Speaker 1:
Information presented on this program is believed to be factual and up to date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Discussions and answers to questions do not involve the rendering of personalized investment advice, but is limited to the dissemination of general information. A professional advisor should be consulted before implementing any of the options presented. Certified Advisory Corp is registered as an investment advisor with the SEC, and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.
Speaker 2:
Stay tuned for On The Money, central Florida’s most listened to financial call-in show, brought to you by Certified Financial Group in Altamonte Springs. It’s the only show hosted exclusively by certified financial planner professionals. Monday through Friday, their CFPs provide financial planning and investment advice for a fee. But on Saturdays, the advice is absolutely free, and has been for more than 30 years for their WDBO listeners. If you have a financial question you want answered by real fiduciaries, the lines are wide open. Call 844- 580-WDBO. That’s 844-580-WDBO. And enjoy the show.
Josh:
Hello, and welcome to On The Money, brought to you by the Certified Financial Group right here on WDBO 107.3 FM, AM 580, always streaming live in your WDBO app, free in the App Store or the Google Play Store. This, of course, is your time to call in to get your financial questions answered by some certified financial planner professionals with the Certified Financial Group, one of the top 100 firms in the entire country as named by CNBC. This is your time to call, get your questions answered by Chris Toadvine and Joe Bert are joining us today. How are you guys doing?
Joe Bert :
We’re doing great.
Speaker 5:
Doing well, Josh. Good morning.
Joe Bert :
Good morning.
Josh:
Thank you so much. Happy to be here. Happy to be a part of this fantastic program where we’re open. We’re open to answering all people’s questions.
Joe Bert :
We are. Happy Easter, happy Passover, and happy celebration to everybody around the world. Yeah, it’s hard to believe another year.
Josh:
Big weekend, another year. Here we go again. Spring has sprung.
Joe Bert :
Yeah, beautiful day today.
Josh:
It is beautiful.
Joe Bert :
But man, we need the rain.
Josh:
Chamber of Commerce day.
Joe Bert :
We need the rain. Anyway that we’re not here to talk about the weather. We are here to talk about you and what’s on your mind regarding your personal finances, decisions that you’re trying to make regarding your IRA of 401k. About your home, long-term healthcare, about mutual funds, about real estate, about life insurance, about annuities, things you’ve heard, things that you don’t quite understand.
And as I say, time and time again, unfortunately we don’t teach our young people, or anybody really, about personal financial planning in school. And we go through life trying some of this, trying some that wake up at 55 years old and find out what we’re looking at as a collection of financial accidents. So our job is to patch you up a little Bondo on the blues, on the dent, on the scrape there and get you on your way as we have for more than 30 years on this program, Provided investment advice, financial information to our clients as we do Monday through Friday.
Chris and I and 14 other certified financial planners provide financial planning and investment advice for our fee working as fiduciaries. But on Saturday morning we are here for you absolutely free. So if you have any questions regarding anything that’s on your mind regarding your personal finances, decisions that you’re trying to make, we are here for you. And the good news for you is the lines are absolutely wide open so you can be right at the head of the line. There’s absolutely no waiting. How about that?
Chris Toadvine:
How about that?
Joe Bert :
How about that? So we are here and we have the topic of the day, which is, Mr. Toadvine?
Chris Toadvine:
Well, the topic of the day is the third rail going to derail? And the third rail of politics they say is Social Security. So it’s a bit ironic that on Easter weekend we’re talking about how to resurrect Social Security. So that it’s there for myself and my children and your children and grandchildren and future generations is the point. And so the report card came out last week. The Social Security trustee report came out last week. And ironically I did an update on this last year. And last year, the math was that if things continued on the current path, there would be enough money in the trust fund to continue paying benefits until 2035.
Joe Bert :
2035, 12 years.
Chris Toadvine:
Which is 12 short years away now 1999, that sounded like an eternity away, but now it’s 12 years comes and goes pretty quick. Guess what? The report card this year lop the year off of that projection, Joe.
Joe Bert :
Ouch.
Chris Toadvine:
So now, ouch, yes. Now if things continue on the current path-
Joe Bert :
With no adjustments.
Chris Toadvine:
With no adjustments and our elected officials continue to kick the can down the road and ignore this huge elephant sitting in the corner, then there’s only enough in the trust fund to continue paying full benefits until 2034.
Joe Bert :
And then what happens?
Chris Toadvine:
It’s 11 years away. And then benefits would have to be cut to around 80% of the current level. So around 80% of the current level. So first take away here, Social Security is not going broke. There’s still going to be revenue from workers. And this is part of the problem. There aren’t as many workers paying into the program today as there once were. I think there’s about 2.7, I don’t know how that 0.7 pays in, but there are about 2.7 workers paying in for each person receiving benefits.
Joe Bert :
Do you know how when the Social Security started, how many workers were paying in back then?
Chris Toadvine:
How many?
Joe Bert :
My recollections serves me correctly, there’s about 35 people paying into the system for every one person collecting.
Chris Toadvine:
That math works pretty well.
Joe Bert :
Yeah. And that’s a pretty good deal. And of course back then, life expectancy was mid-sixties. Well, so they didn’t expect to pay out a lot of money-
Chris Toadvine:
That’s right.
Joe Bert :
…over all those years. And then what’s happened in Social Security as you know it did, the original retirement age was 65. And then they moved it to 62 and then you had survivor benefits on top of that. And then you had benefits for dependent children. And all those other stuff that they add onto it over the years without making any major adjustments. And it wasn’t until 1984 when President Reagan stepped up and say, “Hey, wake up here folks, we’ve got to do something.” And that’s when they pushed out the full retirement age to age 67 today. That’s where we are. But still 62 of early, but age 67 for-
Chris Toadvine:
62 of early. And of course, so the big question Joe becomes, well what do we do about it? And quite simply, there are a couple things you can do. You can raise taxes or you can cut benefits. How do you think cutting benefits would play politically?
Joe Bert :
That’s why it’s the third rail.
Chris Toadvine:
That’s why it’s the third rail. That’s why it’s the third rail. So I, here Chris’s going to give his opinion now.
Joe Bert :
Go ahead.
Chris Toadvine:
I don’t think benefits are going to get cut.
Joe Bert :
I agree with you. I agree with you because it’s just the fact it is the third rail. I think if benefits are going to be cut, they’re not going to be cut for the people that are receiving Social Security right now or that are expecting to receive Social Security in the near future. The current and soon to be retirees, because those folks vote for the most part.
Chris Toadvine:
That’s right.
Joe Bert :
And when you look back, what Reagan did back in the ’80s, he pushed out the retirement age. It didn’t affect the folks that were in their thirties. And the people in their thirties, that’s 40 years from now. I don’t have to worry about that and I don’t think about it.
But the folks that are getting a check every month, they will be at the polls. I can guarandamntee you.
Chris Toadvine:
They will be at the polls for sure. There’s around I think 67 million. So roughly one in five Americans, is receiving a benefit from Social Security. Think about that one in five. I mean, how many of those five people are children and two young to vote? So yes, those folks vote and that would not play politically. So what is the other option? Raising taxes. And I think that ultimately that is the likelihood that taxes are going to go up. And the question will be how will they go up?
So now Social Security payroll taxes, we call it the 7.65%. And that’s what I educate my clients on often, because many times they don’t realize that the payroll tax is different from income tax. So if you’re paying 20% income tax and you’re paying 7.5, let’s call it 7.65 in payroll to you’re really paying 27,5%. So-
Joe Bert :
Plus your employer is paying.
Chris Toadvine:
Plus your employer is paying the other 7.65, it was really 15.3. So if you’re self-employed, that’s 15.3%.
Joe Bert :
Bingo.
Chris Toadvine:
And that’s up to currently. So this is one of the things in play, Joe, that is up to 160,000 of income up to 160. Now a question for you. Do you know what level of income was taxed when Social security started 1935?
Joe Bert :
What level of income?
Chris Toadvine:
How much?
Joe Bert :
I wasn’t around back then and I was close, but not that quite. So tell me.
Chris Toadvine:
So not a load of questions. $3,000.
Joe Bert :
Wow.
Chris Toadvine:
So $3,000. So that amount of earnings that gets subject to Social Security taxes, has gone up consistently pretty much every year. It stalled a few years and that will likely continue. And the question, these are some of the proposals and things that get bantered around, should that go up to 400,000? Should it be unlimited? Should it only be on income above 250,000? So the evil rich people who have high incomes are going to likely be paying more payroll taxes. And it’s a question of how much and what does it look like, in my opinion. Other things in play are how long should dependents get benefits? Should they continue to get benefits until they’re 26? Should we extend that age?
Should spousal benefits be 50%? That’s a question. Should it be 50% for a spouse who never worked, so that essentially a couple could claim 150% of that worker’s benefit? Or should that be reduced? So these are the kinds of things that are on the table and in play. And Joe, as you know, I was playing a little game yesterday when you came by my office. What was their website? The website, and I would encourage our listeners, if you want to in a fun and kind of quick way, get educated on the issues and possibilities that could help fix Social Security actuary.org. So actuaries are people that crunch numbers for a living and generally work for insurance companies. But Social Security, they crunch numbers around the viability of different options. And so if you go to actuary.org/socialsecurity, you can take the Social Security challenge. And you get to visit Townsville and you go around Townsville.
Joe Bert :
Townsville, oh.
Chris Toadvine:
Townsville, yeah. It’s a pretty cool little town.
Joe Bert :
Do you have an avatar?
Chris Toadvine:
Well, I didn’t have an avatar, but there are avatars.
Joe Bert :
You could do that?
Chris Toadvine:
Well there you go visit the coffee shop and the TV station.
Joe Bert :
Really?
Chris Toadvine:
And yeah, you do. And you ultimately end up in City Hall where you get to decide the things that you think should be done to fix Social Security.
Joe Bert :
What’s this website again?
Chris Toadvine:
It’s actuary.org/socialsecurity. How about that? And it’s called the Social Security Challenge. And so you get to kind of play around with raising payroll taxes with adjusting benefits for spouses, with changing benefits for workers. And how long or how young should you be able to collect at 62 you said? Should that be 63? 64? Should future workers, again, this is where we put it on the backs of people that don’t really realize it should, that full retirement age be raised from 67 to 68 or even 69?
Joe Bert :
People up at least until before covid, were living longer. And of course if you’re living longer, you’re paying benefits for a longer period of time. So there’s a lot of things that to be… It’s not just one thing, but if you do here a little there, a little here, a little there, you fixed it. The problem is nobody wants to address it.
Chris Toadvine:
Well that’s right. And look, if I could say one thing listeners, I would say call or write or better yet, call and write your elected officials. It’s time to deal with it. The math, Joe, is that about 3.6%, so call 3.5% of payroll. So think about all the payroll in the United States that is subject to Social Security taxes, about 3.5% that would shore up the system like indefinitely. Okay, for 75 years. That’s as far out as they look, for 75 years. So 3.5%. I think I shared with you yesterday, I went to a presentation probably 12 years ago, something like that, where that number was one something percent. So we have kicked the can down the road and kicked the can down the road. And the longer we waited, no different than our clients who are saving for retirement, the longer you wait to begin saving, the more you’re going to have to save.
And this is the same issue with Social Security. In that last year it was about 3.4% to fix the problem. This year’s 3.6. So every year it’s going up. People benefits have gone up a lot. Did they factor in, did the actuaries consider that we would have inflation and there would be a benefit increase of 8.5%? Or 8.7. So it’s these kinds of things that ultimately impact and we have fewer workers as you outlined a few minutes ago. We have fewer workers paying into the system, which is really a big source of the problem.
Joe Bert :
And this isn’t unique to the United States. I mean this is going on in Japan right now, in China, in Europe. Look what’s going on in France. I mean they’re burning the place down.
Chris Toadvine:
By two years, right.
Joe Bert :
And I think they made a big mistake. I think Macron made a big mistake in affecting the people that are just about ready to retire.
So, he should have done what Reagan did. He said, “Okay, we got to make some changes. 30 years from now, we’ll make these adjustments.” Unless, you know what might have happened? Same thing that’s going on here. They waited forever to make the adjustments and now-
Chris Toadvine:
Waited too long.
Joe Bert :
Exactly.
Chris Toadvine:
And then they’re in dire straits.
Joe Bert :
Exactly.
Chris Toadvine:
And that’s what we don’t want to do. So I think we have a caller, but we want to come back to how do you deal with this? If this is you, does it affect how you claim your Social Security? And we do have a question that was submitted this week in that regard, Joe. But I think we have a caller on the line, Josh.
Joe Bert :
And we’ve got a break coming up.
Josh:
That’s right. If you want to hop on the air with Joe Bert and Chris Toadvine, the number is 844-580-9326, 844-580-WDBO or send us an open mic. We got open lines for you. JR coming up after this break and you are listening to On the Money where we’re planning tomorrow, today with the Certified Financial Group.
Welcome back to On the Money right here on WDBO 107.3fm, am580. Always streaming live in your very own personalized WDBO app. Download it for free in the App Store or Play store, stream us live wherever you have internet connection. This of course is On the Money brought to you by the Certified Financial Group office here in central Florida. Answering your questions every single Saturday morning live on the air for the low low price of free. If you want to hop on the air with Joe Bert and Chris Toadvine, a couple of certified financial planners. The number is 844-580-9326, 844-580-WDBO. JR is calling in today. Go ahead Jr. You’re on.
Chris Toadvine:
Morning JR.
Joe Bert :
Hey, JR.
JR:
Well good morning. Thank you guys for what you do. I’ve been listening to over 40 years to my Saturday morning routine here.
Joe Bert :
Well thank you.
JR:
But I appreciate what y’all do.
Joe Bert :
JR, before we get into your call, tell me how are you listening? Radio or on the app or your computer?
JR:
Well, I actually, I walk around with a little old Sony Pocket Radio.
Joe Bert :
Oh, okay.
JR:
Capped to my ears.
Joe Bert :
Got it.
JR:
So when I’m out doing my lawn mow and I actually use my radio and the app on my radio, my wireless headset for doing that, so.
Joe Bert :
All right, very good.
JR:
But yes, you guys are with me all the time, so.
Joe Bert :
Well, thank you. How can we help you?
JR:
I just sold a piece of property and my local bank wants me to meet with their investors in investing the money. I’ll be 67 this year. I retired from the post office. I have my Thrift Savings Plan. I don’t really want to do anything but have fun with the money. And I talked to the gentleman, actually it was someone related to the bank and the investment gentleman. I asked him if he was a fiduciary. And how do you know the difference when they ask him that question? Do they say, yes, I am one and this is the reason why I am one? Or how do you go about proving that they are not necessarily a broker? Where I’ve heard some horror stories back in the day of some brokers where they look for themselves and not for the customer?
Joe Bert :
Well, that’s a great question. Unfortunately, anybody can call themselves a fiduciary, right, Chris?
Chris Toadvine:
Well, they can JR. And this is one of the challenges in our industry, and so I commend you for digging a little deeper. Because what happens in our industry is people wear different hats at different times. And unfortunately folks like yourself don’t always recognize when they change hats. And we wear a fiduciary hat, I wear a fiduciary hat 100% of the time. I don’t switch hats. How you find out, I think you ask them very directly, do you offer any products for a commission? Quite simply that’s it. Because look the challenge and the potential conflict, and maybe it’s not for some people, but for some folks it is. Is if you’re charging a fee and you’re getting one to 2% on that fee, let’s say per year versus a product that might pay you 7% or so right up front, a lot of times if someone is hungry, they need to make some money.
Those products start looking pretty enticing. And oftentimes though, when you get into those products, I call them Roach Motels, Jr. You can get in but you can’t get out. So I would like to pick up on this. I know we got a quick break here JR. If you can hang on with us for a second, we’ll come back and talk about it a little more. Can you do that?
JR:
Yes, sir.
Chris Toadvine:
All right. We’ll be right back, Josh. Take it away.
Josh:
Thank you so much, JR. Thanks for hanging on through us through the break here. We’re going to take up your call after this break. If you want to hop on, follow the question of JR with the gentleman from Certified Financial Group. The number is 844-580-9326, 844-580-WDBO. You are listening to On the Money where we’re planning tomorrow, today with the Certified Financial Group.
Speaker 2:
Welcome back to On the Money. Central Florida’s most listened to financial call and show. Brought to you by Certified Financial Group in Altamonte Springs. It’s the only show hosted exclusively by certified financial planner professionals. Monday through Friday, their CFPs provide financial planning and investment advice for a fee. But on Saturdays, the advice is absolutely free and has been for more than 30 years, for their WDBO listeners. If you have a financial question you want answered by real fiduciaries, the lines are wide open. Call 844-580-WDBO, that’s 844-580-WDBO and enjoy the rest of the show.
Josh:
Welcome back to On the Money, brought to you by the Certified Financial Group right here on WDBO 107.3fm, am580. Always streaming live in the WDBO app. And if you’re in that app, you might see a new button that you can sign up to see the team at Certified Financial Group here at the radio station. But I can get to that in just a few seconds. If you want to hop on the air, we’re so fortunate to be joined by Chris Toadvine and Joe Bert, the Oracle of Orlando himself, answering your financial questions.
The number to call me so I can put you on with them is 844-580-9326, 8844-580-WDBO. We also have Rodney Ownby standing by in the office. If you want to ask your question off the air, maybe you got some personal information you want to give out or some questions that you don’t want the whole world to know about. He is here. Happy to answer your questions. That number is to the Office of Certified Financial Group is 407-869-9800, 407-869-9800. Chris, Joe, we got some workshops coming up too if you want to talk to the team.
Joe Bert :
Yeah, we sure do bud. We got three about lined up, right Chris?
Chris Toadvine:
Yeah, we do have several workshops coming up. So quickly hang in there with us JR. We’ll be right back. But we have a week from today, we have Rodney Ownby and Charles Curry hosting Everything You Want to Know About Mutual Funds and ETFs, and ETFs. So that is next Saturday, April 15th. They still have a few seats available, so you can register for that at our website, financialgroup.com. Then the following Wednesday, Charles Curry is hosting Savvy Cybersecurity – 10 Threats Every Person and Business Faces, How to Protect Yourself Now. So again, that’s Wednesday the 19th, that’s a Wednesday evening at 6:30 here in our office in the Learning Center. And then on the 29th, Matt Murphy is hosting How Tax Planning Changes through Four Stages of Retirement. And that is at your office, Josh, down there at WDBO Studios.
Josh:
That’s right on the other side of our building in the Stanley Steemer Performance Studio from 9:00 to 12:00. If you want to come see the team at Certified Financial Group and come watch them do the show live at our radio station, just opened up the WDBO app, and click the button that says tax workshop and that’ll put you on the records to come on and watch the show. Be a part of the team, be a part of the radio magic. And also while you’re here, go ahead and learn some stuff that the Certified Financial Group was always happy to teach you.
Joe Bert :
So once again, these are absolutely free. The first two that Chris mentioned about mutual funds and ETFs, everything you ever wanted to know and the cybersecurity threats, they will be held here at our offices in Altemonte Springs in our Learning Center. We can accommodate about 30 folks comfortably in our state-of-the-art facility and provide you with some refreshments and give you some great information. So those are all on our website at financialgroup.com, financialgroup.com. Absolutely free and we hope to see you there. So let’s get back to JR.
Chris Toadvine:
JR.
Joe Bert :
You still there?
JR:
Yes sir. I’m still here, oh yes.
Joe Bert :
Thanks for holding on. So your question was to circle back for those listeners may have just joined the program, how do you know if you’re really dealing with a fiduciary? Because as we say in I think one of our commercials that anybody can call themselves a fiduciary and unfortunately the word is kicked around. And often used in a sales context where somebody’s trying to sell you something but you don’t really know if they have your best interest at heart.
In our industry, the world is broken down into really two major segments. One is the broker dealer world and the other world is the investment advisory world. Broker dealer world work for a broker dealer and broker dealers, the firms have been around for years. The names, I don’t need to tell you who they are, they’ve been around for years and generally you buy something from them and they’re paid a commission.
Their standard is what’s called a suitability standard. And that’s the distinction. What they offer to you can do no harm. That’s a general idea. You may not be the best for you, but it does no harm. Whereas a fiduciary on the other side of the world, where Chris and I work as registered investment advisors, advisory representatives. What we work on as a fiduciary standards, which means we have to demonstrate that what we’re doing for you is not in our best interest, but it’s in your best interests. And that the key is you need to ask them, are you an investment advisory representative and what’s the name of your firm? And those are some of the kinds of questions you want to ask. And these are the things that I think our listeners need to know. Can you answer on that?
Chris Toadvine:
Well look, I think that’s well said Joe and JR, I think it’s not only are you an investment advisory representative because often that’s one of the hats that’s worn. But do you also wear the hat of an agent, an insurance agent? And again, I’m not mad at agent, there’s a place for him. It’s just important for you to understand. And my belief is I don’t want a doctor writing me a prescription who is employed by the pharmaceutical company. I just don’t.
I want an objective doctor who can look at all of the different medicines that might be out there and recommend to me the one that they think is best for me. Not the one that they’re beholden to by virtue of some kind of sales conference that they get to attend if they write so much business. Or by virtue of the fact that it pays them more.
And these are the conflicts that exist behind the scenes when folks are not a fiduciary. Again, I’m not mad at them. I work with agents to help my clients get the insurances they need. Insurance is a very important part of a financial plan, but it should not be… There’s a saying in the industry, Jr, that when all you have is a hammer, everything looks like a nail. So if I happen to only have an insurance license or I work for a brokerage firm, and look, the big ones are pretty savvy and sophisticated. The big names like Joe said, that have been around a long time, they provide investment advice.
Also, what I don’t think they do such a good job on, is financial planning. Their hands are tied. They’re reluctant to accept that responsibility. And I think that’s the benefit of working with an independent registered investment advisor. Who is a fiduciary, who is not beholden to the home office, who is not beholden to new leadership wanting to impress Wall Street or whatever it is.
So I think that if I were not here, my wife knows go to someone who is only compensated by fees. Because I think it just removes the potential conflict that’s there. And so I think that’s what many registered investment advisors do. So back to your question JR, how do you know that? I think you ask them directly, “Do you work as… Are you registered with a broker dealer and do you have an insurance license?” And see what they say. And if the answer is yes, then what that tells me is they may offer investment advice, but they are also offering products for a commission. And somewhere along the way, you’re likely going to get offered one of those as part of your investment plan.
Joe Bert :
And just because somebody does a financial plan for you, does not mean they’re fiduciaries because a lot of firms will throw that out as a lost leader. They’ll offer to do it for free just to get you in the door.
Chris Toadvine:
Good point.
Joe Bert :
And we charge a fee for our services. We think our time is worth it. And our clients have said, “This is the best thing I’ve ever done.” It’s give you peace of mind and we’re not trying to sell you something. All we sell is advice. So I’m not going to get off the soapbox here, but Jr you opened the call with, you had sold some property and you went to the bank and you said, the thing that really stuck out to me is you want to have some fun with this money.
JR:
Exactly.
Joe Bert :
Okay, sir, your plan is to spend the money, I presume.
JR:
Oh well, if my wife, lets me. Yes.
Joe Bert :
Well that’s always the challenge. So that bank that says-
Chris Toadvine:
Spend some on her, JR.
Joe Bert :
But that says that money probably should not be what we say invested. It should be put in something that’s liquid. So you could draw from it as you want it and need it. Investing is long term and that’s where… Be careful because they’re going to try to perhaps offer you something that sounds really good, but look at if there’s any strings attached to you to get your money out.
Chris Toadvine:
Yeah, that’s right. And that’s where the planning comes in, JR. And it sounds like you’re kind of mentally doing this, but really to kind of think out how are you going to spend it, go have fun? Is that trips, is that buying toys? What is that? What do those things cost and when? And that’s how you back into should I invest any of this money or should I just keep it safe? The good news in today’s world, you can actually earn a return, which for the first time in about 15 years now you can on save money. So that’s something to think about.
JR:
Okay, very good. I still plan to contact you guys. I think you’d be worth sitting down with y’all and just put all my cards on the tables, let you take a look at them. But I appreciate you guys and I hope you have a great Easter.
Joe Bert :
Thank you, JR.
Chris Toadvine:
Thank you. You too, JR.
Joe Bert :
You too. And we’d love to see you come on in the office and stop in and say hello.
Chris Toadvine:
For sure.
Joe Bert :
So that’s what we do here at Certified Financial Group. We offer our complimentary consultation and a second opinion. We provide financial planning advice and investment management for a fee working with our clients as fiduciaries. The important thing is that we’re certified financial planners and our code of ethics requires us, and this is the other thing you want to ask your advisor, “Are you a certified financial planner?” And if not, why not?
Chris Toadvine:
If not, why not? I mean that’s what I have told clients for years and prospective clients that it’s not a guarantee that someone is great. No more than an MD is a guarantee that you have a good doctor. But it is a starting point. And if someone is in this profession and they’re not committed enough to the profession to do the work. And it’s not easy, Joe. I mean it takes time and that big test at the end has eaten many lunches, but nonetheless it is a starting point. And so yeah, if they’re not, why not?
We do have a question that was submitted this week. I think it’s a good question. Kind of back to our topic of Social Security and will the third rail derail? And the question was, “I’m 66 and was planning to wait until age 70 to start receiving benefits given that the projections for Social Security are going to run short of cash by 2033. Should I reconsider and start receiving benefits now?”
Joe Bert :
And this is from one of my clients, and in your situation, Dave, I would not do it because as you recall when we did the planning for you, you had enough liquid resources there for you to be able to defer. Now you’re concerned about the system running out of money. As we said under opening comments, if you were listening, you and I and those two people that are at are near retirement don’t have to worry about major changes in Social Security. It’s going to be there for you. The only reason that we would recommend the people not defer to age 70 and grab the money early, is primarily if you have some health issues. Because-
Chris Toadvine:
Well, that’s right. If you know for sure, I mean, again, I think what would my advice be to Dave and to others like Dave? It would be, first of all, don’t make a decision out of fear. Don’t make a decision. I understand that it’s unsettling that our elected officials keep kicking the can down the road. The other thing I would say, Dave, is when you think about it, if you start now, yeah, you do collect benefits for maybe three, four years that you wouldn’t if you’re waiting. But if you wait for four years, let’s say that’s 132% of what you would’ve gotten at 66. I did the math, if, if, if. And I don’t believe it’ll happen, Joe.
Joe Bert :
I don’t either.
Chris Toadvine:
But if the benefits were cut to 77%, you would still get, that’d be about 101, 102% of your benefit amount. So by waiting, you still end up getting the full amount that you would’ve gotten at 66. So versus if you start at 66 and then you get a cut, if you’re believing that would happen, I don’t think it’s going to happen. I think that ultimately payroll taxes are going up. There will be some other adjustments to the system. I don’t know exactly what those will be because there are some that really want to expand Social Security. That want it to be a much larger program.
I think first things first, I think let’s take care of the folks who have paid in for decades and who are receiving benefits. And then for future generations, let’s shore it up. And if that means raising the retirement age by a year or so, most of us could live with that. And maybe not allowing benefits at 62. But for some, I mean disability perhaps, but not allowing retirement to occur until 64. That adds time to the trust fund.
Joe Bert :
The other thing to keep in mind, Dave, is that that benefit that you’re building now by deferring to age 70, as Chris said, is 132% of what you would get at full retirement age. If when you pass on, that’s what your wife will inherit. So you want to get that benefit as large as you can get it, because it’s longevity insurance. And this is the other thing we look at when we do planning. Doesn’t apply to everybody. And this is the beauty in the necessity I think, of doing planning. So you can see in black and white, we put it up on the screen and you look at the trade-off. If I take Social Security now, what am I giving up? If I wait till longer, what am I gaining? And then you make a rational decision.
Unfortunately, people go into this with their intuitive, what they heard from their brother-in-law, from their neighbor. And the Social Security Administration can’t give you any advice. They’re not supposed to tell you what to do. They can just tell you what your options are. And I can understand the need to grab the money now, but that’s not necessarily the best thing to do. I see we’re up against the clock. Josh, take it away.
Josh:
If you want to hop on the air with Joe Bert and Chris Toadvine, the number to call is 844-580-9326, 8844-580-WDBO. Or send us an open mic right there in your WDBO app. You are listening to On the Money where we’re planning tomorrow, today with the Certified Financial Group.
Welcome back to On the Money right here on WDBO 107.3fm, am580. Take us with you wherever you go as long as you have internet in the WDBO app, free in the App Store and Play store. We joined by this hour… We were joined this hour by Joe Bert and Chris Toadvine and a couple of certified financial planners of the Certified Financial Group. As the show wraps to an end, if you question popped into your head and, “Oh, I want to get my question asked by the qualified people,” the top 100 firm in the country, the number to call is 407-869-9800. That’ll put you in touch with Rodney Ownby standing by answering your calls in his office, 407-869-9800. Gentlemen, Joe, Chris, do you mind if I ask you one of our email questions that popped into us?
Joe Bert :
Let’s do it. And while we’re on, you mentioned Rodney, if the line is busy, leave a message and he promises to get back to you.
Josh:
Hot commodity that Rodney opens like [inaudible 00:34:46]
Joe Bert :
He’s in addition to being a CFP, he’s also a CPA. So he’s got a lot of-
Chris Toadvine:
And a good guy.
Joe Bert :
And a good guy, yeah.
Josh:
Not too shabby, not too shabby. Okay, this question comes to us from Ruby in Mount Dora. Are annuities and treasuries covered by the FDIC?
Joe Bert :
No.
Josh:
Our question too.
Chris Toadvine:
That’s a simple one.
Joe Bert :
Yeah, annuities are covered by what’s called a Life Guarantee Act. We’re in the state of Florida, if a insurance company goes bust, you’re covered. Is it still, what is it, $200,000?
Chris Toadvine:
I think it’s like 350,000 or something.
Joe Bert :
So every insurance company that does business in the state of for Florida, like FDIC Insurance, they pay into a pool. If insurance company goes bust, the state of Florida will cover you up to that amount for an annuity or your cash value in life insurance. And treasury bills?
Chris Toadvine:
Treasury bills are backed by the Full Faith and Credit of the US government, which I guess what stands behind the FDIC, is the Full Faith and Credit of the US government. So it is not FDIC guaranteed treasuries are not. But treasuries are backed by the claims paying ability of the US government and all of us as taxpayers. So it’s really better than the FDIC. It cuts out the middleman and they just print more money and pay you off. So you don’t have to worry about treasuries, at least for today. And annuities, as Joe said, are not insured by FDIC, but there are separate mechanisms in place. But it’s up to a limit.
So agents are not allowed to offer that as a guarantee when they sell you products. And if you’re over that 300,000 ish limit in a particular annuity product, there is no backing. So you just need to be aware of who you’re dealing with and make sure you’re dealing with an A rated insurance company. And frankly, if the US government ran their finances, like most insurance companies, we probably wouldn’t be talking about Social Security today.
Joe Bert :
That’s correct, yeah.
Chris Toadvine:
Anyhow.
Joe Bert :
The difference is insurance companies have to have a profit motive. To stay in business, whereas the government, there’s no profit motive there. There’s business no matter what they do.
Chris Toadvine:
Well and you know what happens, Joe? Some of these shenanigans that where they say, “Okay, well we’re going to save money on Medicare, so we’re going to take that money and spend it somewhere else.”
Joe Bert :
Exactly.
Chris Toadvine:
We’ve got… And this happened the… What was the IRA? Reduction Act?
Joe Bert :
Inflation Reduction Act.
Chris Toadvine:
Inflation Reduction Act and others where there were some green projects that got funded right through savings on paper, savings in Medicare. And so it’s all these shenanigans that get played behind the scenes that companies that are publicly accountable can’t do.
Joe Bert :
So real quick, let’s wrap up on some of the workshops we have coming up. We’ve got three here. We’ve got one week from today. That’s going to be everything you ever want to know about mutual funds and ETFs.
Chris Toadvine:
That’s correct.
Joe Bert :
And then we have one on the-
Chris Toadvine:
That’s Rodney and Charles, that’s Wednesday the 15th at 11:00 AM. So that’s here in the office. Next Saturday we have Savvy Cybersecurity with Charles. That is on Wednesday, April 19th, beginning at 6:30 here in the office in our Learning Center. And then on Saturday the 29th, Matt Murphy is talking about How Tax Planning Changes Through Four Stages of Retirement. And that is down at the WDBO Stanley Steemer Studios. So you can come watch the monkeys make the show, and then get an education there from Matt in regards to how tax planning changes. You can register for all of these at our website, financialgroup.com, financial group.com. Just click on workshops and you can see others that are going to be offered in the month of May and beyond.
Joe Bert :
Yeah, we hope to see you there and once again, they are absolutely free. I guarantee you you’ll walk away with some information that’ll help prevent you become from becoming a financial casualty. So good being with you. Happy Passover, happy Easter to all of our listeners and we’ll see you next week.
Josh:
Thank you so much. You’ve just listened to on the Money where we’re planning tomorrow, today with the Certified Financial Group.
