474 | Social Security Deep Dive | Denis Shapiro

24:02But do you still have the ability to get this disability insurance through the federal government? So it goes back to the same question of how disability is defined. And its definition is the substantial gainful amount. And it's an actual dollar amount. So it changes every year. But as of right now, it is$24.60 for a blind individual and$14.70 for a non-blind individual. And that's per month? Per month, yes. So in theory, if you are disabled but still working and you're making, let's say,$14.50, you can apply for disability. Again, it's a hard to sell because you're telling... So interesting fun fact is who actually makes the medical decision?

24:42It's not actually Social Security. The Social Security works with the state agencies of that specific state. So if you file in Virginia, it's actually Virginia's disability determination services that are going to make that actual determination. They want it to create a clear line in the sand. So, for example, if you live in New York, New Jersey, you have the disability determination service for each state. Now, once your case gets sent up, you're making that argument that you can't physically work. So it's a hard argument to make when you're making$1460 and the threshold is$1470 because it's, you know, the person who's making the decision is just going to look at that and say, well, you know, there's not much difference here.

25:18So they're just going to find them not disabled. So I think it's very, very important. Also understand that the blind is significantly more and also understand that that number, the SGA number is not hard and true. And what that means is there are reasons why we would discount wages. So for example, let's say someone's making$2 ,000 a month and is working as a secretary or an executive assistant, whatever you want to say, and they get diagnosed with cancer. And their boss, the lawyer feels terrible for this person. So the lawyer goes, you know, come in one day a week, you know, make me a cup of coffee, schedule some meetings for me, you could go home, and I'll continue paying your salary.

25:58Now, what that does is that's called a work subsidy. So as long as the lawyer confirms that she's only doing 20 % of the job, or 30 % job or 50 % job, we then take the actual amount she makes And we actually multiply by that factor and that number can bring it down. So let's say in our example, the secretary makes$2 ,000 a month and the lawyer is confirming that she gets a 50 % subsidy. Now we take that 50 % times it by 2000. Now we're at$1 ,000 a month. The SGA level is only$1 ,470. All of a sudden now this person is below the SGA threshold. So subsidies are huge and a lot of people aren't familiar with it.

26:39And sadly, a lot of representatives that are taking your claims are actually not 100 % familiar with it. So it can be easily swept under the rug, but it's a very, very powerful tool. The other big thing is called income-related work expenses, IRWEs. And the easiest way to say that is, let's say someone has a wheelchair, and the cost to upkeep that wheelchair costs them$500 a month. And without upkeeping that wheelchair, they can't go to work. So if they make$1 ,500 a month, and now you take the$500 of the wheelchair expenses, and now you bring down the earnings to$1 ,000. So a good representative, the way that they're trained is supposed to actually get to the bottom of the real earnings.

27:20However, unfortunately, and this is one of the reasons why I kind of left the agency, is that you get assigned numerous amount of cases in one day. You're looking at your caseload. And then when you're doing your disability claim and you're dealing with that intake, you hear, oh,$1 ,700. Okay, this is a denial. The person's working over SGA. Click, click, click. You'll get a notice. Have a good day. I got to get to my next claim. So that's really, really important. And this is something that I do want to get out to the audience, is that just because you hear it from a representative doesn't mean it's actually factual.

27:50You'll have to understand that there are these ways to bring down your earnings. So just because you're working doesn't mean you're automatically not entitled to disability. It just means there's more evaluation that's needed. And the more you're familiar with some of these basics, there's not a thousand of them, but income related work expenses is a big one. And that's a lot of the medications that people pay for out of pocket can be considered a income related work expense. The subsidies is another big thing. So these are really big things that a regular representative, and I'm not saying there's some great representatives out there, but I would say two out of 10 times it will be missed.

28:24And it's a high audit finding after the fact, because they'll not catch it a lot of times. So just to be mindful, just because you're working doesn't mean you don't qualify for disability. There are these different ways of breaking down your earnings, such as income related work expenses and the subsidies. So just keep that in mind for the audience. Yeah, that's really, really helpful. Okay. So that's something important, again, just to be mindful of this may not come to pass for that many of us, obviously, but just that it's, it's there in your mind as something to be even aware of. And I think that that would be a win walking away from this episode for sure.

29:00So I guess just going back, and I really want to dive into when to claim it, how to maximize social security. I think that's the real meat here for most people, but just the final thing on how social security benefits are calculated. So as I understand it, there are a minimum number of basically work credits. So I guess it's like 40 work credits that you earn four per year. So it's just a fancy way of saying you need 10 years of work history to qualify, right? So now you've reached that threshold, but then again, like we talked about before, it's calculated on the 35 highest years that you have.

29:33So the minimum threshold is 10. And then anything above that presumably increases your potential benefits until you get to that cap that we talked about. There is a maximum amount. So this is really a program for middle-class, lower middle-class people, certainly. So there is that maximum, right? But Dennis, is there anything else we need to consider as part of these work credits or anything else? What about people who were stay-at-home parents who potentially don't have those 10 years? Is that just a hard and fast, okay, if you don't have 10 years, there's no help? Or how do we think about that?

30:07Really great question. And Brad, I think your understanding of the situation is actually quite excellent. Let's give a scenario of if someone's worked for 10 years and then they don't work another day in their lives, right? How is their earnings record going to look like? So it's a 35-year formula. So you're going to have, obviously, the 10 years that you've worked will be the 10 years. And assuming that all 10 years qualify for credits. So it is important to note there is a minimum for these credits. So quarters of coverage for 2024, a quarter of coverage is 1730. So as long as you have 1730, and that's also important to keep in mind for self-employment because it's the same quarter of coverage.

30:45So if someone turns around and says, well, how could I have not gotten my 10 years of credits? You know, I made three grand or 3 ,400, whatever it is. The reason is because there is a minimum amount for a quarter of coverage. Okay. So wait, the four credits. So is that basically looking at it as like a quarter of a year? Is that what you mean? Yep. Gotcha. And it doesn't have to. So if you work in January and you earned the 8 ,000, you've earned your four credits. It's just, they won't be credited to you until this is, I don't know, side note, if you want to get into it, but a lot of times, let's say someone has 39 work credits, they'll come in and we could actually file the claim for the next quarter to start.

31:21So let's say, you know, we are in July, but we need to wait till October 1st to actually give him the credit. So there's a lot of nuances when it comes to that. But yes, that is quarters of coverage are earned throughout the year, but it can only be credited for one specific quarter, but it doesn't have to be earned in that quarter, if that makes sense. Okay. And you said it was 1730. So that means what 6920 per year,$6 ,920 would be that 1730 times four. So if you earn more than that, then you earn your four credits for that calendar year. Is that fair? Correct. You just earn your four credits, right?

32:00You can never earn more than four credits in one year. Got it. Got it. Got it. Okay. So like when I looked at my list of earnings history, going way back to when I was like 17, I have like$100,$200. I don't even know where that came from, frankly, but that would get me nothing. So those are more or less zeros or am I misunderstanding? You're misunderstanding because you're not factoring in COLA. So you're$200 in 19, I don't want to date you, let's say 1995. Yeah, we'll say that. Not really$200 because if you call it adjusted for inflation, that might have got you a credit or two. If you go on the social security website, it actually goes all the way back to when the program basically started, what a credit, what the number actually comes in.

32:41So it is inflation adjusted. Just to give you a sense in 2023, the quarter of coverage was 1640. So it's like a$90 difference between the two. So it is significant because if the call is pretty significant. Now, I've been at Social Security for a period where there was a two, three year period where inflation was supposedly zero and the quarters of coverage stayed the same. Everything stayed the same for three years. It was like a time capsule, like it was frozen. And then the last two, three years before I left, it was heavy inflation. And you see these numbers just jump. Gotcha. Okay. This is really, really interesting.

33:17Yeah, I would not have even factored in that COLA. So that's yet another thing that we need to be cognizant of. So right, going back to maybe stay at home parent or some such like, is it just if you're under those 40 credits? Like what happens then? So there's a couple of things. So one, this is where people don't really understand is that the program was actually designed in an era of a one working parent household. So there's a whole sequence of benefits called spouse benefits where you're getting half of what your spouse is going to get as long as you're married for more than 10 years. So those are kind of the nuances you kind of have to figure out because yes, if a stay at home spouse ends up getting divorced in nine years, and then they personally don't go ahead and work somewhere else for a significant time period, they're not going to be entitled to anything.

34:06So it's all about how long were you married to someone? Will you be eligible for spouse benefits? And we've had some funny situations. In my career, I did close to probably over a thousand retirement claims. We've had situations where they came in and the spouse was not insured herself and she was only married for nine years. And she was like, well, the divorce stipulation says I get a social security benefits. Well, I was like, divorce stipulation doesn't change social security. We're lost. Because once I put in that the marriage is nine years, the system itself calculates the denial. There's a denial code for all of those things.

34:38So there's nothing I could turn around and say, well, no, we're going to give credit for another year, whatever it is. And a lot of, honestly, a lot of divorce lawyers kind of know this. And if people are in that nine-year bucket, and if that marriage is going bad, you know, that might sometimes be that little incentive to get them over to the divorce line is like, all right, you know, if I get divorced in the next, you know, 11 months, my wife gets screwed or husband gets screwed, whatever it is, vice versa. So I've seen situations like that left and right. Oh, I believe. Yeah. Okay. That is fascinating.

35:07So, right. Like you said, there's nothing you can do in the sense that, oh, maybe they had four working credits and then these nine years of marriage. It doesn't, it's not additive what you're saying. It's like hard and fast rule of, okay, you had to be married. So I guess what you're saying though, is let's say someone is married for 13 years and they didn't work during that time and they hadn't worked, you know, they just couldn't get to those 40 credits, right? Let's just assume they're well under that. but they were married for 13 years, but happened to get a divorce. And then it's, you know, let's say even a couple of decades later, they still are entitled to 50 % you said of the It could depend.

35:42Yes. So it'd be the divorce spouse benefits. Those are the benefits that they would be entitled to in that situation. It does depend. The 50 % is if they took it at full retirement age, it does get reduced if they taking it early itself. So that does play a role in that situation. And then there's divorced widows benefits as well. So there's a lot of different rabbit holes. But the point is, if you are a stay at home spouse, there's a lot of different options. And by the way, let me just clarify when I said about the marriage being 10 years, if you're currently married, that doesn't apply, you don't need a 10 year requirement at that point.

36:14This is for people who are let's say, there is a minimum requirement, I believe it's two years that you have to be married for at least two years to qualify. But the point is, you don't have to be married for 10 years. But if you do get divorced, your marriage needed to have lasted for 10 years to qualify unless the marriage ended at death. And then that's a whole different situation. Okay, right. Yet another rabbit hole. Yeah, way too many rabbit holes to dive into in one podcast episode. But yeah, that's hugely helpful. So okay, right. So they are not like tethered to that ex spouse. So it's not like they need to get in touch with them or anything.

36:49It's just okay, this is what I'm entitled to. They're working with the Social Security Administration, Right. So it's, it's just that you are entitled to those benefits if you had married for 10 years and you're subsequently divorced. So, okay. That is really, really helpful. And since we're now talking about, all right, maybe starting to take social security, right. And you said like you're full retirement age, you're maybe early or whatever it is. Okay. So let's get into the when to claim social security and how to maximize. Cause I think this is something people really want to hear about in this episode.

37:21And then like we said, we'll do part two, part three, whatever. down in the future. But when to claim Social Security? I think that's just I'm going to leave it there and not ask too many specific questions because you're the expert. So why don't you just run with that? So the first thing I kind of want to get out there is that Social Security filing strategies has gone incredibly less complicated since the time I started with agency and when I left the agency. When I started the agency in 2010, there were so many different strategies of how to maximize earnings. And I'll kind of go over some of them that don't exist just to give you guys a frame of reference.

37:56So what would happen a lot of times is that one spouse would file their benefits. They would then have their wife come on to their benefits. So the wife would start getting half. They would then suspend their benefits so that theirs can grow. And then later on, they would switch over to theirs at 70, but their wife collected the whole times. So it was called file and suspend benefits. All of that is out the window. So as of right now, it's really, really simple. So when you file, the earliest you can file is basically at 62 years old. The big contingency on filing at your early retirement is A, are you okay with the reduction?

38:33The reduction is significant. It is on a monthly basis. So when you go into social security, you could ask for what's called your benefit matrix, and they will literally give you every single month what your benefits would look like if you filed. So whether or not you filed in July or August or September, it's usually it's a really simple formula. It's an 8 % annualized formula broken down on a monthly basis. But A, if you're filing at 62, are you okay with the reduction? B, now this is the big one is just because you're filing for retirement doesn't mean you actually retired from your W-2 job or self-employment or vice versa.

39:06So if you have not actually retired from your day job, you are subject to what they call an annual earnings test. And that number is really important. Let me get that number for you guys. The annual earnings test in 2024 is$22 ,320 a year. So basically what that means is that if you're working over that amount and you claim for your social security benefits, you're actually going to get penalized for$1 for every$2 over that limit, which is significant. So that is what you need to know when you're filing early. Then the next important milestone is 65 because at 65, you could claim your Medicare.

39:44But a lot of people confuse just because you claim your Medicare is that their full retirement age. It is not. That is 65. That is a very, very different rabbit hole we could kind of get into. Can I just interject real quick right there? So the social security side is an actual decision, right? So it's 62, 67, potentially 70 or later, and you're going to get different payouts based on when you actually decide to make that claim. Now, talk me through the 65 for Medicare. Is that a similar decision of, hey, I'm potentially foregoing something? Or is it just like a hard and fast, like, hey, I'm 65, I can use this, it's time to start claiming?

40:24No, this is definitely a different rabbit hole, but I'll keep it a really high level. So what people don't understand is Medicare is not Social Security. Social Security and Medicare are two different agencies. But for some reason, I guess someone in Congress or whatever, a lot higher pay grade than me, decided that it would be a genius idea for Social Security to be the face and take basic enrollments for Medicare to process Medicare, because there isn't no such thing as you're going into a Medicare office to file your Medicare benefits. So Social Security got intertwined with basically filing for Medicare.

40:56And there's four parts of Medicare. Part A, which is hospital. It's otherwise associated as hospital insurance. Hi, that's the word am I looking for acronym? Yeah, hospital insurance. Hi. SMI is part B, which is supplemental medical insurance. That's your outpatient visits. That's if you're going to go to your local primary care, etc. That's part B. Part C is your different plans, like your Aetna's and all of that stuff. And then part D is prescription. So with social security, you're really only dealing with A and B A, as long as you got 10 years of coverage of those quarters of coverage, your high monthly benefit premium is actually zero.

41:32So you're not paying anything for it. So there's really, it's a really hard case to ever say like why it doesn't make sense to file at 65. You usually always take at least part A. Now, SMI is a whole different story because SMI has a monthly premium amount is$174.70. cents. So that's the one where it's not an easy decision, but that decision is going to be based on if you currently have insurance through active employment. Now, be very careful of, I didn't say through your active employment. I just said through active employment. So if your wife is working and you're covered through her insurance and she's physically working, you're fine.

42:12You could actually delay getting SMI and you delay them paying that$174 a month because you're getting similar coverage through your wife's insurance or your insurance. Depends if you're actually physically working. Now, really important, Affordable Care Act does not count. Cobras don't count. So it literally has to be insurance through active employment. And as long as you meet that, you could delay that monthly premium. But if you don't meet that, and I'm assuming most FIRI members won't meet that because they've been doing Affordable Care Act or the different health insurance strategies, they probably are going to want to file as quick as possible, because that's probably a great rate for them.

42:49The$174 a month to cover outpatient. So between your hospital stays and your outpatient, you're getting pretty good insurance. And then there's part C and D. $174 a month. Yeah, I'll take it. Okay, so that's part A and part B. And then, yeah, just real quick, C and D, just to close out Medicare? C is the supplemental. You don't actually need to get it. That is like if you want to get UnitedHealthcare, Medicare. So there sometimes is your supplemental or advantage plans. they both kind of fall into that sea. You could go to different Medicare agencies that kind of sell it. But those are the ones you're also getting when you're turning 65.

43:25Or if you have a parent who turned 65, you're getting 1000s of brochures of these different plans. AARP is a really, really big one. So you're getting kind of bombarded, but you don't actually need it. You could just turn around and stay with A and B. Like when I always explained it to people that were filing, A and B is your general, you're going to go to a hospital, it's going to be covered. B is going to be covered outpatient. However, if you have diabetes, or a specific health condition, where it won't fit nicely into B where you'll have a lot of outpatient expenses or something like that, there might be a supplemental plan that kind of has that focus.

44:01And then it may make sense for you to get that supplemental insurance plan directly through Aetna or, you know, UnitedHealthcare, Blue Cross Blue Shield, the whole nine. Okay, that'll make sense. And right, like you said, D is prescription drugs. And yeah, So that, I think that covers Medicare and it sounds like, and again, this, we're not, we're not giving advice here, but it sounds like, all right, you hit 65, it's time for Medicare. So it doesn't seem like there's a massive decision there, which is important, but then just going back to the actual social security benefits. So this is where there is truly a decision.

44:32And like you said, and, and it's a very heartening thing to hear that it's a lot less complicated now. It actually sounds like from when you started way back when in 2010, it was a lot more convoluted. And now it just, to me, and I would love to hear you respond to this. It sounds like it is just, you're looking at a chart and my payout benefits are X per month. If I start collecting at 62, they're Y per month. If it's this age, you know, whatever, 65, 67, 70, like it changes and there are different points. So A, is that loosely accurate? Are there additional considerations? And is it every subsequent year after 62 or are there threshold points where it's 62, 67, 70, or do you get more if it's 63 as opposed to 62?

45:22So every month you wait from 62 to 70, it is more based on the 8 % annualized return. It is that simple unless there are additional considerations and the additional considerations and like in life, it's that gray area. The gray area is if you're a widow. Remember, I was describing that file and suspend strategy, that file and suspend strategy has not been taken away from widows. So if you are a widow at 62, you can actually go ahead and claim your deceased spouse's benefits, collect that till 70, and then switch over to the maximum, maximum, maximum amount that you can get at 70. So those are those kind of considerations where, and this is when you need to when you're talking to your social security representative, and you're taking that claim, you really hope that they're doing that, like they're supposed to have a due diligence checklist of addressing a lot of these type of potential benefits.

46:13Unfortunately, a lot of that time it's missed. And that's where those nuances add complications. But yes, if you're not a widow, it's a simple, when does it make sense? And I'll give you guys a hint. It's usually a 12 to 15 year formula. So it's usually if I don't take it today, I'm going to have to wait till 12 years to really start losing out. So if you think about the fact that it's an 8 % annualized return. It's kind of that formula kind of thing. So it usually takes 12 years. The funny part is for the first part of my career, I always just wrote it down for them. So really high level, and I'll kind of walk you through it.

46:51Let's say someone's going to get $1 ,000 a month, right? If they take it today, but if they wait till tomorrow, they'll get$1 ,008, right? So really easy calculation by waiting one month, they're giving up$1 ,000 in exchange for an extra$8 a month for the rest of their life. Okay. So if you do the numbers, it will always come out to roughly 12 to 15 years unless there's additional benefits to be had like widow's benefits. So if we do, let's say that$1 ,000 a month, divide that by$8, we get 125 months, divide that by 12, and we got 10.4 years. But usually it does fall in that 12 to 15 year bracket.

47:29But even then, it's a simple formula, right? If I take it today, my benefits will be stuck at this level, but I've gotten a thousand dollars. And if you pay yourself the$8 a month, how long until that money is withdrawn? And the answer is 10.4 years at that point. Okay. That is very, very interesting. So I guess that begs the question of like, how does someone consider a lifespan, right? And like how long they think they're going to live, et cetera. Like, is it as simple as what you just explained to us or like, how would you talk somebody through that? Yeah. So the first consideration, and this is where it was frustrating as just a social security worker is you end up giving the person their options, but you cannot get any guidance.

48:15That was like a firm, firm rule. And that's kind of where we, I wanted to switch over and I wanted to actually work with the person's professional team. Like if they have a CPA and they have a financial planner, let's talk this through. And between the three of us, we can really make the best decision for this person because you don't want the decision to be an isolated decision. All right. So Dennis, I totally get that. Obviously at SSA, you could not give personalized advice. And again, we're not giving personalized advice to anybody listening, but let's just say you were talking to me, right?

48:43And so now you're out of the government, you're a consultant. How would I go about, like, what would you ask me? What would be the things that I need to consider in terms of, Hey, do I even think about like men in my family live to X age? Is that a consideration? Is it my other financial situation? Is it a spousal? What are even the considerations? And then what would I need to bring to you or to another consultant, or if I just wanted to do it on my own, to think through this? So this is a great example. And this is something that we do do for our clients. So the first, first thing is like, hey, are you under that annual earnings test?

49:22Because if you're not, it's not really a difficult decision. Either wait until you are, right? Because that annual earnings test only applies to you until your full retirement age. And then once you hit your full retirement age, then re-approach that conversation. So that's the first thing. The second thing that I would have to say is who else would be eligible for these benefits if I file today versus waiting four years? So for example, let's say you've adopted, because most of the time someone, And it's really clever how they did this because child benefits only last till 18 years old or 19 if they're still in high school.

49:57So if you think about it, most 60 year old guys or females, their kids are already grown up. So the government doesn't have to pay the child benefits. But let's say you're a grandparent and you've adopted your kid because adopted kids can get child benefits. So now let's say your adopted child is 15 years old. And if you take yours, yes, yours would be reduced. But now for the next three, four years, you could take the child benefits and you could put that away in a college fund because that's not a welfare program. And now you can basically pay for the kids college in three years from the Social Security benefits.

50:31That becomes a different consideration that it's not just about you. Sometimes it's about who else would be eligible for those benefits. And those retirement benefits, a lot of times is significant. And the way this is a good rabbit hole to go into what a lot of people don't understand there's your personal amount, which we kind of went over is about$3 ,600 for 2024. However, there's also a family amount. And usually the family amount is almost an additional 50%. So let's say someone who's$3 ,600, their family amount might be$5 ,700. That means the kids technically can split the difference between the$5 ,700 and$3 ,600 of$2 ,100 up to a certain point.

51:11So if you have two, three kids, that could be substantial. You could be talking about another $2 ,100 that goes to your kids. And think about that per month, almost on a tax free basis kind of thing. So that's where the decisions aren't as simple as like, hey, this is really just a numbers, it's a 12 year formula. No, it's like, hey, are you working under the earnings limit? If the answer is yes, no. And sometimes, like people don't understand, I've talked to people that are 62 years old, and after I've explained to them that they could collect benefits, and then their kids will get benefits, it sometimes puts them to the situation where they're like, all right, I'm going to retire early now.

51:46And early for the regular mainstream people, not early for the FI community. But for them, I just gave them three years of their life because now they're retiring at 62. They're below the earnings limit. They stopped working and now they collect the social security benefits and they never realized that all of this was possible. Okay. That is fascinating. So right. Those are two things to consider, right? The annual earnings test, are you making over, we said in 2024, it's$22 ,320. Obviously that changes every single year. So that's not going to be the same number in the future. But to consider that, and then right, do you have kids, I guess, 18 or under potentially 19 if they're still in high school?

52:23So okay, those are two main things. Anything else like that? You know, I'm sure there are a million rabbit holes. So we can't touch on everyone. But any other main ones? Or are those like the two main ones that you'd say? And then like you said, the health, you know, if you have a history of males dying in your family at 66, why are you waiting till 70? Like this money does not go into an estate. This is use it and lose it. If you don't use it, you're gifting it back to the government. So a lot of times, I guess most of the FIRE communities know the historical stock market returns going back to the 30s, whatever, is about 8 % when you factor in dividends, if you do a total index on.

53:01So the other consideration here is if you feel like you're financially capable, why not take it, put that money in your thing, instead of spending it, take it and invest it at 8%, you're collecting it. But now that money is in your control, where if something happens to you, that money goes into your estate versus things. So that's the other nuance that, again, I would never give this advice, guidance when I was working for social security. But these are the things personally, as someone who was someone in the fire community and believes in passive income and believes in the capabilities of the community, I would think you're taking it away from the government.

53:36If you can match that 8 % return, you know, what's the value in that? Yeah, that's a great point. Because right, we're saying, okay, you delay, you get a guaranteed 8%. And of course, investing on your own, you can't guarantee it. But like you're saying, you have that principle then sitting there, right? So that's actually in your control at that point, and could be passed on to heirs, etc. So yeah, that's a massive consideration. I really like that. I guess thinking about other potential like interactions with the FI community. Is there anything to consider with like your other net worth or your other accounts, 401ks, IRAs?

54:10Is there any interplay or is it just as simple as, all right, this is my age, this is the potential income. All right, I understand what happens if I delay versus like you said, take it out and start investing it. Like, is there any other interplay? I wouldn't say so. It is obviously always part of a bigger financial picture of choosing whether or not to take it or not. But I do think it's a lot simpler than some of the other programs. There's no required minimum distributions, nothing like that. It's a pretty simple formula. And then the other thing I did want to kind of mention, and this isn't exactly answering your question, is for someone who has a disabled child, when you take your benefits, depending on the amount, if your child is disabled to the point where they're never going to work ever again, they're going to be eligible for what's called disabled adult child benefits.

54:57and it's really important that they have to be diagnosed disabled before the age of 22 for them to qualify those benefits. And Social Security is kind of funny like that because if you end up, let's say you have a 22-year-old and you're 64, 65 years old, if you could go and file for your benefits and now your child is eligible for these disabled adult child benefits, it's easier for them to get approved around the time that we're looking for that disability. So if that threshold is 22, it's easier for them to get approved at 22. Now, if you wait seven, eight years, he's going to be a 30 year old.

55:30So that means when they're making that medical determination, they're going to have to go back eight years to find that he's disabled in that time period. So those are the little considerations that you really want to talk to someone that can see your whole picture and ask really good questions. Like, do you have a disabled little child? And, you know, we didn't address any of the welfare side of it, the SSI program. That's a whole different conversation. but those are the considerations that when you're in your 60s, you have to give, you know, is someone else going to be potentially eligible, especially a disabled adult child?

56:02It is critical. If you have that adult child, that's never really going to work. You want to figure out how to get them those disabled adult child benefits, which would be significantly higher because it's based on the workers earnings record, not the child's. Gotcha. Okay. Yep. Yet another one of these just little important pieces of information for us to all just file away. And if that's pertinent to you, just really, really critical. So yeah, Dennis, I guess we have really covered a lot here. This is obviously an intro to this deep dive, but I think we did a pretty good job. Is there anything else that's like absolutely critical for part one of this deep dive into social security?

56:41Yeah, Brad, thanks for asking me that. So I would definitely say that there's a common misconception about the fact that you can't work if you are receiving social security disability benefits. That is a huge, huge misconception. So the goal for the government is to actually try to get off the disability benefits. So when you're filing for disability, it's probably a good idea for you not to be physically working because of the conversations we had about substantial gainful activity. Once you're actually approved, that's a whole story. So let's say, you know, you got diagnosed with something like MS or anything, and you couldn't work for that year, you file for disability, now you're on disability, and you start taking medication, you start feeling a little bit better.

57:19There are so many incentives that the government gives you to actually go try to work. And I'll just briefly kind of mention it. So the first incentive is that the way they structure the Social Security disability benefits, and important to note here, this is not about SSI, because they have very different rules, but also disability. So with regular Social Security disability benefits that are based off your earnings history, you have basically nine months to go back to work and you will still get your full Social Security check. Now it's important you notify Social Security and the whole nine yards, but you could go back, feel it out, they're called your trial work months.

57:51Once you get past your trial work months, you get into a three-year period where you're in your extended period of eligibility. Basically, if you're working over your substantial gainful amount, you're not entitled to your Social Security check. If you're under it, then you are entitled to vote. So you could actually collect the salary and at the same time collect your disability. And then after that 36 month period, the first month you're over the substantial gainful amount, that is when your disability actually ceases. So it's a 45 month period of encouragement for you to go back to try to get back into stability of working.

58:24And the government also has this contract called Ticket to Work. Basically, Ticket to Work is, let's say you want to go and become a chef. If you sign up to Ticket to work and you work with these counselors and there's vocational rehabs, they'll turn around and pay for your culinary school. You could go to like culinary school. So there's tons of these incentives to work. And so few people actually use it because they're so scared of losing the benefits instead of realizing that the benefits is a snapshot of your current situation. It doesn't necessarily have to be your situation in five years, seven years, 10 years.

58:55So that's the last thing I kind of wanted to try to get at that misconception. People think just because they get it. And when they do get it, there's always a stigma to it. If you if you get it when you're 3040 50 years old, you know, at the end of the day, these are benefits, especially the social security disability benefits that have been taken out. And like you mentioned, you weren't even aware about this disability insurance. But in reality, this is something that most people have paid into. And it's almost like, would you think twice about filing for disability that you're physically paying for separately?

59:25And the answer is no. But most people are not aware that this is included. And they're also scared of being labeled a fraud or this or that. But at the end of the day, someone has to actually find you disabled. It's not a simple process. So that kind of misconception, it's nothing to be embarrassed about. And once you're on it, it's not a lifetime thing. It could be something that's temporarily help you for the next year or two, and then maybe use one of these sick to work programs or some other ways. And you can hopefully ease yourself off of the program. Yeah. Dennis, that's really incredibly helpful.

59:57I think you've opened up a lot of eyes today. This is just chock full of information. I'm going to go back and listen to this at least once and write down a whole lot of things. I would say the action step, the very obvious one is if you have not signed up for ssa.gov, go there, log in, find out what your benefits are projected at, look at your past earnings. And like we said, every year you should be logging into this. So that's like the call to action from this. And I did want to leave this. So before we hit record, you actually went out of your way to say, I'd almost just to maintain objectivity.

1:00:33I would almost rather people, you didn't talk about my consulting business, but I think it's really important because you're a member of our community, you're helping people. And there might be people out there who need to reach out to somebody and we'd rather them reach out to someone in our community. So could you mention how somebody could get in touch with you, the name of the consulting business if they were so inclined? Yeah, Brad. Thank you so much for opening that door. So the name of my company is Financial Security Advocates. So you could just F-S-Advocates, A-D-V-O-C-A-T-E-S dot com.

1:01:05Quick note, just preface. If you have like a question or two, yeah, shoot it. We would never, ever, ever charge for anything like that. It's only if you're, we're talking about like a deep dive, comprehensive plan. That's what we actually get into financial considerations for. Also, if you, you know, a friend of family that needs a question asked, consider me a resource to the community. There's a lot of misconceptions out there. And that's kind of one of the reasons why I left social security. So yeah, financial security advocates, fsadvocates.com. Yeah, Dennis, that is fantastic. So fsadvocates.com.

1:01:37And like you said, if anybody has questions, that's an incredibly generous offer. And if you do have questions for the podcast for round two, for round three, send them to me. So you can either feedback at chooseofi.com or like I said earlier, the easiest way is So just hit reply to any of my weekly emails and just write as granular of a question as you have, because we want to answer them. Like I said, we spent six or seven plus years at Choose a Vibe really not diving into this. And it's time that we thoroughly, thoroughly cover it. And now we have our in-house community member experts to help us with this.

1:02:10So, Dennis, again, thank you very much for being here. You got it. And Brad, just before I leave, I posted a link if you want to share it for the newsletter, because we threw out a lot of numbers during the podcast. If you go in there, a lot of the stuff that we talked about is right there in one page. That's fantastic. And Social Security updates this every year. And they also show you the previous years. So you see everything from the amount that they're taking out in taxes, the amount that's the maximum earnings. And that's maybe a part two question of how that actually works, what happens after you hit the max.

1:02:41And you can actually see how the FICA is broken out between the Social Security and the Medicare. And then you got your quotas of coverage. You have your earnings. So that retirement earnings test, that's another way of saying annual earnings test. So that's there. And there's also two different annual earnings tests. One is the year you're approaching full retirement age. We'll get into that in part two. The SGA amounts, everything right there is on one sheet. So this is a really great one to just kind of be familiar that this cheat sheet kind of exists. And this cheat sheet probably will answer 99 % of questions that people have.

1:03:14Yeah, Dennis, this is fantastic. I'm actually going to put this in the show notes. So for anybody who is interested, you can find the show notes on your podcast player. Just look for show notes or go to our website, chooseabout.com and just go to podcast and you can find the show notes for this episode. So yeah, this is a really important link. And it looks like, yeah, it's just very simply the fact sheet from Social Security. So it's super helpful. All right, Dennis, thank you again. I really appreciate your time. That honor. Thank you so much for inviting me. Thank you for listening to today's show and for being part of the Chooseify community.

1:03:47If you haven't already, the best ways to get involved are first subscribe to the podcast. So you're listening to this on a podcast player and just hit subscribe and then subscribe to my weekly newsletter. I actually sit down every Monday and write this by hand and I send it out Tuesday morning. So just head over to chooseify.com slash subscribe. And it's really, really easy to get on the newsletter list right there. and I would greatly appreciate it. It's the best way to get in touch with me. You can actually just hit reply to any of those emails and it comes directly to my inbox. So that's the way that I keep a pulse of the community and how we keep this the ultimate crowdsourced personal finance show.

1:04:26And finally, if you're looking to join an in real life community, we have Chooseify local groups in 300 plus cities all around the world. So head to chooseify.com slash local and you'll find a list of all of those cities in 20 plus countries all across the world. And if you're just getting started with FI or you have a family member or a friend who you think would be interested, two easy ways. Choose a FI episode 100 is kind of our welcome to the FI community. And even though it's a couple years old at this point, it still stands up and it's a really great just starting point to get an understanding of what is financial independence?

1:05:02What are we doing here? Why are we looking to live a more intentional life where we save money and use it as a springboard to live a better life. And then Choose a Vi created a Financial Independence 101 course. That's entirely free. Just head to choosefi.com slash fi101. And again, thanks for listening.