SPEAKER 03 : 0:00

Welcome to Retirement Unpacked with Al Smith, owner of Golden Eagle Financial. You want a retirement plan that alleviates your fears about the future so you know your money will last. As a chartered financial consultant, Al Smith will help you find a balance between the risk and reward of the market and the safety of your retirement income. And now, here’s your host, Al Smith.

SPEAKER 02 : 0:25

Welcome to another program of Retirement Unpacked. I want to thank you for tuning in. There’s other things you could be doing, but you’re listening to me. I sincerely appreciate that. I will have some good information for you this afternoon that you’ll be able to take with you, I believe. And if you have a question while I’m on the show, feel free to call in. And if I don’t know the answer to it, I will find the answer. So it’s the beginning of the year. We’re already halfway through the month of January. We’re at the middle of January, January 15th. And I think if we haven’t already done a few things that are going to set the tone for the coming year, we should probably sit down and do that. The last shows I’ve had, I talked a little bit about New Year’s resolutions and how you can do those things to benefit yourself, or maybe you can make a commitment to do something to help other people. And I think both of those are good. Improving your own health is good, and doing things to help other people are also good. But I think… when you make a positive choice of doing something that’s going to help yourself financially, that will free up all kinds of opportunity many years from now. And it’s difficult to think about 20, 30 years from now if you’re in your 30s or 40s or something like that. But I guarantee you the people I sit down and have a conversation with who have made a commitment to set aside money on a regular basis, and now they’re in their 60s or 70s, those folks are in a much better place. And like the Chinese proverb, the best time to plant a tree is 20 years ago, and that’s also the best time to begin planting. saving for retirement, which obviously we can’t do that. But if you don’t have a good long-term savings program, if you don’t work somewhere where they offer a 401k, then 2025 should be the time for you to start your IRA. If you’re married, you can do an IRA for yourself and one for a spouse, even if your spouse stays home. If your spouse is also working, each of you can set aside, I believe it’s $6,500 a year. If you’re over age 50, I believe it’s $7,000 a year. And you would be amazed to see how much $7,000 a year would grow to if you begin at a younger age. And I know I’ve talked about the three components that determine how large your nest egg will be, and those three components are how much you set aside on a regular basis, the return you get on the money you set aside on a regular basis, and the most important component, component is the length of time that you set aside that money. And the length of time obviously is determined by your age. And I’ll refer again to Einstein. I say a lot of the same things over and over, but they’re rather important. Einstein said that the eighth wonder of the world is compound interest. And if you don’t believe that, come into my office and we’ll crunch some numbers. I’ve sat down with maybe a couple where one of them is 30 years old and the other is 28. And we crunch the numbers. What is it going to look like if we set aside this much money for 30 years? And starting two years earlier has an unbelievable effect when we extrapolate that out 30 years. If someone’s saving, let’s say, $500 a month or something, and if someone starts two years earlier, it’ll have $50,000, $70,000 more in that nest egg after 30 years. And if you get a higher return, that number is even greater. Well, if you don’t have the guidance or the structure or the concrete ideas of how you should begin saving for retirement or if what you’ve been doing is working, give my office a call, because that’s the kind of conversations I love to have. I love to sit down with people and show them if they are on track, show them if they’re not quite on track, what things they can do to make a correction. You can reach my office at 303-744- 1128. And again, with all the things going on in the world, we are anticipating some good growth in the stock market. No guarantees, of course, but with the things that have happened recently, we’re anticipating some good growth. And so it’s a good time, if you haven’t already, to get that investment account going and growing. And what kind of account you want to have, we can talk about that. You may want a Roth, a traditional IRA, or if you’re self-employed, you can save a significantly greater amount in what’s called an SEP IRA. You can save as much as $25,000 a year in products like that. Social Security changes every year. I’m going to talk about some of those changes here right now. Every year there is a cost of living adjustment. And I think two years ago, you might recall, it was really significant. I’m relying on my memory, but I think it was about an 8% adjustment. This past year, the adjustment for 2025 is going to be 2.5%. That’s one of the major changes that has come about in Social Security. Something else, they base the wage base at which they tax Social Security on certain statistics, but they have raised that wage cap to $176,000. Now, that represents only, I think, less than 9% of the population of But if that is you, if you’re self-employed, that means you’re going to be paying $930 more into Social Security. If you’re working for someone else, then that increase will add $465 of your income increase. into Social Security, but that of course also raises your maximum Social Security benefit. Something else that they have increased in 2025 is the level at which you can earn income when you file Social Security early. You’re able to file Social Security as early as age 62 for a reduction, and that reduction is between 25 and 30 percent, depending precisely on your age and so forth. But it used to be a modest amount of income that you could earn before your Social Security would be reduced, and they have been increasing that each year. For 2025, that amount is $23,400. Now, let’s say, for example, if you file Social Security early, age 62, and you want to continue working and you make $33,000. And let’s say $33,400. Well, that additional $10,000 you make, you would lose about $5,000 of Social Security benefits because the reduction is two for one. So if you plan to file Social Security early and you’re also continuing to work, keep in mind that every $2 you earn above $23,400, you will lose $1 of Social Security. Now, that is only W-2 income. If you have some kind of business and you can pay yourself a salary, keep that salary under $23,400. And the balance, pay it to yourself in the form of profits. Now, if the business is incredibly profitable, that can kind of send up a red flag to the IRS. But if your total income is going to be in the neighborhood of $50,000, have $23,400 of it, the W-2 or salary or wages and the rest be profit. And this is something you can do if you have… an S corporation or an LLC. You can have part of your income be in the form of profit and part of it in the form of salaried income. Now, most people don’t file Social Security early. Most people file at full retirement age. which, of course, is between age 66 and 67. And there’s a whole table. You can go to socialsecurity.gov and find out precisely when your full retirement age is. And if you’re younger, it’s closer to age 65. 67 than it is age 66. Many years ago, full retirement age used to be age 65. And as people began living longer and Social Security Trust Fund began shrinking to some degree, they raised that and they raised it to an age between 66 and 67. And with some of the financial shortfalls they’re predicting for Social Security, and I’m not talking doomsday or anything like that, but the trust fund is running rather lean, especially the Medicare and Medicaid component also. They are predicting that that is going to be lean. And whatever occurs… has to be passed by Congress. So sometimes people, younger people tell me, oh, well, gee, Social Security isn’t going to be around when I’m older. Well, even though they’re looking at shortfalls in the future, the only way Social Security can be changed is through an act of Congress. So I’m certain that Congress will do whatever is necessary to shore up Social Security, especially since older people who depend on Social Security, they vote in very high numbers. percentages. And so those running for political office, House of Representatives or the Senate or something, they can’t get reelected if they’re talking about reducing Social Security benefits. So they’ll have to figure out some way to shore that up. Some of the other changes in Social Security, folks with disabilities are collecting Social Security disability. There are 7.2 million people right now collecting Social Security disability prior to age 62 or 65. Now, for folks who are disabled, if they are not blind, they can earn up to $1,500 per month before any of their Social Security would be reduced. In 2025, that was increased by $70. Now, if people are disabled and they are blind, that amount was increased by $110 for 2025 up to $2,700 per month. And essentially, that component of Social Security, the disability component, a lot of people rely on that. And some of the people who are collecting Social Security disability are able to work, but in a limited capacity, which is why they have this blending of income along with Social Security, and they’re enhancing that or making that a little bit better each year. Now, if you… personally have not gone to the Social Security website and looked at your benefits, if you’re getting up in years a little bit, if you’re in your 50s or even in your 60s, if you have not gone to socialsecurity.gov, because they have your earnings record there and they have what your projected benefits would be. Those benefits, if you’re disabled or if you’re retiring early at 62, if you’re retiring at full retirement age, or if you postpone to age 70. Some people find that to be attractive, postponing to age 70. But the point being is if you haven’t done that, I highly recommend that you do it because Social Security, for many of you out there, is going to be a major component of where you’ll be receiving income in retirement. After the break, I’ll talk about one of the biggest changes in Social Security, probably in the past 20 or 30 years.

SPEAKER 01 : 15:03

Putting off planning for your retirement another year can cost you tens of thousands. But Golden Eagle Financial can get you back on track to maximize your retirement now. Al Smith of Golden Eagle Financial is a retirement advisor who gets to know you from the very onset. What are your dreams for retirement? What do you want to do when the work is done? Many people want to give back or volunteer or donate time or money. Others might like to travel or learn a new skill. And Al Smith can help make all of these dreams a reality. Whether your dream is giving back to other groups or people, traveling the world, or taking up a new hobby, Al will make sure you’re prepared for the road ahead without financial concerns. He’s a man who has years of experience and can help you make your retirement dreams come true. Contact Al Smith of Golden Eagle Financial on the klzradio.com advertisers page. Investment advisory services offered through Brookstone Capital Management LLC, a registered investment advisor. BCM and Golden Eagle Financial Limited are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold to individually licensed and appointed agents.

SPEAKER 02 : 16:17

Retirement Unpacked, thank you for listening. We’ve been talking about getting a savings investment program started in 2025. That should be one of your resolutions if you don’t already have a program for long-term wealth accumulation. And in addition, we’ve been talking about Social Security, some of the changes for 2025. Now, the biggest change coming for 2025 is is the passage of what’s called the Social Security Fairness Act. Going back for quite a number of years, there were two provisions. One of them is the pension offset provision. The other is the windfall elimination provision. These were laws that affected Social Security for either workers or dependents who worked for a number of years and put into a pension. and at that time did not contribute to Social Security. The most common ones, especially in Colorado, are para, and there are also some county pensions, firefighters, police officers, many of them contribute toward pensions as an alternative to Social Security. Prior to the Social Security Fairness Act being passed, the way it would work is, let’s take a hypothetical example. Someone works for 15 years in the private sector. And you only need 10 years or 40 quarters to be fully insured to get Social Security benefits. So if you worked for seven years and then worked for the state of Colorado and you’re under PARA, you don’t have enough benefits. credits to collect Social Security. But let’s say if someone worked for 15 years in the private sector and contributed to Social Security and then found a job through the state of Colorado or as a teacher. Well, that person normally, not normally, but before the Social Security Fairness Act was passed, there would be a table he could look at. And you would look at it under the windfall elimination provision, which has been repealed. And essentially, if someone qualified maybe for $1,500 a month Social Security benefits, once you look at that table and look at what you collected in pension, that $1,500 would have been radically reduced, possibly to as little as 30% of that. Now, that’s the way it worked under the old windfall elimination provision. Now, there’s another law that works similarly. It’s called the government offset provision. And I’m a divorced person, and my ex-wife worked both for the federal government as a hardworking postal worker, and also she was a teacher. She taught special needs kids. And one thing I will say, unrelated to finances, is education. Anyone who does that, God bless you, because it takes an enormous amount of patience and diligence to work with special needs kids. But in any event, normally a divorced spouse would be entitled, if you’re married 10 years or longer, to 50% of the primary worker’s Social Security, you know, the ex-spouse. And because she had earnings where she did not contribute to Social Security personally, she would not be eligible for Social Security benefits for 50% of my benefit, or if I died, 100% as a survivor benefit. Now, this Social Security Fairness Act completely repealed that. So if you’re listening here today and if you are covered under PARA or if you have a spouse covered under PARA and if one of you has Social Security benefits of 40 quarters or more, it would be very wise to come into my office and we’ll sit down and crunch some numbers and find out what benefits you are entitled to. My office is 303-744-1128. And they are estimating that about 3 million people in the United States are entitled to increase Social Security as a result of this new law being passed, the Social Security Fairness Act. Now, when they say 3 million, I think the workforce in the United States is about between 70 and 80 million. So I’m thinking the number may actually be higher than that. And for those – anybody who has 40 quarters of Social Security, which they look at it in terms of quarters, but what that really means is 10 years – where you contributed to Social Security, the terminology they use is that means you are fully insured. And if that’s the case, you are now entitled to your full Social Security benefits. There is no longer any offset. If you worked for the state of Colorado or if you were a firefighter, police officer, teacher, or anyone where you contributed to a pension without contributing to Social Security. So, again, over and over, I will be talking about this frequently because this affects a lot of people. I know a lot of you out there are covered under PARA, and this is something that you should consider. investigate. Again, my number is 303-744-1128. With respect to Social Security, people often ask me, well, when is the best time to file? When should I collect? And people also ask me, well, is my Social Security taxable? And the answer to that, if it’s taxable, the answer is it depends. Because how much other income you are drawing is going to determine how much your Social Security will be taxed. And often when I sit down with people who are maybe in their 50s or 60s that have pretty good incomes and will likely have a good Social Security benefit, if they have a considerably large nest egg that is going to be taxable, like a 401k or an IRA, then we take a look at a strategy where maybe we can make some of that other income tax free. And we do that by creating a schedule where we can create, we can convert rather traditional IRAs to Roth. By doing that, When someone begins collecting Social Security, if their additional income is only partly taxable and part of it is tax-free, then their income tax bracket could be as low as zero, depending, of course, on liability. how much taxable income there is in addition to your Social Security. So these are some things to think about. And getting back to when is the best time to file, there’s a lot of things to determine. If you postpone between full retirement age and which is between 66 and 67. If you postpone to age 70, that grows about 8% a year. A lot of people who postpone to age 70 have Social Security that is well in excess of $4,000 a month. And if someone has only modest taxable income on top of that, they could be in a zero tax bracket. So this is where some planning comes in. There’s a form. It’s called a worksheet. It’s called the Form 915 worksheet. And that form helps determine how much of your Social Security is taxable. And occasionally I’ve asked people who are collecting Social Security, I’ll say, well, you remember this form, right? I’m sure your CPA or your tax preparer filled this out. Well, they don’t fill it out. It has like 19 different forms. items that you fill in that are mathematical. And the reason that’s not filled out is everyone’s taxes are computed based on software. The software figures that out. And if you have questions about how much of your Social Security might be taxable or if you’re entitled to larger benefits because of the Social Security Fairness Act, give my office a call and we’ll have a conversation. 303-744-1128. Thank you for listening, and God bless you. And I think some of our prayers for the folks in Israel are being answered because I’ve heard there is a ceasefire and some of the hostages may be released, which is good news. Again, God bless you. Hope you’ll be here next week. Bye.

SPEAKER 03 : 26:32

Thank you for listening to Retirement Unpacked with your host, Al Smith of Golden Eagle Financial.