Ben Green from Insurance Advantage joins us again, this time to discuss Social Security Benefits—the different types, how benefit amounts are determined and taxed, and when we're able to receive them.
Video Transcript
- Hello everyone. And welcome into Senior Living Live. My name is Melissa. I hope you are having a fantastic day today. And it's gonna be another good day because we've got another great video from one of our favorite insurance man, men. His name is Ben Green. Ben, how are you today?
- Good, Melissa. How are you doing?
- I'm doing great. It's always good to see you. You always bring such fantastic knowledge tips and tricks for all of our viewers. And for those who are fortunate enough to have caught Ben's other formal Senior Living Live interviews, he is truly a wealth of information when it comes to many topics that affect many people including our seniors. Ben is the president and COO of Insurance Advantage and he has lent his expertise to us already to break down Medicare and long-term care insurance, today Ben we are talking about social security benefits, but before we do give us a little bit more about your background.
- Absolutely, absolutely. So Ben Green here in Columbia, South Carolina today. I'm a native of a South Carolina did my BA in Finance, Morehouse College in Atlanta. And then I did International MBA in South Carolina and I have a kind of sales, marketing, management. And now obviously a lot of insurance background worked for previously for State Government for a while actually I worked for the University of South Carolina representing them and doing some recruiting for them before. And then I worked for the State of South Carolina representing them and trying to bring business in and was really happy to serve them and in represent the State of South Carolina. But now I'm even happier to represent my clients and work on their behalf to get them the best policies available. And Insurance Advantage we got cranked up about 11 years ago and really started in the affordable care act marketing space and have moved over to Medicare. And then into kind of the pre-retirement planning side for with locking long-term care insurance, helping folks life insurance and annuities and also doing where we're gonna talk about today which is Social Security Planning and strategy which the key point is there is some strategy around that we can dig into.
- Yeah. And I can't wait to get into that. Now we all know what social security is and it starts when we begin working. We know it's that thing that gets taken out of our paycheck and we don't think about it until we get a little bit older, but how and when do we get that money back and is there an optimal time to do so?
- Yep. Yep. So... Yeah so you start paying for your social security benefits, if you will when you start working a part of that money for FICA taxes which is the Federal Insurance Contributions Act Tax as part of that pays for your Medicare part A which we'll talk about a little bit more. And then part of that pays for your social security down the lines. It's usually about 6.2% of your wages from your job. And so you can get that back once you turn typically once you turn 62, at least. A lot of folks go to the full retirement age which we'll talk about at 65 and 66.
- Gotcha. Okay. So now when it comes to spouses and we have many of them who perhaps left the workforce to help rear and take care of the children. So whether it was a husband or a wife who had to stay home and took on that role and opted to leave the workforce can they draw social security? And if so, when does that window open for them?
- Yep, so typically unless you're qualifying for social security disability, which we'll talk about a little bit, usually you're in your enrollment window the benefit window opens up at age 62. And for spouses, they can elect to either, take their individual benefits or they can take a look after their partner their spouse's benefits. And the lower earning spouse can collect up to 50% of a higher earning spouse's benefit. And that is where you absolutely need to do some math and make sure communicate as a couple to make sure, you're doing the right thing before you pull the trigger, if you will because once you do begin your social security benefits it's virtually impossible to roll them back.
- Yeah. And let's dig into that a little bit. So when we talk about the amount and you mentioned 50% there but 50% of what? So if you waited for that optimal window, so to speak to start drawing on your social security benefits how is that amount determined? Is it your salary all time for one year? What is the minimum someone can expect? And the maximum someone can expect?
- So great question. So typically speaking that they're gonna take the average of your 35 of your monthly earnings for the last 35 years and kind of a rollout your benefits based on that the minimum believe it or not is about $41 per month that you can get as a social security a benefit eligible person. The maximum regardless of what your salary was is $3,148 per month. And when you looking at taking your benefits, you have to, you can't become eligible unless you have about 40 quarters of work which translates to about 10 years obviously of work. So there are minimum requirements there unless you're qualifying for some sort of disability or SSI.
- Sure, sure, absolutely. And that and SSI, that is something that can start a little earlier just depending on what's your situation is. So let's get into that. How does social security differentiate from SSI benefits or social security disability benefits? And can you help someone with both?
- Yeah, yeah so first of all since social security disability is simply for someone that has become disabled. And they can actually apply for it online through the social security administration. They can go to like one of the state offices within their states to apply for it. Sometimes folks on the disability side have to use a lawyer to help them kind of prove their disability claim. And we have a resource in terms of that and referrals we can give, whether you're in South Carolina, Georgia, New Jersey, or wherever. On the social security, on the SSI side, that's Supplemental Social Security Income side. That's really a Federal Program that's funded by General Tax Revenue, it's designed for aged, blind typically or disabled people who have little or no income. So it's not a great program to qualify for, if you will you certainly don't want to. Or wanna have to qualify for that program. But it provides basic, cash for things like food, clothing and shelter.
- Gotcha. So we've covered social security benefits in general. We've covered social security income which is SSI and then
- Disability social security disability.
- That's right. So three very different types of social security insurance that people can receive. When you're talking to your clients Ben, what are you telling them in terms of the optimal time to begin drawing to receive the maximum that they can possibly receive?
- Yeah, that's a great question. So we tell them essentially to wait if they possibly can't. Wait as long as you can based on your family's history and based on your health history and so forth. So you can start retiring at age 62 typically speaking. Full retirement age is based on this nice little a little chart here that we pulled together is typically around age 66, okay. And in kind of here very quickly, the pros and cons. So at eight 62 you can receive those benefits a lot earlier obviously. The con is that you're gonna miss out on some money. And typically speaking every year that you wait for social security to kick in or to take it, you get about 8% return per year. Don't know about you, but 8% guaranteed a year that's a really good income for a lot of folks that beats a lot of mutual funds out there. And so that's a really nice benefit to be able to bill if you can wait for it. Your full retirement age, around age 66 and a half for a lot of folks, get a higher monthly check and there's no penalty if you are employed. Okay. So based on your income if you do have some income coming in there there's a little bit of a penalty that you have to consider. But the con is that you waited a couple years later and some folks, they wanna take it as early as possible because they're not sure how their health is gonna hold up. And then finally, if you can wait all the way into late 70 you're obviously going to get the largest check possible. But the con is that you waited until eight 70. So you've missed out on eight years of revenue if you will. And so you benefit the most, of course if you live to be age 90 for example. Which more people than you might imagine well actually lives at age 90 now.
- Yeah. And one more question I have on this, if someone maybe plan very well or they have a pension or they have other means of cashflow per month and they just say, you know what, I don't need this money which is a great problem to have. Does social security at any point force you to begin taking those funds?
- That's great. That's a great question. So yes by age 70 you're gonna kind of automatically be enrolled in social security, but Melissa, you bring up a great point because one of the strategies that you can employ is to hold off on taking some of your 401 money, for example. Some of your other tax qualified money that's building up through your 401 accounts your IRAs, et cetera. And you could, for example, take your social security benefit during that time. Or if you're gonna, if you can't afford it you can start to use some of your 401k benefits early on 'cause you can access them a lot of times at age 59 and a half. So you can use some of that money to take you from the age of 60, for example, to 65 if you retired a little early at 62 till the age of 65 or 66 to kind of bridge you to that full retirement age for social security and then you can begin to use your social security benefit at age 66, for example, and really kinda benefit from that from a fuller check, if you will.
- Yeah. And so that is a stay tuned because you do have a planning for retirement segment that is coming up
- Yes that will entail a lot of these things. So great information so far. Now I know that when it comes to social security in general it's always a hot topic politically, but what is the latest and greatest in terms of social security benefits? What has changed? What has maybe remained the same? And I hear that recipients started to receive a raise on that and in 2021 at the beginning of the year.
- Yes. Yes. So, yeah. So in the beginning of the year, folks got a raise of 1.3%. That's the COLA or the Cost-of-Living Adjustment as they call. And so you get that typically once a year sometimes they either wait a year or two to it's to give that raise. And so that's always good. It's always good to get a raise. However they did have a few changes in terms of Medicare to offset that potentially. So for example, your Medicare part B deductible went from $198 last year up to $203 per year for this year. And the Medicare part B premium, which is part of Medicare along with part A, that went from $144 per month, last year up to $148 and 50 cents this year. And so you did get somewhat of a raise on the social security benefit side but Medicare did offset some of those gains. And so that's kind of the yin and yang of social security COLA increases in Medicare.
- Gotcha. And then as we wrap up Ben again this is just really the tip of the iceberg. And if somebody does have additional questions and I assume that they do, because there's a lot that goes into this, how can they get in touch with you and your office?
- Sure, sure. And before I get to my contact info the other thing about social security that the last thing I do want to just continue to mention is you can be taxed on it. And so as you, as part of your role strategy you need to be aware of that. And you need to do some research on that or contact folks that can actually help you with that. We always help folks for free whether it's social security, Medicare, or anything else. And so if they do have any questions they can give me a call at 803-519-3394, send me an email or give our office a call. Always happy to help folks. Whether they're in South Carolina, Georgia, Jersey, or wherever
- And that is why you're the best you are the man. We appreciate you your information exceptional as always. Thank you so much for joining us today.
- Thank you for having me. I appreciate it.
- Thank you. And for more information on Senior Living Live, you can head over to our website, www.seniorlivinglive.com we've got a lot of video content. You can check out 24/7. We appreciate you watching as always have a great day everybody.
