Is Social Security Really Going Broke? Here’s What the Headlines Aren’t Telling You

TPIR Ep 127 Full Show.mp3: Audio automatically transcribed by Sonix

TPIR Ep 127 Full Show.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker 1:
Hey, Matt, I saw the headline this week that Social Security is going broke in 2032. So should people be freaking out? No. Short answer to that is no. Longer answer is should they be concerned? Sure. Should they be paying attention? Yeah, absolutely. But panicking? Definitely not. Welcome to Take Pride in Retirement, the podcast dedicated to helping members of the LGBTQ plus community protect and grow their hard earned money. Get set for a show full of education and insights with your host and advisor, Matt McClure. We recognize every family is unique. The goal of the show is to help you achieve financial freedom, so you and your loved ones can have the retirement you've always dreamed of, a retirement you can take pride in. No matter who you are, where you're from, or who you love. So now let's start the show. Here's Matt McClure. Hello there and welcome to another edition of Take Pride in Retirement. Matt McClure here with your host, your advisor, your friend, your pal and your confidant. And I am Josh noble, the attache to the advisor, aka co-host, aka Matt's husband. Indeed. And no matter who you are or where you come from, who you love, how you identify, or how much money you have, you deserve a retirement you can take pride in.

Speaker 1:
That is what the show is all about, after all. You know, if you're enjoying these conversations that we have here on the YouTube channel, on the podcast channel, wherever, especially on YouTube, we're trying to get that to really take off here. So if you're on YouTube, please like and subscribe. Subscribe. Ah, the beautiful sound of the subscribe. Um, but it really does help more people find the channel. It helps with the algorithms and all the stuff that, you know, kind of above my pay grade a bit. Um, and if you would like to talk about your own retirement plan, reach out. I mean, I would love to do that with you. Take pride in retirement.com is the website. Take pride in retirement.com. It's the name of the show.com that we did that on purpose, by the way. Uh, and you can also call 85524692118552469211. Is that number all right. So let's get right into it, Mister Attache.

Speaker 2:
So listen Matt, is Social Security going broke?

Speaker 1:
That that seems to be the rumor. Um, and I know you said yeah, as you said there at the very beginning, you saw that kind of headline. But no.

Speaker 2:
So then why does every headline say that?

Speaker 1:
Well, that's a very good question. I mean, you know, Social Security is funded a couple of different ways, right? So it's funded through the trust fund, which is the part that people always say, oh, that's the thing that's running out of money. That's what's going to quote unquote go broke, right? So there's the trust fund that's been there for a long, long time. Money had been put into it. Now it's sort of being drained because not enough money is going into it to sort of keep the numbers up. Right? Then there's also payroll taxes. So the payroll taxes that you and I and everybody else who make a paycheck will pay those payroll taxes, FICA taxes, they're called. They go to, you know, Social Security and to like Medicare, and they pay for benefits. They'll pay for current benefits. Now, those are a couple of different ways that Social Security gets its money. So just because the trust fund goes away doesn't mean that it's all going to go away, right? It still has that other funding. But think of that trust fund as like kind of like emergency savings, right? Because, you know, you want to have an emergency savings account. You never know what's going to happen. And as we know, the Hvac can go out once or twice or 15 times. So it's a little, a little something that's, that's happening right now, folks.

Speaker 2:
Um, that is our life. That is our life, right?

Speaker 1:
It's so true. But it's like it was all fine until we had a tune up. Isn't that weird how that happens? Um, yeah. But, you know, if you've got that emergency savings account, you're still getting a paycheck, right? If you're employed, you're still getting a paycheck, but you've got that emergency savings account. You're just spending more than you bring in. If that's the case, then eventually those savings, that emergency fund is going to run out. But the paycheck keeps on coming. So you can still spend. You just can't spend as much as what you're doing. So yeah. Current projections do show, and this is from the federal government that the trust fund is going to be depleted late 2032. But that does not mean that Social Security is going to disappear. Um, payroll taxes will continue to pay most of the benefits under current law. That could be reduced, though, if Congress doesn't act. If they don't, if they don't do something and getting them to agree that the sky is blue on any given day is a challenge these days. Uh, but the trustees of Social Security estimate that they would have to cut the benefits to 78% of what they currently are. Uh, they could still be paid from the ongoing revenues. But, um, it's 78 is less than 100. So it's not a, not a fun prospect for people.

Speaker 1:
Well, here's the thing. Let's pretend that Congress just does nothing pretend. Um, this is that's not historically how things happen at all. Right. I mean, yeah, okay. Well, let's let's, let's just say hypothetically they do nothing. Okay, good. Hypothetically, if Congress were to do nothing, you know, the current law would actually require across the board benefit cuts, kind of like I was saying, you know, just reduce that, reduce that benefit from 100% of current scheduled benefits to 78% something thereabouts. That's the current projection anyway. But that's not Social Security ending. That's still a significant benefit cut. And that's because benefits can only be paid from the dedicated revenues. Like people say that Social Security is going to be paid. Um, I think you have to dig into other parts of the federal government to fund Social Security. Well, no, Social Security has to self-fund. So that's why these payroll taxes and the trust fund are the only two sources of funding for it. Unless Congress acts. And that's why we're in the situation that we're we're in right now. Yeah. So, I mean, we're not talking about no checks at all. We're talking about smaller checks. Yeah. Still not fun. But not the check going away. Right. Right. Yeah. And you know, and I worry about people who will hear this headline and all of these headlines, not just one, obviously, but a bunch of headlines out there that that talk about this.

Speaker 1:
And they'll rush to claim Social Security at 62 because they're afraid that the money's not going to be there by the time they reach whatever their full retirement age might be. It's either 66, 66 and some months or 67 for everybody really listening to the sound of my voice right now. And then, you know, they'll rush to, uh, claim at 62 when they're first eligible because they're afraid that those benefits are not going to be there by the time they reach that full retirement age or even age 70, when you can get a maximum, the maximum benefit that you'd be entitled to. And that could really reduce your lifetime fit because you don't know if that's going to be the best situation for you. I believe that Congress will do something eventually. They'll kind of they'll have to. I think the political winds will dictate that they will have to. Otherwise, we'll throw all the bums out of office. You know, I think it'll be that type of situation. But you. If you rush to claim at 62, you permanently reduce your lifetime benefit, like regardless of what happens, right? So even if the benefits are cut in the future, you've already reduced your benefit by claiming early at age 62, you don't get that increase to the full retirement benefit that you would be eligible for until your full retirement age.

Speaker 1:
That's why it's called that. And then you can even do yourself better by going all the way out to age 70 and getting the largest monthly benefit possible. Whether or not that is the best thing for you. Contact me. Reach out. Take pride in retirement.com and I can run an RSS, a roadmap. I'm a registered social security analyst. I can run that RSS a roadmap. It takes all the different things into effect, right? The different variables and all that. And the and it gives you kind of what is the optimal claiming decision for you based on your information, not based on these headlines, not based on somebody else's information. And the bottom line here is, you know, fear is not a retirement strategy, right? It's really not. It's got to be an actual plan based in reality. Right. And I feel like someone like you, the advisor that cares can ease those fears, especially with these headlines, right? So like I would say, reach out to Matt and see what he can do to help you because he's going to have your best interest at heart, even with these headlines swirling around. Right. And like I've always said this, especially this situation, it's obviously it affects everyone, but it's especially important, right, for the LGBTQ plus people.

Speaker 1:
Oh, absolutely. And, you know, I mean, I only say this quite often, you know, a lot of the things that we'll talk about really do affect everyone. But there are always special considerations that need to be taken into account for the LGBTQ plus community. Otherwise, what in the world am I doing here? Yappin my gums anyway? Um, but there are. I saw that look. Uh, but there are LGBTQ plus retirees, many of us who are more likely to rely heavily on personal savings just because pensions have become less common, things like that. Many have experienced career interruptions, wage disparities over the years, especially when you get to like the T in LGBTQ. Plus, uh, a lot of people in that particular part of the community have experienced those types of things, especially here lately. And, you know, people are more likely to depend on chosen family for their caregiving. They often don't have adult kids to provide some of the financial support or caregiving support. Uh, if you are LGBTQ plus. And you know, they'll benefit from we will benefit from coordinating Social Security, uh, that claiming strategy with a broader retirement income plan. And that's what I love doing for people putting together a full retirement income plan, showing you how you can, yes, actually retire no matter what Social Security does.

Speaker 1:
And then we'll let Social Security be the cherry on top, not the thing that you rely on. Right? So you've got to maximize every dollar. That's why maximizing, maximizing every dollar really, really matters here. Um, and it reminds me, I met with a couple, um, who were just absolutely convinced that they needed to file immediately, that it was like, oh, I've heard, you know, this thing, all these scary headlines, Social Security, it's not going to be there and all this stuff, but actually sat down, spoke with them calmly. And after running the numbers, waiting a few years, actually added several hundred dollars a month and many, many thousands of dollars over their projected lifetimes. And so that really strengthened the surviving spouses future income, because the higher earner benefits by waiting, you know, and then when one of the spouses dies, the larger of those two benefit checks is the one that remains. So the surviving spouse gets the larger check and it's, you know, those headlines really almost cost them those many, many thousands of dollars looking into the future. So it's, um, you know, it can be a real game changer here. You've got to approach these things with a level head. Yeah. All right, let's do some myth busting, that myth busting with Matt.

Speaker 1:
So I'm going to throw some things out to you that I have heard. All right. Cool. Let's do it. I'll look forward to this. Because you know how much I love MythBusters. Yes. First off, Social Security won't exist by the time I retire. That myth is busted. Um, that's very unlikely, because I believe, as I said, that, you know, the the law as it currently stands is there will be some benefits there, some benefits that remain about 78% of the current projected benefits. That's what is is projected right now. But it's very unlikely that it will go away completely. Um, as again, that would just be political suicide, I think for any politician who wanted to do that. Right. So look, I should claim now before the money disappears like a New York taxi driver. Now, um, I should claim now before the money disappears. Truth is on that one. It depends. Maybe. Maybe not. You know, everybody's situation is different. It's what we say all the time. Let me run an RSS, a roadmap for you. It's free. I'll do that. Absolutely free of charge, free of any cost, any obligation, any of that stuff. And it shows you, based on your information, what is best for you, literally based on your information and not somebody else's or some speculation or anything like that. Yeah.

Speaker 3:
So now, um, I heard that the government, they could just print money.

Speaker 1:
You know, I actually visited the Bureau of Engraving and Printing, uh, when it was really cool, actually, uh, when I was like 20, I think. And, um, yeah, so I, you know, the government, they, they can print money and they do print money. Um, but Social Security is not financed through any other source, uh, of, you know, government funds through any other taxation or any other thing other than the trust fund reserves and payroll taxes. That's what current law says. That could change sometime in the future. Uh, obviously laws do change quite a bit and over time, certainly, but the, um, you know, current law says that, no, they can't just print the money to pay for Social Security benefits. That's, that's really not a thing. All right. And finally, I don't need a retirement plan because I'll just have Social Security. Uh, that one I it breaks my heart when I hear people say that, right? Because you might not realize the power that you actually have as an individual to dictate your own future in this way. Obviously right now everything is more expensive. Um, we often say, and it's become a running joke in our house in this economy, like as just as a response to basically anything that costs any facts.

Speaker 3:
Out again in this economy.

Speaker 1:
Exactly. And in this weather too, it's like, come on, this weather could have couldn't have gone out in like the fall where we could have just opened up the windows. Ah, of course it that's the way it happens. It's Murphy's Law, right? But this you don't want to rely only on Social Security. You actually do have the power to set money aside, let it grow over time, and then turn that into an income that you can live on in retirement, not just live, but thrive in retirement. Do the things that you want to do. And then as I said earlier, that means Social Security can be just the cherry on top. Don't let it be the thing that you rely on. And also, you know, the real takeaway, I think, from this conversation is don't let the scary headlines make permanent financial decisions for you. You know, take control. Control the things that you can. You know, Social Security has faced financing challenges before, and it has been for quite a while. You know, Congress has acted in the past that they did that, most notably in the early 80s, I believe it was when they changed some of the taxation rules and all of that. But while nobody can really have that crystal ball and look, you know, I've got a crystal ball, but it's broken. It's been in the shop for a long time.

Speaker 1:
I don't know, they can't get it working. So sorry. Can't help you with future predictions here. And nobody can do that. Nobody can predict especially what's going to happen in Washington. But history suggests that those issues are going to be addressed before benefits suddenly disappear. They'll just keep, you know, kicking that can down the road as far as they possibly can. Um, so look, I gotta say this to wrap up, if today's conversation has raised some questions for you as an Lgbtq+ person, as an ally, as just someone who is concerned about these issues, about when you should claim Social Security or how it fits into the overall retirement plan that you really should have in place. I'd love to help you really, really would. You know, this is exactly the kind of planning that I do for folks every day, day in, day out, I do this kind of thing. You don't need to be worrying yourself with this. Let me take that burden off of you. We'll work together and I'll show you what's possible. Right? The initial consultation, absolutely complimentary. Go to take pride in retirement.com. That's. Take pride in retirement.com. Schedule a time to talk. You can also go, uh, on the phone and use the app. That's the little, the little usually green phone icon on your phone and dial me.

Speaker 1:
Dial me up 85524692118552469211. Yeah, and I have a little, um question here for the YouTubers that are watching us. I'm just curious. So if you could ask anything, if you could just say Social Security, I got one question. What would that be? Yeah, that's a great, great thing. So if you have a question, if you are watching us on the old YouTube machine right now and you have a question about Social Security, just even just one, put it in the comments. Absolutely. We read all of those and I would love to interact with you. You know, your question might even become the topic of a future episode. Who knows? Right? So yeah, stay tuned for that. You could become famous in the world of take pride in retirement. Well, think of like, uh, some sort of fan name for people that listen to the podcast. Oh yeah. On that we need to. Yeah. Or maybe we'll put a poll out or something like on that. You know, we've been watching hacks, so we know the little Debbie's. Yeah, which we're sad that show ended. We'll think on it. Or honestly, if you guys have some sort of idea for fans of Take Pride also post that. Yeah, let us know. Proud retirees, I don't know something. We'll come up with something. We'll workshop it.

Speaker 1:
Yeah, yeah. Throw it around. But yeah, leave that in the comments too. Hey, well that is going to do it for this edition of the show. Mr. attache, thank you so much for keeping me on track with things. As always, it's a pleasure. As always, Mr. McClure. Pleasure. Mr. McFarland. Um, well, thank you for listening and or watching the show. Really do appreciate you as well, because hey, without you listening or watching, we don't even have a show to begin with. Uh, that'll do it for this particular edition. But until next time, take pride in yourselves and take care of each other. We'll see you then. Thanks for listening. To Take Pride in Retirement, members of the Lgbtq+ community deserve to work with a fiduciary financial advisor who puts their needs first. To schedule a free, no obligation consultation with Matt McClure and the team at Active Wealth Management, call (855) 246-9211 or go online to take pride in retirement.com investment advisory services offered through Brookstone Capital Management LLC, BCM, a registered investment advisor, BCM and Active Wealth Management Incorporated are independent of each other. Insurance products and services are not offered through BCM but are offered in sold through individually licensed and appointed agents. Matt McClure, an active wealth management are not affiliated with or endorsed by the Social Security Administration or any other government agency.

Speaker 4:
Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment, and is not a solicitation or recommendation of any investment strategy. Registered investment advisors and investment advisor representatives act as fiduciaries for all of our investment management clients. We have an obligation to act in the best interest of our clients and to make full disclosures of any conflicts of interest. Please refer to our firm brochure, the ADV two A item four for additional information.

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