Investing

The Social Security Earnings Warning Everyone Misses

Austin Smith

Published: July 19, 2024 8:07 am

Small Retirement Decisions Can Make A Big Difference

Lee Jackson and Doug McIntyre discuss their decisions to take Social Security benefits early and the financial implications of earning additional income while receiving these benefits. They also highlight the challenges and considerations people face when relying on Social Security for their retirement income.

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Transcript:

I want to take people back to part of what you just said.

You have to look at your income.

I’m going to take Social Security.

It doesn’t matter.

What is it you just told people about earning stuff?

In other words, once you’ve made that decision, if you’re earning money someplace else, I don’t know that everybody gets that.

Well, you can continue.

Let’s say you’ve left your job.

Well, I was working for a family office in Houston.

And when that job ended in 2012, that’s when I talked to somebody at 24-7 who was your partner at the time.

And he knew that I’d had a blog and I’d used WordPress and all that.

So I got a job.

And I was making decent money, but I wasn’t really tripping that job.

That penalty area.

So for me, it made sense because I could take the money.

I could also make money.

Plus, you know, Social Security doesn’t count any sort of ancillary investment money against you.

It’s only money you make as a 1099 or a W-2 employee that can go against it if you take Social Security early.

So that’s something that’s a warning for people, isn’t it?

I mean, if people don’t understand sort of the ins and outs of Social Security, it’s one of the first things you should look at, right?

Absolutely.

And for some people like me, it did make sense because, I mean, I was…

By the time I would have gotten the full amount, which I would have received by now, it was somewhere between $500 and $700 more, okay?

So I figured, okay, how many years of making $5,000 to $7,000 more does it take to equal the $125,000 that I already have and put to use in numerous different ways?

And it was years, and it was seven or eight years.

I don’t think a lot of people go through the process you just did.

You need to look at what you’re going to do with the money.

There are some people who say, I’m going to live on the money.

I have to live on the money.

But there are some people who they don’t have to live on the money.

So it’s like, okay, if you give me $30,000 a year in Social Security.

And I think I can do something with it where I can make 5%, 10%, whatever my assumption is.

I’ve got to go back and do the math about whether or not it makes sense for me to go early because I think I can make some real money on what I get from Social Security if I take it early.

Well, even if you put it into a one-year T-bill, you’ll make 5%.

And granted, you can’t buy a bunch of T-bills with your monthly distribution.

But I mean, if you saved it up for a year and did it, you could.

So I mean, there’s numerous ways that you could make more money off it if you don’t need to live on it.

But like you said, and to be frank with you, if anybody that tells you they have to live off their Social Security, they’re going to live a very, very meager life.

Because, I mean, most people that don’t have that much.

I mean, they’re not getting twenty-five or twenty-eight hundred or three thousand a month.

They’re getting, I think the average payment for Social Security is about seventeen fifty.

So it’s pretty tough to live on that.