You can never have too much information on Social Security. Brody Rosenfeld is on the Solid Financial Advice podcast today to help me dissect the Social Security beast. We dive deep to teach you as much as we can about Social Security. You’ll learn a brief history of how it started, what it looks like today, will it go broke, and how and when should you file. You’ll want to listen in since Social Security makes up a big chunk of just about everyone’s retirement plan. So sit down and have a listen to learn all you can about Social Security in 20 minutes!
Outline of This Episode
- [1:47] A brief history of Social Security
- [4:15] Who benefits from social security?
- [5:45] Is Social Security going to go broke?
- [9:58] How do they calculate what you’ll receive?
- [11:55] When should you file for Social Security?
- [15:53] What are some of the unique benefits to Social Security?
- [20:11] You can never really know what the right choice is
Some background information on Social Security
The idea behind Social Security actually came about in 1889 in Germany. Otto von Bismarck created the first state-run, old-age insurance system. The Germans found that by creating this system they freed up the workforce a bit. Social Security didn’t come to the United States until the middle of the Great Depression in 1935. Roosevelt created it as a part of the New Deal. Surprisingly, many states had their own old-age pension systems at the time but only 3% of those eligible took part in it.
Who benefits from Social Security?
When we think of Social Security we automatically think of retirees, but families of deceased workers, people who are disabled as well as retirees all benefit from Social Security. 1 in 5 Americans receive a Social Security benefit right now. Retirees are the largest portion of beneficiaries. And 1/7 of retirees depend solely on Social Security as their income.
Is it going to go broke?
We all contribute to social security. You’ll notice the 6.2% FICA payroll tax on your paycheck. The money goes into a special issue treasury security where it only earns about 3%. So there is money going in and it is growing but there is more money going out. If nothing is done by Congress to fix the lopsided amount that is paid out it won’t go broke but they would only be able to pay 79% of benefits to the beneficiaries. Find out more information on Social Security by listening to this episode of Solid Financial Advice.
When should you file for Social Security?
When to file is always the big question regarding Social Security. People tend to want to file early at age 62. But mathematically it will benefit you more if you wait until age 70. Unfortunately waiting until 70 isn’t the blanket answer for everyone. Sometimes it makes sense for someone to file early. If you file before full retirement age you’ll lose 6.67% each year. But if you wait until after full retirement age you’ll earn 8% more each year. There is a lot to consider when deciding at what age to take Social Security. Listen to this episode to learn more to help you decide when the best time for you would be.
Connect with Brody Rosenfeld
Connect With Brody at Foundation Financial Planning
Connect With Ryan A. Hughes and Bull Oak Capital
- Podcast (at) BullOakCapital.com
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