Social Security is a critical part of most people's retirement plan.
Social Security is a critical part of most people's retirement plan.

The Social Security Administration says that about 40%
The Social Security Administration says that about 40%

of your pre retirement income will get replaced with your Social Security
of your pre retirement income will get replaced with your Social Security

benefits. So it's really important to understand how this works. Now,
benefits. So it's really important to understand how this works. Now,

there's a nice checklist that goes over the basics of Social Security,
there's a nice checklist that goes over the basics of Social Security,

and we're going to walk through that in the next couple of minutes,
and we're going to walk through that in the next couple of minutes,

I'm not just going to read it to you, but I'll try to
I'm not just going to read it to you, but I'll try to

provide some additional context and we'll drill down into some numbers that
provide some additional context and we'll drill down into some numbers that

hopefully help paint the picture of what Social Security might do for you
hopefully help paint the picture of what Social Security might do for you

in retirement. By the way, I'm Justin Pritchard, and I help people plan
in retirement. By the way, I'm Justin Pritchard, and I help people plan

for retirement. Be sure to check the description below that has some free
for retirement. Be sure to check the description below that has some free

retirement planning resources, as well as a link to the document we're walking
retirement planning resources, as well as a link to the document we're walking

through right now. One of the main things to know is that it's
through right now. One of the main things to know is that it's

not just a set program that you get... Yes, there are certain rules
not just a set program that you get... Yes, there are certain rules

and restrictions, but you get to make some choices and that includes when
and restrictions, but you get to make some choices and that includes when

you take benefits, that might include How long you keep working,
you take benefits, that might include How long you keep working,

which helps to build up your benefit to the extent you have control
which helps to build up your benefit to the extent you have control

over that, and then the type of benefit you choose is also possibly
over that, and then the type of benefit you choose is also possibly

in your control, one of the main things to understand is the full
in your control, one of the main things to understand is the full

retirement age, now, this doesn't mean when you're allowed to retire,
retirement age, now, this doesn't mean when you're allowed to retire,

you can retire at any point, but when you reach your full retirement
you can retire at any point, but when you reach your full retirement

age, that means that your benefits don't necessarily get reduced for early
age, that means that your benefits don't necessarily get reduced for early

claiming or for certain earnings that you get if you continue to work
claiming or for certain earnings that you get if you continue to work

after you take benefits. For most people approaching retirement these days,
after you take benefits. For most people approaching retirement these days,

full retirement age is age 67, but it's always smart to check with
full retirement age is age 67, but it's always smart to check with

the Social Security Administration and find out exactly when your FRA or
the Social Security Administration and find out exactly when your FRA or

your full retirement age is. You can actually take benefits anytime between
your full retirement age is. You can actually take benefits anytime between

age 62 and age 70 for most people, now claiming early at age
age 62 and age 70 for most people, now claiming early at age

62 means you'd get a reduced benefit that's also called Early claiming,
62 means you'd get a reduced benefit that's also called Early claiming,

and that can make sense in some cases, but in a lot of
and that can make sense in some cases, but in a lot of

cases, it helps to... Wait until your full retirement age or even to
cases, it helps to... Wait until your full retirement age or even to

delay taking your benefits, so they provide an example here, we use $1,000
delay taking your benefits, so they provide an example here, we use $1,000

as your benefit at full retirement age of 66, $1,000 is a nice
as your benefit at full retirement age of 66, $1,000 is a nice

round number to work with, if you were to claim at age 62,
round number to work with, if you were to claim at age 62,

your monthly benefit would be $750, that's a reduction of 25%
your monthly benefit would be $750, that's a reduction of 25%

and that lasts for the rest of your life. So instead of getting
and that lasts for the rest of your life. So instead of getting

a thousand bucks a month, you get $750,
a thousand bucks a month, you get $750,

on the other hand, if you were to wait until age 70 to
on the other hand, if you were to wait until age 70 to

claim, you would get $1,320 per month. That's a 32% increase.
claim, you would get $1,320 per month. That's a 32% increase.

Roughly 8% per year for four years. In this example... And that certainly
Roughly 8% per year for four years. In this example... And that certainly

helps. One of the reasons those delayed retirement credits[or those increases
helps. One of the reasons those delayed retirement credits[or those increases

that come when you wait beyond your full retirement age] are so important
that come when you wait beyond your full retirement age] are so important

is that they can go on to your surviving spouse, they get to
is that they can go on to your surviving spouse, they get to

take that increased benefit for the rest of their life if you die
take that increased benefit for the rest of their life if you die

first, so it's important to consider who else might be relying on you
first, so it's important to consider who else might be relying on you

when you take your benefit... Again, this is just an example,
when you take your benefit... Again, this is just an example,

so check your own statement and log in to the Social Security's website,
so check your own statement and log in to the Social Security's website,

SSA.gov, to look at your own individualized numbers, and work with a financial
SSA.gov, to look at your own individualized numbers, and work with a financial

planner if you want to get some projections on how things might unfold
planner if you want to get some projections on how things might unfold

in the future. The amount you actually get is going to depend on
in the future. The amount you actually get is going to depend on

your work record, so that includes how many years you worked and what
your work record, so that includes how many years you worked and what

your earnings were during those years to hire your earnings, typically the
your earnings were during those years to hire your earnings, typically the

higher your Social Security benefit, at some point you get capped out and
higher your Social Security benefit, at some point you get capped out and

those earnings don't count, but for many people, it's the 35 years that
those earnings don't count, but for many people, it's the 35 years that

you learn the most that go into your calculation, so a higher number
you learn the most that go into your calculation, so a higher number

can help bump up what you get each month in your Social Security
can help bump up what you get each month in your Social Security

benefits, and Social Security is a lifetime income. So if you're concerned
benefits, and Social Security is a lifetime income. So if you're concerned

about running out of money, perhaps spending down the assets you have saved
about running out of money, perhaps spending down the assets you have saved

up for retirement, Social Security can help mitigate that risk, that's because
up for retirement, Social Security can help mitigate that risk, that's because

the payments continue to come to you, that's why your claiming age is
the payments continue to come to you, that's why your claiming age is

so important. It's a decision that you might make in your 60s,
so important. It's a decision that you might make in your 60s,

but that's going to affect you for the rest of your life,
but that's going to affect you for the rest of your life,

which could be several more decades, so it can be tempting to take
which could be several more decades, so it can be tempting to take

that income early, and sometimes... Again, that makes sense, but if you
that income early, and sometimes... Again, that makes sense, but if you

delay, you get a bigger payment for the rest of your life.
delay, you get a bigger payment for the rest of your life.

Speaking of the rest of your life, there may be some inflation over
Speaking of the rest of your life, there may be some inflation over

the years and prices may rise over time, and your Social Security benefit
the years and prices may rise over time, and your Social Security benefit

is adjusted for inflation. You get cost of living adjustment COLA or "COLAs"
is adjusted for inflation. You get cost of living adjustment COLA or "COLAs"

that can increase your benefit along with inflation, those adjustments don't
that can increase your benefit along with inflation, those adjustments don't

always keep up with every type of inflation such as health care in
always keep up with every type of inflation such as health care in

your later years, but they do help you keep your purchasing power over
your later years, but they do help you keep your purchasing power over

time, and it's one of the few places you can get an inflation
time, and it's one of the few places you can get an inflation

adjusted payout that lasts for the rest of your life, it's hard to
adjusted payout that lasts for the rest of your life, it's hard to

find that with privately purchased annuities, for example, they get very
find that with privately purchased annuities, for example, they get very

expensive, if they're even available. Like many other forms of income,
expensive, if they're even available. Like many other forms of income,

your Social Security benefits might be taxable. Now, if it's your only source
your Social Security benefits might be taxable. Now, if it's your only source

of income, you just get Social Security, it's not likely that you would
of income, you just get Social Security, it's not likely that you would

pay taxes, but if you have other sources of income, including withdrawals
pay taxes, but if you have other sources of income, including withdrawals

from pre tax retirement account, like an IRA, a traditional IRA or a
from pre tax retirement account, like an IRA, a traditional IRA or a

401k, for example, those can cause your Social Security benefits to become
401k, for example, those can cause your Social Security benefits to become

at least partially taxable, so you want to plan for that as you
at least partially taxable, so you want to plan for that as you

look at your income, and it might make sense to arrange for other
look at your income, and it might make sense to arrange for other

types of income that don't cause your benefits to become taxable.
types of income that don't cause your benefits to become taxable.

For example, if you take withdrawals from a Roth IRA, those would generally
For example, if you take withdrawals from a Roth IRA, those would generally

not under current law, cause your Social Security benefits to become taxable,
not under current law, cause your Social Security benefits to become taxable,

so that's a good reason to look at Roth accounts for your future
so that's a good reason to look at Roth accounts for your future

planning, you don't necessarily have to stop working when you take your
planning, you don't necessarily have to stop working when you take your

benefits, however, you want to be careful in the years before you reach
benefits, however, you want to be careful in the years before you reach

your full retirement age, the Social Security Administration may withhold
your full retirement age, the Social Security Administration may withhold

the portion of those earnings and you might get those back later,
the portion of those earnings and you might get those back later,

but that can be a surprise to some people in the year you
but that can be a surprise to some people in the year you

reach full retirement age gets a bit more forgiving and after you reach
reach full retirement age gets a bit more forgiving and after you reach

full retirement age, you can continue to get your benefits and earn income
full retirement age, you can continue to get your benefits and earn income

without any reduction in your benefits, but be aware of taxes,
without any reduction in your benefits, but be aware of taxes,

in fact, working might help you secure a bigger benefit. Again,
in fact, working might help you secure a bigger benefit. Again,

they look at your highest 35 years of income, and so if you
they look at your highest 35 years of income, and so if you

are later in life in your higher earning years and you continue to
are later in life in your higher earning years and you continue to

work and earn a good income, that can potentially bump up the numbers
work and earn a good income, that can potentially bump up the numbers

that go into the calculation for your earnings, if you're going to use
that go into the calculation for your earnings, if you're going to use

Medicare as most people do around age 65, it's important to stay on
Medicare as most people do around age 65, it's important to stay on

top of the enrollment date, that's because the penalty for enrolling late
top of the enrollment date, that's because the penalty for enrolling late

is steep and at lasts for the rest of your life,
is steep and at lasts for the rest of your life,

especially if you're going to take Social Security benefits after age 65,
especially if you're going to take Social Security benefits after age 65,

it's critical to sign up for Medicare, start that process three months before
it's critical to sign up for Medicare, start that process three months before

your 65th birthday again for most people, and that way you can avoid
your 65th birthday again for most people, and that way you can avoid

those penalties if you get it done on time. For many people,
those penalties if you get it done on time. For many people,

Social Security is just a retirement benefit, but there are also benefits
Social Security is just a retirement benefit, but there are also benefits

for other family members and for those with a disability, qualifying for
for other family members and for those with a disability, qualifying for

Social Security Disability benefits is difficult, it's not necessarily the
Social Security Disability benefits is difficult, it's not necessarily the

same as qualifying under your private policy that you might have purchased
same as qualifying under your private policy that you might have purchased

on your own or that you have through a job, but there are
on your own or that you have through a job, but there are

benefits for those who are unable to do any kind of substantial work,
benefits for those who are unable to do any kind of substantial work,

and if that disability is expected to last for more than a year,
and if that disability is expected to last for more than a year,

so if you have a disability that affects your work, be sure to
so if you have a disability that affects your work, be sure to

speak with an expert... Possibly an attorney who can help you with the
speak with an expert... Possibly an attorney who can help you with the

process of applying for benefits. When it comes to retirement planning,
process of applying for benefits. When it comes to retirement planning,

Social Security is a big deal for married couples, that's because spouses
Social Security is a big deal for married couples, that's because spouses

get a benefit, it goes off the other spouses work record,
get a benefit, it goes off the other spouses work record,

and in some cases, both spouses work and they have a nice benefit,
and in some cases, both spouses work and they have a nice benefit,

and you can make some decisions about when each of you claims based
and you can make some decisions about when each of you claims based

on what's best for your household. But even if one spouse never worked,
on what's best for your household. But even if one spouse never worked,

that person can typically get half of the working spouse's benefit based
that person can typically get half of the working spouse's benefit based

on the working spouse's work history, and if one of the spouses dies,
on the working spouse's work history, and if one of the spouses dies,

the surviving spouse typically gets to step into whatever the bigger benefit
the surviving spouse typically gets to step into whatever the bigger benefit

was for the household, and that can provide some financial relief,
was for the household, and that can provide some financial relief,

and that's why once again, it's really important to think about any surviving
and that's why once again, it's really important to think about any surviving

spouse, if you die first will you leave them with a reduced benefit
spouse, if you die first will you leave them with a reduced benefit

or will you leave them with an enhanced benefit that has been bumped
or will you leave them with an enhanced benefit that has been bumped

up with the late retirement credits? For many people, Social Security is
up with the late retirement credits? For many people, Social Security is

the primary or the only source of guaranteed retirement income, but if you
the primary or the only source of guaranteed retirement income, but if you

worked for a government body you might have a different system,
worked for a government body you might have a different system,

for example, if you were a teacher in a local school district,
for example, if you were a teacher in a local school district,

perhaps you didn't pay into Social Security, but you have a pension instead,
perhaps you didn't pay into Social Security, but you have a pension instead,

or you might have a pension plus Social Security, if you did indeed
or you might have a pension plus Social Security, if you did indeed

pay into Social Security during those years, it's important to understand
pay into Social Security during those years, it's important to understand

what benefits are available to you and what types of payments you've been
what benefits are available to you and what types of payments you've been

making into different pension systems, in some cases, your Social Security
making into different pension systems, in some cases, your Social Security

benefit could be adjusted or eliminated entirely based on income you get
benefit could be adjusted or eliminated entirely based on income you get

from a pension, from your government jobs. So be sure to ask your
from a pension, from your government jobs. So be sure to ask your

employer, your former employer, how that works, do you need to be concerned
employer, your former employer, how that works, do you need to be concerned

about those types of adjustments and what can you expect when it comes
about those types of adjustments and what can you expect when it comes

to retirement income? The Social Security Administration stresses that your
to retirement income? The Social Security Administration stresses that your

benefits shouldn't be your only source of income, you typically need assets
benefits shouldn't be your only source of income, you typically need assets

to draw from to help supplement those benefits, and with the benefits you
to draw from to help supplement those benefits, and with the benefits you

get plus the withdrawals from your retirement savings, for example, then
get plus the withdrawals from your retirement savings, for example, then

you can have an income that supports the standard of living that you
you can have an income that supports the standard of living that you

want in retirement, so it's important to make smart decisions about your
want in retirement, so it's important to make smart decisions about your

Social Security, but it's important to look at other aspects of your retirement
Social Security, but it's important to look at other aspects of your retirement

plan such as how much you're saving, how you're investing it,
plan such as how much you're saving, how you're investing it,

and how you might turn that into an income that can support you
and how you might turn that into an income that can support you

during your retirement years. A financial planner can help you with that,
during your retirement years. A financial planner can help you with that,

or you can do more research on your own. I hope you found
or you can do more research on your own. I hope you found

this helpful. If you did, please leave a quick thumbs up.
this helpful. If you did, please leave a quick thumbs up.

Take care, and I'll see you next time.
Take care, and I'll see you next time.