INFORMAZIONI SU QUESTO EPISODIO
In this episode of More Living with Jim Brogan, host Jim Brogan welcomes Hamilton Morales, a Social Security strategist with 25 years of experience, to break down the complexities of Social Security. They discuss when to claim benefits, how spousal, ex-spouse, and widow benefits work, and the impact of taxes and employment on payments. Hamilton emphasizes treating Social Security as an income asset and stresses the importance of a personalized retirement income plan. The episode also covers Medicare's IRMAA surcharges and clarifies misconceptions about recent legislative changes affecting Social Security taxation.
Automatically Transcribed With Podsqueeze
Speaker 1 00:00:02 You're tuned into more Living with Jim Brogan, broadcast live from the Brogan Financial studios at Newstalk 9087, where old fashioned values, expert knowledge and genuine understanding come together to give you the retirement straight talk you deserve. Jim's a former National Advisor of the year recipient and a financial educator, and he's here today to talk about how you can live out the best years of your life. Jim and the Brogan financial team have been helping retirees and retirees across the southeast for over 20 years in their pursuit of financial independence. You can reach them during the week at 865862 6800. So sit back, relax and get ready to learn because more living with Jim Brogan starts now.
Speaker 2 00:00:45 Hello East Tennessee, welcome to More Living with Jim Brogan, where it's all about living the best years of your life, your way as you listen to Newstalk 987 Sky. And for many retirees, Social Security represents one of the few sources of income that you can count on for the rest of your life, but deciding when to claim understanding how your benefits are calculated.
Speaker 2 00:01:11 Coordinating benefits between spouses. How to understanding how ex-spouse benefits work both with ex-spouse benefits and widow benefits, and knowing how income taxes are continued employment may affect your checks can make Social Security far more complicated than it at first appears on the surface, so the decisions you make surrounding Social Security can have consequences that can last for decades. We see statistics most people don't claim at the optimal time. I want to kind of dive into what does that really mean? Because because we don't know when we're going to die. Right. And so that affects all this. But how can how can these rules apply to your individual retirement strategy. It really is so important. So today our guest is Hamilton Morales. Hamilton is going to help us break down Social Security and clear up some common misconceptions, and discuss what individuals and couples should be thinking about as they approach retirement. Hamilton is a senior vice president with Financial Independence Group. He is a social security strategist. he's been in the industry for 25 years now. He's been both a producer, a financial planner, an investment specialist, and a wealth preservation consultant, someone I've known for, I guess.
Speaker 2 00:02:30 Hamilton. What's it been? I've known you for about 14 years now.
Speaker 3 00:02:34 That sounds about right.
Speaker 2 00:02:36 Good morning. Hamilton. Welcome to your living. Tell. How are you doing today?
Speaker 3 00:02:40 I'm doing great. And it's great to hear your voice. Jim. I hope you're doing well.
Speaker 2 00:02:45 I am Hamilton. you know, you you've been in the industry for about 25 years. So how did you decide to focus on being the Social Security guy?
Speaker 3 00:02:56 Yeah. So interesting story there in the the company that I work for we we help and support independent financial advisors and we try to do that in many different ways. And one of the ways that we wanted to do that is by helping financial advisors to help their clients with Social Security, because quite honestly, where do people go? You know, you could pick up the phone and call Social Security, but, if anybody has ever tried to do that, I hope you have a whole lot of time on your hands, and you're not even sure if you're going to get the right answers or not.
Speaker 3 00:03:31 And so most people don't know where to go. And most financial advisors don't have a good working knowledge of how Social Security works. And so, about 11 years ago, I dove into Social Security and went through all the training and, became a national Social Security advisor and all these different things. So I could be that person that people like you can go to when they need answers to tough Social Security questions.
Speaker 2 00:04:01 And you talked about calling Social Security. They're actually forbidden by law to provide advice. And a lot of people don't realize that they can give you they can answer questions, they can give you facts, but they cannot give advice. Right?
Speaker 3 00:04:14 Yeah. Well, not only that, if you and here's here's what people don't understand if you don't ask the question correctly. So you may want an answer to something, but you ask it in such a way that's going to give you a different answer. Social security can't ask you. Well, do you really mean this or are you trying to get, you know, they can't have this conversation with you.
Speaker 3 00:04:39 They can just only answer the question that you asked. Whereas with me or you, we can kind of dive in a little bit more and say, okay, well, what do you what do you really want to know? And let's go from there to make sure we give you the right answer.
Speaker 2 00:04:55 Absolutely. let's, let's let's start big picture. Hamilton. there continues to be a lot of concern about the long term financial health of Social Security. And I don't want to spend too much time on this because we don't have a crystal ball. We don't know the future. how someone that is approaching retirement, how how do you advise them to approach those concerns when making a claiming decision? And should the possibility of future changes influence whether someone claims earlier?
Speaker 3 00:05:26 Yeah. Great question. So twofold on that. Number one, I think everybody all your listeners have heard the term or the saying too big to fail. Well, Social Security is too big to fail. It is one of the largest, pieces of the federal budget.
Speaker 3 00:05:44 And so for the federal government to allow that to collapse, I just don't see it happening now. What does that mean? Well, that means there's got to be some changes. When will those changes happen? Well, they better happen by 2033 or 2032, right? So for people who are looking at cleaning now, what I would tell them is first and foremost, this is the most important thing is you must have an income plan in place or to be working on an income plan, because how can you know for sure when the best time to turn Social Security on is for you in your particular situation? If you don't have a plan in place, you just can't. And so whatever that plan says, that's when you turn it on. And I would not give much thought to what's going to happen in the future, because typically the way these things work, once you have your your benefits turn on those people are going to be grandfathered in and you're not going to see much, if any changes for people who are already taking Social Security.
Speaker 3 00:06:50 Those of us that are going to be taking it on later, that it's going to affect.
Speaker 2 00:06:55 Yeah. One of the things I like to say Hamilton and you know, I don't know if you'll agree with this, but I you know, I think if somebody is over 60 years old, they're pretty safe. And I don't think they should be making election decisions based on concerns about Social Security viability in the future. I think if you're between 50 and 60, which I am, I think, we're kind of in this zone where maybe, you know, we may see some changes. We may not. Now, if you're under 50, I think there's probably going to be some fundamental changes. But even somebody like my daughter, who just got her MBA a year and a half ago and is working now, she's 26, I believe some level of Social Security will be available for her. It just may look different. What are your thoughts with what I just said.
Speaker 3 00:07:42 Man? I think you hit the nail on the head and I completely agree.
Speaker 3 00:07:45 I think those of us that are between 50 and 59, we just don't know. We're. Yeah, we're in that limbo stage. Those that are younger than that, I think they're going to see the big changes. things like, increased in full retirement age. I fully believe it's going to go to 70. The question is at what? What year are they going to be looking moving forward? Who's it going to affect? Yeah, absolutely. You know Jim, here's the biggest thing. And nothing against baby boomers love the baby boomers right. but unfortunately fortunately unfortunately depending on you look at it that the big issue right now because we have what what's the statistic like 10,000 baby boomers a day that are retiring. Okay, here's the issue. You've got these 10,000 a day that are retiring. We don't have enough people entering the workforce as they are exiting the workforce to, to to deal with that. And right now we're at a 3 to 1 ratio so that we have three workers paying into Social Security for every one person who's taking the benefit.
Speaker 3 00:09:00 That is going to quickly go to 2 to 1 because of how many baby boomers that are retiring every day, versus how many people are going into the workforce paying into the system. So it's it's it's fairly bleak. Something's got to happen for sure.
Speaker 2 00:09:16 Yeah. Back when Social Security is interesting, you bring that up back when Social Security was passed and it and it really started, they started cutting checks in 1940. It was like 42 to 1 or 43 to 1. So in other words, every one beneficiary taking Social Security, you had 40/40 people paying into the system. Now, as you said, it's it's it's less than 3 to 1. So there are challenges. I just think there's going to be, you know, as you said, raising full retirement age. I mean, you raise for retirement age, three years, you're effectively reducing people's benefit by close to 25% or, you know, 20, 25%, right? if they draw it the same age. So, you know, things, but, you know, when Social Security was started in 1935, you know, 65 was full retirement age.
Speaker 2 00:10:05 Well, it's almost 100 years later and it's gone to for 67. I mean, that's kind of crazy, right?
Speaker 3 00:10:10 Well, what's even crazier is what was the life expectancy back then?
Speaker 2 00:10:15 Yeah, that was 62. Yeah. 6162. Yeah.
Speaker 3 00:10:19 Yeah. So so yeah, people couldn't turn to Social Security until 65, but the average life expectancy was 62, so most people weren't taking it.
Speaker 2 00:10:27 So Hamilton, before we get to our first break, just give us a big picture. What do you think people approaching retirement most need to understand about how Social Security actually works?
Speaker 3 00:10:37 Yeah. they need to they they need to treat it as an asset. An income asset, because there's only three there's only three contractually guaranteed incomes you can generate for yourself out there. One is Social Security. Two is pensions and three is annuities. That's it. There's nothing else out there that exists contractually that will guarantee income. And so you've got to look at it. Yes. As a big asset. You can't go grab it.
Speaker 3 00:11:05 But it's an asset that's you're turning into an income stream. When do I turn that on. And how is it going to be the most beneficial for me in my income plan? That's where you start.
Speaker 2 00:11:17 That's a great word. and I'll just add that it's guaranteed income and can be for life. and, and that's what's so great is no matter how long you live, that's a, that's an asset that will pay you income. We're visiting with Hamilton Morales. He is a senior vice president with Financial Independence Group. He is a social security strategist. We come back, we'll dive into the nuts and bolts of it. What does it mean when you draw early? What does it mean when you delay? And then most importantly, how do you go about making these kinds of decisions? So stay with us. This is more living with Jim Brogan here on Newstalk 987.
Speaker 1 00:11:55 Welcome back to Newstalk 98 Seven's Brogan Studios, where Jim Brogan is coming to you live with important news and advice to help you achieve your dream retirement.
Speaker 1 00:12:04 Get ready to learn and live. Here's your host, Jim Brogan.
Speaker 2 00:12:10 Welcome back. More living. This is Jim Brogan. You're listening to Newstalk 987 Waukee. We're talking today about Social Security benefits, such an important election that you'll vote on in retirement. Hamilton week of Hamilton Morales with us. He is a senior. Excuse me, social security expert. he's with Financial Independence Group. And, I like to say, Hamilton. It's the most important election you'll vote on in your retirement years, although certainly all of our elections are important. so, you know, one of the biggest decisions is when to clean. So just give us a brief example of the difference between claiming at 62 versus versus full retirement age versus waiting to age 70, and how those choices permanently affect someone's monthly benefit.
Speaker 3 00:12:59 Sure. So everything is based off of your full retirement age benefit amount. So your full retirement age is based off of the year that you were born. So for most people that we're talking with now, they're they were born in 1960.
Speaker 3 00:13:15 And after we do have a few obviously, that are in their late 50s. That was born in the late 50s. And so depending on what year you were born, your full retirement age may be 66 and eight months, 66 and ten months, something like that. So everything is calculated based off of that benefit amount. So if you choose to take it at 62, you can do that. But there's two caveats. Caveat number one is it is going to be reduced. And that is a permanent reduction. It will not Increase, except for cost of living adjustments down the line. the second caveat is, if you choose to continue to work while you're taking your Social Security benefits, you're going to have to deal what's called with what's called the earnings test, which allows you to earn in in wages. This is only wages $24,480 per year before they start reducing your benefit based off of that test. and so certainly you can do it early. and I will never tell anybody not to do it early.
Speaker 3 00:14:23 It all comes down to what are you trying to accomplish? What is your income plan? Say, what other income do you have coming in? There's just so many factors. However, there are people that say, wow, you know what? If I wait till 70, I get an increase in my Social Security benefits between my full retirement age and age 70 Of 8% per year. Now, where else can you go to get an 8% simple interest but 8% growth on your income guaranteed per year? It doesn't exist. Right? So. Right. people look at that and say, well, I'm certainly going to wait and go to 70. And that does sound great. However, again, there are factors you have to deal with and you have to look at. This is why the income plans say it all the time. You give seminars and I just hammer the fact that income planning is so key because it gives you clarity based off of your particular situation. And when you want to retire, the type of income you want, the type of expenses, you have, all these different factors.
Speaker 3 00:15:33 When is the best to turn on Social Security based off of your situation? Not based off of what some guy on a radio show says, or some guy on a commercial says whatever. It really comes down to what is best for you. Based off of what that income plan says.
Speaker 2 00:15:52 Yeah, I like to say, Hamilton, you know what your neighbor or your coworker, your brother or sister did. Maybe the worst thing you could do is just. Absolutely. The situation is different. We often hear people talk and talk about the break even age. You know, when comparing, claiming early versus delaying the benefits, in your view, how useful is that calculation and what other factors should someone consider besides simply asking, how long do I have to live for waiting to pay this off?
Speaker 3 00:16:20 in my opinion, it's not that big of a factor. And again, it goes back to the income plan. Because if I'm doing if I'm turning it on when it's best for me in my particular situation, the break even is irrelevant because I'm doing what's best for my situation.
Speaker 3 00:16:38 Now, what other factors come into play? Well, that's that's that's a great question because a lot of people are married and your spouse comes into play whether you like your spouse or not. They come into play. And so, that's a key factor. Whether that spouse has earned their Social Security benefits or maybe they never got their 40 credits. It doesn't make any difference, especially if they're the the lower of the two earners. it's very important at that point. Now you've got an extra factor that comes into play. That's kind of outside of the income plan that you've got to look at. Because if I have the higher that you benefit and I'm a guy, well, unfortunately, statistically speaking the ladies are going to outlive us. Well, if my wife outlives me, that means she's going to step up into my benefit because it's the higher of the two benefit. I want that benefit to be as high as possible for her when I predeceased her. Well, what does that mean? That means I may have to go to age 70 before I turn it on.
Speaker 3 00:17:48 So those are factors that come into play.
Speaker 2 00:17:51 Yeah, there's a lot. There's so many things. There's spousal benefits. Understanding the widow or widow will benefit down the line. Income taxes, which we're going to get into that. so the, you mentioned the earnings test if you draw before full retirement age. And I just want to stress and I'll give you an opportunity as well. Hamilton, that's only earned income from wages or self-employment. I had a, I had a client. This was years ago. Hamilton. It was probably 15 years ago. And he had retired at 62. he and his wife and, he had some employer stock that he had owned directly with the employer. And, and then, it was a couple of years after that, it was 60. He was age 64, and he decided to sell some of his stock. And all of a sudden, and he had already drawn Social Security and he got panicked. Oh my goodness. I sold my stock.
Speaker 3 00:18:47 And what have I done?
Speaker 2 00:18:48 Security benefits.
Speaker 3 00:18:49 Back.
Speaker 2 00:18:49 And he called me and I was able to, ease his. That's considered unearned income. Investment income? Yes. As our retirement account distributions, all these other things. So.
Speaker 3 00:19:00 Yep. Yep. Yep.
Speaker 2 00:19:02 So let's talk about the spousal benefits. How do they work when one spouse earns significantly less than the other? Or perhaps spent many years outside the workforce which you brought up?
Speaker 3 00:19:14 Yeah. So this is the number one question I get. Believe it or not, it is by far the number one question I get. How do spousal benefits work? And so, to try to keep it as simple as I possibly can, two things have to happen before. And this is this is if they're married, I'll hit it there. If they're divorced in just a second. But if they're married, two things must happen before the the lesser. The spouse who has the lesser of the two benefits can can get spousal benefits. First of all, you must turn on your benefit and be receiving it.
Speaker 3 00:19:53 And second, your spouse must be must have turned on their benefit and being receiving it. So once those two things have happened, what's going to happen is Social Security is going to look at your full retirement age benefit amount, 100% of it, and they're going to compare it to half of your spouse's full retirement age benefit amount. If your full amount is greater than their half, you do not qualify for spousal benefits. You can't get them. However, if your full retirement age benefit amount is less than your spouse's half, then you do qualify. And what they're going to do is they're going to subtract those two numbers. and the difference is the spousal benefit that gets added on to what you're already receiving. Now, the misconception of this is, well, I get 50%. No, you get up to 50% of half of their full retirement age benefit amount, not what they're receiving. So if you're your spouse takes their benefit at 70, you're not getting 50% of their 70 benefits. Vice versa, if your spouse takes it at 62, you're not getting 50% of their 62 reduced benefit.
Speaker 3 00:21:19 It's always calculated off of the full retirement age. Benefit amount. Number one. Number two.
Speaker 2 00:21:27 Hey, Hamilton, I just want to jump in there. It's important to everything you just said about waiting to 70. Basically, the spousal benefit stops increasing if you wait beyond 67. So so there's no benefit there. And so and to get the spousal benefit like if for my wife to draw the benefit on me I have to be drawing. Right.
Speaker 3 00:21:48 Correct.
Speaker 2 00:21:49 So that could affect our decision because I mean, if I wanted to lay to 70, then she'll have to go past age 67 before she can get that spousal benefit.
Speaker 3 00:21:58 That's correct. And then the the other increase. Correct. Yeah. And the and the but there's two different things. Look at that. If she has her own benefit, then she goes ahead and turns that on and starts receiving that. Because remember statistically speaking those guys are going to go first. And so her benefit doesn't is not as important as yours. Not only while you're alive but also if you predeceased her because we want that to be as high as possible.
Speaker 3 00:22:28 So again, it's all these different factors that come into play that we have to find out from the person we're talking to. What is the most important thing to you as it relates to Social Security? Is it getting it quicker? Is it taking care of your spouse? What? You know, what is it? And we. And that we start putting this together for them to hopefully bring clarity and how it fits inside their income plan.
Speaker 2 00:22:57 Absolutely. Because, you know, when it comes to, you know, the higher earning spouse, it's not just do I live long enough? It's it's it's. Do do I or my spouse live long enough? Because whatever that higher benefit is, it's not just my lifetime that we're looking at. we we're going to dive into more of this. I want to divide into I want to dive in. Divorce, spousal benefits. Also, it may sound like everybody should delay benefits. Some people cannot afford to delay, you know, and income taxes come into this question as well.
Speaker 2 00:23:30 So, stay with us. We're also going to have our, dollars and cents segment. How Social Security is affected and how all your income can affect the income related Medicare adjustment. Irma. How does that all work? And how much credence should you give to your Irma premium in terms of your income planning? So stay with us. This is your living with Jim Brogan here on Newstalk 987. Wochit.
Speaker 1 00:23:58 Welcome back to Newstalk 98. Seven's Brogan Financial Studios, or Jim Brogan is coming to you live with important news and advice to help you achieve your dream retirement. Get ready to learn and live. Here's your host, Jim Brogan.
Speaker 2 00:24:13 Thanks for tuning in this week. This is more living with Jim Brogan where it's all about living the best years of your life your way. Today we're visiting with Hamilton Morales. He is a national social security expert. He is social security strategist. He holds the National Social Security Advisor designation. And we're talking about the ins and outs of Social Security benefits, which is such a fundamental part of income planning.
Speaker 2 00:24:37 before we get back to Hamilton, however, it is time for dollars and cents.
Speaker 4 00:24:44 Want to be sure you are getting the most out of your retirement? For all the years of your retirement. That's the primary goal of more living with Jim Brogan and our dollars and Cents segment, where we provide you with an important financial tip that will help positively impact the quality of your life and retirement. And now, here's Jim with this week's dollars and cents tip.
Speaker 2 00:25:10 The income related Medicare adjustment amount. Erma IRM aa. It's very, very dreaded, as many of you know. depending on how much income you make when you're drawing Medicare. So people 65 and up, for the most part, the more you make, the more you could end up paying. In Medicare premium, we have means testing for both Social Security benefits and Medicare benefits. You know, the more you make, the more Medicare premium you pay. The more you make, the more of your Social Security income is taxable. With Medicare, I see many people going to great lengths to avoid paying the Irma, the income related Medicare adjustment amount.
Speaker 2 00:25:55 and my biggest takeaway that I want you to take today is Irma is an important consideration in everything that you do. You know, whatever you do this year, in 2026, in terms of an income perspective, if you do a Roth conversion, you know that's taxable income. If you sell a stock or a piece of property and have a long term capital gain that can affect your Medicare premium, all that happens two years from now. Your Medicare premium in 2028 looks at your income in 2026. So if you're drawing, if you're paying Medicare right now, your your potential Medicare premium. Irma is determined based on what you made in 2024. And so we have to be very aware of these kinds of things. at the same point, we don't want to cut off our nose to spite our face. And this is where I see people go to great lengths to avoid the Irma, premium on their Medicare. And, for example, I have the table pulled up here in front of me, and I'm looking at Medicare premium for 2026, which of course is based on your income in 2024.
Speaker 2 00:27:04 And I'm looking at married filing jointly. Okay. And they do look at adjusted gross income plus any tax free municipal bond income. So is municipal bond income completely tax free? well, it's federal income tax free, but it can affect your Medicare premium. So you have to add that in the most important part of that is whatever you're claiming as a deduction, whether it's a standard deduction or itemized deductions. That does not help you on Medicare premium. It is a it is adjusted gross modified adjusted gross income. But I'm looking here at a married couple. You pay the standard Medicare premium. If you're a joint filer at up to 218,000, a modified adjusted gross income. it's right at $203 a month for part B, $202.90. The next tier. If you start making more a good bit more than that, then you have to pay more premium. And the next tier kicks in when you go above 274,000 of joint income. And by the way, if you're a single filer, they're literally half okay.
Speaker 2 00:28:16 So it's easy to do the numbers. So you know, if you if you click above 274,000, you could be 275,000 or $274,100, and you now are in the next tier. You pay additional premium. And that's going to be two years from now. But it's only going to be in that one year. So if you do Roth conversion this year and we use the tables that we have now, these will be adjusted for inflation. But then that income in two years will affect my Medicare premium. So when we're doing planning discussions like Roth conversion, selling off stocks with capital gains tax planning, a lot of the things we talk about on this program, number one, we have to understand there's a potential impact on our Medicare premium in two years. But then and we want to go in that eyes wide open. At the same point we don't want to go overboard on that. Let let let's break this down. I mean, that bump in Medicare premium, it's about 80 bucks a month. So for a married couple, you're talking 160 some dollars a month.
Speaker 2 00:29:27 You're talking less than $2,000 a year. So if you're doing something like Roth conversion planning, where you're converting IRA dollars to Roth in a, in a, in a, in a good, attractive tax bracket like 22%. And you're going to generate less than $2,000 of Medicare premium two years from now. You know, that's an important consideration in considering whether to do Roth conversion. But at the same point, let's not let the the, you know, the the carriage drive the horses, right. You know, if it let let's not make a mountain out of a molehill. when you get to the next here, the next tier kicks in at over 300. And, at two at over, 274. Excuse me. The first here kicks in at 218, then the second is at 214 or 274. Excuse me when you kick in at 274. Now you're talking about an additional premium of about $2,500 a person. So it does start getting a little bit more punitive in my mind, especially when you get into the higher tiers.
Speaker 2 00:30:35 That doesn't mean it's the worst thing in the world. If you trigger those tears and it's only going to be for the one year, right? So you have to look at what's the long term implication. What is your tax planning strategy look like? What is your income planning look like? As Hamilton today in our as our guest has talked incessantly about the importance of income planning with things like Social Security, election. All of these things, we just want to be aware of how everything is related on the income tax return, how it can affect things like taxes on Social Security, how it can affect Medicare premium. We want to be eyes wide open at the same point. You know, we don't want to cut off our nose to spite our face. So being aware of these thresholds is critically important in your long term wealth management and retirement planning.
Speaker 4 00:31:28 That's our dollars and cents segment for this week. You can find this week's dollars and Cents segment and others by visiting Brogan Financial.
Speaker 2 00:31:41 Do check us out online.
Speaker 2 00:31:42 Brogan financial.com. We have a wealth of resources on there that you can subscribe to. I do want to mention my two part class that I hold through Penn State Community College thrive financially in retirement. It is coming up on September the 29th, so it is two two hour sessions on successive Tuesdays, September 29th and October 6th. And I get into seven key areas that I think everybody needs to understand when they prepare for and be successful with being financially independent, which is what retirement is, right? You don't have to depend on earned income in order to support your lifestyle. What are the risks that come into play? A Social Security election is one very important part of that decision, of course. And so I do dive into that. In addition to tax planning, investment investing for short term income with long term growth of income, just all of these different things. So again that's Tuesdays, October, excuse me, September 29th and October 6th, 6:30 p.m. at the Hardin Valley West Knoxville location. the course fee is $59.
Speaker 2 00:32:54 You can find out more information. You can go to confidence with retirement.com. Again that's confidence with retirement. And you can click click on a link there to register and find out more about the class we've been visiting with Hamilton Morales. He is a national social security expert. And we're talking about the very, very important decision of claiming Social Security. you know what? I want to talk about divorce. Hamilton before I do, though, and I was talking about it in that, in that social in that, dollars and cents segment. Trump, just this past week said we eliminated tax on Social Security. Now, that was one of the first things that I got asked questions when the One big Beautiful Bill act was passed, did we actually eliminate tax on Social Security income?
Speaker 3 00:33:43 Yeah. Yeah. So that that it's unfortunately it's a political statement. Right. So the answer to that question is no. That tax still exists. What they did do is they increased the standard deduction to the point where it allows a lot of people not to have to pay taxes on their Social Security benefits because of the standard deduction.
Speaker 2 00:34:12 Which is $6,000 per person, which is an extra deduction if you're 65 years or older. Right.
Speaker 3 00:34:17 Well, that's yeah, that's what we call the bonus, right. The bonus deduction on top of increasing the, the the current. Well, the standard deduction before the big beautiful bill came out for marriage filing jointly was 30,000. And then it went up to 31,500. For a single filer. It was 15,000 went up to 15,750. And then if you were over 65, if you were single, you got an additional $2,000 deduction. Or if you were married, you got an additional $1,600 per person deduction with the one big beautiful bill. And that didn't change, by the way, that's still the same.
Speaker 2 00:34:58 Yeah, those are still there.
Speaker 3 00:34:59 One big beautiful bill. they they added an additional bonus for those that are 65 and older of 6000 per person or if you're married, 12,000 total. So, I mean, if you think about it, I mean, that's if you're married filing jointly and you're both over 65, that's $46,700 in standard deductions you get.
Speaker 3 00:35:26 And so based off of their numbers. And gosh, I mean people way smarter than me doing these these gymnastics with math, if you will. have come out and said that, that it really lowers how many people actually pay taxes on their Social Security benefits. But do not be. No, not do not misunderstand. That tax still exists if you go over the threshold. The question is now how much do you actually pay given the standard deductions?
Speaker 2 00:36:01 Yeah. The extra deduction is merely helping offset some of that income. Yeah. correct. But that extra $6,000 in your deduction goes away at the end of 2028. So we have this year plus two more years and then it goes away right now the other one I mentioned this as well. Yeah you mentioned the 1600 per person. If you're 65 and up jointly filing. That does not go away, right? That's still part of the permanent code. All right, let's dive into a divorce. Spouses divorce can obviously affect Social Security. Under what circumstances? Hamilton.
Speaker 2 00:36:35 Can someone qualify for benefits based on their former spouses, their spouses earnings record? And does claiming that benefit affect what the former spouse or current spouse can receive?
Speaker 3 00:36:49 Yeah. So everything that I said with with the married couple works the same way with ex spouses with one difference. And that one difference is with the with the married couple. Remember, both had to turn on their Social Security benefits in order for the one who had the lesser benefit to get spousal benefits with a divorced couple, only the person who wants the spousal benefit that person must turn on their benefit their ex-spouse only has to reach age 62. Social security does not require them to turn on the benefit. And if you know people who've had bitter divorces, you understand why they did that. Yeah, because.
Speaker 2 00:37:38 I'm on delay, my benefit. But you can't get the spousal.
Speaker 3 00:37:40 Because I don't want that person to get anything out of me. Right. Yeah. So they said, no, we're going to take that out of your hands.
Speaker 3 00:37:46 Once you turn 62 and the other person turns their benefit on, they're going to be eligible. Now, the person who's taking the spousal benefit must be single. Their ex-spouse can be remarried. It doesn't affect you at all. So keep that in mind. So that's how that's how spousal benefits works for widows benefits or ex widows benefits, you still could be eligible for a widow's benefit off of your ex-spouse if they pre-deceased you. two things have to happen. Number one, if you're under age 60. You must be currently single when your spouse passes ex spouse passes away. If you are over age 60 and remarried, as long as you were remarried after your 60th birthday, you can still be eligible for your ex spouse's widow's benefit even though you remarried as long as you remarried after age 60, which is crazy to think.
Speaker 2 00:38:50 But that's really important. Somebody might be 5758 years old dating, and they're planning on getting remarried. Will they need to? And they've lost a spouse there and they qualify for widow benefit.
Speaker 2 00:39:00 They need to understand, hey, just wait till you're 60 and you'll still be able to have that widow benefit, right?
Speaker 3 00:39:06 Get get remarried at 60, your 60th birthday in one day, and you're good to go.
Speaker 2 00:39:12 There you go. well, how long do you have to be to have been married? If you're an ex spouse to qualify for these these ex-spouse benefits?
Speaker 3 00:39:19 Yeah. Good. Good. Yeah. So. So you had to be married for at least ten consecutive years before you got divorced. And you had to have been divorced for at least two years to be considered ex spouses. A lot of people don't know that second piece.
Speaker 2 00:39:39 Yeah. Say that again for us one more time.
Speaker 3 00:39:42 You got it. You have to be married for at least ten consecutive years before you get divorced. And you have to be divorced for at least two years to be considered ex spouses. So, in other words, if you got divorced, but it's only been a year and you want to get spousal benefits, they're going to treat you as if you're still married.
Speaker 3 00:40:05 So you both have to turn on your benefits before you can get the spousal benefit.
Speaker 2 00:40:09 Yeah. And consider what if somebody loses their spouse and, let's say they. Excuse me. Let me rephrase this. What if they get a divorce and within two years that ex-spouse dies?
Speaker 3 00:40:26 Same thing. So you're still eligible at that point in time because you're you were married for at least ten consecutive years before you got divorced. The two year rule doesn't really come into play for that. It's irrelevant.
Speaker 2 00:40:38 So when you remarry.
Speaker 3 00:40:39 If you are.
Speaker 2 00:40:40 If a widow or widower remarries before 60, then of course they attach to the new spouse. How long do they have to be married to the new spouse for that to be official?
Speaker 3 00:40:52 if the new spouse passes away, you had to be married for at least nine months. Unless, unless, unless it was an accident. If it was an accident, you don't have to be married for nine months. There's always a caveat.
Speaker 2 00:41:09 There's always caveats. So complicated. Hey.
Speaker 2 00:41:13 I've gone. Oh, we do this. Hamilton, we're almost out of time. I got to get to our last break. When we come back. I just want to kind of wrap this up in terms of how people balance these decisions. So stay with us. This is more living with Jim Brogan here on Newstalk 987 Waukee.
Speaker 1 00:41:30 Welcome back to Newstalk 98 Seven's Brogan Studios, where Jim Brogan is coming to you live with important news and advice to help you achieve your dream retirement. Get ready to learn and live. Here's your host, Jim Brogan.
Speaker 2 00:41:45 Welcome back to More Living. This is Newstalk 987 Wookey. Today we're talking with Hamilton Morales, a social security national social security expert. As you can hear from those questions I was asking in that last segment, he's really an encyclopedia when it comes to Social Security benefits. Hamilton. I went a little over on that last segment. We just got a couple of minutes left. Big picture. I mentioned tax planning. I mentioned some people cannot afford to delay.
Speaker 2 00:42:09 We can't dive too much into those things. But big picture. How does someone go about making this decision.
Speaker 3 00:42:16 Gosh, I hope we've established the fact that to do this on your own, is fraught with with a lot of pitfalls, and you really need somebody that you can trust, your financial advisor that really understands how Social Security works and how it's going to impact you. And if they don't understand that, which a lot of them don't, maybe they have a resource like me where they can come in and help those clients out. So it's really key to have somebody that really understands how this stuff works, that can walk you through that process and how it affects you in your particular situation.
Speaker 2 00:42:54 Very, very well said. And it's, you know, it's not just looking at some fiction, you know, theoretical break even. It's how if you delay benefits, how are you going to pay your income? How are you going to draw income? And can you afford to do those kinds of things? And there's just so many things that go into it.
Speaker 2 00:43:12 we just have a literally a minute left. Hamilton I just want to say go big Orange. Who are you cheering today for between Tennessee and Georgia Tech? Mr. Alabama fan.
Speaker 3 00:43:24 Hey man. SEC. All the way. Let's go Vols.
Speaker 2 00:43:27 But we all have a big game at Kentucky.
Speaker 3 00:43:30 Game of the year.
Speaker 2 00:43:31 You've got a big game at Kentucky. Yeah. You nervous at all or are you confident?
Speaker 3 00:43:36 Always. Always nervous. New coach over there. you don't know what you're going to get. Second game of the season. Anything can happen.
Speaker 2 00:43:44 His mouth will stay on the coach of Kentucky. I know this is not a sports show, but, man, his his mouth is right. A lot of checks. We're going to see what ends up happening if he's able to cash those checks. Hamilton Morales, thank you so much. Time for taking. thank you so much for taking time out of your busy schedule. It's always a pleasure to have you on and visit with you. as I say, you're an encyclopedia of Social Security benefits.
Speaker 3 00:44:08 Yes. Thank you so much for having me on.
Speaker 2 00:44:11 That's Hamilton Morales. I want to mention again our two part class, Thrive Financially in Retirement is coming up on September 29th and October 6th. Two. Two hour sessions through Pelosi State Community College. it is at the Heart and Valley location. Adult education. We're going to talk about thrive financially in retirement. We're going to talk about the seven key areas I think everybody needs to address. Check. Check it out at confidence with retirement. Many thanks to Wayne for engineering the show. To Mary Caroline for producing the show. Have a wonderful weekend. You've been listening to More Living with Jim Brogan here on Newstalk 987 w Cokie.
Speaker 5 00:44:50 The views expressed by Jim Brogan and his guests are not that of Cumulus Media. Any discussion of financial, legal, and tax planning strategies is not intended to be individualized advice and is general in nature. Always consult with your advisor for advice specific to your needs. This program's content does not represent a recommendation of any particular security strategy or investment by Jim Brogan or Brogan Financial, Incorporated.
