Podcast Episode - Suze Goes To School: Social Security Spousal Benefits
May 21, 2023
Listen to Podcast Episode:
Suze starts this lesson with an update on what’s happening with the debt ceiling negotiations and energy stocks.
Podcast Transcript:
00:00:00
Music: (Music In).
00:00:29
Suze: May 21st 2023. Welcome everybody to the Women and Money podcast as well as everybody smart enough to listen. Yes, this is Suze School. This is me without KT. You know, so many of you wrote in and said, absolutely not. We love our KT. Let's keep her on Thursday with you Suze.
00:00:58
Suze: And then just let's keep Suze School on Sundays because they're both so different. So I have a little announcement to make. That is exactly what we are going to do except... For the next month or so, I just want you to listen closely. OK. Our producer that we all love, Robert.
00:01:24
Suze: Robert has decided that he's finally gonna go on vacation
00:01:30
Suze: and you know what he's gonna go do? He is going to go around the United States everywhere where Dead and Company, the original band was called The Grateful Dead. And then over the years after Jerry Garcia died, now, they're known as Dead and Company.
00:01:52
Suze: And he wants to see their last concerts. So therefore he's not gonna be available to produce things and record them the way that we normally do. Because what I like to do with Suze School especially, is I like to record it
00:02:11
Suze: as close to when we're gonna drop it. So that if something happens in the economy or the stock market or whatever it is, I can talk to all of you about it, but that's not gonna be able to happen while Robert is gallivanting around the United States. Let's put a pause in that for just one second. Robert, I'm about to tell you something. So, a long time ago,
00:02:41
Suze: I was on the plane and the man sitting next to me
00:02:46
Suze: was named Micky Hart. Now I didn't know who Mickey Hart was on any level
00:02:55
Suze: and he looked at me and he said, oh, aren't you Suze Orman? And I said, yes, he said, I'm Mickey Hart of the Grateful Dead. And I went, oh, you're the drummer. And he said I am not a drummer, Suze, I am a percussionist
00:03:20
Suze: and I'm like, ok, whatever. And Robert do you know that he invited me to a Grateful Dead concert.
00:03:31
Suze: And I actually went to the concert and I was right there backstage, watched the whole thing.
00:03:40
Suze: And now I actually got to do the financial planning for one of them just so, you know, sir, but back to the point.
00:03:49
Suze: So because Robert will be gallivanting around the United States to see these concerts...
00:03:58
Suze: just while he is gone,
00:04:01
Suze: I'm going to ask your indulgence that we will be doing Ask KT and Suze anything for Thursdays and Sundays because then we can just do a bunch of them ahead of time
00:04:18
Suze: and he'll be able to take a vacation and do all of that as well. So for those of you who wrote in and you said, oh, we love KT we could, why not do another ask Suze and KT Anything besides Suze School? All right. So you're gonna get it for a little while. But all of you need to know if during those times something does happen
00:04:45
Suze: and I need to school you on something. I will figure out a way to do so, but I just hope that you pay attention and continue to go to Suze School via the Ask KT and Suze Anything because really there's always a lot to learn
00:05:06
Suze: All right, two things recently have happened on Friday of last week now. And that is, uh, the both sides were having these meetings on the debt ceilings, ok?
00:05:23
Suze: And everything looked like it was going pretty good. In fact, they announced that maybe next week they would have some solution to this and we could put this all to bed. Janet Yellen met with all of the bank CEOs saying it's all looking really good then sometime on Friday afternoon,
00:05:48
Suze: everything broke down. The reporters say that they were standing outside the doors and all of a sudden this congressman, you know, by the name of Garrett Graves, I think that was his name. He walked out and he looked at them and he said, these meetings are no longer productive. Like he said, something like I'm not quoting him but something like this...
00:06:12
Suze: until people are willing to have, you know, true conversations. We are not just going to sit there and talk to ourselves. We are done
00:06:23
Suze: And they're over now
00:06:25
Suze: Now, I don't know when they'll get back together. I don't know what that means, but that's not the most uplifting and positive type of news. On the other hand, however, Powell on Friday, the Fed chair, Jay Powell also said that rates may not have to rise as much as expected to curb inflation.
00:06:54
Suze: And he went on and he gave a talk and essentially what he said is to make sure that the banks aren't under too much stress because they still are under stress. Maybe he doesn't have to raise the fed funds rate as much as he expected to do. So. So we'll see what happens with the Fed meeting in June. If he does that.
00:07:17
Suze: that's really a good thing because as I said to you just last Thursday, it's not good. It's not good to continue to raise the fed funds rate when the system is under this much stress.
00:07:35
Suze: All right. So that's just what I want you to know in terms of what happened on Friday.
00:07:41
Suze: But in regards to all of that, I am saying to you, stop freaking out, they will figure this out. Your treasury bills, your certificates of deposit, your money and money market funds. We will be ok. That doesn't mean that things won't get wonky for a while.
00:08:05
Suze: But I have a feeling that once everybody sees how wonky things will go because they can't agree on anything, maybe they will all come to their senses. But you know, this is a far, far bigger problem
00:08:23
Suze: then just this. I think we've kicked the can down the road when it comes to our debt ceiling maybe 78 times. And there's only so far that you can kick that can down the road.
00:08:39
Suze: It is impossible to have $31 trillion worth of debt. It is impossible to think that as that debt continues to grow and grow and possibly receipts go down and down that we're not going to one day get into serious financial trouble.
00:09:04
Suze: So I think it's really important that both sides of Congress get their acts together and really figure out what we can do about this problem
00:09:19
Suze: Because we have smoke here in this building and smoke means eventually we could have a fire and everything then really does go down. We're not there yet, but that doesn't mean that we won't get there one day. So kicking this can down the road
00:09:39
Suze: and just continuously raising the debt ceiling without figuring out how to get things under control and what we really can and can't do.
00:09:50
Suze: I'm telling you one day this will look like good news to everybody. So I hope they really can get their act together. But in the meantime, all of you are to just kind of stay put knowing we will be ok with what you have. Also, in terms of many of you are still asking about
00:10:17
Suze: P X D, Pioneer, Devon, what should you do? I'm just gonna repeat once again,
00:10:25
Suze: these markets are crazy.
00:10:28
Suze: They will go up, they will go down, they may go up again for the next two weeks or so. I've said that to you before. They may take a big dip sometime here before the end of the year and then go way back up again.
00:10:44
Suze: But when you are invested and you are invested for dividends in good companies,
00:10:54
Suze: then you have to stick with the program. Now, if you have been dollar cost averaging into P X D or Devon, they have gone down considerably, which means your yield from where you've purchased, it will be higher. However, if it is starting to make you nervous, if you are not knowing what to do, don't do anything, then stop buying it. Stay where you are and that's it
00:11:24
Suze: Because remember that was only to make up a very, very small part of your portfolio. It wasn't to be everything that you invested in. It was just to be a part of everything.
00:11:41
Suze: So this should not be freaking you as much as it is. If it's freaking you, then this isn't right for you and then you should just sell and take your losses. I'm serious because what's the goal of money? The goal of money is for you to be secure and if you've done something that's making you feel insecure, then you shouldn't have done it to begin with because that means you didn't understand it
00:12:08
Suze: or you need to stop doing it.
00:12:11
Suze: Now, I'm not selling, I'm not nervous about it. I understand very well. What's happening here? I do as I've told you before, believe that there will come a time. I don't know when that is that oil will go back up to $100 a barrel or so. And then things will go back up again. But in the meantime,
00:12:36
Suze: when I'm not sure what's happening with interest rates, when I'm not sure what's gonna happen with treasuries or anything else. At least I know I'm getting dividend money in stocks. As I said, that, that kind of reminds me we should do a Suze School. Maybe I'll do that next Sunday on preferred stocks because that's something that many of you might want to be looking at as an alternative for money for you to get income.
00:13:06
Suze: But you have to understand when things go up and things go down,
00:13:12
Suze: you can't let that freak you out.
00:13:15
Suze: You should be happy about that. So I just wanted to say that to all of you next. I want to say something as well. And I want you to listen to me very closely
00:13:29
Suze: last Thursday
00:13:31
Suze: for the Ask KT and Suze Anything podcast, KT asked me a question that she got from the wall about a divorced woman who wanted to collect social security at 62.
00:13:47
Suze: And she wanted to know if she took it at 62 and took a reduction
00:13:53
Suze: when she turned 67
00:13:57
Suze: could she then switch from her own social security to her ex spouse's social security and collect 50% of his social security? And I said yes.
00:14:12
Suze: And I have to tell you I could not have been more wrong if I tried.
00:14:19
Suze: So, the correct answer
00:14:22
Suze: is, and I want you now to take out your Suze notebooks because it's very easy to get confused about this. But this is the correct answer... this. I can promise you now,
00:14:38
Suze: If you want to collect social security at 62
00:14:43
Suze: right? What will happen is this:
00:14:47
Suze: the Social Security Administration will look at what your benefit would be at 62 based on your own work record. And they will figure that out,
00:15:01
Suze: then they will compare that
00:15:05
Suze: to what your ex spouse's benefit would be based on their work record. Ok.
00:15:14
Suze: And they will look at that and then starting at the age of 62
00:15:21
Suze: you would receive the higher of the two.
00:15:26
Suze: Now, what this means is, if you took it at 62
00:15:32
Suze: you would still get a 30% reduction. So let me give you numbers here. And if you write these numbers down, then you'll never get confused. Like I did the other day, it happens people. But you know, do you remember that one podcast that I gave maybe two years ago where I told you the greatest words in life
00:16:01
Suze: and I said the six greatest words in life are I admit that I was wrong.
00:16:09
Suze: So on some level, it felt good to admit it and that's what it is. But anyway, here we go.
00:16:16
Suze: Let's say you are 62.
00:16:20
Suze: And at 67
00:16:23
Suze: your primary insurance amount, that is referred to as your P I A, would be $1200 a month. Now
00:16:36
Suze: your primary insurance amount is figured at what your social security would be at your full retirement age.
00:16:49
Suze: And remember now, everybody born 1960 or after, their full retirement age would be 67.
00:17:02
Suze: So let's go back to this example.
00:17:06
Suze: So here you are, you are 62 years of age.
00:17:11
Suze: Your full retirement age is 67.
00:17:15
Suze: But if you took your P I A at 62 rather than 67 you would get a 30% reduction.
00:17:29
Suze: So if your P I A, your primary insurance amount is $1200 which is what you would get at the age of 67 and you take it at 62. There is a 30% reduction
00:17:47
Suze: or $360 a month. 30% of $1200 is $360. Or your social security would be $840 a month
00:18:06
Suze: Then what would happen is, the Social Security Administration would then calculate as I said, what your ex spouse's P I A would be at his full retirement age or they refer to it as F R A...
00:18:26
Suze: and let's just say that would be $3000 a month.
00:18:32
Suze: Then what they would do is they would calculate what you would get if you took the spousal benefit now,
00:18:42
Suze: and with that 30% reduction, what that would mean is you would only get $1050 a month. So rather than taking $840 a month, if you took your own social security,
00:19:04
Suze: you would get $1050 a month
00:19:09
Suze: if you took your ex spouse's social security or your spousal benefit.
00:19:16
Suze: So they would automatically give you
00:19:21
Suze: $1050 a month forever.
00:19:24
Suze: Now,
00:19:26
Suze: let's just figure this out. So you understand it. And how did I get that $1050 a month? Remember
00:19:36
Suze: if your ex spouse was getting $3000 a month as his P I A or would get that as his full retirement age,
00:19:49
Suze: you are entitled for a spousal benefit of 50% of that ex spouse's P I A. Got that
00:20:02
Suze: If your ex spouse's P I A is $3000 a month, you are entitled at your full retirement age of 67... 50% of that amount of money or $1500 a month.
00:20:22
Suze: So, how did I get that $1050 figure?
00:20:28
Suze: Well, if at 67 you are entitled to a full 50% of his P I A or 50% of $3000 which is $1500. 30 percent reduction
00:20:44
Suze: because you now want to take it at 62
00:20:48
Suze: is 30% of $1500 is $450 or $1050 a month.
00:20:58
Suze: And that is how much you get. So it does not work where you get to take your Social Security at 62 then you switch over to a spousal benefit at 67. No,
00:21:15
Suze: the Social Security administration figures out right then and there when you want to take a benefit, which benefit would be higher yours or the spousal benefit. And that is the one that they give you.
00:21:36
Suze: Here's one of the big mistakes that many of you make when you go and you figure out the future income that you can count on.
00:21:48
Suze: Now, you have to know that you do not get 50% of what your spouse, whether it's an ex spouse or your current spouse, of what your spouse gets at 70
00:22:05
Suze: you get 50% of what his P I A would have been at his full retirement age. If you wait to take it till your full retirement age, did you get that?
00:22:24
Suze: So the big mistake again, that many of you make is in this example,
00:22:30
Suze: if your ex spouse waited to take their social security till 70 and let's say your ex spouse or your current spouse is now getting $4000 a month
00:22:48
Suze: in your head. You think that if you wait till your full retirement age? So in this example, if this woman waited till she was 67
00:23:01
Suze: you think that you will get 50% of what your spouse or ex spouse is currently getting or $2000 a month in this example? And that is wrong.
00:23:18
Suze: You would only get
00:23:21
Suze: if you were at your full retirement age when you applied for it, 50% of what your spouse or ex spouse would have gotten
00:23:34
Suze: as their primary insurance amount at their full retirement age. So in this case, again
00:23:43
Suze: this person would have gotten $3000
00:23:48
Suze: at let's just say 66 or whatever it was, which was their full retirement age
00:23:55
Suze: even though they're getting $4000 now at 70 because they waited
00:24:00
Suze: because they were only entitled to $3000
00:24:07
Suze: at their full retirement age. You would only get 50%
00:24:14
Suze: of the $3000 at your full retirement age or
00:24:21
Suze: whatever reduction you would take from that money if you took it before your full retirement age. So don't make the mistake thinking. Oh,
00:24:34
Suze: you know, I'm gonna get 50% of what my spouse gets. If I just wait till my full retirement age, it does not work that way. You do get however
00:24:49
Suze: 100% of what your spouse gets if your spouse happens to die. So if your spouse is getting $4000 a month right now
00:25:04
Suze: and your spouse dies, and let's just say your full retirement age, whatever it may be or older, you get 100% of that amount of money. If that amount of money is more than what you would be getting on your own.
00:25:23
Suze: So just remember that what I just said now is the absolute correct way it works. My apologies for that. Just a few things for you to understand, to qualify for spousal benefits. If you are divorced,
00:25:44
Suze: you have to be 62 years of age or older. You have to have been married for at least 10 years. Your ex has to have qualified for social security, whether they've taken it or not does not matter
00:26:04
Suze: and you have to not be remarried at the time that you want that you apply.
00:26:13
Suze: So that doesn't mean that here you are, maybe you're younger, you were in your twenties. And maybe you got married and you were married for 10 years and then your ex went on and was incredibly successful and maybe you weren't as successful and then you got remarried to somebody and you were married for a while.
00:26:38
Suze: But if you are divorced or your spouse died before you then apply for spousal benefits. So let's say they, you got divorced or your spouse died at the age of when you were 60 then guess what? You can qualify for spousal benefits based
00:27:03
Suze: on your first spouse's record. Just remember that also. Just remember, and you should all look into this even if it's your ex spouse
00:27:17
Suze: and you're at least 60 years of age or older, 50 if you're disabled and other things that are out there or maybe you did get remarried after the age of 60
00:27:32
Suze: then what's interesting is that if your ex spouse happens to die, you then very well could qualify for survivor benefits at that point in time. So that's just something that you all should look into.
00:27:54
Suze: Ok. That's a brief Suze School today. But a very, very important one. As time goes on because this elicited a whole lot of questions about social security KT will be adding them to the Ask KT and Suze Anything podcasts. But until Thursday, when Miss Travis will join us again,
00:28:24
Suze: there's only one thing that I want you to remember to say every single day and it is as follows today, wherever I go, I will create a more peaceful,
00:28:39
Suze: joyful and loving world. And if you do that,
00:28:45
Suze: I promise you you will be unstoppable.
00:28:51
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