Your Full Retirement Age: The Most Important Thing About Social Security

FRA: The Most Important Thing To Know About Social Security

There are A LOT of important things that you need to know about Social Security. But there’s one that’s more important than any of them.

Let’s dive into this topic because that’s what you’re here to learn about. I’ve often said that you don’t need to know everything about Social Security to make it work for you. It’s like me driving my truck. I have no idea how the internal combustion engine really works, but I know the enough of the basics to keep me safe while I’m operating it. It’s the same way with retirement planning and investing. If you have a firm grip of the basics, you’ll be ok. That’s why I wrote this book, Social Security Basics: The 9 essentials that everyone should know. 

The Most Important Factor in Social Security

Someone asked me the other day, which of those 9 basics do you think is most important? I didn’t hesitate. Its your full retirement age.

Understanding at which point you attain the official age of social security full retirement is crucial so you can understand how the benefit reductions and increases will affect you for the various filing ages and so you’ll know at which point the earnings limit will no longer impact you. 

Thankfully, this is one of the simpler parts of Social Security. If you were born between 1943-1954, your full retirement age is 66. For every year thereafter, the full retirement age increases all the way to birth year 1960. For everyone born in 1960 or later, the full retirement age is 67 (for now).

Understanding this age is important for two reasons. One, you have a limit on the amount of earnings you can have PRIOR to your full retirement age. Once you reach full retirement age, there is no limit. The second reason is how your full retirement age (FRA) controls the increases or decreases to your benefit amount. We often discuss these increases and decreases in terms of annual numbers, but its really important to know how to figure them on a monthly basis. Afterall, if your FRA is 66 & 6 months, your penalty for filing at 62 will be higher than the individual who has a FRA at 66.

How Monthly Reductions and Increases Work

Here’s the way the monthly reductions and increases work. 

At your FRA, you are entitled to 100% of your benefit amount. If you file early, your benefit will be reduced. However, the reduction is different based on how early you file. If you file in the 36 month period immediately prior to FRA, your benefit will be reduced by about .56% per month. For months BEYOND the 36 month period immediately prior to FRA, your benefit is reduced by about .42% per month. If you file after FRA, your benefit will increase by about .67% per month up until age 70. 

FRA: The Most Important Thing To Know About Social Security

So with these simple numbers, you can do the math for yourself and not be forced to rely on the SSA to tell you what your benefit will be.

Do you think the FRA will be increased or decreased in the coming years? Please comment below, as I’d love to hear your thoughts.

Now that you’ve read this article (which is a great first step in understanding Social Security), I’d recommend staying connected with my content so you won’t miss anything. In many cases I’ll publish my newest stuff on YouTube and then share it on my Facebook page. Then my content team does their magic and cleans it up into an article for those who enjoy reading. (Again…the article is shared on my Facebook page.)

Be sure to subscribe to my site so you won’t miss any of the new content coming out, plus you will receive the blueprint version of my book for free. Alternatively, you can just head over to Amazon and buy the full version. I can’t guarantee this, but I’m pretty sure you’ll get more value than the $12 it costs.

Thanks so much for reading…have a great day. 

What FDR Said About Social Security

What FDR Said About Social Security. This article is based on an email I received from a reader. It was about promises made by FDR. I've debunked the myths of these 5 promises and explained them each in detail.

I received an email that had some quotes from President Franklin Roosevelt about Social Security. This email came to me from a reader who wanted to know my thoughts.

It says…

Just in case some of you young whippersnappers (& some older ones too) weren’t taught or just didn’t know this. Be sure and show it to your kids. They need a little history lesson on what’s what. And it doesn’t matter whether you are Democrat or Republican. Facts are facts!!!

FDR’s “Facts”

Franklin Roosevelt, a Democrat, introduced the Social Security (FICA) Program. He promised:

1.) That participation in the program would be completely voluntary,

2.) That the participants would only have to pay 1% of the first $1,400 of their annual incomes into the program,

3.) That the money the participants elected to put into the program would be deductible from their income for tax purposes each year,

4.) That the money the participants put into the independent ‘Trust Fund’ rather than into the General Operating Fund, and therefore, would only be used to fund the Social Security Retirement Program, and no other Government program, and,

5.) That the annuity payments to the retirees would never be taxed as income.

So let’s take each of these and talk about their validity.

The Myths Debunked

Myth 1: President Roosevelt promised that participation in the program would be completely voluntary

This tax has never been voluntary. From the first days of the program to now, anyone working at a job covered by Social Security has been obligated to pay their payroll taxes. There’s never been an opt-in or opt out provision except in VERY narrow circumstances.  

In the early years of the program, I believe that only about half the jobs in the US were covered by Social Security. So someone could choose to work at a job that wasn’t covered by Social Security and not have to pay FICA taxes and of course, that person would not be eligible to collect a future Social Security benefit. I suppose, in a very indirect sense, participation in Social Security was voluntary by your choice of employer. However, if a job was covered by Social Security, participation in payment of Social Security taxes was mandatory. 

 
Myth 2:President Roosevelt promised that the participants would only have to pay 1% of the first $1,400 of their annual incomes into the program. 

 
In the original 1935 Social Security Act the amount of tax was 1% each on the employer and the employee, on the first $3,000 of earnings. This rate was increased on a regular schedule in four steps so that by 1949 the rate would be 3% each on the first $3,000. The figure was never $1,400, and the rate was never fixed for all time at 1%. 

Myth 3:President Roosevelt promisedthat the money the participants elected to put into the program would be deductible from their income for tax purposes each year

There was never any provision of law making the Social Security taxes paid by employees deductible for income tax purposes. In fact, the 1935 law expressly forbid this idea, in Section 803 of Title VIII.  

It says, “the tax imposed by section 801 shall not be allowed as a deduction to the taxpayer in computing his net income for the year in which such tax is deducted from his wages.” 

Myth 4:President Roosevelt promisedthat the money the participants paid would be put into the independent “Trust Fund,” rather than into the General operating fund, and therefore, would only be used to fund the Social Security Retirement program, and no other Government program

The idea here is somewhat correct. However, this statement is usually joined to a second statement to the effect that this principle was violated by subsequent Administrations to pay for a war or some other project.  

The Social Security Trust Fund was created in 1939 as part of the Amendments enacted in that year. From its inception, the Trust Fund has always worked the same way. The Social Security Trust Fund has never been “put into the general fund of the government.” 

Most likely this myth comes from a confusion between the financing of the Social Security program and the way the Social Security Trust Fund is treated in federal budget accounting. Starting in 1969 (due to action by the Johnson Administration in 1968), the transactions to the Trust Fund were included in what is known as the “unified budget.” This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are “on-budget.” This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken “off-budget.” This means only that they are shown as a separate account in the federal budget. But whether the Trust Funds are “on-budget” or “off-budget” is primarily a question of accounting practices–it has no affect on the actual operations of the Trust Fund itself. 

 
Myth 5:President Roosevelt promised thatthe annuity payments to the retirees would never be taxed as income. 

 
Originally, Social Security benefits were not taxable income. This was not due to the way the law was written. It was the result of a series of administrative rulings issued by the Treasury Department. 

There were three separate Treasury Rulings, two from 1938 and one from 1941. During the years 1937-1939 two types of Social Security benefit were paid: Lump-sum retirement payments to retired workers, and lump-sum death benefits to the family of deceased workers. So there are two 1938 tax rulings, one covering lump-sum retirement payments and one covering lump-sum death payments. 
 
In 1939 the Social Security Act was amended and dramatically expanded to include survivors and dependents benefits of various types. In a 1941 ruling, the Treasury Department explicitly extended its earlier rulings to these new types of benefits. 
 
In 1970, the prior rulings were reaffirmed. 

In 1983 Congress changed the law by specifically authorizing the taxation of Social Security benefits. This was part of the 1983 Amendments, and this law overrode the earlier administrative rulings from the Treasury Department.  

So..the next time you see this email, you’ll know that it’s not really accurate. I’ve found that to be the case for lots of stuff on the internet.  

Thanks to the reader for the email. Now that you’ve read this article (which is a great first step), I’d recommend staying connected with my content so you won’t miss anything. In many cases I’ll publish my newest stuff on YouTube and then share it on my Facebook page. Then my content team does their magic and cleans it up into an article for those who enjoy reading. (Again…the article is shared on my Facebook page.)

Be sure to subscribe to my site so you won’t miss any of the new content coming out, plus you will receive the blueprint version of my book for free. Alternatively, you can just head over to Amazon and buy the full version. I can’t guarantee this, but I’m pretty sure you’ll get more value than the $12 it costs.

Thanks so much for reading…have a great day.  

How A Baby Boom Could Save Social Security


Yes…you read the title right. A baby boom can save the Social Security trust fund.

3 Assumptions That Could Change Everything

On an annual basis, the Social Security trustees release their report detailing the solvency of the Old Age Survivors Disability Insurance program, also called the OASDI or simply…the social security trust fund.

You’ve probably heard about the OASDI being empty by the year 2034, and that there will only be enough tax revenue to cover 75% of the benefit payments.

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Video: Medicare at 65 – Is EVERYONE Required to Sign Up?

The numbers of Americans who are working beyond 65 are increasing. Since many of these workers are covered by healthcare plans at their jobs, it causes many of them to wonder if they need to file for Medicare part B. In this video I clearly lay out who does, and does not, need to file for Medicare at 65.

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5 Social Security Mistakes That Can Devastate Your Retirement

Recently,  I started studying for my private pilot’s license. As I’ve learned about the mechanics of skillfully piloting an airplane, I’ve also realized that there are many similarities between flying a plan and planning for retirement.

Take this as an example: when you fly long distances, making constant adjustments is not optional… it’s a requirement. If you fly just one degree off course for a short 300 mile flight, you’d miss your target by 5 miles!

Getting where you need to be, when you need to be there, requires precise navigation and constant adjustment. Planning for retirement is no different.

Mistakes made when you are close to or at the point of retirement could be irreversible. This is especially the case when you are making decisions about Social Security.

One of my most trusted mentors often tells me, “Big doors swing on little hinges.” The small decisions you make, when stretched over long periods, can have big consequences.

Here are the five 5 Social Security mistakes that can cost you dearly when you retire.

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Video: Social Security Survivor Benefits

Making a video that covers Social Security Survivors benefits is a project that I’ve put off for several months. However, I went to FinCon, a financial media conference, and realized that I needed to get off of my laurels and get some of this helpful content produced. I hope you find this video useful.

I’ll put a transcript below if you want to read along.

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You Can’t File for Social Security at 62 (here’s why)

filing for social security at 62

“Devin, they told me I can’t file for Social Security at 62!”

My client, Cheryl, was a little upset. She’d just returned from a trip to the Social Security office where she’d been told that she could not collect benefits as soon as she turned 62.

Cheryl did exactly what she thought she was supposed to do. Her birthday was July 3, so she went into the Social Security office in May and met with a claims representative.

The claims rep finished her filing process and told Cheryl that she should expect her first check on the second Wednesday in September.

What?!

If my client turned 62 in July, why would it take two months to get her first check?

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3 Stupid Reasons to File for Early Social Security

filing early for social security

Believe it or not, there are some good reasons to file for early Social Security benefits. But those only apply in some circumstances — and more often than not, people’s reasons to file early can be downright stupid.

That sounds harsh, but this about it: we’re talking about maxing out your available retirement income so you can make the most of this stage of your life. You don’t want to make a mistake here, especially a silly one you could have easily avoided.

Still, even when I give people the information they need to know about filing appropriately for their specific situation, some people just don’t get it.

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