Why It’s Important to Understand Social Security - Expert Edition Episode 62

Today, I want to discuss the importance of annually reviewing your Social Security statements. Regular checks ensure our earnings are accurately recorded, which is crucial for predicting and securing our financial future upon retirement. By understanding how life events affect our benefits, we can make informed decisions that enhance our long-term financial security. Join me as we explore how to maximize Social Security benefits and safeguard our financial future.

Links from the episode:

• Financially Intentional Instagram Post

• ‎Catching Up To FI: Social Security Made Simple | Mike Piper | 054 on Apple Podcasts

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TRANSCRIPT:

Naseema: [00:00:00] At least once a year, I like to check my social security statement over at SSA. gov. And I like to check it because number 1, You should be verifying every year that what social security is reporting is what you actually earned and you can go in and update that, but it tracks like how much I've been working.

I started earning an income. And so I think it's pretty cool. And the other day

I did a post about just how much I, since I was a nurse in 2009 and so I went from earning in 2009 $36,261 to last year earning $69,152. My highest earning year. was 2022 where I earned 277, [00:01:00] 000.

I think that I'm going to talk to like specific years of my earnings. Obviously last year only earned 69, 000 because I was pregnant. And so I only worked literally from January to january 1st to March 31st, which for three months earning 69, 000 is a pretty good. And that was my taxable income.

And that does not include the disability income that I was getting. I did qualify for disability benefits, and I did get paid disability. So I think that's, That's interesting. So social security only tracks like your earned income. And so it's very interesting to see like in 2009, when I first started working as a nurse, only worked from July.

So that's a half a year. Earning as a new grad just working I wasn't working full time. [00:02:00] No, I wasn't working full time. Cause I went straight into the master's program. So I was working part time, so that's why it was so low. And then the next year it went up to 75, 000. And then in 2011. I started working two jobs still in my master's program, but then it went from 74 to one 44.

Then there were some drops in 2016. I only made 165, 000 even though the year before I made 216, 000 because guess what? That's when I had my first child. So that was in 2014. And then In 2019, even though my, my second daughter was born in 2018, she was born the very last day of 2018. She is a new year's Eve baby.

But so in 2019 I was on maternity leave some of that time. So I got paid 131, 000 dollars while the year [00:03:00] before I made 169, 000 dollars. Oh, the other thing to note is in 2018. Is when I went from working two jobs to Working only One job and I went from working six days a week to working six days a month so in the middle of 2018 That's when I made that transition.

So in 2017, I made 255, 000 in 2018. I made 169, 000 and in 2019 I made 131, 000 while I was on Maternity leave. And then in 2020, you see that jump up to 268, 000. What happened in 2021 that it went down to 204, 000? I don't remember , but it went from 2 68 to 2 0 4 and then back up to 2 [00:04:00] 77. And then in 2023, I made $69,000 for those three months.

I'm gonna post the link to this clip and I'll share my screen for the people who are watching on YouTube. So you guys can see what I meet during that time.

So yeah, so you'll see, I went from in 2009, my first year as a nurse working half a year, from, Making 36, 261 to 2023. Obviously, it's the last full year I worked making 69, 151, but the majority of the time I was making in the 200, 000 range with some drops and the years that I was pregnant, so I think this information is great to look at and also reminds me of what was happening at different points in my life, but it's just a reminder also to go check your social security.

Statement

I am going to share some interesting facts [00:05:00] that You can learn from your social security statement. So some interesting things about social security is that In order to be eligible for Social Security, so to qualify for benefits, like you earn credits through your work, and you earn credits up to four each year. This year, for example, you earn one credit for each 1, 700. 30 dollars of wages or self employment income. So when you've earned you've earned four credits for that year.

So most people need 40 credits over their working lifetime to receive a retirement benefit. For disability and survivors benefits, young people need fewer credits to be eligible. They check your records to see whether you've earned enough credits for benefits. And if you haven't earned enough, they can't give you a benefit statement, but I obviously have worked a 40 credits this [00:06:00] year to receive a benefit.

And then below that, it'll tell you it'll say you earned 69, 152 dollars in 2023 is that correct? And then I can go in and review my full earnings. And like I said, my full earnings go back to 1999 I believe Yeah, 1998. Actually, that's when I first started working my first job at the boys and girls club And when I earned a whopping two thousand dollars I think it's also interesting to note that in 2002 I had zero earnings and you know what I was doing in 2002 I was taking a year abroad in ghana So that makes sense, but that is literally the only year I didn't have earnings since 1998 when I first started working So anyway, I love checking this statement because a walk down memory lane and trying to see like You what the heck was I doing doing during this time what it also gives you [00:07:00] is a retirement calculator so you can plug in It'll tell you that first of all your estimated monthly benefit at your full retirement age and my full retirement age is 67 Is that i'm gonna get three thousand one hundred and forty three dollars You At my full retirement age and it gives you your retirement age and date Your annual salary average annual salary and right now it has a 69, 000 but I'm gonna change that to two hundred thousand dollars.

That's usually my annual salary is closer to that And so if I take my retirement out early say, I wanted to retire early at 62, my monthly benefit would be 68. My monthly benefit would be 26, 088 dollars. If I started as 67, and took my benefits out It would be a 39 48. And, [00:08:00] but if I delayed my taking out my benefits until I was 70 years old, I would get 49, 015.

So it's just like super interesting. And Also here you can, you know that you can qualify for a disability benefit if you become unable to work due to medical conditions expected to last at least one year or result in death and that would be my disability benefit would be 3, 500 a month, 3, 558 a month.

And my family qualifies for survivor benefits. And I think this is really interesting because this is the survivor benefit that, Naima's getting for her dad passing away.

So for survivor benefits, it says I have enough credits for my family to qualify for survivor benefits. If I die this year, certain members of my family will be able to receive these benefits. So my child would receive 2, 700 a [00:09:00] month. My spouse caring for a child would receive 2, 700 a month. And then my spouse starting at full retirement age would earn thirty six hundred dollars a month.

My total family benefits cannot be more than six thousand three hundred and twenty three thousand dollars. My spouse or my minor child, Would be eligible for a one, one time special benefit of 255. And I forgot where that 255 comes from. It's like a one time benefit. They give everybody that qualifies for social security benefits.

And I think it's a weird number. And I forgot, like, when I was applying for my daughter's benefits, they told me why, but I forgot. I'm sure if I read more about it. And they have a special PDF about survivors benefits. I'll learn more. And my friend explained it to me too, but I forgot why. Anyway, you can look that up.

Why you get 255. As a [00:10:00] one time benefit. I don't know. And then also when you when it's time to qualify for Medicare part A and B at the age of 65, you you can apply through social security and you apply as early as 3 months before your 65th birthday. You want to make sure you apply early or as late as 3 months after turning 65.

And also, if you have are and have been married, your current or former spouse may be eligible to claim benefits based on your earnings. So you can calculate a benefit for it from your current or former spouse. Your current and former spouse may receive benefits based on your earnings record.

Your spouse's decision on when to begin this benefit can impact the amount of their spousal benefit. If your spouse begins the benefit between the ages of 62 and their full retirement age, the spousal benefit amount will permanently Reduce by [00:11:00] the percentage based on the number of months of their full retirement age If your spouse is under full retirement age and works while receiving benefits Their benefits may be affected by the retirement earnings test I don't know.

I think this is just all great stuff and reasons why you should check your social Security, statement, but if you don't know what social security is it serves as like a safety net for retirees It is not meant to be your full benefit. I cannot live off of three thousand dollars a month so I am planning To have enough from retirement so I can have at least 10, 000 a month So having the social security benefit in addition to that is going to be great And I know that there's a lot of this fear that social security benefits won't exist And I plan according to that but I am of the mindset now that Social security benefits will be around in the next how long will it be before I [00:12:00] am 67 15 years, 67, no 27 years.

I'm sorry. And 27 more years. Hopefully social security will still be around and I'll be able to receive another. 3 to 4, 000 in benefits. So I'll just look at that as icing on the cake, but it's a safety net. It offers a steady stream of income to support you in retirement, understanding that the nuances of this program enables individuals to make informed decisions regarding their claim benefits, maximizing the benefits.

Their final financial security and retirement. So you have a choice and when you're going to take it out It provides crucial support to individuals with disabilities as well as families with deceased workers and Like I said, so not only is it for your retirement benefits for disability is for deceased family members like my daughter gets the benefit beyond retirement and disability benefits, Social Security plays a pivotal role in safe guarding [00:13:00] the financial stability of families, spousal benefits, survival benefits and dependent benefits are among the various provisions

that can significantly impact that family's financial trajectory. So you really need to understand that. So Understanding how social security works is not merely a matter of financial literacy. It's a fundamental step towards securing one's future. So whether you're just planning for retirement, preparing for unforeseen circumstances, like it's just like you look at a life insurance policy, or you're just looking to safeguard your family's well being, the knowledge of social security empowers you.

Individuals to navigate life's uncertainties with confidence and resilience. So I always Implore you to set a reminder on your phone So I have the reminders app on my iPhone and I just say check social security account actually once a year They actually email me and let me know that my social security [00:14:00] benefits have been updated and that's at ssa.

gov And there is actually a really good episode on the podcast catching up to FI where they have a social security expert on there. I will link to that in the show notes. So check out the post that I did on Instagram, check out the catching up to five. Episode and last but not least, make sure you sign into ssa.

gov and check your own social security benefits so you can understand how it's going to affect your retirement. Also, if something were to happen to you, how much of a benefit your kids and your spouse, your loved ones will get. All right. Hope that was helpful. Tap in, let me know if you guys have checked yours and I'm looking forward to hearing your thoughts.

Hey there I’m Naseema

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