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You tried to double dip by working and taking your Social Security benefit at age 62, but you go to claim your benefit and the government gives you a check for $0.00. That happens to people every day because they don't know the rules and the government loves not paying you what you're owed. Let me show you how to avoid that fate. I'm Brad Leinberger, certified Financial planner and founder of Seaside Wealth Management, and I'm here to help you create peace around the issue of money, both now and in retirement. I'm passionate about coaching people on financial matters, and that's why I shoot video content such as this. In this video, I'm going to cover how not to lose your Social Security benefit. So if you have your site set on claiming your Social Security benefits early and you plan on continuing to work to double dip. Then keep watching so you can avoid making a major mistake that could rob you of hundreds of thousands of dollars in retirement. Let me introduce you to a couple of my clients, Carl and Wanda Thorson, and how Carl's mistake around his Social Security timing almost derailed their retirement. So the names are Wanda Thorson, who's 59 years old. And Carl Thorson, who's 62 years old. Wanda is a high income earner and she's the Chief marketing officer at a large hotel chain in Chicago, IL. She earns about $215,000 a year and due to the position, she's had long hours and a lot of travel and she wasn't able to be around for the kids a whole lot. She's healthy and her family has a background of living into their 90s. Wanda wants to delay Social Security as long as she can and initially when we started talking she was thinking full retirement age, which for her is 67. After looking at her situation and her family history, we said best thing for her was to delay all the way until 70, when the benefit maxes out. Wanda's financial priorities are to see the kids more and be able to travel to them. The kids are spread all over California, New York, Texas, and Wanda would like to have a phased in retirement. She loves her job and she's not going to be able to leave quickly, but she does know that she needs to pick up some more hobbies and she wants to spend some time writing in her book. Carl thinks he doesn't have a long life. Expectancy Because both of his parents died in their late 70s, I showed Karl the data around life expectancy and how much more Social Security income that he would receive. By delaying the benefit, Karl had a 50% chance of making it into his 90s. And while Carl did not want to delay all the way until age 70 like Wanda, he did agree that he would delay his benefit until full retirement age, which for him was 67, and by delaying until 67 Carl's. Benefit was gonna be 40% higher than it would have been at age 62. Like Wanda, Carl loves his job and he's a plant manager at Kellogg, earning about $85,000 per year. Couple that with the fact that Carl got sticker shock when it came to purchasing health insurance before the age of 65 when he's eligible to go on Medicare. When he shopped around, he found that the monthly expense on health insurance was going to be about $1500 a month, or $18,000 per year. This led Carl to decide that he would work. Until age 65, when he qualifies for Medicare and the costs are much less than on the open market, O Carl's financial priorities are he wants to play a lot more pickleball. He loves to fish, and he's excited to have more of a relaxed household now that the kids are out of the household. So Wanda is working at home after the pandemic. And so Carl wants to be around Wanda more and get to spend some time together. And that's when I got the call. It was Carl and he was frantic. Carl's normally a pretty calm guy, so when I heard the emotion in his voice. I knew that something was terribly wrong. Bad. I made a mistake. I really messed this up. I blew it. You gotta help me out. Calm down, Carl. Calm down. Tell me what's going on. Well, you know how we had a plan in place for me to take Social Security at 67? Yeah, well, I was out fishing with my friends and they were ragging on me for not taking my Social Security benefit early. Right now at 62, they said you gotta take your benefit at 62 before the system goes bankrupt. Carl, you didn't do that, did you? Well, yeah, I did. All my buddies were telling me how great it was for them, so I thought it would be great for me, too. Folks, peer pressure doesn't stop in your teens. Then Carl told me. He wanted some extra spending money so he could travel more with Wanda, do some things around the house, have a little bit of fun together. Plus he was worried that the system was going bankrupt, so he wanted to take his money out while he could. Carls benefit at Full Retirement age was going to be about $2227.00 per month, but by taking the benefit early at 62, it was reduced down to $1591.00 per month, nearly a 40% reduction. But here's where the real problem lies. Because Carl is not yet Full Retirement Age, he's subjected to the earnings penalty. Anyone who's not yet full retirement age who's working and taking Social Security. Cannot earn more than $22,320 without their benefit being reduced. For every dollar over 22,320, the Social Security benefit is reduced by $0.50 on the dollar. In fact, the benefit can reduce all the way down to 0. And that's exactly what happened to Carl. The good news is, like golf, where you get a bowl again, you can get a gift that everybody wants, the ability to get a do over when you make a mistake, at least when it comes to your Social Security planning. In golf, it's called a Mulligan, or the chance to redo a stroke. But with Social Security planning, it's called a withdrawal of your application. You can literally withdraw the application inside of 12 months, and it's as if you never applied for the benefit at all. The key is you need to repay. Whatever benefit you've received in the 12 month period, and you can only do this once in your lifetime, so you get one mole again when it comes to Social Security planning. You do, however have an interesting opportunity once you attain your full retirement age. So let's say in Carl's case that he chose not to withdraw the application in that 12 month window. He could, once he hits full retirement age, choose to suspend his benefits at full retirement age. This literally would freeze the benefit. And it would stop his paycheck and let the benefit continue to grow at 8% per year. Sometimes I see people do this if they start taking Social Security but realize it's not going to give them enough money over the long term. Or perhaps they received an inheritance, or maybe they hit the lottery, but now they can suspend their benefit and let it compound at 8% per year. Not a bad return. So we fixed the problem for Carl by having him withdraw his application and because he didn't receive any money, because it was zeroed out. He actually didn't have to write a check back to the Social Security Administration. For those people who are actually receiving money and they decide to withdraw their application, in that case, they would have to write a check. As long as they did that, then it's like it never happened. Literally, it's a Mulligan for Social Security planning. So in order for me to give you some more details, let me jump into Carl situation and we'll show you what we did. So originally the base case plan, what we wanted Carl and wanted to do was delay that benefit for both of them. All the way out until age 70, as I mentioned before. So here's the reason why we wanted that because that would have put $1,202,000 in their pocket at the age of 80, and had they both lived until the age of 90, that strategy would have put $2,728,628.00 in their pocket. That's a lot of money. If both of them lived until the age of 100, that would have put 4,000,700. $79,362.00 in their pocket. That's a whopping sum of money, so all that made sense on paper. However, Carl was still not convinced, nor was he comfortable with the strategy and the reason why I'll show you right here. The reason why was because Carl was not convinced he was going to live long enough to reach the break even point. Now the break even point is the age that you must live in order to. Receive the benefits from delaying your benefit or taking it later. Let me show you what I mean. The primary strategy is the one where Carl is taking his benefit at 70, and this is the one that he elected not to do. And we compared that to Karl taking his benefit at full retirement age, which for him is 67. And you can see that the difference is about $600.00 per month, actually $650 less per month by taking it just three years earlier, but by taking the benefit. Early you actually, you're receiving money earlier, so you're actually coming out ahead. You're winning in the short run because you're receiving more money. And so we calculated how much Carl is actually winning or getting ahead here and the total amount that the the peak of of his of his winning so to speak is $66,445. And that's right at the age almost like right when he's turning age 70. But. If he had chosen to delay and was receiving $650 more per month, now the extra monthly benefit was going to eat into those winnings. And let me explain what I mean. That leads us to our break even point, which was right here at the age of 81. In other words, Carl would need to live until age 81 for it to make more sense to take the Social Security benefit at 70 versus age. 67 And again, Carl was just not convinced, nor was he comfortable. He just didn't think he was gonna live that long. And so couple that with the fact that as we study well, how much extra money would that have put in his pocket? And we took it all the way out to age 93. And again, Carl wasn't convinced he was going to live that long. But should he live that long, the decision to delay the benefit until 70 would have put an extra 58,100. $53 in his pocket. And Carl looked at that sum of money. And while $58,000 is a lot of money, it wasn't enough to tip the scale in the favor of Carl delaying all the way till 70. In other words, he said, you know, I'd rather hedge my bets and I'd rather start the benefit at 67 rather than rolling the dice because I I know I have to live until age 81. If I delay, he said, I'm going to start at 67. So we went through an exhaustive study and an analysis, but at the end of the day, we came to a place where Carl. That's really at peace with the decision and we were at peace too. And one of the reasons why we were at peace is that in both scenarios, Wanda ended up delaying until age 70. And Wanda had the larger benefit because she was the breadwinner, She she earned more money in her career. Her benefit was going to be really, really nice and and we like that because if Wanda died first, Carl would have inherited Wanda's benefit. That's known as the Survivor benefit. So in this situation. Where Wanda dies first, Carls benefit goes away and then Carl switches over to Wanda's benefit, and that's now known as the survivor benefit. And so either way, because Wanda chose to delay hers until 70, we felt very comfortable. If Carl wants to take his a little bit early at 67, that strategy's fine and you could see it right here. So you could see that at the age of 80. Delaying the benefits would have put $1,202,000 in his pocket and then at 90 it was 2,728,000 and that's combined in both their pockets and we'll compare that to the situation where Carl takes at 67 and Wanda delays and you could see when we quantify it they are actually they're they're coming out ahead at that age of 80. Ohh you know 1, 215,000. So they're ahead by about 13. $1000 and yes, at the age of 90 they're now lagging behind. But again, these were not large enough dollar amounts to encourage Carl to delay till 70. So at the end of the day, we work through a process and we came up with the one that worked best for Carl and Wanda and there's 1800 rules to the Social Security system. It's really confusing and there's hundreds and hundreds of different timing strategies that you can apply. So the right answer, what's right for you, is going to be unique and custom to you in your. Situation. But that's why I encourage you like Carl and Wanda go through this and really understand the rules and understand the impact of when you claim and really try and avoid the big mistakes. And in this case we're able to clean up the situation for Carl. He withdrew the application. He was able to delay until 67 things worked out just fine. But I will never forget that phone call when Carl called my office in just a a frantic nervousness. It was unforgettable actually. But the good news is. You're able to write the ship, solve the situation, and they are really enjoying a wonderful retirement at this point in time. If you have over $1,000,000 in investable assets, get in touch with our office and we'll put together a complementary Social Security analysis to help you maximize your benefits. For more videos from us about Social Security, keep watching. Thanks for watching and we'll see you on the next one.