Social Security Decisions That Shape Your Retirement (What LGBTQ+ Retirees Need to Know)

TPIR Ep 92 Full Show.mp3: Audio automatically transcribed by Sonix

TPIR Ep 92 Full Show.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
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.

Speaker2:
Welcome to Take Pride in Retirement, the podcast dedicated to helping members of the LGBTQ+ 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.

Speaker1:
Hello and welcome to another edition of Take Pride in Retirement. Matt McClure here with you, your host, your advisor, your friend, your pal and your confidant. Yes, all of the above. I really do appreciate you joining me this time around. And every time we're able to get together for the show a couple of times a week, we're coming to you now on the old YouTube machine and also on the old podcast machine, uh, or something like that. Uh, yeah. Wherever you get your podcasts, you can find the show. You can also find us on YouTube if you're watching. Hi. I'm waving at you right now. For those of you who are listening to the audio version, you don't see that. But, you know, uh, that just means you got to go on over to YouTube and search for take Pride in Retirement, like, and subscribe. Uh, I would really appreciate that. Like the video, uh, to this episode, but also, hey, go back and like other videos, watch them get something out of them, I hope. And, uh, I'd really appreciate you just spreading the word about the show because, you know, I, I really want my my whole goal here is to make a big impact on the LGBTQ plus community. It's a community that I am obviously a part of, but it's a community that I kind of owe a lot to. I feel like in in life, and so it's my way of giving back to the community, this show and just the work that I do every day.

Speaker1:
And I'm so glad to be able to do it. Um, so yeah, I mean, so thank you. First of all, that's that's the biggest thing. And you can reach out. Schedule a 100%, uh, you know, complimentary, no obligation, uh, meeting with me. It's a full consultation. Deep dive into your retirement reality. Really? Um, it's looking at all of the things that you have now, looking at what you could have in the future, and then comparing that with a plan that I would recommend. And you know what? If you're in great shape, I'll tell you, you're in great shape. But chances are it can help you. And if I absolutely can help you, then I will. And I want to. That includes a Social Security analysis as well. Based on your previous earnings and all the things really detailed report called an RSA roadmap. And, um, that's obviously free as well. And this is, uh, a lot of value that you get for free. So once again, go to take pride in retirement comm. That's the website. Take pride in retirement comm. Few ways to get in touch with me there. Just choose one and click it. Um, and it almost sounded like an insult. Choose one and click it. Uh, but no, just choose one of the options there to reach out and uh, and do it.

Speaker1:
Uh, also, you can give me a call if that's more your speed. 855246 9211 (855) 246-9211. All right. Lgbtq plus and individual individuals and couples listen up to this show because we are talking about I just mentioned it, Social Security, this episode, it's kind of a deep dive into Social Security. We've talked about it before on the show, but it bears repeating. I like to do this every so often. Things do change. You know, we got the cost of living adjustment for this year that's been implemented, all that stuff. And people always have questions. And so I kind of like to tailor things as I go forward based on questions that I've had in the past. And so some big questions, hopefully we'll get answered. And one of the one of the biggest answers to a lot of this stuff is like anything financial, it depends because you are you right. You are. There's no other you there's no other person who is like you. I mean, people obviously have similarities and all that stuff. There's this weird thing that just happens. So my husband and I, we watch jeopardy all the time, but we DVR it or we record it. You know, whatever you call it these days, we record it in the cloud and, um, we watch it. We're like behind. We're several weeks behind still. And so there was a guy who was is a jeopardy contestant and was a champion.

Speaker1:
I don't know, he's he's still a champion when we were watching. But this was a couple months ago now. Um, but he's an identical twin of a guy who was a long time champion and I was I was having an out of body experience. I was like, oh my gosh, am I what is going on? Until that first break, when Ken Jennings, the host, you know, walks down the line and meets the contestants and he goes, you know, like, don't adjust your sets. This is a twin of the guy. And the other guy was in the audience and I was like, oh, yeah, okay, that makes sense. So even though they look a lot alike, they're not exactly alike. They talk a lot alike. The whole thing. Identical twins. But even if you have an identical twin, there is only one. You. You know that identical twin, chances are, has not saved and spent exactly like you have. And all the things. So it all boils down to what is right for you. And those options are there. You know it's not. Social security is not a one size fits all thing. Much like your finances in general and your retirement plan in general. It's not one size fits all. It's customized for you. And so we're going to start today with kind of what the market environment looks like right now and why that matters for Social Security planning.

Speaker1:
It makes planning kind of in advance more important than it has been. And then we'll talk about, you know, early versus delayed claiming and what that decision could mean for you long term. That's probably the number one question that I get as an advisor. When should I claim. Well, depends. Do you need the money now? Do you need the money later? We'll go through that as well. We'll also cover spousal survivor and divorce related rules that a lot of people miss. Especially important for the LGBTQ plus community. And we're going to look at how taxes and Medicare premiums can quietly reduce what you actually keep. A lot to get to in about 20 minutes. So I'm going to do it. We've got £10 a show to cram into a £5 bag here. So let's get right into it with the market backdrop today and why it matters. So looking at the big picture market conditions can really shape your retirement outcome. Think about the people who retired or were planning to retire in that, you know what's kind of called the lost decade there between, uh, 2008 and 2018 ish, something like that, where it's like, boy, there were there was, you know, slow growth some years in the market and then there was no growth in the market some years, and then slow growth and then no growth.

Speaker1:
And it was like, you know, especially in the beginning of that, where we had the big market downturns 2008 and all that. After the Lehman Brothers went under and the housing crisis and all of those things just spelled disaster and led to the Great Recession. And so those people, you know, time was not on their side. And so market conditions really reshaped their retirement outcome or their potential retirement outcome long before they filed for Social Security, you know, interest rates, inflation, market volatility, all of those things influence how long your savings can last and how much retirees end up relying on guaranteed income and guaranteed income source. The biggest one for most folks is Social Security. Here's the thing, though. And there is actually a quote that I found about this from FDR. Franklin D Roosevelt, Franklin Delano Roosevelt, the president who signed the Social Security Act into or whatever the the name of the actual bill was, but signed Social Security into law. And he was saying, look, it's not meant to lead to streets paved with gold and, you know, pay for an easy life for you so you can move to Bora Bora and never have to worry about anything again. Obviously I'm paraphrasing, but the, you know, Social Security is only meant to cover about 40% of your pre-retirement income. And that's, you know, for the average worker there. And for many people, um, it's people rely on it way too much.

Speaker1:
They try to replace too much of their income with Social Security and don't have other income sources in retirement. I mean, retirement income often these days needs to last 20 to 30 years. And so the LGBTQ plus lens matters for this discussion as well, because a lot of people just didn't have smooth, uninterrupted careers, myself included. I had an interrupted career. I missed out on several years of income that I was relying on because of workplace discrimination. And so it happened to me. It could happen to you. Obviously, this was this was several years ago, but still, you know, I was in my I was in my 20s. And, you know, it's prime time to start earning and saving and all that stuff. And I ended up with a lot less money than I thought I would, and it was not a pretty situation for me financially. And so I've had to spend years digging myself out of that hole. And so some people experienced those types of things because of discrimination. Others delayed saving because they waited for legal recognition of their relationships. Those realities can mean, you know, you have kind of like me, fewer peak earning years, which makes Social Security claiming decisions even more important. And when savings had less time to grow, guaranteed income matters even more. Markets are going to rise and fall, and in fact, market declines about 10% or more, you know, every few years, really, if you kind of look at history, inflation over time will erode your purchasing power.

Speaker1:
So if you've got inflation eroding purchasing power and you've got a market decline in whatever particular given year, and you're withdrawing income during that market downturn, especially if it's early in retirement, that can significantly increase the risk of running out of money later on. And so Social Security plays a critical role in that. Benefits are paid for life. They're adjusted annually for inflation. Delaying benefits past your full retirement age can increase that monthly payment payout by 8% per year until age 70. Social security creates a stable income foundation, especially when markets are uncertain. And so that's why I want to do this show and tackle this topic today. And of course, if you have any questions as we go along here, take pride in retirement. Com is the website. So let's talk about one of the most important decisions you'll make when to claim Social Security, as I said, is the biggest question that I get as an advisor and as a registered social security analyst. Uh, you know, someone who has gone through this education and certification designation process to put those RSA initials after my name and say I'm someone who knows the ins and outs, I can have a higher level discussion with you about Social Security and help you, uh, you know, optimize your claiming decisions for you and for your, your life and for your goals and all the things.

Speaker1:
So, you know, if you wait until full retirement age that 67. Most of the time these days, anyone born after 1960, it's 67. Then you receive your full earned benefit, the full amount that you are entitled to. You can claim as early as 62, but the benefit then is permanently reduced. There is one caveat there where if you claim, then within a year you can say whoops, takes you back. I didn't mean to claim my Social Security benefit. So here can we stop it? And then I'll start again later? Yes, but you got to pay back all the benefits that you've been paid. And if you don't have that sitting in the bank or in an investment account or wherever, then you could be in trouble. So 62, you get your permanently reduced benefit with that one caveat. But, you know, even future cost of living adjustments are applied to that lower amount, right? So it's not like, oh, you've got a bigger cost of living adjustment because you claimed earlier, so you're earning less. So they say, hey, we're going to give you a bonus. No, that's not how things work. So 62 is the earliest. 67 is full retirement age for most people. It's right now for for anybody listening to the sound of my voice is either 66, 66 and some months or the age of 67, and then 70 is the latest in claim.

Speaker1:
It makes no sense to wait after the age of 70, because if you delay beyond 67, let's say 67 is your full retirement age and you delay claiming until age 70, well, you get an 8% increase in that payout each year that you that you do wait. And so you maximize your monthly benefit at age 70. And here's why. The timing, situation and discussion matters. Social security benefits are paid for as long as you live. And so you're claiming decisions affect income not just now but in the future potentially for decades. You know, I mean, you're talking about 20 or 30 plus years in retirement these days because people are living longer, then that's the timeline we're looking at, not just at the now, but at the future as well. And so nearly half of retirees rely on Social Security for at least half of their income or more. And claiming too early can increase reliance on personal savings. You know, if you need the money now, if you're if you look at it or if you just want to say, oh, I'm eligible, I'm going to do it, then if you get that lower paycheck every month from the government, then the deal going forward is that that is permanently reduced. No. Takes a back seat at least after that 12 month period that I talked about.

Speaker1:
And so then you may have to draw down your own personal savings earlier and earlier because of that. So if you don't immediately need those funds every month, delay. It may be right for you. It may not. We'd have to take a look at your personal situation and see what you need every month. And for LGBTQ+ listeners, you know the decision isn't just about math. Oftentimes, health disparities, stress from discrimination, caregiving responsibilities, uneven earnings histories, all that stuff can influence when income is needed. And so at the same time, delaying benefits can be especially powerful for those who expect longevity or who want to protect a surviving partner later in life. You know, if there's a if there's a larger age gap between you, maybe that's something to that that you can look at. Maybe you delaying until age 70 and then really maximizing that benefit. And we'll talk about spousal and survivor benefits momentarily and show you what that advantage could be for your spouse. Um, you know, either as while you're still living as the spouse or as a survivor. So we'll talk about that. But, you know, choosing when to claim Social Security isn't just about oh, should I start now or should I start later? It's about deciding about when to take your income so you have an income that lasts and is going to be optimized for you for your situation.

Speaker1:
And so here at Take Pride in Retirement. Listeners can start working with me today on this and on all aspects of planning for retirement. My goal is to get you to and through retirement. And so we'll sit down together. We'll get to know your goals. We'll get to know the retirement lifestyle that you are working toward, kind of your dream retirement. We'll identify any risks or gaps in missed opportunities in your current plan and your investments. We'll see what's working, what's not. Basically, we'll answer any question that you have clearly, honestly and without pressure with, you know, there's no obligation to this. But but the bottom line, though, is your retirement should not be a guessing game. Right. It shouldn't feel like that. It should be like, oh, let's just throw it at the wall and see what sticks. No, you want a plan? You want a plan that you can count on. And so not only you shouldn't be relying solely on Social Security anyway. Too many people find that their reality in retirement. Let's help you work toward a situation where you're not just relying on Social Security, and the Social Security is the cherry on top. You know, it's the thing that is maybe your fun money every month. And, uh, you know, it just takes the pressure off, really, when that's the case. It all starts with a simple conversation. And you can go to take pride in retirement to get started.

Speaker1:
Take pride in retirement. Com or call 855246 9211 (855) 246-9211. All right. So as promised spousal and survivor benefits here. You know Social Security. It's not just a decision that is individual, especially when you're married. It's a household decision. Um, for LGBTQ+ couples, history matters here. You know, many same sex couples couldn't even legally marry for decades. And that timing can affect spousal and survivor benefits. And so understanding those rules is really helpful can help you make a meaningful decision. And it can help you, you know, realize what the difference is in lifetime income. So so with those lenses on let's talk about this. A spouse may be eligible for up to half up to 50% of their partner's full retirement age benefit. So that benefit number at age 67 for the higher earner. If you as the lower earner, you know, are entitled to a benefit that is less than half of that, let's say you're only you know, let's say one of you is a is a doctor or a lawyer, and the other one is a starving artist, for example. And so there's going to be an income disparity there. Well, if that, you know, uh, doctor, a lawyer is at 67 eligible for, uh, $50,000 a year benefit, let's say, just to throw a number out there, then that spouse could be eligible for up to 25,000 per year at that full retirement age as well, based on their partner's earnings record.

Speaker1:
Now, survivor benefits work a little differently. So spousal benefits are while you're still alive, you and your spouse are still alive. So the lower earning spouse can get up to half of what is earned by or what is the benefit is at full retirement age by the higher earner. Right. So spousal benefits. Uh, so that's that is spousal benefits, survivor benefits. Later on when one spouse passes away, Let's say you're both getting paid Social Security benefits at that time. One of the checks is higher than the other. Both checks don't survive that. But the one that does survive is the larger amount of the two. So that check from that higher earner is going to be the one that survives. The lower amount goes away. So only one of those paychecks remains. It is the higher of the two. Sounds great. And and you know, in a lot of ways, yeah it is it can be for your situation. But you got to keep in mind you're still losing money that was coming into the household. So it's something that you got to plan for. You've got to have all of this in mind. And so the spousal benefit and the survivor benefit, this discussion is really important because, you know, many women and LGBTQ plus surviving spouses as well tend to live longer. If you're a surviving spouse and an LGBTQ+ couple, or if you're a woman, you live longer.

Speaker1:
And so delaying the higher earning partner's benefit can dramatically increase survivor income later on in life. That's what I was talking about later on. If you are a higher income earner, if you are, um, you know, maybe a little bit older as well, it could make sense for you to delay all the way out to age 70, maximize your benefit, and then that maximizes income for that surviving spouse later on in life. It's like, you know, you're you're paying it forward a bit in that way. And so again, for a lot of LGBTQ+ couples, the decision here is not just financial. It's about dignity. It's about stability. It's about independence. And so if you're married or your partner, these decisions are big. And they should be evaluated together, not separately. So visit take pride in retirement comm. Give me a call 855246 9211. We'll go through it I'll give you that RSA roadmap that detailed look at your own situation, for what you could get for your benefits, and how to optimize it for you. All right, so, um, some rules about divorce. It's another one that comes up in the LGBTQ plus community. I just had a meeting with someone not long ago who was in the process of going through a divorce. It's not an easy thing. It's not, um, ever a subject that people want to discuss or talk about really.

Speaker1:
Ever. Because it's just it's hard. It's difficult. And divorce changes a lot of things, right? I mean, it's, um, it doesn't automatically, though, erase Social Security eligibility. That's the good news. And it's especially relevant in the LGBTQ plus community. A lot of people may be married later in life because of marriage equality not being a thing earlier. Right. And it also, maybe you were in a situation like this, this person that I was speaking with not long ago where you were either either closeted or whatever the situation was, and ended up marrying someone of the opposite sex early in life. Maybe then you quickly realized or slowly realized maybe this wasn't such a good idea. And you know, you you divorce later on, whether amicably or not. And that could be your situation. That's sort of the more common one for me. And so if you were married for ten years or more, if you were married for ten years or more, you may be eligible for benefits based on your ex-spouse's work record. Now, claiming on an ex does not reduce their benefit, doesn't affect them at all, right? Survivor benefits may still apply as well, even if you're ex married. But if you were married for ten years, you are currently single. You haven't remarried. You can potentially claim benefits based on your ex-spouse's earnings record, and then it sort of works like a spousal benefit at that point.

Speaker1:
But many people assume that those benefits ended with the marriage. Nope. Not the case. Not the case at all. Others delay claiming because they believe their ex has to file first. But that's not always true either. That's something you need to check on as well. The benefits are earned. They are not favors. And so misunderstanding the rules can mean missing income that lasts a lifetime. It really can. And even for people who've been divorced decades, it can still matter big time. One more quick topic to talk about here. Before I close out taxes and Medicare and you think, okay, this whole thing has been about Social Security. What about taxes and what about Medicare? Well, taxes, you know, you pay income taxes on at least a portion of your Social Security. The vast majority of of us will. And so that can actually affect your Medicare premiums. The amount that you earn can affect your Medicare premiums. So Social Security benefits may be taxed depending on your income, your household, you know, your combined income as well. Up to 85% of benefits can be subject to federal income tax. And a lot of LGBTQ+ retirees may be single or widowed or living alone, maybe divorced, like we just talked about. That can mean higher taxes and lower income thresholds. So losing a spouse can also trigger tax changes as well. Higher Medicare premiums almost overnight can happen in that situation.

Speaker1:
Higher income can also increase Medicare Part B and part D premiums through Irma surcharges. Now Irma is not your friend down the road. Irma is the income related Medicare adjustment amount. And so if you earn over certain thresholds, if you earn too much, then that amount will get added to your Medicare premiums. And especially part B is the is the most common because not everybody necessarily has part D. Um, because if you have a Medicare advantage plan, etc., but Irma is going to charge you more for your Medicare based on how much you earn, potentially, and sometimes for an entire year due to an due to a one time income spike, you could be paying a bunch of money for your Medicare premiums that are applicable to you, even for just a year, because there's a two year lookback period. So it's like what you have now. What you are now is going to affect you in a couple of years. And so you got to just be aware of that plan for that and make sure that your planning includes a look at Social Security, a look at any potential income spikes that you may have going forward. And Social Security planning is important to be a part of the overall planning Situation, right? It should never happen by itself on an island in isolation. Coordinating claiming decisions with tax strategy going forward with all of the other things taken into account, the timing, personal pensions that you may generate and I can walk you through how to do that as well and help you along that route.

Speaker1:
And, you know, all of those things kind of working in tandem can help reduce surprises, reduce your stress importantly as well, and preserve more of your income. So your Social Security check isn't the same as when it lands in your bank account. And for LGBTQ+ individuals and couples retirement planning, it's not just about numbers. It's about protecting the life you've built and the people that you love. So if you're single, you're partnered, you're married, you're divorced. Whatever your situation, no matter who you love, where you come from, how you identify, uh, where you are in life, who you are, how much money you have. I want to help you figure all of this out. I can get you that detailed report. Just schedule a free consultation. Go to take pride in retirement comm. Take pride in retirement. Com or call 855246 9211. That's (855) 246-9211. I'll be happy to go through things with a fine tooth comb for you. No cost, no obligation, no strings attached, I mean it. Well, that'll do it for this edition of Take Pride in Retirement. Thank you so much for being a part of things. And until next time, take pride in yourselves and take care of each other. We'll see you then.

Speaker2:
Thanks for listening to Take Pride in Retirement. Members of the LGBTQ plus 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 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 and 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.

Speaker1:
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, item four for additional information. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products. They do not in any way refer to investment advisory products. Rates and guarantees provided by insurance products and annuities are subject to the financial strength of the issuing insurance company, not guaranteed by any bank or the FDIC.

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