Steve Seid:
Hi and welcome everybody to The Whole Truth in the Bay Area, California. I am Steve Seid.
Kurt Dupuis:
And from Atlanta, Georgia, I'm Kurt Dupuis.
Steve Seid:
You like this intro, right? Are you good with this from the Bay Area and in Atlanta, Georgia, you're good with the intro?
Kurt Dupuis:
Yeah, I think it's good that people know where we're from.
Steve Seid:
I was listening to a couple of other podcasts and it's really funny how they do the intro. Like there's this Brooklyn Nets one I listen to. Yes, I'm a Brooklyn Nets. Not just because they traded for a James Hart and I've been a long suffering New Jersey Nets fan since they-
Kurt Dupuis:
You started at Kevin Durant.
Steve Seid:
... since they drafted Derek Coleman in 1991, I think. But one guy gets on the mic and he goes, "Hello." It's really funny. I think we've got a good intro. I just want to make sure we have a good intro. You know what I'm saying?
Kurt Dupuis:
Well, if I'm honest, our intro could use a revamp.
Steve Seid:
It could? Okay.
Kurt Dupuis:
Yeah, I think it's good, but it's not great.
Steve Seid:
Okay. So we should think about a revamp.
Kurt Dupuis:
Since we're talking about this live. I mean, that's my real opinion.
Steve Seid:
Yeah. Okay. Well, we'll have to revisit it. I do like talking about the Bay Area though. Anyway, we got a good one for you today. Good one.
Kurt Dupuis:
Yeah, we do. Yeah, we do.
Steve Seid:
We got Brian Doherty on, social security expert. Really, really valuable. This is one of those episodes that no matter who you are, you're going to take something from.
Kurt Dupuis:
I need people like him in my life because social security, I mean, my eyes begin to glaze over just as soon as you say those words and I know nothing about it. So, to talk about a subject that I know nothing about with a guy that knows a ton about it is very refreshing. And we did this via Zoom and he almost lurched out of his camera, which is typical how he presents. The level of enthusiasm with this guy talking about social security is incredible. He's knowledgeable and passionate about it. It's fun to watch.
Steve Seid:
I think I referred to him as Matt Foley, the Chris Farley character from Saturday Night Live, the motivational speaker, which was hilarious. I hope he took that-
Kurt Dupuis:
He did not take offense at all.
Steve Seid:
He didn't. I don't know if he's seen it. Maybe he will after.
Kurt Dupuis:
No, no, he leaned into it.
Steve Seid:
Yeah, no. You can't. You cannot love that. But yeah, he brings a lot of excitement to the subject. The reason we have him on is because it's super, super important and it's still a gap for most financial professionals out there. So, we're going to get into that in a couple of minutes. What Kurt and I are going to start with is a fun segment. So, what we want to do is... What did we title this, Kurt? What did we call this segment?
Kurt Dupuis:
I'm going to call it... We really struggled with this. I'm going to call it Two Truths, One Lie.
Steve Seid:
Two Truths, One Lie.
Kurt Dupuis:
So, what we did was come up with otherwise known as Steve and Kurt pretend they're on a date together. It's like something you'd ask a date.
Steve Seid:
I like Two Truths and One Lie better. Okay? So we're going to read three things and one of them is a lie and the other person's going to guess what it is. Do you want to go first? Do you want me to go first?
Kurt Dupuis:
Let me do mine first.
Steve Seid:
Okay. So, you're going to read three things. One of these isn't true. I have to guess what it is. Go ahead.
Kurt Dupuis:
Okay. Number one, I have trained for and completed a marathon.
Steve Seid:
Okay.
Kurt Dupuis:
Number two. I have trained for and completed a triathlon. Number three, I have eaten a worm.
Steve Seid:
That's good.
Kurt Dupuis:
I'm really proud of it if I'm honest, because I mean, we're playing a chess match here and I'm very curious to see who's going to win.
Steve Seid:
I think the worm is true. So, I think one of the other two is false. And the easiest thing to do would be to get rid of the triathlon because that's the harder one and it's more likely you didn't do that. That's going to be my guess. I think you've trained for and completed a marathon and you've eaten a worm and I think you haven't done a triathlon.
Kurt Dupuis:
You're right.
Steve Seid:
Is that right?
Kurt Dupuis:
Yeah. You're right. Not for reasons that I think are accurate, because I think a marathon is harder than a, triathlon you have to...
Steve Seid:
It's hard, man. That's big time.
Kurt Dupuis:
Well, you had to distinguish, are we talking sprint? Are we talking Iron Man, are we talking traditional? I'm not going to parse those out. But yeah, 2010, I think. I ran a marathon under four hours. Quite proud of myself for that one. And on my bachelor party, we went fishing and the captain dared me to eat a worm, and obviously a group of dudes. I had to eat a worm.
Steve Seid:
That sounds gross.
Kurt Dupuis:
So I ate a worm.
Steve Seid:
Wow.
Kurt Dupuis:
I got a hat out of it. So, there's something.
Steve Seid:
That's something else. Okay.
Kurt Dupuis:
All right. Give me my categories I get to choose from.
Steve Seid:
So, here's the categories. And you can just choose this the whole way. Concerts, favorite bands, jobs, injuries, embarrassing work issues, biggest regrets, oh, embarrassing high school facts.
Kurt Dupuis:
Oh gosh.
Steve Seid:
Those are pretty good categories, right?
Kurt Dupuis:
Those are great categories.
Steve Seid:
Right?
Kurt Dupuis:
Because I always like embarrassing you.
Steve Seid:
I told you in a prior episode when you said something embarrassing that I had to come back in and do embarrassing stuff. So I will say there's some embarrassing throughout this. Assuming you pick those categories, you might just want to hear-
Kurt Dupuis:
Okay. Yeah. I want the, was it embarrassing high school stories?
Steve Seid:
The two things that start with embarrassing are embarrassing work and embarrassing high school.
Kurt Dupuis:
I want embarrassing high school.
Steve Seid:
Okay. Okay. Let's see.
Kurt Dupuis:
For a thousand Vanna.
Steve Seid:
Item one, I failed gym class at one point in high school. Number two, I had multiple piercings on my body in high school and item-
Kurt Dupuis:
I'm already giggling so hard.
Steve Seid:
... and item three, you know it's funny, so let me read the third one and then I'll make the comment. And three is, I had my hair dyed bleach blonde for a considerable amount of time.
Kurt Dupuis:
Oh my gosh. This is hard.
Steve Seid:
You know what's funny about these though? There is a bunch of them that I had to leave off because I was trying to do the worse things, but I had to cross out some categories because it's like, I will get fired. So, number one is that I failed gym class.
Kurt Dupuis:
I love that just two of those are true.
Steve Seid:
Multiple piercings or dyed blonde hair?
Kurt Dupuis:
Gosh. This is really tough. So, I mean, I'm just going to lay it out there.
Steve Seid:
Yeah.
Kurt Dupuis:
You don't strike me as an overtly athletic person, but anybody could fail. It could just be some weird extraneous circumstance. Piercings in high school, that's brave. The blonde, I had bleached tips in high school or middle school, so that one I feel like's true. So false, you didn't really fail gym class, that’s what I think.
Steve Seid:
That's correct. That's right. You got it right.
Kurt Dupuis:
Yes.
Steve Seid:
So the truth is I actually was very athletic. I was a star baseball player in high school and I played-
Kurt Dupuis:
Star baseball player?
Steve Seid:
I was a captain of my high school baseball team and a very, very good... I played year round, traveled all over the country.
Kurt Dupuis:
Oh my goodness. Didn't know that about you.
Steve Seid:
Yeah. The piercings were like everybody, we had a friend who worked for one of those things at the mall and just everyone... And I'd had multiple ear piercings, which I took off a long time ago. The blonde hair was a baseball thing. We all just bleached the heck out of our hair as a team decision and-
Kurt Dupuis:
Team unity.
Steve Seid:
Yeah. And it was there for a really long time. I thought it was a really good idea until I remember this girl saying when I finally just let it grow out. And I think I might have even dyed part of it back just because it was looking crazy. She's like, "Oh God, thank God you're back to that." Yeah. And I did not fail gym class. Gym class I was fine at it.
Kurt Dupuis:
Thank goodness. Thank goodness.
Steve Seid:
Wow. I did not expect us both to be completely right on those.
Kurt Dupuis:
But honestly, I feel like I had a 50/50 chance.
Steve Seid:
Yeah. Well, me too.
Kurt Dupuis:
I think we both just guessed right.
Steve Seid:
Me too. This is a fun segment. You like this?
Kurt Dupuis:
So, we need to go to the casino now. Is that what you're telling me?
Steve Seid:
Well, mean reversion. So, I hope we do segment two of this because I feel like I was prepared to do a lot more. But let's jump into Brian Doherty, the social security expert. And here's three things to really take away or look for as you listen to Brian Doherty. The first is, how important it is to have an expert or someone you can bounce specific cases off. There's a lot of little ins and outs-
Kurt Dupuis:
Very nuanced.
Steve Seid:
The second is this restricted application strategy. When you find those in your book, they're gold, there's a limited time for them left, but it really is like a take action now. See if they're there because if you can find them, clients will love you. And then the last thing is the calculator, which we can give you access to through Brian. So anyways, we'll be back with our conversation with Brian Doherty. It's The Whole Truth, stick with us.
Disclosure:
The views expressed herein are those of the participants and not those of Touchstone Investments.
Steve Seid:
So, we are absolutely delighted to have our good friend, Brian Doherty, social security specialist on here. And I'll start out, Brian, with a couple of thank yous. So first, thank you because I've been working with you, Touchstone's been working with you for a long time and you've been an incredible partner. I will send him, I get some late West Coast requests for a social security case. And I could send it to him and the guy on like a Friday afternoon at like 6:00 PM will turn it around. He's the most responsive partner I think I've ever dealt with. So, I want to start by saying thank you for being-
Brian Doherty:
Thank you.
Steve Seid:
... a great partner, Brian.
Brian Doherty:
I appreciate that, Steve.
Kurt Dupuis:
And I've had him in Atlanta too. You will not see a more passionate presenter, especially about a topic that not a lot of people get jazzed about, but it's important. And his enthusiasm is indicative of how important it is. Our clients love him and we're happy to share some time with him and talk about some social security.
Brian Doherty:
Yeah. You know, Kurt, when the expectations are so low to begin with, because people think social security, oh, this is going to be really boring. Why do I have to come here? It's easy to exceed those expectations. I always tell people, I've been speaking for a while, at the end of the day, you do have to entertain them too. No matter what you're talking about, you have to try to be entertaining.
So, I get a kick out of it when people say, "Wow, I didn't expect that, Brian. That was really great." So anyway, when you set the bar real low, it's easy to exceed it.
Kurt Dupuis:
Yeah. But you exceed it really well, Brian. I mean, you're sweating, you're passionate, you're moving around. I mean, you're next level with that stuff, so it's always appreciated.
Steve Seid:
It reminds me of the Saturday Night Live, what is it? The Matt Foley with Chris Farley's. It's like I've been downstairs in the basement drinking coffee for a day and then he comes out sweating and throwing stuff. Anyway, you're not quite like that, but the energy is fantastic.
Brian Doherty:
I wish I was. I saw that episode, that's one with the motivational speaker. Right?
Steve Seid:
Yeah.
Brian Doherty:
Yeah.
Steve Seid:
That's right. I dare anyone to watch that and not laugh. The funny things about those is you look at the characters that are in it with them, like David Spade cannot keep a straight face, even though he's, it's just the funniest thing.
So, we're going to jump right into it. The question is, it's not like you've always been a social security expert. So, how did you even get into this? Talk a little bit about your background and when you even decided to go down this route.
Brian Doherty:
Yeah. That's a great question, Steve. Believe me, I never thought that at one point in my life this would be what I did, social security. In fact, for most of my life, most of my career, I knew nothing about social security. And it wasn't, my last stint in corporate America was working at New York Life, which was a great job. I loved it, the best experience I had.
In my last five, six years there, I traveled all over the country and I was doing a lot of retirement income planning training to thousands of financial advisors. And at the time, I didn't know anything about social security, but I quickly realized that social security is going to be a really important part of every retirement income plan. So, I decided I better learn something about this.
And I started to do my own research and from the moment I did, I was really blown away. I had no idea that social security worked the way it did, allowed people to do the things it allows them to do, and had all these great features to it. I'd go to all these big meetings, national conferences, all these outside speakers were there, nobody at the time, this was like 12 years ago, talked about social security.
So, I realized that very few people, very few financial advisors knew much about social security. And again, I realized how important it was. So I decided, you know what? I'm going to go and educate people. And one of the things I decided to do was to write a book. And I'd never written a book before. I thought it would take me like six months. It took me over four years. I didn't know if it was any good.
It came out in 2015 and I was surprised that it won a couple of awards. It won the International Book Award as the Best Business Personal Finance Book that year. I was blown away. There were over a thousand entries from like 15 different countries and my book beat them all and also won the Eric Hoffer Award.
So anyway, it's won a couple of awards. People always get impressed when I tell them about that. And I usually do that when I start a presentation to get their attention, and then they tend to listen to me more. But anyway, so that's basically how I came here. And I've been talking about it for 10 years now, exclusively about social security.
And I got to tell you, usually every couple of weeks or something, I learned something new about it. I mean, there's so much to it. And it's a great program and I just want people to realize how great it is, and also emphasize that they need to know what all their options are before they claim so they don't leave any money on the table.
Kurt Dupuis:
Well, and I should also say, the book is fantastic. It's a fairly quick read, but just so dense with practical information. We work with a bunch of different firms and some have different types of social security calculators or whatever, but any time that we've dug into them with Brian, we've found either really bad assumptions or it's something that a third party, or using someone like Brian, has uncovered additional talking points at a minimum, but in some cases, extra dollars that can be realized by clients as well.
Brian Doherty:
Yeah.
Kurt Dupuis:
So, in that vein, you've talked about this for a decade, you've written a book, you've traveled the country educating financial professionals about social security and helping them, empowering them to help their clients make better decisions. Let's start with a recap of that decade of experience. What are some of those really big gaps or misunderstandings?
Brian Doherty:
Yeah. You know, I think a lot of financial advisors are still intimidated by the topic because it can be very complicated and complex, there's a lot of moving parts. And I think the last thing that they want to do is advise somebody on when and how to claim social security, but they end up giving them the wrong advice or some misinformation because it's easy to do. I've done a lot of live presentations, not in the last year because of COVID, but I do some big meetings. There'd be 500 financial advisors in the audience and I'm on the main stage. It's always a rush to get up there in front of 500 people and talk.
And when I get done, there's usually a break afterwards. And a lot of people, financial advisors, will stand in line to ask me questions. But this is no exaggeration, at least half, if not more of the questions I get from them are about their own personal situation. Because a lot of the financial advisors are older. They're in their late fifties, early sixties.
And they'll come up to me and they say, "Hey, Brian, that's great stuff. If I was a young person, I'd use social security to prospect for new clients, but I'm packing it in, man. And I don't want to really work that hard anymore, but hey, can you help me out with my situation? Here's my benefit. Here's my wife's, what should we do?"
So, there's a lot of interest on their part for themselves and their personal situation because they're getting ready to retire. But I still think there's huge gaps in terms of knowledge in general in the industry on how to advise our clients on what they should do. And that's why I realized early on, I just had the book and I was going around talking about it. But people reading the book and financial advisors, they're not going to get done with it and say, "Okay. Now I know what to do. Now I know how to advise my clients." They're still going to need another tool and that's when I started to develop the calculator.
Because at the end of the day, they need to plug some information in a tool and that tool tells them exactly what their clients should do.
Steve Seid:
So you talked about how they always ask questions about themselves, but really, what are they missing? What do the average financial professional doesn't know these few things about it? Is it claiming strategies that still exist that they don't know about? Is it… I mean, I'll let you answer that.
Brian Doherty:
You know. I know there's a great claiming strategy restricted application, but that's going to go away sunset in a couple of years. I think they don't realize what a great program social security is all the time. And I bring this up in my presentation, especially in this incredibly low interest rate environment. Nobody's going into banks and putting money in CDs or very few people anymore. And even bonds, it's hard to get a decent rate of return on a bond these days. So rates are incredibly low.
And I say, well, most people understand, and financial advisors too, that the longer you delay claiming your benefits, the bigger the benefit is going to be. But what I've found is they don't understand by exactly how much. They know, "Hey, if I claim at 62, I'm going to lock into the smallest monthly benefit for the rest of my life. I can wait until 70, lock into the biggest benefit." Or they can claim it any age in between.
But the bottom line is that for every year that they delay claiming past age 62, their benefit is guaranteed to increase by 6% to 8% per year up until age 70. Now, I call that a risk-free guaranteed rate of return, 6% to 8%. In this incredibly low interest rate environment, where are you going to find a risk-free guaranteed return of 6% to 8%? Nowhere that I know of, Kurt and Steve.
And you don't lock into that for a few years, you lock into that bigger benefit for the rest of your life. And the other cool thing is this COLA option from social security. It's an incredible inflation hedge. I think it's the best on the street. And you can adjust that 6% to 8% for whatever the COLA increase was for that year.
Let me give you a quick example. Let's say, I'm going to take you back to 2019. Let's say somebody was 66 years old back then. That's their full retirement age. They really don't need their social security income. Maybe they're going to work another year or they got enough assets. Anyway, they're going to delay at least one more year. All right? They're going to delay from age 66 to age 67.
Just by delaying that one year, they get a minimum increase of 8%. Now, the COLA adjustment for that year, 2019, was 2.8%. You add that 2.8% on top of the 8%, that brings the total increase to 10.8%. Just by delaying one year, they almost increased their benefit by 11%. That's incredible. Now, let's say they get to age 67 and they're like, "You know what? I still don't need the income. I'm going to delay one more year." And now it's 2020. They get another minimum increase of 8%.
The COLA increase last year was 1.6%. That brings the increase up to 9.6%. So look at, just by delaying two years, they increase their benefit by over 20%, and they locked into that for the rest of their life. I tell people everywhere, it's incredible. It's the best deal on the street, certainly in this country. And whenever I do that, whether I'm talking to financial advisors or I'm in front of clients, they're looking at me like, "That's really is a good deal." They haven't looked at it that way. That's one of the basic things.
Everybody gets the same COLA percentage increase. It doesn't matter when you claim your benefits. But if you apply that same percentage to a bigger benefit, it results in bigger dollar increases every year for the rest of your life.
I got a real simple chart, Kurt and Steve, in my presentation that shows you how dramatic your benefits can increase over time with even marginal rates of inflation two or two and a half percent. And you know what? For women, they should really consider this more than anybody else because women live longer than men. It isn't even close. They have a such a high probability of living into their late eighties and early nineties that they should take full advantage of this COLA and getting that percentage increase on the biggest benefit possible so that they receive the biggest benefit pay raises over their lifetime.
Kurt Dupuis:
I'm always struck by how counterintuitive what you just said is for people to actually apply. They think, "Hey, well, I got to get it at 62 because I don't know what's going to happen. I may be gone by 65. I've got to take it now while I can." And you do a great job of displaying the math behind why that might not be a really good assumption.
So, not only do you get the increase, but if you're 62, your chances of making it later in life are much better. But I'm always combating that with financial professionals that say, "No, you've got to take it when you can get it."
Brian Doherty:
If we look at men and women in this country, life expectancy, their combined life expectancy is age 78. And I think, it's been my experience that most people think they die by age 78. That's not it.
Life expectancy is simply a statistical term. It's a mean average. And what it means is that 50% of people will die before that age, but 50% of people will live up to and beyond that age. I tell financial advisors and clients, "Look, if you're doing any kind of planning, retirement income plan on anything to a 50% probability of something happening, you living up to and beyond age 78, you should plan on that happening."
But there's a second aspect of life expectancy that hardly anybody knows, and it blows people away. And that is the longer you live, the farther you push out your life expectancy. I got a cool chart in the book and in my presentation. A 65 year old, if a man lives to age 65, he pushes his life expectancy up to age 84, the woman pushes her life expectancy out to age 86, there's a 50% probability that one of them will live to age 90.
I always make a joke. Usually the audience, if it's financial advisors, if three quarters of it, at least, are guys. And I say, "Hey guys, I got some bad news for you. If anybody's going to live to be age 90, it ain't going to be you. It's going to be all the women in this room because women overwhelmingly outlive men."
If you look at the number of men and women alive at age 85, there's twice as many women alive at age 85 than there are men. There's three times as many women alive in their nineties than there are men. And if you go back to the 2010 census, and I just checked these figures again last week, there were 53,000 people in this country age 100 or older, 44,000 of them were women. Women overwhelmingly outlive men.
And you know what? Social security is a bigger issue for them because they collect benefits for much longer period of time than men do. And if you're a married woman, at some point in your life, that survivor benefit is going to end up being critical on you maintaining your quality of life and standard of living because husbands overwhelmingly predecease their wives. And they ought to make sure that they maximize the size of that survivor benefit so they get the biggest check possible after their husbands die.
Steve Seid:
So, I want to cover restricted application in a second. Because even though it's going away, it's just completely magical when we make it work for people.
But I completely agree with what you said about it being an amazing deal on the street and the weight and the rate of return. And I think people probably hear that and they go, "Okay, the government's paying out all this money and the government can't pay its bills now." Is social security going to go away? So, you must get that question a lot. How do you address that?
Brian Doherty:
Yeah, that's overwhelmingly, whenever I do a webinar, or a live presentation and open up for questions, that's usually the first one I get. And it's like young guys like you, you guys are decades younger than me. I run into them all the time. They'll say, "Oh, I should get that book for my parents but it isn't going to be around when I retire."
I go, "Oh yeah, it is. And you're going to be real happy it is." So, here's the deal. I talk about, first of all, the worst case scenario. There is a long-term funding issue for social security, right? What's the worst thing that can happen if the government doesn't do anything to address that? They can't get together compromise and fix the system.
Well, social security has trustees and they come out with a report every year. In the last report they came out and they'll tell you what will happen if they don't do anything to fix the system. If nothing happens, they don't fix the system, then in the year 2035, they'll have to reduce everybody's benefits by about 22%. 22%, 2035. Everybody gets 78% of what they thought they were going to get.
Now, once they do that, and this usually surprises people, social security is on sound financial footing, can meet all its benefit obligations through the year 2094. 2094. Almost into the next century. Now, Kurt and Steve, that's the worst thing that can happen. Now, they also tell you the simple things, the math, believe it or not is simple. It may not be easy because it involves some increases in taxes. But then they'll tell you the simple things that can be done to fix the system, shore it up in the next 75 to a hundred years without any benefit cuts.
Now, one of the things I did a couple of years ago, I had a really smart guy, Bruce Schobel, who was a ex-head actuary at social security, ex-head actuary at New York Life. He's an MIT grad with a degree in actuarial science. He's a math genius. I said, "Bruce, let's look at some of this stuff that they recommended and come up with a plan." So, what we did was we looked at that FICA tax, right? We all pay the FICA tax, comes out of our paycheck every time we get paid at 6.2%.
Well, not only do you pay it, but your employer does too. So, if we increase the FICA tax to 7%, okay? So, 6.2% to 7%, 80 basis points, that resolves about 50% to 60% of the long-term funding issue. The other way, the quickest way to get it done would be the earnings cap. I believe this year, 2021, once you make over $142,000, they stop taking out that FICA tax. Okay?
Well, there's only 6% of all wage earners in this country that have earnings that exceed $142,000. So, 94% of people pay FICA taxes on all their earnings. If we were to increase that earnings cap to 4 or $500,000 along with the 80 basis points increase in FICA taxes, you resolve the long-term funding issue for the next 75 to a hundred years with no benefit cuts.
Now, Steve and Kurt, I know some of you and some of your listeners might be saying, "Hey, after 142,000, I don't want them to keep taking out that 6.2%." I go, "Yeah, neither do I, but you know what? You won't like it when it's happening, but you'll like it when you go to retire and claim your benefits. Because your benefit is going to be so much bigger because of all those additional FICA taxes you paid."
And one of the reasons they put that earnings cap in to begin with, they didn't want people making over a hundred thousand dollars a year from social security. I say, well, I don't make over a hundred thousand dollars a year. They've paid all those FICA taxes if it shores up the system with no benefit cuts. But bottom line is, worst case scenario-
Steve Seid:
Yeah, that's interesting.
Brian Doherty:
... a 22% benefit cut. And then they're good through 2094.
Kurt Dupuis:
Excellent. So Brian, let's circle back to that restricted application concept which I just described as magic. Tell us about it. What it is, how long it's going to last and can financial professionals still take advantage of it right now?
Brian Doherty:
Yeah. I still run into it all the time. It's been my experience, people that have accumulated assets and savings, they tend not to claim their benefits early. And so, with restricted application, there used to be this other cool claiming strategy called file and suspend.
Well, the government took that away in 2016. As of May 1st of 2016, if you didn't use it, it was gone forever. And I think as a result of taking that away, most people think that all of these creative strategies are gone, but no, restricted application is still around, but you have to be qualified to use it. If you happen to be born before January 2nd of 1954
And if you're born before that date, I tell financial advisors all over the country, your biggest call to action and a sense of urgency. Go back, identify all your clients born before January 2nd, 1954, contact them, ask them one question. Have you claimed your benefits yet? If they say no, you say, "Stop everything, come on in here and talk to me. I need to show you this incredible strategy."
I can't tell you how many people I've showed it to. They don't believe it. They're like, "Why would social security let you do this? Why would they let anybody do this?" And I have to tell them, "Well, you're qualified to use it. You might as well take advantage of it." And this strategy could pay them. I've done it for married couples where pays them an extra $70,000 in social security income before they reached their 70th birthday.
I mean, I'm not talking about living to age 90, 95 or 100, before their 70th birthday. And if they don't do it before then, they're going to miss out on all that extra income. So, real quick, here's how it works. Say you have a husband and wife. Let's just say the husband was born before 1954. The wife can be born after that date. And if only one of them was born before that date, they can still use it. So, ideally, if the husband has the bigger benefit, that would be the best way to use this strategy.
So, what would happen would be the wife would claim her benefit, whatever her age is, 62 to 70. She'd claim her benefit first. She has to. And then the husband, as long as he's at his full retirement age or older, he can claim and restrict his benefit to only a spousal benefit.
And that entitles him to get 50% of his wife's full retirement age benefit amount. Let's say the wife had a full retirement age benefit of $2,000. So, that means the husband can get just a spousal benefit starting at a thousand dollars a month. And while he's receiving those spousal benefit payments, hopefully over the next three or four years, so that would be $12 grand a year, $36 to $48,000. He still delays his own benefit and that grows by that minimum of 8% per year up until age 70.
Then at age 70, he switches to his maxed out benefit. And he's going to receive that for the rest of his life. And he's also maxed out the survivor benefit. But while he's waiting to do that, he can receive $30 to $50,000 in spousal benefit payments. It's unbelievable. And people, when I get done with it, they say, "Brian, you're creating income out of the air. Just out of the air. Why would they let you do that? How can it be legal?" I go, "I don't know, but it's legal. You might as well go get it. And every month that you wait, you're losing money. So come on."
Steve Seid:
Yeah. If you're listening to this show right now and you haven't done this, go through your book, figure out who's been born before January 2nd, 1954 and see if they've claimed. When we find these cases, it's amazing. It's like finding free money, that spousal benefit payments. And a special thank you…
Kurt Dupuis:
Ka-ching.
Steve Seid:
And a special thank you. Yeah, a special thank you. Yeah, I did this for my parents, Brian, after working with you and they were like cloud nine. So, you're welcome mom and dad.
Brian Doherty:
You must be their favorite son now Steve.
Kurt Dupuis:
So your mom's talking to you again now. So Brian, I'm going to get you fired up because it's not hard to do, but also this is a subject that I know you like to get fired up about. Let's talk about how the social security office gets stuff wrong, and how, maybe they don't always give out the best information.
Brian Doherty:
Yeah. In fact, Kurt, yeah, I just I'm in the process of finishing a new presentation that I've put together and it's called the three common massive myths about social security that cause even smart people to make bad decisions. And the third myth is the biggest and most dangerous myth. And this myth is social security customer service employees know what they're talking about. That's a myth.
And I've experienced over the last 10 years myself. I've literally advised well over a thousand clients and individuals and married couples and widows and divorcees on when and how to claim their benefits. And sometimes, they'll go into the local social security office and then they'll get back home and they'll call me on the phone. And from the minute I answer the phone, I know they're ticked off at me. And I say, "All right, what happened?"
They say, "Well, we went into the social security, we showed them what you told us we can do and they said we can't do it." And then I say, "Yeah, all right. Well, they don't know what they're talking about, but I do." And then it sets them off again. They're like, "Brian, wait a minute. They work here. They got their computers, they got access to everything." I go, "Yeah, you would think they know what they're talking about. But a lot of times they don't. It happens all the time. And people end up losing out on a lot of money in terms of lost benefits. And sometimes, over your lifetime, it can be hundreds of thousands of dollars in lost benefits."
And a lot of times I have to twist their arm and say, "Look, if you need to go back in there and schedule another appointment, ask for the manager, tell them, 'Look, I know I can do this and I want it set up today.'" And then they'll usually call me back afterwards and say, "You were right, Brian."
But so that's anecdotal information. There's another best-selling author out there. He's a college professor with a PhD in Economics and he's been doing this for a while just like me. And he estimates that 50% of the time, social security customer service employees give out wrong information or misinformation. There's another expert…
Kurt Dupuis:
Incredible number.
Brian Doherty:
Yeah. It's incredible. And there's another expert that says every year, people leave $10 billion of lost benefits on the table because they don't know all their claiming options and social security doesn't make them aware of it. All right. So, this is all, hey, these are smart people, right? And they're making estimates. Is there really any factual evidence? Well, yeah, there is. It's an internal audit that social security did on its own customer service employees. This is really scary. Okay.
Kurt Dupuis:
Uh-oh.
Brian Doherty:
So, they published the results of this two years ago in 2018. Now, keep in mind, Kurt, Steve, every month, 65 million people get a social security check. Okay? 65 million. What they did was they looked at a small sample of a little over 13,000 cases for widows and widowers. And what they concluded was that in 82% of those cases, their customer service employees gave out wrong or misinformation. 82% of the cases, over 11,000 of those 13,000 cases - gave out incomplete or wrong information. And it costs these widows and widowers over $142 million in lost benefits, $142 million.
Steve Seid:
Wow.
Brian Doherty:
Now here's the kicker. Here's what really upsets me, should upset you and everybody listening. They published the results two years ago. They know they short-changed all these widows and widowers over $142 million. They haven't done anything. They haven't done anything to make these people whole, which to me is unconscionable.
If any of the companies you worked with were to do that, short-change their customers $142 million, at the very least, they'd make you pay that back and then they'd probably fine you hundreds of millions, if not billions of dollars.
And so, I tell people all the time now, you need to know what all your claiming options are. You can't count on social security to tell you. And if you do count on them, chances are you're going to get wrong information and you're going to leave a lot of money on the table in terms of lost benefits.
Kurt Dupuis:
So this is like physical wellbeing, financial wellbeing, you have to be your own best advocate. So, whether you're a financial professional advising clients or a client yourself, you've got to educate yourself on this. Know what you're talking about to the extent that you can fight for your own self-interest. That's a really important lesson.
Steve Seid:
I got a couple of questions based on that, Brian. So first, I know that you've been on the phone with people from social security when they're giving out wrong information. And so, when the person who's working with you puts the social security person on the phone, what do you say to them?
Brian Doherty:
Steve, the social security customer service person will not come on the phone. They won't go on the phone with me. And so, I have to coach the person. They're mad. And I say, "Look, ask for the manager. Managers are usually more knowledgeable. They've been there for a while, more experienced, show them what I gave you, the printout, and tell them this is a restricted application or whatever it is and I know I can do it. And I want you to set it up for me today and I'm not leaving until it gets done."
And sometimes you have to do that. And they come back and they say, "Brian, you were right." I'll be honest with you, sometimes when they first call me, they're saying nasty things about me like, "I thought you knew what you were talking about," this and that. And then they get done. One guy I saved him over $53,000, right? And he was really yelling at me on the phone. And then I convinced him to go back in. He comes back. "You were right." I go, "Yeah, you had some really nasty things to say about me before."
He goes, "Yeah, I'm sorry I said those things, Brian." I go, "Yeah. Well, do you think it was worth your time and effort and money that you paid me?" He said, "Absolutely." But anyway, it happens way too much and it ain't right.
Kurt Dupuis:
It's probably better that you don't actually get on the phone with them because they'd flag you. They'd flag you. You'd have to have a burner phone, because if the social security office knew your number, they wouldn't answer the phone when you called.
Brian Doherty:
I know they'd-
Steve Seid:
But the takeaway is also, for those that don't have Brian on the phone, is ask for the supervisor and be prepared, know what you can do. Brian's calculator, which we'll talk a little bit more in a second, it lays it all out for you. So you know the information you have is right. Ask for the supervisor if you get that wrong information.
Brian Doherty:
Yeah. I wrote a little article about that. That's one of the things I say, it's lucky these people had me as a resource, most people don't. And they walk out of the office thinking that social security customer service employees know what they're talking about. And as a result of that, they missed out on a lot of benefits, and it happens way too much.
And that's where your financial advisors you work with, I strongly encourage them to work through you guys to get access to my calculator because we'll make sure that they're aware of all their claiming options and don't leave any money on the table. And there's one other thing I want to add about that. And I write about this too. The FICA taxes that we all pay, if you earn a decent living, over time, you're going to pay hundreds of thousands of dollars in FICA taxes into the system, right?
Not only you, but for every dollar of FICA tax that you pay, your company has to match it. So, whatever you pay, double it because your company matches it. And it could easily be many hundreds of thousands of dollars over your lifetime when you go to claim your benefits. I tell people, "Look, don't you deserve to get every dollar of benefit you're entitled to because you've already contributed into the system hundreds of thousands of dollars. You should be able to get it back in the most efficient and effective way possible. So you need to make sure you know all your claiming options and you do that." And working through you guys and using my calculator, we'll make sure of that.
Kurt Dupuis:
Okay. So, we've covered several, I think, really crucial points here. First, restricted application, if that's viable for your clients, is something you should definitely take advantage of. We talked about the book and your presentation and how you help educate and coach financial professionals and their clients on the best claiming strategies available to them. But really where the rubber meets the road is this calculator that you have built from the ground up. Tell us more about that generally, but then also specifically, what can we tell people to input into this calculator to give them the best options?
Brian Doherty:
Yeah. So, the calculator is really simple to use. There's only a few basic pieces of information. All we need are dates of birth, if they're married. Dates of birth for the husband and wife, their social security full retirement age benefit amount, which they can get right off of their statement and then also their marital status. Are they married, divorced, widowed, or single? And that's all we need.
When I was first looking at developing this, I looked at some other social security calculators. And one of the things that a lot of them have in common is they ask you to pick the day or the year you think you're going to die.
Kurt Dupuis:
Morbid?
Brian Doherty:
Based upon that, they'll tell you what the best claiming strategy is. Now, going back to the actuary that worked with me that proofread my book and stuff. I asked him, I said, "Bruce, have you seen these calculators where they ask the husband and wife to pick the year they think they're going to die."
He's, "Yeah." I go, "What's the probability that they're right? That they're both right." He said, "It's less than 1%, Brian." So I said-
Kurt Dupuis:
Oh, wow.
Brian Doherty:
"Then there's a 99% probability that the specific claiming strategy that they pick will be wrong because they're not going to get in the years if they die." He said, "Yeah." I said, "You're a math genius, man. That doesn't sound very smart to me." He goes, "No, it really isn't." And based upon that, we took that totally out of the equation. And I like that.
Kurt Dupuis:
Yeah. So you're doing the math around what you know, not about what you think you might want to try and probably predict.
Brian Doherty:
Right.
Kurt Dupuis:
That makes much more sense to me.
Brian Doherty:
Yeah.
Steve Seid:
Is it mostly people submitting to you to run cases or are they doing them on their own?
Brian Doherty:
Overwhelmingly they submit it to me to run the cases and I really like doing it. And I've done it for both of you guys and I'll send it to you, send it the advisor. And then we even get on the phone with the advisor and their clients and help the clients make the best decision for their personal situation. And that's really where the rubber meets the road. Helping the client explaining, there could be up to three suggested claiming strategies, help them pick the best one for their situation.
And I think that's where we can really add some value to make the financial advisor look good by bringing these services to their clients. And the other thing, Kurt and Steve, that blows me away is that some really wealthy people are really interested in making a good social security claiming decision.
I think everybody is, but I was really surprised that sometimes I'll get done with a financial advisor, he or she will call me back says, "Brian, they loved it. Oh, by the way, they got $15 million with me. They got $20 million in assets with me." I was like, "Why do they even care? I mean, social security..." he goes, "You don't understand, this is what they've done all their lives. They've made good money decisions and they want to make a good decision when it comes to claiming social security." Blows me away.
Steve Seid:
One of the other things that we spend a good amount of time talking through is, the cases that are outside of the normal? So can you talk about some of those special situations? I know there's a lot of them, so I won't ask you to be exhaustive, but what are some of the other special cases that people bring to you?
Brian Doherty:
The only thing I'd say there's, I mean, if we get into all this stuff, we could be on the phone for three, four or five hours. There's all kinds of options that divorced spouses have, and widowed spouses especially, widowed and widowers, make sure you know all those options as a thing you can do, claim a survivor benefit first, your own benefit later, all that stuff to maximize it.
The point of emphasis is know these options before you go to claim. All right? And if you don't know all your options, chances are you're not going to get all the benefits you're entitled to and you're going to leave some money, maybe a lot of money on the table, hundreds of thousands of dollars over your lifetime. So, know all your options before you claim.
Steve Seid:
Awesome. Well, thanks, man. It was really, really great to have you on the show. And we will come back next with our Costanza Corner. This is The Whole Truth, stick with us.
Steve Seid:
And welcome back to our Costanza Corner. Kurt, you've got something for us today, right?
Kurt Dupuis:
I think so. It's been a really big deal in my family. So, as of Tuesday of this week, and my folks are split. So we're talking about three different sets of grandparents. So, the generation ahead of us all have received their COVID-19 vaccinations.
Which, yeah, I'm really happy about. Just great sigh of relief getting that rDNA in people's bodies and get it working and get them some immunity.
Steve Seid:
Are they all in Georgia? No, they're not.
Kurt Dupuis:
No. None of them are in Georgia. We got Virginia, Louisiana and Florida.
Steve Seid:
Wow, you guys are getting them out-
Kurt Dupuis:
Three sets.
Steve Seid:
... much quicker than us.
Kurt Dupuis:
My dad is in Florida, has been up and awake with neighbors at 5:00 AM on multiple mornings trying to log into Publix and various websites to find spots. Because you can imagine, I mean, Florida, the supply/demand relationship-
Steve Seid:
It's the Wild West down there.
All I know is I'm like last on the list. That's all I know. That's all I know.
Kurt Dupuis:
Actually, this is a good little tidbit. Apparently folks in financial services are moved from a level five, which is the lowest up to a level four.
Steve Seid:
Look at that.
Kurt Dupuis:
I don't know if that's true, but it's something I've heard, so I'm sticking with it. And why not?
Steve Seid:
I think it's one of those threat level oranges with the Homeland Security. You don't know what it is, but you know it means something.
Kurt Dupuis:
Yeah.
Steve Seid:
Yeah.
Kurt Dupuis:
My favorite was Ron White's disaster emergency protocol.
Steve Seid:
What's that?
Kurt Dupuis:
It's like, just give everybody a helmet. And you got two stages. No helmet and put on the helmet. It's time for a helmet. I like simple binary systems.
Steve Seid:
I love that guy. I haven't seen that guy in a long time. All right. We'll get out of here. Thanks for listening, guys. We'll see you next time.
Kurt Dupuis:
See you. You can find The Whole Truth and subscribe for free on Apple Podcasts, Spotify, or your favorite podcast app. We'd love it if you took the time to rate and review the show on Apple Podcasts, it helps others find the show. And for more episodes of The Whole Truth, go to www.touchstoneinvestments.com/thewholetruth. That's touchstoneinvestments.com/thewholetruth, all one word.
