over it and move on. Right?
April: That's right. That's right. So before we get into the content, a couple housekeeping items for you, if you don't have it, grab a piece of paper and a pen like I've got here, there may be some questions that you have as we go. We won't have time today for any q&a at the end, like we would normally do at one of our live events. When John and I were doing live seminars on Social Security, Medicare, and other retirement planning issues, our seminar's about an hour and a half long. And usually we have to kind of stick to a pretty tight agenda and schedule there to make sure to go through all the content, and especially have questions at the end.
So as we're going through the presentation, if you have any questions, jot those down and then send an email over to me or to John, and someone on the team, we'll make sure that we get back to you about that. There may be some things as we go through, you want to drop down some to do's. So we're going to talk about some things you should be looking at on your social security statement. So you might have some to do's that you want to look at as well. And then there may also be a topic of discussion that you want to have with us. So just again, I suggest having some paper, some pen, because we're going to go through a lot of information today. Okay, a little bit about us and our team. So I always like to say you know, it's not a one man show or a one woman show around here. We have several members on our team. So you've got me and John. And then we also have Audie and Jay and Zac as well.
So Audie and Jay are in Tallahassee with John and then Zac is in Jacksonville here with me. Before I go in, and we start really started digging into the the webinar content because I know some of you may have to jump off the call a little early. And if you do, I would recommend that we maybe schedule a time to do a phone appointment. This would be at 25-30 minute call for you to discuss any goals and concerns that you may have around retirement planning. So John has been helping clients with retirement planning issues, like Social Security, Medicare, IRA rollovers, required minimum distributions, inherited IRAs since 1975.
What we find to be most important though, is that there are a lot of lessons that we've learned in the last 45 years of helping clients when it comes to retirement planning. And so we know what works and what doesn't work for people, and we can share those with you. So we're going to talk today we're gonna mostly be focusing in on Social Security. But that's only a small piece, if you will, to the overall retirement planning discussion that we have with clients. So we'll touch on some of that.
John: I will take a moment and share with everyone your background and then I want to make a comment before you get into the material.
April: Yes, thank you. So I am I have been working with John and our clients at North Florida for about six and a half years coming up on seven. And I worked with a previous firm in Tallahassee before that for about four years. And throughout my career, I've really focused on working with people, mostly helping them with retirement, I would say I was telling someone this morning that majority of people that I meet with and John meets with our people who are about one to three years from retirement sometimes earlier than that to five to eight years from retirement. And these people want to make sure that they have all their ducks in a row, right, and they're ready to step off into retirement.
So that's primarily the group that we serve. And I'll take that a step further and say that we primarily work with people who are retiring from the Florida Retirement System, they're FRS members. And as I mentioned, I worked with a previous firm for about four years before I came to North Florida. And that's all we did. We worked with employees at state universities throughout Florida. And so they were FRS members. So I became very familiar with the benefits offered to people under FRS. Now, John, throughout his career as well, has primarily worked with members of the Florida Retirement System. Right, John?
John: Correct.
April: And so we've found some really good synergy and working together with both of our experiences to help people. And John his I'm gonna, I don't want to tell your story, John, but I will, that your father and your grandfather both retired from was it Department of Transportation, right?
John: That's correct. Over in West Florida, Defuniak Springs.
April: Mm hmm. So you are very familiar with the benefits that are offered to FRS members. And then also some of the common questions or concerns that they have too because you lived it through your parents and your grandparents.
John: Well, as a friend of mine put it I am, I grew up in a state employment family. So I understand the issues, both the retirement side, but also the day to day stuff. And because I have literally 45 years of doing that, I feel like I'm on top of it. And even though I have clients from all areas, and all walks of life, my number one passion is helping people in the Florida Retirement System.
April: Well, maybe we'll circle back and kind of talk about some of those key issues today. What we're going to be talking about when it was our presentation day on Social Security, we're going to be talking about how social security works, what you need to know around the program, different payment scenarios, and then also issues around the program as well. So let's, let's roll up our sleeves and get to work. So let's talk about how social security works, first and foremost. I think most of you on the call may be familiar with how social security works. But sometimes there is a little bit of confusion around this. So we'll kind of go through this together. Social Security was started back in 1935. And it's funded through the taxation of wages.
Those of us who are paying into Social Security today paying into the trust fund are the ones who are paying the benefits for the beneficiaries today. So that we're gonna circle back and talk about that later, because that also comes in to some of the issues around the program when it comes to funding, but through taxation of wages, that goes into the trust fund for Social Security, and then that is what pays the current beneficiaries for Social Security. You can see here that the average monthly benefit now this was as of January of this year, was about $1500 per month. $1,503 is the average monthly benefit, again as of January of 2020. So those numbers get updated every year.
So coming up in 2021, we'll have a new presentation with some new numbers for everyone about the different numbers that will change periodically. So we're going to go through some of those today. How do you qualify for Social Security. So you have to earn what's called Social Security credits. So as we're working, we earn credits for Social Security. And this is what allows us to qualify for Social Security benefits and Medicare benefits as well. When you've earned 40 credits, you're able to qualify for both Social Security and Medicare, you could earn up to four credits per year. So for most people, if you have worked for about 10 years, 10 years, then you qualify for Social Security and Medicare. There are some earnings limits, you do have to make a certain amount to qualify.
But again, for most people, if they have 10 years of working history, they qualify for both and their spouse too would qualify for Social Security and Medicare. How is your benefit determined? Your benefit amount? That's really what it comes down to when we're talking about social security. We want to know what's your Social Security benefit going to be at the different ages that you can claim? So you know, you've got your full retirement age. We're going to talk about a little bit later about claiming early as 62 are deferring for as long as, as age 70. But how that benefit is determined, is Social Security averages your highest 35 years of salary. And if you do not have 35 years of a working history, then they're going to average zeros in for any year to get you to 35 years.
Very important there. So when depending on your work history, you may want to double take a look at what so security has for you for your work history. And see if you've got your 35 years, if there are any zeros in there that might benefit that might change to when you're thinking about taking Social Security. That's one of the things that we want to take a look at there. But yes, they it's based on your highest 35 years of salary. And then if you don't have 35 years, they'll they'll put a zero in there for you. I would recommend going to the Social Security website and taking a look at your statement. They used to mail paper statements, and they kind of got away from doing that. And so the best way to look at your benefits now are to go online and set up an account. You can go to ssa.gov, or social security.gov. And you can take a look at your benefits. They've got some different calculators on there as well for you to take a look at.
I will say too if you haven't registered on the social security website before, we would recommend that you at least set up an account. Because we've heard of some fraud that happens people try to go in and create a you know username for you if you haven't done that already. So I went I went in a couple years ago and created mine so that I can go in and see too. And you can see a couple different things. You can see what your earnings history is. So it's really it's kind of neat to see what the earnings history is what's been reported to Social Security. There's not usually too many issues with that. But it is good to double check and make sure all that looks accurate. And then you can see the different benefit amounts as well. Again, looking at what your full retirement ages are claiming early furring and then also what would be available to any survivors as well.
Let's keep talking about the pros and cons about what you should know around the program. The first thing is when you were born determines your full retirement age. So if you were born between 1943 and 1954, your full retirement age is 66. If you are born 1960 or later, your full retirement age is 67. And if you're born between 1955 and 1959, they are bridging the gap between 66 and 67. So yours might be 66 and two months. 66 and six months, again, depends on when the year you were born determines your full retirement age. And when you activate your benefit, when are you going to start taking Social Security determines what amount you will receive. So we're going to talk about an example of someone's full retirement age was 66. And if they waited till 66, to claim Social Security, they would receive their full benefit. Sometimes we call it the FRA the full retirement age. If they can, you can also claim it early. So you can claim it early as 62. But if you claim it early, you're going to have a reduction in benefits. And that reduction is locked in for life.
Sometimes there's there's a lot of confusion and misinformation about this. Some people think that if they take their benefits early at 62, they're going to give them a reduced amount for a few years. And then at 66 it'll change to their full amount. And that is not accurate. What you started at is what it's going to be locked in at. So very important when you're looking at your different calculations. We're also going to talk about what's called delayed retirement credits, because you can delay past full retirement age, and social security gives you an increase for every year that you delay past your full retirement age. Now everyone's situation is different. There is no right or wrong answer there is no one size fits all, or a rule of thumb.
So I always say John's heard me say this before. I'm not a big fan of rules of thumb, because who's thumb are we using? Are we using my thumb or using John's thumb or using your thumb? So rules of thumb to me don't always work. It has to be very individual to your situation. And there's a lot of things to consider when you're thinking about if you're going to claim early or if you're going to do so john here, I was thinking we could just kind of talk through this a little bit about maybe reasons why someone would take it early, why they should delay taking Social Security, and other items that people should take into consideration when they're thinking about when to take Social Security.
John: Well, let me jump in for a moment, because I know you'll cover some of this in slides coming up. But let's just take each one of them. If you're going to consider taking your benefits at 62, to understand that if you earn more than 18,000 of earned income, you're going to have a penalty. So for every $2, you earn, above that 18,000, you're going to lose $1 benefit. We have people April who still don't know that. And then we have people, like you said just recently, we had someone who thought they could take the reduced benefit. And then once they reach full retirement age started to full benefit. So there's a lot of confusion about it.
Should you take the benefit at age 66 in this example, or wait to 70. In my case, I started mine at age 66. April and I had several discussions about it, I've had the pleasure of looking at literally 1000s of plans in my 45 years of doing this. And with the time value of money, I decided I'd rather have the income now. Now, some people should wait until 70. Why? In my case, I have other savings investments, life insurance in place. So the life insurance would be to take care of people that I love and care about and either my death. I just recently advised a gentleman wait until 70, he did not need the income. Now he could wait by waiting until 70. Since he has zero life insurance, none, then the survivor benefit would be a higher number.
So instead of like on the screen getting $3,000 per month, his widow would have almost $3800. So it depends on your individual situation. April is correct in stating that the one size does not fit all with this. I'm sick and tired of the advisors telling people take it as 62 to because bankrupt, you get all you can. Well, I got news for you, if the system were to go bankrupt, they're going to cut back on all of our benefits. There is a wealth of information on the website for Social Security, I would encourage you to read the trustees report for yourself. Most people will not do that. Because they get boring, or other than geeks like us that enjoy that stuff. It probably is. Which leads me to one other thing, the concept of who not how, April.
And people ask us how do I do this? How do we do that? And you know, maybe that's the wrong question. Maybe the right question is who can do this for me? Or do this with me. So our job is to help you where you want to go. We have a lot of experience and focus on getting things done. Just went through some therapy yesterday, in fact, for vertigo. Well, I could have done exercises myself and hoping it would work. But I went in, young lady solved my problem in one hour session. And so who versus how. We know how to do it. So let us be the who that helps you if you want help with Social Security, Medicare and other issues involved in retirement. But those are my comments here because I'm sure you're getting this. If not, I'll jump back in.
April: Yeah, no, I think you're right. All of those are things to take into consideration and you just hit on a couple of key areas there. Will you continue working? That's a big thing. Even if you're at full retirement age, why are you going to continue working?
John: Like me.
April: Like you. That's right, exactly.
John: On paper, I'm retired. I'm getting Social Security pension. I don't want to fully retire. I want to keep working as long as I am creating value and I'm relevant and I'm helping.
April: Right. And, you know, for everyone to get into that individual situation. You know, John, we were meeting with some clients earlier this week and one couple plans to work to about 68. But when they retire, that's it. They're done. Right? There's they're not going to do any sort of work after that when they leave. They're both their jobs. Ones retiring from the state one does not work for for government. And when they retire, that's it. They're done. There was another gentleman who he's got the potential to do some consulting. So he's gonna retire and then he'll probably do some consulting, what that looks like yet we're not sure, but he's got that option available to him. So it just kind of depends again, on your individual situation. You've got to consider your health. Right that's that's a big part of it as well, about when to claim. We can talk through your health.
John already mentioned about depending on your other assets, and are we concerned about survivor benefits, those are some reasons why you may delay and again depends on other income streams that you may have in retirement. Do you have a pension? Or is the rest of the retirement planning burden on you, the individual to have the income that you need in retirement? So those are the things that we all look at when we're working with clients and going through what we call a retirement rehearsal, where we show you exactly what it looks like financially to retire, and we play what if. What if we did this? What if we took it early? What if we take it at full retirement age? What if we take it at age 70? What are your different pension options if you have those available? What does that look like from a retirement standpoint?
And then we also talk about how to distribute assets. So if you've got, you know, retirement accounts, you know, maybe you have a 401k or a 403B or deferred comp, maybe you have some investments outside of that, and walking through, how are you going to have what's your plan for distributing those assets in retirement. So that's what we do, working on retirement rehearsal with clients.
John: And we have a number of clients who have either the optional retirement plan with the University System, or the FRS investment plan, which is a bigger, because now when you retire you have to pick the right social security option, determine when to do Medicare, but also how do you select the right income plan for you, based on. All of this is going to be addressed. Sadly, most people wait until the last minute, they're in scramble mode. So but I'm impressed with the number of people who registered for the webinar, I think we had like 60, I thank you said. So that I'm pleased to see that because we see ourselves as educators first. And if we can help people, then they're ahead of the game. And every time we do these, we just we get a full house, either live in the training center here or webinars. But anyway, I know, you got more stuff to cover so ahead.
April: Yeah, no, that's a good point. So let's just kind of keep going here. And we'll we'll circle back on some of these other key issues for people. Now, again, we talked about this a little bit, but you do have delayed retirement credit. So every year that you delay past social security and past your full retirement age, Social Security is going to increase your benefits 8% per year. They'll actually do it on a monthly basis. And so it's .67% per month. So let's say your full retirement age was 66. But we're going to work six more months, they're going to increase it by that many months that you delay taking Social Security. But it is an 8% increase, if you delay.
I also want to point out too, if you're still working at this point, let's say you are, the couple we were talking to earlier this week, John, they're going to be he's going to be full retirement age next year at 66 and two months, but he plans to work to 68. He has a couple things that are going to be increasing his social security benefits. Not only is he going to get the 8% increase for delaying taking social security, but he's still working. So he's still paying into social security and his earnings right now are continuing to go to increase what his monthly benefit is. So this all comes back to are we going to be working? Are we not going to be working and all those other factors that we talked about earlier as well, especially when it comes to looking at these delayed retirement credits. On your benefit, you're going to see your different benefit amounts. Now you're going to see what happens if you take social security at 67, and your full retirement age 66-67 or somewhere in between.
If you take Social Security early at 62, or you wait until 70 for your full retirement benefits. You're also going to see on your statements, what amounts would go to your survivor. And we're going to talk about survivor benefits a little later, when we're doing the retirement rehearsals for clients, we're going to ask for copies of your statements. If you're married we're going to ask for both so that we can take a look and walk through the scenarios of what it looks like. Maybe for one of you to start claiming, the other to delay. What about spousal benefits? There's a lot of different things to consider about the claiming strategies. We're going to talk a little bit about those today.
So you know what they are. But that's why we would ask for copies of statements so that we've got your accurate numbers in front of us. There is a cost of living adjustment for Social Security. It's not guaranteed every year, but there is a cost of living adjustment. So the COLA the cost of living adjustment is tied to the CPIW which is the consumer price index for urban wage earners and clerical workers. This is not the inflation number that is often quoted in the media. So first. know that. But if there is an increase in the CPIW then you're going to see a cost of living adjustment for your Social Security benefits.
For example, in 2020, the COLA was 1.6%. But there have been years when we've had zero cost of living adjustment. That was back in 2000, we actually had two years back to back 2010, 2011. 2016 was also zero. And then 2017. Right after not having a cost of living adjustment, you got a pay increase of .3%. Most people told me it was like almost insulting, you know, the the .3, not really giving them a cost of living adjustment or having a zero there.
John: That did not cover the cost increase on Medicare.
April: That's right. And so you have to take those things into consideration, too, about Medicare. Medicare premiums once you're over 65. One of the other common questions that we get about Social Security is taxes. How much will the tax be on social security? So, taxes on your Social Security benefit, depend on two things. One, it depends on your filing status. Are you filing as an individual or joint return, and then also, what is your combined monthly income. So your combined monthly income is a calculation, it's your adjusted gross income, plus any non taxable interest, plus half of your Social Security benefit. That equals your combined income.
So we're gonna walk through both scenarios about if you file as an individual or a joint return, and what that looks like. Individual filing status, if your combined income is between 25 and 34,000, then 50% of your benefit will be considered taxable. If your combined income is greater than 34,000, then 85% of your benefit will be considered taxable income. We can help you with this looking at tax returns, John and I are not CPAs. But we review enough tax returns, we can help you if you need some help. Looking at the tax side of things. If you're filing a joint return, and your combined income is between 32,000 and 44,000, then 50% of your benefit is considered taxable. And if your combined income is over 44,000, then 85% of your benefit is considered taxable. You can have taxes withheld from your monthly benefit. Some people don't realize that we had a client a couple of weeks ago we're meeting with and she was actually she actually got penalized from the IRS, because she was not having taxes withheld from her monthly benefit. So just make sure that all of that is in good order when it comes to your taxes. Now let's talk about if you decide to continue working and taking social security.
We talked about this a little bit earlier. But you can see if you're if you claim early at 62. And you're still you have any sort of like you have earned income over for 2020, it's 18,240, then your Social Security benefit is going to be reduced by $1 for every $2 above that limit. Now this 18,240 number, the earnings limit changes typically every year. Every year, that number goes up a little bit. So we just have to pay attention and have the accurate numbers. So that's why we talked about it's important to know if you're retiring and 60 do Are you still going to be working? And what's your income going to look like from that. If you take it in the year that you turn your full retirement age, any wages above 48,600, your Social Security benefit is going to be reduced $1 for every $3 above the limit.
Now, John, we just had this case, and we were talking about with a client, because he is going to be full retirement age in August of next year. And he's working. And he's considering starting social security in January. So we had to walk through this very thing with him making sure that looking at if he was going to have a reduction in Social Security benefits, what would that be? Or was he going to be in good shape and not have any kind of reduction there. So again, all part of what we want to look at when clients are getting close to retirement and social security. Now if someone waits if you wait till the month that you reach full retirement age, there's no earnings limit. You can continue to work you can get your Social Security benefit and there's no earnings limit.
So in his case, if he waits until August of next year when he turns his full retirement age, they don't care how much money he makes, he can make a million dollars, and he's not going to have any reduction in his benefits. It's only going to be between January and July that we have to pay attention to there in his case. Okay, let's get into some different payment scenarios with the program. The first is spousal benefits. So as we talked about earlier, when you have 40 credits for Social Security, both you and your spouse are eligible to claim a benefit or social security, and the spousal benefit equals half of the other spouse's benefit. Sometimes, you know, John, we find that it's easier if we use like numbers for this scenario here.
Let's pretend for a moment that you and I were married, and you're spouse A and so your Social Security benefit is $1,000 a month. And let's assume that I have a lower record. And so maybe my spousal benefit is only $250 a month under my own record. I would qualify for a spousal benefit equal to half of yours. So in that scenario, I would qualify for a spousal benefit of $500 to get me to half of what the higher earner's record would be. So spousal benefits, higher earner gets their record their earnings, and then a lower earnings spouse, it's either going to be whatever they qualify their own record, or half of their spouse's, whichever is higher. And Social Security has what's called deeming roles now. And so if they'll automatically give you the higher of the two, of course, I always say double check, make sure that they're giving you the right amount. We always want to trust but verify. But they do have deeming rules where they should automatically be giving you the higher of the two.
There are widow and widowers benefits as well, which, as a widow or widower is equal to the higher of the two records. You don't get both you don't get yours and theirs but you only get the whichever one was higher. So in that case, again, let's assume that my record my my benefit was $500. And John's was $1000. And John passes away, I'm going to receive $1000 from Social Security, not just the $500. So there are widow and widower's benefits, we can help walk you through these different payment scenarios as well. And depending on the different survivor benefits, I'm not going to spend a lot of time here because it can get a little complicated, because it's not just do you have a widow or widower's benefit, they're also going to look at if you have any income as well. But you can claim a widow or widower's benefit early. Can be even as early as age 60. But again, it depends on if you have other sources of income that are coming in as well. So we want to pay attention to that.
Let's talk about divorced spouses. If you were married for at least 10 years or longer, you still qualify to have a spousal benefit under your ex spouse's record, even if you're not married to that person. And as long as you're still not married to that person. But as long as you're married for 10 years, you will qualify to have a spouse or record under your ex spouse, each of them have to be at least 62 years old to start claiming, and the hire record spouse if they remarry, let's pretend that they've remarried.
You taking a spousal benefit on our ex spouses record does not impact their benefits at all. Doesn't impact their new spouses benefits either. Death has some different rules to go through when it comes to, you know, divorced spouses, but we can walk you through that if that's your situation. There were some major changes to Social Security back in 2015. In fact, john, those were some of the fastest changes that we've seen get passed through, right.
John: It's the fastest I've seen in my career. 1975 to 2015, I've never seen Congress come together and put aside their partisan views and make decisions so quickly. And it's gonna happen more because this is a very touchy subject. There's already some things brewing, that if there's time when you get into some of the issues I'll address that I've been reading about and studying. But you're right it's the first time we've seen something move this quickly. The last time we saw was 1980s when social security was totally overhauled back then. '83.
April: Two things happened. And when they past these changes in 2015, they were phasing out what's called the restricted application and they got rid of that file and suspend. I'm not going to spend any time on file and suspend today, because you would have had to have already qualified and done that with social security as of April 30 2016. We are going to talk about the restricted application briefly. But you had to have been 65 by January 1, 2019, to qualify for the restricted application. So if that's you, we should take some time to talk about that, again, you've got to be as it must have been 65 as of January 1 of 2019.
So what the restricted application allows you to do, again, you've got two spouses, it would allow spouse A to defer taking their benefits, but take a spousal benefit from their spouse's record. So again, let's pretend that John and I are married, and he is the higher record spouse. What he would do is he would not take social security at full retirement age. And he would defer that until age 70, until you know, the maximum age for Social Security. And the meantime, though, I would take my record at my full retirement age, so I'm getting my benefit, and he would be getting a spousal benefit under my record. So this is one of the things that they are phasing out. So it is a claiming strategy, a very popular one. But you had to have been 65 by January 1 2019.
To take a look at that. Now let's get into some of the issues around the program. You know, one of the main issues that we have with social security is the number of workers that are paying into Social Security. It's assuming that we're going to have the number of beneficiaries continues to grow, that are collecting Social Security. And so as that number grows, the ratio of workers to beneficiaries is shrinking over time. And that's putting more pressure on the trust fund to be able to pay out current benefits. The trustees are where they change this year. Sometimes it's you know, 2032, 33, 34. But it is projected that if social security, there are some changes aren't made, that the trust fund will be exhausted by 2034. And in that case, social security would only be able to pay 75% of current benefits. So for every dollar that you're receiving on Social Security, would be reduced that to 75% of that. That is obviously an issue with the program, we do think that they will make the necessary changes to make sure that that doesn't happen.
And there are a lot of things that have been proposed over the years to do that. It could be that they start raising the claiming age from full retirement age like they've done before, from 67 to later. They could go away with people claiming early. That's a claiming as a strategist, some of they've talked about. Increased taxation for social security as well. So a couple different ideas that have been proposed for these changes, as we talked about with again, with the issues like John was saying, it's subject to political agendas. And then also it's this change that CPIW we talked about for the cost of living adjustment, which is something that we believe they should change at some point as well. But yes, the political agendas. It definitely becomes Social Security becomes that political football, it seems very often.
John: There was talk just this week about using CPIE based on elderly. If that happens, you're going to see lower cost of living adjustments. This is the kind of stuff that as I've gotten older, throughout my career, people would come to me with ideas. What do you know about this? What do you know about that? I didn't know. So I started learning. And that's the benefit of having clients that are ahead of me that are 100 years old, late 90s, early 90s, etc. It forced me to learn this at an early age, and you're benefiting by doing the same thing, Apirl. So we have the experience of dealing not just with our own planning, there's literally 1000s of people who will be benefited by helping them over the years. We benefit because we learned something new. We can now share that information with other pepple by doing these webinars.
April: That's right. All right, let's recap what we've kind of talked about so far. So how social security works. It's funded by the taxation of wages, they average your highest 35 years of wages to get your benefit amount. You've got to have 40 credits for you and your spouse to qualify for Social Security and Medicare. And we recommend that you read your statement, what you need to know about the program, full retirement age depends on the year you were born.
Also, when you start taking Social Security effects what your benefit amount will be, there's a cost of living adjustment, but it's not guaranteed every year, you may have to pay taxes on your benefit. That depends on what other income streams that you have. And if you plan to continue working in retirement, really want to pay attention to those earnings limits. And that all go that goes back to when do you start taking social security as well. There are different claiming strategies. You've got spousal benefits, widow or widowers benefits, survivor's benefits, divorced spouses. And then we also talked about the options with those delayed retirement credits and spousal benefits that that are being phased out.
And again, you got to be 65 by January 1 of 2019 for those. And then issues around the program, funding, you know, that's something we all know, and we've heard about with Social Security. There's definitely a political agenda. Can be a couple political agendas. And then also, you know, it's not really an issue with the program. But it may be an issue that impacts your retirement is that Social Security was never meant to replace all of your income. So you have to have other income streams in retirement, whether that's a pension or assets.
John: April, let me jump in here, please. When, if you go back and you listen to the video of it. But the quote from Franklin Roosevelt was that we never intended to replace all their income. You have to remember when this was started, it is actually started back in 1933. First benefits was paid '35. We were just coming out of a great depression. Social Security was designed to be a way to give people a livable income. And some of the things that have been kicked around that are being rethought today, because of the pandemic and the economic crisis is creating. Economic crisis, meaning for some people who've lost their jobs, or other people who are very well, when people say the economy's in the tank, well, it depends on what you mean. Some businesses are doing extremely well. We're doing a webinar here, companies that are doing this type of service are flourishing, they're doing very well, because people are having to work from home.
But one of the things that was proposed in Congress before was to stop allowing anyone to take social security at 62. I was just reading an occupational journal just three nights ago, that one of the big changes was, wait a minute, we can't do that now. Because so many people who've lost their jobs, claiming Social Security is 62. So what impact would that have on people who are in trouble? Another issue was do away with (inaudible) for your Social Security tax, that one we will probably see happen. Around $30,000 is the cap. Medicare is unlimited, we'll probably see these tests go higher taxable wages, or have another option to limit benefits in retirement, based on an earnings test. If you make over a certain income, then you have a benefit.
So are all of these I can give you a long list. I think maybe next time we do a social security webinar. We try to stay away from political stuff. But if it's something that is potentially out there, but those are just some of the things. I want to make one thing clear. I am not someone who likes to deal with fear very well. I don't like it when someone uses fear tactics only. Someone tell you take your benefit now because the system is going bankrupt. I think you need to challenge that person or persons. It's not going bankrupt. There might be a lower benefit but if we as Americans keep saying I don't want to give up my benefit. If we don't do something to make it smaller. Like that.
April: Okay, John, anything else you want to add before we close out here today because we've gone through a lot of information.
John: The only thing I want to add is for everyone, I would encourage you to continue being curious through learning about this. When you see articles about it in a magazine or newspaper read it. I get questions about calls, we get surprised getting money. Most of the stuff that's out there we see it because we research and study. But I would encourage you to take advantage of a telephone appointment with no cost or obligation to do that. To chat with you. Most of the time in those conversations something will come up the person didn't even think about, and we're able to help them. And if we can help you, we'd love to know hype, no pressure. If you'd like to chat with us, please do.
April: That's right. And so we like I said, we would recommend that call, we schedule a time for a 25 to 30 minute phone appointment. And that'll be a time for you to discuss any goals or concerns that you have when it comes to retirement planning. You can do that a couple of ways you can reach out to John and I directly by email or by phone. To schedule a phone appointment, you can call our main office number, which is located in Tallahassee at 850-562-3000. Again, that's 850-562-3000 and ask to schedule a phone appointment, you can do that with me with John, or with anyone on our team. So with that, I just want to say thank you for taking the time to join us today on this webinar about social security. We hope you found it impactful. And hopefully you'll join us on our next one on Medicare. Yes, John.
John: April, just remind them of the date, even though you'll be getting the email but just put this one the calendar.
April: Yeah. So it's gonna be December Wednesday, December 3 at noon will be our next webinar on Medicare. And as soon as I did mention, this has been recorded being recorded and will have a replay available. It does take a couple weeks for that replay to get posted to the our website. But as soon as we have the replay, we'll be sure to send that out to you.
John: And one last item, a shameless plug for checking out our podcast because on the podcast is a wealth of information. So if you've not done that, please. We have a series of 8 podcasts that have been produced that will be coming out regarding planning specifically for members of the Florida Retirement System.
April: Right. And you can find all of that on our website at johnhcurry.com. That's johnhcurry.com. All right. Thanks again. Have a great day.
Voiceover: If you'd like to know more about John Curry's services, you can request a complimentary information package by visiting johnhcurry.com/podcast again that is johnhcurry.com/podcast or you can call his office at 850-562-3000 again that is 850-562-3000. John H Curry chartered life underwriter, chartered financial consultant, accredited estate planner, masters in science and financial services, certified in long term care, registered representative and financial advisor Park Avenue Securities LLC. Securities, products and services and advisory services are offered through Park Avenue securities a registered broker dealer and investment advisor. Park Avenue Securities is a wholly owned subsidiary of Guardian, North Florida Financial Corporation is not an affiliate or subsidiary of Park Avenue securities. Park Avenue Securities is a member of FINRA and SIPC. This material is intended for general public use by providing this material we are not undertaking to provide investment advice or any specific individual or situation or to otherwise act in a fiduciary capacity. Please contact one of our financial professionals for guidance and information specific to your individual situation. All investments contain risk and may lose value. Past performance is not a guarantee of future results. Guardian, its subsidiaries, agents or employees do not provide legal tax or accounting advice. Please consult with your attorney, accountant and/or tax advisor for advice concerning your particular circumstances. Not affiliated with the Florida Retirement System. The Living Balance Sheet and the Living Balance Sheet logo are registered service marks of The Guardian Life Insurance Company of America New York, New York Copyright 2005 to 2020. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities or Guardian and opinions stated are their own.
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