The Retirement and IRA Show · 2026-07-04 · 1h 14m
Key moments - from our scoring
Substance score
49 / 100
Five dimensions, 20 points each
This episode tackles three critical Social Security misconceptions that trip up both claimants and Social Security agents. The first addresses spousal benefit calculations: when a spouse claims early at 62, their own benefit is permanently reduced by roughly 25%, and when the higher earner later claims and unlocks spousal benefits, the lower-earning spouse only receives the spousal offset - not a jump to the full spouse benefit amount. Jim Solnier and Chris Stein walk through the math of a case where a wife's benefit increased only $54 when her husband claimed at 70, clarifying that this is mathematically correct given her early-claim reduction. The episode also corrects a dangerous error from a Social Security agent: the claim that PIA (Primary Insurance Amount) recalculations stop at 70. In fact, the system recalculates every year based on new earnings; what stops at 70 is the accrual of delayed retirement credits. Finally, they explain the Social Security wage base - for 2026, only earnings up to $184,000 are subject to Social Security tax and credited toward benefits, so additional high earnings beyond that threshold don't increase your benefit calculation. The episode is essential for anyone still working past 70 or advising clients on Social Security strategy.
No. The Social Security Administration automatically recalculates your PIA every year if you have new earnings that hit your record, even after age 70. What stops at 70 is the accrual of delayed retirement credits - not the PIA recalculation itself, so continuing to work after 70 may increase your benefit if new earnings replace lower historical years.
No. Her benefit was permanently reduced by roughly 25% when she claimed at 62. When you claim at 70, she receives only the spousal offset - the difference between her own permanently reduced benefit and what the full spousal benefit would be. In this episode's example, that offset was only $54.
Only if your new earnings replace lower-earning years in your record. However, once you have 35 years of high-earning years (maxing out the wage base), additional work typically will not increase your benefit because the system only credits up to the annual wage base cap ($184,000 in 2026).
The wage base is the maximum earnings amount subject to Social Security tax each year ($184,000 in 2026). Earnings above this amount are not credited toward your benefit calculation, so a person earning $185,000 and one earning $400,000 are credited identically for that year.
The surviving spouse steps up to your full benefit amount, with no penalty applied for any early claiming they did on their own record, providing meaningful income protection for long-married couples.
Our reviewer’s read on each dimension, with quotes from the episode.
The episode contains solid technical content on Social Security spousal benefits, inherited IRA rules, and 403(b) variable annuities, with specific calculations and regulatory clarifications. However, much of the runtime is consumed by casual banter about geography, weather, and celebrity gossip (Travis Kelce/Taylor Swift), which adds minimal value for a B2B operator.
once you peg the needle 35 years, additional work is really not going to do anything because you've got 35 that have maxed it out effectively
RMDs cannot be rolled over. Which is why if you do a Roth conversion, which is a rollover prior to satisfying your rmd, you now have not done a rollover
The content recycles well-known Social Security concepts (bend points, spousal benefits, PIA recalculation) and standard 403(b) explanations. The hosts acknowledge they're working through recurring questions but offer little novel framing or counterintuitive analysis. The perspective is competent but conventional.
I wouldn't say I'm anti variable annuity. We talked in fact on the last uh, series over the month at one show
these rules are complicated for sure. So I don't, I'm not surprised that this misinformation was given
This is a host-only Q&A format with no guest expert. While Jim Saunier and Chris Stein are CFPs with direct retirement planning experience, they're fielding listener questions rather than being interviewed about substantive expertise. The format lacks the depth that external guests with specialized operational knowledge could provide.
This is the Retirement and IRA show coming to you from beautiful Northern Colorado. Join us as certified financial planner Jim Saunier as well as Colorado State University finance instructor and certified financial planner Chris Stein
Jim's entire team specializes in retirement planning
The episode includes concrete numbers: the wife's $1,457 benefit, husband's $5,249 at age 70, PIA around $4,000, spousal offset of ~$54, wage base of $184,000, and specific scenarios around the 10-year inherited IRA rule. However, many general statements lack named companies or broader market data, and some technical explanations reference regulations without pulling actual case studies.
his benefit was reduced approximately 30% more. Actually more like 25% because based on her, um, her birth year, uh, her full retirement age was 66 and two months
So if you have earnings above that, it doesn't increase your crediting to your earnings record anymore. Somebody making 185 is going to credit the same as somebody making 3 or $400,000
The hosts demonstrate good follow-up within technical discussions, with Chris pushing back on misconceptions (e.g., correcting the Social Security agent's error about PIA recalculation at age 70). However, much of the episode consists of tangential commentary and inside banter. When engaged on substantive topics, the questioning is solid, but the overall structure wastes time on non-substantive material.
The agent was incorrect. The agent was probably confused about the, uh, the fact that they no longer grant delayed retirement credits past 70
these rules are complicated for sure. So I don't, I'm not surprised that this misinformation was given
Computed from the transcript - who did the talking, and the words that came up most.
Jim and Chris discuss listener emails on Social Security spousal benefit calculations, variable annuities in a 403(b), converting Inherited IRAs, and the Social Security child-in-care provision's effect on spousal benefits. (10:00) - A listener asks Chris to explain why his additional high-earning years increased his own benefit so little, due to Social Security's bend point formula, and how that translated into only a small spousal benefit adjustment for his wife. He also asks whether Social Security stops recalculating a worker's PIA once they reach age 70. (28:00) - Georgette asks why her 403(b) funds are classified as variable annuities rather than mutual funds, and whether they function like other variable annuities sold on the open market. (54:30) - The guys field a question about a non-spouse inherited IRA, where the account holder wants to know whether the required RMD must be taken before completing a separate Roth conversion. (1:05:15) - Jim and Chris address whether the child-in-care provision removes the early-claiming reduction to a wife's spousal benefit, in a case where she claims at 62 and her husband, the higher earner, waits until 65.
Transcribed and scored by The B2B Podcast Index.
Speaker A: The retirement denier ratio represents the words and views of the show hosts exclusively and should not be construed as investment, legal or tax advice. All information is believed to be from reliable sources however, we make no representation as to its completeness or accuracy. All economic and performance information is historical in nature and is not indicative of any future results. Any indices mentioned on the show are unmanaged and cannot be invested indirectly. Diversification and asset allocation strategies do not assure profit or protect against loss. Never make any investment or financial decisions based on information offered on this show without first consulting your financial, legal or tax advisor. Financial planning services offered through Jim Solnier and Associates llc. Uh, a registered investment advisor.
Speaker B: This is the Retirement and IRA show coming to you from beautiful Northern Colorado. Join us as certified financial planner Jim Saunier as well as Colorado State University finance instructor and certified financial planner Chris Stein teach you about IRAs, 401ks, annuities, Social Security, pension plans and estate planning in a fun and enjoyable show. Whether you are listening live in Colorado or streaming from their website or itunes podcast, Jim and Chris want you to know that they're available to help you plan for your retirement. Just visit their website@jimhelps.com that's Jim H E L P S.com and click the Meet the Team button on the homepage. Now here's Jim and Chris with today's show.
Speaker C: Hello everybody and welcome to the retirement and IRA show Q& A edition for this week. This is going to be the birthday, uh, show. Actually this is going to release on July 4th of 2026, the 250th anniversary, at least how we recognize it of the United States of America. So happy, um, birthday to everyone out there celebrating. And I must say she it doesn't look a day over 240, so 250 years, that's quite a long time. Hopefully we have many, many more birthdays ahead of us, so we've got a pretty typical Q and A show. We've exited Annuity Awareness Month so we won't have a show chock full of annuity questions, although we're going to do one. We promised to do one per show at least, uh, just to work through some of the questions we received during the month of June. And so my understanding is we're going to kick off the show with a Social Security question as we typically do, and then, uh, an annuity question. Then we'll get into some other random retirement planning style questions. So reverting back to our more typical format, uh, that we do on Every month except for the month of June. So Jim is, uh, joining me from. I, uh, guess I'll call it back home, where he grew up in Massachusetts. So he's not in his possible future retirement home of Ohio. He's not in his sometime visiting state of Florida, but he's in Massachusetts visiting family and joining us today remotely from the comfort of his old bedroom. Maybe, I don't know. I don't know. I don't really know where he records when he's back home visiting mom and sister. So, Jim, if you're ready, maybe you can answer that burning question. Actually, this isn't the house you grew up in, right?
Speaker D: Is not even close to the house I grew up. I grew up in the north end of New Bedford, Massachusetts. And right now I'm pretty much in central Rochester, Massachusetts, not far from Wareham, the gateway to Cape Cod. So anyways, that is where I am right now.
Speaker C: So you're not too far from Sandwich.
Speaker D: No, I could. Well, today, which is pretty much the dawn of the fourth of July holiday, I want to get no way near.
Speaker C: Yeah, I remember that. Trying to get on the Cape. We were there on a holiday and it was treacherous.
Speaker D: The traffic, it would be a nightmare. This weekend I will get. I'll go no way near there, but I am in Massachusetts. I'll be heading back to Colorado. Sunday, uh, July 5th, folks. I'll be in Colorado about two and a half weeks before I jump on a plane and head to Ohio again. And I'll be in Ohio for three weeks, at least tentatively. I've got all the flights booked, but I may reschedule. I'm not 100% certain I'll stay in Colorado just two and a half weeks. I may stay longer, I think if it gets really hot. Well, it is hot and dry. If it stays hot and dry, pisses me off. I'll probably go to Ohio. Um, but give us a little update, Chris, because I, I'm not in Ohio right now. I'm in Colorado right now, folks. I keep hearing about the fires though, and smoke and heat and dryness is, is nothing's changed and, and fire restrictions. Finally.
Speaker C: Um, yeah, the heat and dryness are certainly continuing and unfortunately fire season has begun. So we had gotten through most of June and then right here in the last week or so, there's been several fire up. Most of them are south of where we are. We're kind of on the northern part of the Front Range of Colorado, so nothing real close to us, although these fires are big enough out of Utah. Uh, and southern Colorado, that when the wind is right, which it is most of the time, um, we get some haze over here. Sometimes it's thicker than others. It increases the color show, uh, of the sunsets, but I'd happily give those up to not have the particulates in the air from the forest fire. So that's, uh, that part's not good. But we all expected it to come. It was just a matter of when and exactly where. So it's started and just hope it doesn't get too terrible.
Speaker D: Yeah, we'll keep our fingers crossed. If I do move to Ohio, folks, there's a lot about Colorado I will miss. Uh, I won't miss, though, the hot, dry weather, as you all know. But I also won't miss fire season, which I don't really think we can call it fire season anymore. Uh, there's fires all the time. And the Marshall fire from several years ago burned. Gosh, was it 1500 homes in. Was it? I think it was 15, Chris, you can correct me if I'm wrong, but in about 12 hours.
Speaker C: And it wasn't up in the forest 30th. It was in, like, the populated area, which was. That was the shocking thing to me. I couldn't believe a fire tore through subdivisions that. On the Front Range here. You always imagine if you're up in the mountains with a cabin or something, you're totally at risk. But this was right in the population center, which was totally, totally shocking.
Speaker D: But also on December 30, folks, and the very next day, the fire got put out by a big, uh, snowstorm.
Speaker C: Yeah.
Speaker D: So that snowstorm was a day late and a dollar short. But nobody expected, as Chris just said, that, uh, many homes to burn that fast on December 30th. Not in the mountains, but just in subdivisions a little bit north of Denver. So, anyways, I won't miss any of that. All right. Anyways, people aren't listening in for that. We're going to kind of revert back. National Annuity Awareness Month is over. We have a ton of annuity questions we did not get to, and I will continue trying to answer them. Don't let that dissuade you from sending more questions in, if you have them. I shared with Chris that m. The sheer volume of questions we received. And I think I mentioned this on a previous episode. Um, I don't know, enlightened me or not enlightened me, but excited me or pleased me. I don't know which way to put it. It just shows that people are trying to lear growth. They're not being dissuade or dissuaded by firms that want you to believe that annuities are horrible. And you're not being dissuade or persuaded in this particular case, by people who just sell annuities who want you to think they're the best thing next to sliced bread. You're trying to do your homework and learn about them and see if they are a tool that may be able to benefit you. Or as the vanguard, the people that everyone you know is going to go to because they know you geek out on this finance stuff. As somebody on the vanguard, you should have more hopeful knowledge to be able to assist when someone comes to you and says, hey, I'm thinking of buying this, or I've been sold this, or I have this particular annuity, maybe you'll have a little bit more knowledge. So don't, uh, say, oh, National Lunar Awareness Month is over. I'm not going to send a question. Send it. And Chris and I will try to get to them. But we're going to begin today, as we always begin, even during National Annuity Awareness Month. We kept beginning with this, and that is with a Social Security. And sometimes, just to switch things up, an IRMAA question. But Social Security and Irma are kissing cousins. Um, kind of kissing cousins. They have the same lineage, so we often lump Irma into Social Security discussions. But today we will do this. Chris is kind of a, a PSA slash question. It's a series of questions. Let me see how many questions, but. Oh, just two. That's not too bad. I will try to go through relatively quickly just to jump to his questions. And let me, let me forward this to you. And hold on. Okay. You should get it. Okay. You'll see there's a lot of text at the beginning. Oh, don't, don't open it yet, because he's got a hint. Okay. And I want to get to the state hint, um, which you should be able to guess. If you don't, I'm personally going to fly home right now, smack you upside the head, jump on a plane and fly back here. So you should get this question. But the point is, once I ask you the question and you guess it, because if you don't again, you're gonna get smacked. Um, you can reference this rather than me reading it all, and I'll just jump to his questions. It's an interesting case, but I think you'll be able to add some enlightenment. Okay, here's this hint. I live in the state whose NBA team will have won the championship by time you read this. And last won the champion. This guy was very sure of himself. And last won the championship in the year that this almost 71 year old was in the spring of his freshman year at college, which for those of you who are counting, he says is the spring of 1973.
Speaker C: Well, I do know that one. I would be embarrassed not to. That would be the, uh, New York Knickerbockers he's talking about there. Commonly called the New York Knicks, but. Knickerbockers. Knickerbockers.
Speaker D: Um, at least he didn't say, I live in the state where Travis Kelsey and Britney Spears are getting married. Because I am fed up, uh, with hearing about this. Cut. All that's on the news.
Speaker C: Well, getting married at Madison, Coincidentally, yes, they are getting married in the same place. The Knickerbockers play true.
Speaker D: There you go.
Speaker C: So. But that's about to be over because they're getting married on, well, today, when this releases on July 4th, aren't they?
Speaker D: They get married on the holiday.
Speaker C: Yeah. 90. It's either Friday or it's either the 3rd or the 4th.
Speaker D: All's what I keep saying. My mom has the news on constantly, which is fine. I don't mind news at all. But they just keep talking about the rehearsal dinner tonight. The rehearsal dinner just. Oh, my God, people.
Speaker C: So I think they're getting much more
Speaker D: important things than a billionaire marrying a millionaire football player. Goodness. All right, can you even name one of her songs?
Speaker C: Um, okay, that was the answer right there.
Speaker D: That was the answer. Okay, perfect. Wait a minute. You have a teenage daughter. You should know all her songs.
Speaker C: I don't know.
Speaker D: Don't teenage girls go gaga over her?
Speaker C: Yeah, but I don't. I don't have a young enough teenage daughter that she rides around in my car listening to music anymore. So. No, we don't listen to a lot of Taylor Swift in my car.
Speaker D: Oh, uh, no, Taylor. Oh, uh, that's right. I think I called it Britney Spears. Sorry, folks. Wrong.
Speaker C: I wasn't listening if you did say that.
Speaker D: So is Britney blonde? I don't know. Whatever. I think so. I think they're both blondes. Okay. And Taylor's bigger than Britney. Right? I might be dating myself on Brittany. Okay.
Speaker C: She's the biggest.
Speaker D: All right, who's cuter?
Speaker C: Uh, uh, hard to say. They're very different looking.
Speaker D: All right. Shows you how much I know, folks. Sorry, Mr. M. Kelsey, if I, uh, said you were marrying Britney Spears, apparently you Were marrying Taylor Swift. Taylor Swift. Thank you, Taylor Swift. All right. And I wish you just get it over with so it's not on the news all the time. All right, so open up the email now because you. You guessed and you can see that there's quite a lot in there. Um, I'm going to jump to his questions, and if you want to reference his description, you can. This is kind of a psa and I'm skipping. I apologize, listener. I'm skipping a lot of the psa. But Chris will build it in now that he has the email into his answer. I'll read the questions. Question 1. Can Chris comment on the math here? Well, you're going to have to explain what math he's talking about. It seems to show that due to the bend points, even though one's spouse worked an additional eight years, it moved the needle very little for my wife's monthly benefit. So he just kind of. You're going to definitely have to read his psa. Um, folks, what happened is he feels his or he realized working longer really didn't increase his wife's benefit all that much. And that's what he's getting at. And you can see in his question, Chris, he clearly referenced a one ratio as opposed to three and a half times. Chris will explain what all that means, folks. His second question is. I asked the agent, this is Social Security agent, folks. He went to Social Security to confirm what Chris is about to show you. I asked the agent, as I am still working, will they automatically recalculate? This one intrigued me. Chris, I remember you talking about this in the past. I asked the agent, Social Security agent, folks, this gentleman is still working. I asked the agent, as I am still working, will they Social Security administration automatically recalculate my PIA and make any adjustments in my wife's spousal benefit? He said, no, they stop recalculating someone's PIA when they reach 70 even if you continue to work. Is this true, Chris? I have never heard of that before. And then he put in parentheses, not that it's going to make much difference in the amount anyway. Anyway, Chris, uh, he. You're going to have to definitely explain the calculation he's talking about. But then this PIA thing, I'm pretty sure you have mentioned in the past that they stopped calculating.
Speaker C: Yeah, let me knock that one out first. And then I've been skimming through the rest of what he said, and I can kind of summarize it. He did write a kind of a lengthy email. But the PIA recalculation The agent was incorrect. The agent was probably confused about the, uh, the fact that they no longer grant delayed retirement credits past 70. But every year that you have new earnings that hit your earnings record, the system automatically recalculates your pia. And if it increases your benefit and would subsequently increase your spouse's, uh, spousal benefit, they automatically adjust that so there is no ending age for working longer and then them ignoring it for some reason. So that part was incorrect. That, and the only reason I know that right off top of my head is I've, um, run across that question previously and did research and found, um, evidence that that is not true, that they do not stop it at 70. What does stop delayed retirement credits? So that's why we always say there's really no reason to delay past 70 in claiming your benefit, other than some people who play that little game of going past 76 months to get them into the next year and then claiming retroactively, they're just kind of shifting the benefit. But, uh, in essence, they're still claiming at 70. So if you wait and claim after 70, whether you're doing it in real time or retroactively, you're leaving money on the table because there's no benefit to you for waiting till after. But if you continue to work even after 70, they will each year recalculate your PIA to see if your benefit should increase. Now onto his original question about the spousal benefit. His original story. He was, he started it off essentially sharing a number of months ago. You can you all maybe recall if you were listener to the podcast back then that I had asked for people, there seemed to be a wide variation of what people were expected to provide to prove they were married in order to claim spousal benefits. Some people, the system seemed to know they were married. Other people had to produce all sorts of documents. Some people just stated they were married. And that seemed to be fine. So I asked people to, you know, give me their stories. And he tells a story of them going in and his wife had claimed, uh, at 62, he was waiting until 70, which just happened here back in August of 2025. And when that happened, of course, when he claimed it unlocked the door to a spousal benefit. And he shared that when they went in to do that, uh, they were just told to call on the phone, have a phone conference, and the agent over the phone essentially take, took their attestation, verbal attestation, swearing that they were married and it was the truth. And the only hiccup they Ran into is that would have worked. They, you know, just swearing, yes, we are married and under penalty of perjury, uh, if you will. Uh, they're making that statement and they record that. And that was going to be good enough for the agent to accept that they were married to, uh, grant, uh, spousal benefits to the, to the wife. Um, they had different last names. And apparently the agent said, because the different last names, I'm going to need a piece of paperwork. So they then had to go down to the office. He took the agent, took a quick photocopy of it, and gave him back the marriage, uh, certificate. And all was good. So that was the PSA part of it. But what he was surprised about is when they went in, it turned out that once she claimed her spousal benefit, uh, it only increased her benefit $54. And he asked, you know, what Jim read first is the first question of his email. Can I comment on the math here? Uh, the wife had a benefit of 1457amonth, and his benefit by waiting until 70 was quite large. It was 52, 49 per month. And so, um, her benefit was reduced because she claimed early. She claimed at 62. So her benefit was reduced approximately 30% more. Actually more like 25% because based on her, um, her birth year, uh, her full retirement age was 66 and two months. So basically 66 we'll call it. And for those of you who had a full retirement age of 66, if you claim at 62, your benefit is reduced 25% for the rest of your life. Now, when he claimed that unlocked the door to a spousal benefit. Well, his benefit, his age 70 benefit was 5249. But that was after delayed retirement credits. So doing a little quick math, I had my calculator right in front of me here. I, uh, can deduce his pia, his primary insurance amount, which is the amount, uh, that he would collect if he claimed it as full retirement age, was about $4,000. So that meant the spousal benefit was as high as 2000. So a lot of people are under the false impression that if she's collecting 1,457, but when he claims and unlocks the door to the spousal, she should be bumped up to 2000. Are missing how spousal benefits are calculated. Spousal benefits are calculated by starting with her own benefit. They give you her own benefit first. And then if the spousal benefit adds to it, they, they top it up with called what's, what's called technically a spousal offset. In this case her spousal offset was about $54 but meaning her PIA was like 1950 just to use some round numbers. So his, the spousal benefit from his record was 2000. Her own benefit was 1950. So if she'd waited t retirement age they would have paid her the, her own 1950 and then the $50 offset to get her to 2000. But she permanently reduced the 1950 by claiming it at 62, turning it into a benefit of about 1450 instead of 1950. And so when he then opens the door to the spousal benefit, they don't say oh, we're going to ignore the fact that you claimed at 62. No, they're going to keep that in place and they're going to say well your spousal offset is $50. So they granted her, you know, in his email he calls it 54. I'm just using round numbers. But that's how they got to her new spousal benefit. It permanently reduces the potential spousal benefits. So a lot of people are confused by that. So we get a lot of questions regarding that. And so there's a, you know, drastic difference in uh, benefits here. And so you know, in his case he's collecting an extra 1250amonth because he waited to 70 compared to his full retirement age and significantly more than his benefit at um, 62. So he waited for a very long time. The good news is if uh, one of them passes away, which is going to happen at some point, right. Um, the survivor will retain his benefit. So um, let's say he passes. She now would be stepped up to the full 5249 that he's collecting. There's no penalty for her claiming at 62 for the survivor benefit. So he didn't ask that question. But that's just informational for their particular story. So it is typical he, he observed, you know, he worked, you know, a bunch of extra years, didn't really move the needle a whole lot on his benefit. He'd already had a lot of high earning years. And that's true once you fill the bucket with 35 years of pegging the, the benefit which is hitting the wage base, which, the wage base I should have at the top of my um, off the top of my head right now for uh, uh, 2026. But it's I think about 146 um, thousand dollars I might be behind a Little bit the 2026 fact sheet maximum. Oh, it's 180. I am a little behind 184. Sorry. Not. Not 146, 184. So, um, each year that goes up. But that's the. At least under current rules, they're likely going to change this just to predict something here on this July 4th show. But only the first $184,000 of your earnings in 2026 for subject Social Security taxes. So if you have earnings above that, it doesn't increase your crediting to your earnings record anymore. Somebody making 185 is going to credit the same as somebody making 3 or $400,000. So once you peg the needle 35 years, additional work is really not going to do anything because you've got 35 that have maxed it out effectively, the benefits that you can accrue. So he's right. He probably won't. They'll automatically calculate his PIA as he continues to work, but it's likely not going to move the needle for his own benefit. Uh, and therefore also not probably for his wife's benefit either.
Speaker D: All right, well, thank you for clarifying that. I am sure he will thank you as well. Um, I did not know that about. When he wrote that about the pia, I was thinking, wow, but now you clarified all that, and yet it to me highlights that sometimes the advice you get from the agent can be wrong.
Speaker C: Yeah. And these rules are complicated for sure. So I don't, I'm not, I'm not surprised that this misinformation was given. It's not a common question because not that many people continue to work past 70. And those that do, very few are in the Social Security office asking the agent, am I going to get a recalculation of my PIA as I continue to work? And most. Doesn't really dawn on most people to even ask. So this isn't something the agent would have run across regularly. And in the back of their mind, they're thinking, oh, yeah, something ends at 70. It must be the PIA calculation, when in fact it's delayed retirement credits. That's what ends at 70, not the PIA recalculation. That happens indefinitely. They don't want to. If you happen to have a good strong earnings year that replaces a low year in your previous calculation. They don't want to, you know, they don't want to harm you in that way by not considering it. There's nothing in the law that says earnings in one year should be ignored compared to other years. It's all of your earnings from the year after Birth until death. Those all go into your earnings record at Social Security. It is not just the last 10 years, which some people think. It's not just the last 35. It's not from age 21. It's none of that. It is literally, if you look at your earnings record, it starts the year after the year you were born. The only year that doesn't get counted is the year of birth. That does not show up in your earnings record every year after does. Most of them are zeros at first, right? Most people don't have earnings in the year they turn one and the year they turn two and the year they turn three, etc. But if you did, they would show up in the earnings record and all the way to the bitter end till the last day that you're on this earth. If earnings are reported for you by your employer or you know, self employed, they're going to hit your earnings record.
Speaker D: Hey, fair enough. Uh, fair enough. Okay, now we're m going to get into regular. Well no, we're going to get into an annuity question because normally it's the second Social Security question. We're going to instead get into an annuity question. So I apologize folks, Folks, we'll get into non annuity stuff. Um, this question, this state hint question. First of all, take your left butt cheek, lift it up and put your left hand under it. Take your right butt cheek, lift it up and put your right hand under it. No googling. I don't think you're going to get this. It's all I'll say the state hint. My state is the largest state by area east of the Mississippi. It also has the most counties of any state east of the Mississippi.
Speaker C: Huh. Um, Alabama.
Speaker D: Close. It's a southern state according to this gentleman. Georgia. I totally missed that. So I go. I didn't google I chat GPT this one folks. And chat said Georgia. But and chat made a good point. He said if the listener says largest by total area, which is what they said, if that includes inland water and Great Lakes water, then Michigan hands down is logic. But the trivia's wording largest state east of the Mississippi usually points to Georgia. So you Michiganians, if you want to argue this, you may. Um, but I never thought of that counting water as well.
Speaker C: Yeah, the water between the mainland and the island, that's part of the state. Do you count that or not? I would, I would say no. You got to be able to touch dirt for it to count for me.
Speaker D: I think so. All right, fair enough. Okay, here's the question. Folks, I have an annuity question to help celebrate your recent National Annuity Awareness Month. In your discussions, variable annuities don't seem to be your preferred annuity option. You seem to prefer single premium immediate annuities. And I know kiss keep it simply spia. Okay, fair enough. We're not going to get into all that if you're a long time listening. You know, Chris and I do favor spias. I wouldn't say I'm anti variable annuity. We talked in fact on the last uh, series over the month at one show. I forget which one about Iovas investment only variable annuities and how they could have been used to help someone. Uh, I think she was 90 or 90, approaching 95. I forget she was up there in years. I think she was 90 and her current annuity was going to forcefully annuitize at 95. And I explained to her that she could consider an Iova investment only variable annuity. Uh, because many of them exist and they have very long. And I spoke about one in particular that did not have a forced annuitization date until 121 1. So uh, 120 or 121. I forget at this point. So again, I wouldn't say I'm negative variable annuities. We just prefer the simplicity, the easy understanding and generally the higher rated mutually owned insurers that tend to offer single premium immediate annuities. Okay. She continues though, like Chris, I am an educator and I have a 403B with TIAA. Some of my main investment options are the CREF funds. So TIA used to go by TIA. CREF. I forget what CREF stands for. I think TIA A. Look it up again, Chris is Teachers Income Annuity association or something like that. Ref. I forget what that is. Uh, they did create the first variable annuity though. But anyways, cref. I forget what it stands for. That used to be the name of this company. They are very popular A very well known in the non profit and employer. Excuse me, um, Education realm because they're big players and what are called 403B plans which also go by the name in the tax code. They've been assigned to Tax Sheltered Annuities. So.
Speaker C: Or tda. Ah, Tax deferred annuities too.
Speaker D: Excuse me, is it tax sheltered or tax deferred?
Speaker C: I think it's tax deferred. It's not really a sheltering, it's. It's a TDA is the, the shorthand most of the time that you see on the uh, insurance company's documents when they've got a 403B that they're holding.
Speaker D: Well, I, I chatted it real quick. According to chat, a 403B M plan is an employer sponsored retirement plan available primarily to employees of public schools, tax exempt organizations and ministries. It is formally known as a tax sheltered annuity or TSA plan. Yeah, and according to Chad, he got this from the irs.
Speaker C: I wonder if just for IRS confusion, they're using that as shorthand in some of the insurance companies. Some of the documents that I see from clients is where I'm seeing this.
Speaker D: I, I'm getting this from a January. I just clicked the link that t is I always ask chat if you ever use chat to source everything. I click the Source. It's from January 29, 2026 from the IRS. Um, IRS IRC 403B tax sheltered annuity plans. A 403B plan, also called a tax sheltered annuity or TSA, is a retirement plan. I won't keep reading, but that's directly from the irs. Yeah, so anyways folks, tax deferred annuity, tax Sheltered annuity, same thing. What it is, is a legitimate plan type that again is offered generally for nonprofits and ministries. Uh, most educational institutions are nonprofits, governmental run, and they offer 403 BS. So this woman has a specific question really about 403 BS and variable annuities. Not necessarily TIA itself, it's just that if you are an educator, it's probably custodied with tia.
Speaker C: Yeah. So TIAA stands formally for Teachers Insurance and Annuity Association. And then cref, which they've dropped that labeling now it's all been folded under TIAA now, uh, stood for College Retirement Equities Fund, which as you pointed out was a variable annuity offering from them where TIAA is known for fixed annuity offerings.
Speaker D: So this woman has a Tax Sheltered annuity, which again is a special type of annuity in the tax code offered. Uh, for all intent and purposes, it works almost mirror similar to 401k plans offered by your private sector employees. Just think of it that way. Similar to a tsp, which is the federal government's version. They operate very similar, they have their own unique rules. Yes, but it's very, very similar to that type of structure. And here's where she's getting confused. Inside this tax sheltered annuity, she put most of her money in CREF funds. I'm not going to read them. She put the names in there. I'm not. But she has these CREF holdings, which are investments very similar to mutual funds tied to the equity markets. Hence variable annuity, because that's what CREF investments are. In fact, Chris already confirmed the E stands for equity. So tia, the insurance company created again, it used to be called TIA cref. Now it's just tia. So she says, hey, I kind of got all my money in these CREF funds. She says, Inside my 403B. These are labeled as, quote, variable annuity. But to me they have always seemed to function as regular mutual funds. Can you tell me what it is about these funds that make them variable annuities instead of being mutual funds? Or are these simply annuities that haven't been annuitized? Are they like other variable annuities that you might purchase on the open market? All right, so let's kind of dig a little bit into 403bs. That's really what she is, is was getting at. And the key to remember they were called tax sheltered or tax deferred annuities because they truly were in the past only offered through insurance companies. And they were annuities. Nowadays they've kind of lost a lot of that annuity structure. There's still a 403B that still considered a tax sheltered annuity, but there's a lot of non insurance company custodians offering 403s. They don't have to be a traditional annuity in the traditional sense. And your CREF funds are, uh, for all intent and purposes, mutual funds. They might have different fee structures inside the 403B way you work as opposed to maybe somebody buying them on the retail market. And I do not, um, sell, offer, do anything with CREF funds. So I don't even know if CREF funds are available on the open market or if they're only available inside a 403B plan. So the reason you say they kind of seem to act like mutual funds is they are mutual funds. Now, technically speaking, inside a commercial variable annuity that you might buy on your own. I've said this many a times, the funds inside there might have the same names as mutual funds. They might have the same investments, the same managers, but they are technically considered separate accounts. And they are slightly different than retail mutual funds in that they often have higher fees.
Speaker C: Fees.
Speaker D: Now I am talking about commercially purchased annuities, not your CREF 403B investments. You wanted to know how your CREF holding your 403B is similar to a traditional variable annuity you might buy on your own. When you buy a variable Annuity, you're still going to have this insurance wrapper, a real insurance wrapper. As I've said, 403Bs have kind of migrated from their original founding or establishment as true annuities, if you will, offered, uh, by these various government employers and nonprofits and ministries. And there are, uh, now custodians who don't necessarily are insurance companies, but they're offering a more custodial wrapped 403B with different investment choices inside there, similar to your 401K accounts. And those will be more traditional mutual funds. So your CREF holdings are, uh, not the variable annuity part. The 403B is being considered by TIA to be a quote unquote variable annuity because it has investments in it that can do what Chris.
Speaker C: They can go up or down or down.
Speaker D: TIA also offers, and I'll let Chris speak to this, even though the woman doesn't mention it. Uh, Chris works with this more than I do now. He sees them. They have a traditional fixed annuity option too, inside their 403Bs.
Speaker C: Yes. Which in that one, the way it's designed, like any fixed annuity that we've talked about on the show here in the past, is that it retains essentially, um, principal protection. It doesn't go down due to any kind of market movements or interest rate movements or anything like that. Can you, quote, lose money because of fees? Possibly, but generally you're going to have principal protection plus earn some type of credited interest that, you know, is calculated a variety of ways, depending on the fixed annuity. So they have their classic annuity that's been around forever. That many, many people that are educators that have TIAA as the custodian in their, uh, uh, for the retirement plan, you'll see right in your statement, something called TIAA traditional, that's a fixed annuity in their own special, you know, version of it. But that's a classic case of a fixed annuity that doesn't have the up and down swings due to an index or other market forces that you'd see with the CREF holdings. The variable annuity holdings. That's the, the main difference.
Speaker D: Just consider your tax deferred annuity or tax sheltered annuity 403B to be the vessel, the wrapper when you're dealing with TIA or, uh, TIA CREF. If you have the TIA traditional, that is the fixed, and you invest in it inside your 403B, you kind of getting a fixed annuity where TIA is going to most likely pay a fixed rate of interest. I Don't know if it's annually reset or multi year, I'm not sure. But your principal is protected. The reason you also see on yours variable annuity TIA is also identifying for you that, hey, some of your dollars inside this are subject to market volatility. A fixed annuity, as you guys all know, Chris rightly pointed out, except for fees, that on some fixed annuities could result in a loss of principal. Most fixed annuities fully guarantee principal. You don't lose, you just get a fixed stated amount of interest every year. But a variable annuity, TIA is going to identify that for you. And that's what they're doing, Listener, and they're saying, hey, these particular dollars are in investment sub accounts. They are mutual funds. These are in investment sub accounts. And they can go up, they can go down, you can lose value. And I think that's TIAA's way of identifying to you, I have or you have variable holdings. And you might, you don't indicate you might also have the TIA traditional. And that's what they say. This is a traditional annuity is what TIA is saying. And it's more of a fixed annuity. And keep in mind, TIA is the ones who created the concept of variable annuities in the 1950s. So they're the ones who thought of this and created this, hey, can we grow the, the dollars that people put into annuities, not just with a fixed option, can we allow them actually to buy investments with the money in the annuity? And it can go up, it can go down, but over the long term, it may earn more than our fixed account. That's what gave birth to variable annuities and then to fixed indexed annuities and then to RILA registered index linked annuities. They just keep evolving. So anyways, listener, that's you don't overthink this. You just have a vessel now. You can take this vessel when you retire, you can leave it at tia, you can leave it at your employer if they allow it. And I'm sure they would, but double check with them. You are allowed to move it to an ira. So if you wanted to leave and move it to an IRA when you separate from service, you can do that. So it's just the vessel that your employer has created to allow them, your employer to put money in and you to put money in. And again, as I tried to specify, you happen to have yours through an insurance company. I won't dispute that. But a lot of more Modern on newer 403B plans, they are not limited to just traditional annuity products. They work for years. But treasury regulation, the, the IRS, uh, Department of treasury, which is kind of the IRS, they have made it perfectly clear a 403 can be held in an actual annuity. Yes, but it can also be. And they went out of their way to stress this. A custodial, a custodial account and the uh, company that offering it can treat it like an annuity contract. They can get the same tax deferred benefits of an annuity even though it's a custodial account. You have an insurance company, you most likely have a traditional annuity, not a custodial 403B. But the only difference between the two is kind of the companies that sponsoring them, Insurance companies are going to sponsor a 403 through their annuity platform like TIA is and a custody one would be offered most likely by a non insurance company. And they might have different investment choices in it as well. So hopefully that's, that's clearing the air a little on what you have. Don't overthink it when you say they like any other variable annuity that you may purchase. Kind of yes, but kind of no. Um, they're not going to have the riders that you can get. Um, with a privately purchased variable annuity they may not have the investment choices and I think they're governed and regulated under the same section of the tax code. But there would probably be enough meaningful differences, the biggest being, and not so much anymore, but gosh, during 2006, 7, 8 and 9. Those years are known in my industry as being the heyday of variable annuities with living benefit riders. We spoke about this a few times in previous shows over the years and it's during that time period where insurance companies were giving these crazy types of living benefit income riders that they were attaching to their variable annuity chassis. You can't get that inside a 403B. You don't get that type of offerings or enhanced death benefits. We talked about those, uh, in June where variable annuities and other annuity contracts may offer for an additional fee, a guarantee that they will grow a death benefit irrespective of how your account performs. Because remember, variable annuity can go up, it can go down. The enhanced death benefit pretty much locks in and protects a minimum death benefit and grows it at a certain guaranteed amount every year. Features like that are not going to be available in your 403. So I think they differ enough from a privately purchased variable annuity, but at their core they're established under the same section of the tax code under the same rules. So anyways, that's it. I don't want to beat that horse to death too much, but hopefully that gives you a little bit of information. You just don't overthink it. Listener, you have an employer sponsored retirement account. Now if you do buy the TIA Traditional, that's a whole conversation for another day because there can be some limitations on that. Just make sure you know what you're purchasing. Purchasing. If you buy the TIA Traditional, definitely talk to the plan representative. Get a good understanding. Nowadays with AI note taking, do not hesitate to either have one of those AI, uh, note taking apps on your phone or if it's online, bring one into the meeting. And don't take no for an answer from your rep. Just tell him I don't have a good memory. I want to make sure I'm documenting everything you're telling me. Uh, especially if you are in a two party state. Uh, the states like California where both parties have to know they're being recorded. Colorado is a one party state. You don't have to tell the other person you're recording them. But my point is, and I wouldn't even use the verbiage recording you're transcribing because that's what these programs do. They don't even have to save the voice recording. They'll just give you either an AI generated summary or the AI generated transcript. My point is nowadays don't hesitate because we did receive Chris a long email and I have not got to it because I'm not an expert in tia. Really diving deep and with a bunch of questions on TIA Traditional and Traditional Version 2. Apparently that recently came out and my suggestion when we get to that question, we can answer some of her concerns, not all of them. She needs and you listener, if you have any questions, every 403B, 401K, 457 tsp will have a plan representative contact them. Um, schedule the meeting and don't hesitate to transcribe it. So there should be no more of these coming home and a day or two later trying to remember what the person said and misremembering and getting the wrong info. Don't hesitate to transcribe everything. Anything you want to add, Chris?
Speaker C: Uh, one thing I do want to add since you brought up the traditional is that um, surprisingly there's different implementations of the TIAA Traditional from one employer to another. The statements might say TIA traditional, but they will function a little differently. Namely some of those have as you know Jim, this 10 year payout restriction where when you want to start taking money out, you can't just take it all out at once. The fastest you can take it out is over 10 years. Other times the TIA traditional and I'm assuming the employer negotiated it with TIAA, it's fully liquid, doesn't have the 10 year. Even though it's still called the TIA traditional. And then there's other factors too. So just because it says that you can't, it's unfortunately not as easy as just googling. Tell me about the TIAA traditional because it's going to differ depending on the employer and the plan agreement they have with tiaa. So you got to talk to the rep and I think Jim's suggestion is excellent. Record it or transcribe it so that you've got document of exactly how they explained it and dig into exactly how it works.
Speaker D: Exactly. And for the listener who sent a very long detailed question on TIA early in this, uh, no, I have not got to it yet. I was hoping to try to get someone from TIA to come on and that's not going to happen. Their compliance is, would have none of that. They made reference in that that there is a new TIA version 2 or something that helped address that illiquidity that you referenced Chris, because we've seen many times that 10 year payout that now is far more liquid but pays less interest. And this person who emailed us, uh, was, was wondering about that. She's why am I getting less interest because of the liquidity? Because Chris is referencing one of the issues with TIA was its difficulty getting your money out. It was uh, under a 10 year payout. In fact, the ED slot, ED slot personally had a massive issue with TIA because of the way they used to do that payout. When RMDs began, we. I don't even want to try to rehash it because I believe TIA finally fixed it. But this was a thorn in Ed Slott's side for years and he had nothing nice to say about TIA because he was saying TIA is forcefully making um, excess contributions to IRAs. The way they were handling this forced payout, I don't want to get deep into it because I believe TIA finally with the technology fixed that issue. But do you remember that Chris, this is going back 1012 years now. Do you remember us talking about that or me talking about it specifically?
Speaker C: I'm very familiar with that issue.
Speaker D: So anyways, my point is we are not TIA experts. We come across them. Um, TIA though is A fine company. It's highly capitalized. A. I'm not saying anything negative about them, but they have some complicated products, and the best person to be talking to is a TIA Replacement.
Speaker C: Yeah, perfect.
Speaker D: Okay, let's jump into another one. Um, I'm gonna do the short one first, okay? Okay. Hello, Jim and Tim. Um, team. Not Tim. We don't have a Tim. Do we have a team? We're not a Tim. All right. Sorry about that, folks. Uh, hello, Jim and team. You've just been lumped into the whole team, Chris.
Speaker C: I'm okay. I'm a team player. I don't mind that.
Speaker D: Okay. I don't have a decent state trivia question, so instead, I'm just going to send you all my best wishes for rain in the Rockies.
Speaker C: Much appreciated.
Speaker D: We definitely need it now, listener with. With the, uh, fires. Okay, after listening to the latest. And I'm. I haven't listened to this show and, uh, I'm personally friendly with this podcaster and I don't think he would mind me mentioning his name, but I'm not going to because I don't know what he said. So we're going to just call him Podcast X. After listening to the latest episode of Podcast X and then reading a Morningstar article, I have the following scenario and want your help. Okay, so let's just get to his scenario. I have a non spousal inherited ira, and I understand it means I cannot convert it to a Roth and I need to follow the 10 year rule.
Speaker C: Okay, assuming he inherited it after 2020, he's.
Speaker D: I'm assuming he did because he's just saying. He's. He's admitting. He says I must follow the new 10 year plus RMD liquidation rule. So it's telling me he inherited it from a non spouse beneficial. Excuse me, a non spouse owner from someone who passed away after their required beginning date. So he must not only close it within 10 years, folks, he has to take an RMD from it every year for the first nine. Right? And then make sure it's all closed by 10. So anyways, we just have to make these assumptions based on what he wrote. I'm, uh, meaning him. I'm using the RMD I'm receiving to directly pay taxes. I am not 70 years old. Okay, that doesn't really matter here, but okay, he's not 70 either. I have my own IRA at a different brokerage house. That wouldn't even matter in this case, listeners. But he has a different personal ira, whether it was at the same custodian or Not. The rules are not different when we get into his situation, but let's just say he's got an inherited ira. I'm going to make this up at Vanguard. And he has his own IRA at Fidelity. That's what he's describing.
Speaker C: Okay.
Speaker D: With my ira, I want to do Roth conversions. So far, so good, Chris. Yeah.
Speaker C: So everything sounds fine so far.
Speaker D: Uh, sounds fine to me as well. I now have a question that I think is simple, but I don't know. Do I have to execute my inherited IRA RMDs before I can do my current conversion?
Speaker C: No.
Speaker D: Okay, Sorry. Done. Um, move on. You. You rained on my parade. Well, you can. Oh, I got it right this time.
Speaker C: You can tell right this time you did.
Speaker D: Nice, Nice.
Speaker C: It needs to rain on the wildfires, though, instead of the parade. You can explain to them, or we should explain to them that the RMDs coming from those inherited IRAs are standalone, unique to that in comparison, completely separate from everything that you're doing with your personal ira.
Speaker D: Absolutely.
Speaker C: That's why.
Speaker D: That's the key there.
Speaker C: Timing doesn't matter.
Speaker D: And don't forget, listener. This is going to sound bizarre. Chris.
Speaker C: Yes.
Speaker D: Whose IRA is the inherited ira, technically.
Speaker C: Technically speaking, Technically speaking, still the deceased person's ira. You are simply the beneficiary having to follow the beneficiary rules. That IRA does not belong to you.
Speaker D: Technically, technically speaking, Chris is correct. It's the dead guys. And I'm sorry, I didn't mean to sound flippant. It could be someone very dear to you, but it's the deceased person's ira. You are, uh, the beneficiary of it. The rule that he is talking about is the rule that says beginning in the year, you are going to be subject to RMDs today, I.e. age 73, beginning on January 1st of the year you turn 73. RMD rules apply to your IRA. Your personal IRA. This inherited IRA is not his personal IRA. It's the decedent's IRA. He is just beneficiary. But on his IRA, he says he's not even 70 yet. Uh, great, because it doesn't matter until he hits 73. And in a couple more years, it won't matter until he hits 75. I don't know. How old is he? Says he's not 70. So is he 69 and a half or is he 40? We don't know. But the point is, uh, what he was kind of getting a little mixed up with is on your personal Iraq, beginning in the year you turn today 73 January 1st. IRA rules apply even though in year one you don't have to take your first RMD until April 1st of the year, following RMD rules apply on January 1st, even if you turn 73 on December 31st, the very last day of the year, it doesn't matter. On January 1, RMD rules apply and RMD rules apply. Say Kris, the first dollars out of
Speaker C: your IRA are what are always considered the rmd. So in the in a year that you owe an RMD, if you take money out, the IRS considers those first dollars to be RMD. And the gotcha here is RMDs cannot be rolled over. Which is why if you do a Roth conversion, which is a rollover prior to satisfying your rmd, you now have not done a rollover. You have taken money out as an RMD and contributed it to your Roth, which you likely are not allowed to do if you're no longer working and you don't qualify. If you've reached RMD age, not that many people are still working, so they don't qualify to make a direct contribution to a Roth. That's the gotcha. So you always have to. If you want to avoid that gotcha, you always have to satisfy your RMD in a year that you owe an RMD prior to then proceeding with a conversion.
Speaker D: Correct? Because he does ask, can you provide a link to the IRS code that specifically captures this requirement? No, I can't provide a link because this is a podcast. But I can tell you IRC section 408 uh, and these are all going to be in parentheses. I don't know if that matters. D3E says the following says rollover treatment does not apply to any amount required to be distributed under the IR RMD rules. And listener, you can go to IRS Publication 590B. That puts it better. The 408D 3E is going to be written in legalese because it's the tax code. Go to publication 590B. It says the same thing more plainly, and I am quoting. You can never make a rollover contribution of a required minimum distribution. It's right there. So the first dollars out is going to be your rmd. You cannot roll over a required minimum distribution. Chris anywhere in The IRC or Publication 590B say that RMDs cannot be converted. Does it actually have that verbiage anywhere?
Speaker C: No, because it satisfies that by saying you can't roll it over and every conversion is a rollover. So they don't use the word conversion because that would only apply to a subset of rollovers. They handle it all by just saying you can't roll it over, which then captures or prevents conversions as well, because all conversions are rollovers. Although not all rollovers are conversions, because you can roll over pre tax to pre tax, for instance, but you cannot roll over an rmd. Thus, that bar is converting it.
Speaker D: And listener, your inherited IRA is not yours. I mean, it is. I mean, if you, if it was stolen, if you were a victim of fraud, they would say you were robbed, not the decedent. But technically speaking, that is not your ira. You are beneficiary of a decedent's ira, so doesn't matter when you take money out of that, you can still do your conversions. And because you are not at RMD age, you're not even 70 yet, so you're. You're fine. RMDs don't begin until you're 73. But just keep in mind, January 1st of the year you turn 73. Or if you were born after, I think it's 1960, but don't quote me on that.
Speaker C: 1960 or after.
Speaker D: Okay, then your RMDs don't begin until YOU January 1st of the, ah, year you turn 75. So. And they could change that by time that happens. That's still years away. So, anyways, good question. Hopefully, hopefully that coincides with Podcast X, because I have great respect for the host of Podcast X. Okay, do we have time for more or not? I know you said we have to finish early, but you tell me.
Speaker C: I, um, would prefer to end it. But if you want to squeeze in one short one, I will ask Joe not to get too mad.
Speaker D: Ah, okay. All right, let me. It definitely can't be the one I had or Joe would personally fly out to Massachusetts and kill me. Uh. Oh, she'd kill you first for letting me answer and then fly out to Massachusetts and kill me. Uh, Joe is the one who, uh, case folks don't know. She kind of handles posting this because I have no idea how to do all that. All right, um, I'm going to hit Chris with a curveball. I just opened up a Social Security question.
Speaker C: Oh, nice.
Speaker D: Okay.
Speaker C: Oh, um, I don't like how it starts with oh.
Speaker D: Well, you. You may not want to answer. I don't know. So this could be an oh or it could be hey, I can answer this, Jim. It's short. It's all I know. Okay. It came in directly from help with my socialsecurity dot com. Came from a person in Indiana. So no state hint. Just. Just a hot, humid state. There you go, Indiana. My wife and I have a child in care who receives SSI and we are approaching our own retirement. However, I am younger than my wife and I'm also the primary wage earner. She is 61 and does have enough earned Social Security retirement benefits. But I'm just 50, 59. If my wife claims at 62 and I am able to wait until 65 to file for my own benefits, would the child in care provision eliminate the penalty from the traditional spousal benefit of half my benefit since she is collecting earlier than me? I hope that makes sense to you, Chris, because I'm clueless on what he's asking.
Speaker C: Um, I think he might be confusing things a little bit because if his wife files at 62, which is next year, that would open the door for him claiming a child in care spousal benefit. So he said, though he's the primary wage earner, so his wife might not have much of a benefit. The spousal benefit will be half that. Now, what will happen is she will be filing early 62, so she'll be receiving a reduced benefit. He will be eligible under the child and care to collect a full spousal even though he's only going to be 60 next year, earlier than you normally could file spousal. But the child in care characteristic eliminates two things. The requirement you reach 62 and also a reduction of the benefit because you're claiming it earlier than your full retirement age. Both of those rules get thrown out the window when you are designated child in care. Which child in care applies when you're caring, uh, for a minor child. So a minor child under the age of 16 or an adult disabled child, which sounds to be the case here because most retirees don't have children under the age of 16. Happens occasionally, but not very often. But adult disabled child also opens the door to the special child and care spousal. Now, Once he reaches 65, she will receive a spousal benefit at that time. I think he might be asking when that happens. Once we get to that point where I'll be 65, she'll be 67. At that point, will she be penalized in her spousal benefit, having claimed her own benefit back when she was 62? I think she will be because of the way the spousal benefit works. I don't think because she's a child in care classification that that's going to get her out of that. My own benefit has been reduced and that's what they're going to pay me first before they pay me a spousal offset kind of related to that first question that we had today. But I might be wrong. This is one. This is very unique. This is just the timing of it, where she's going to claim she's not the primary wage earner, so his benefit is much bigger, likely to give her a much, uh, healthier spousal benefit. Bigger than her own benefit. But I think he's asking, will she ultimately be penalized later on, five years from now or so when. When he's 65 and finally files. Normally, if there was no child in care, she would be penalized. The fact that she claimed her own at 62 is going to be with her for life. I don't know for sure. I think she will still be penalized, but there might be some weird nuance, so I'd have to. I'll see if I can find a definitive answer. But this is one of those. This one's tricky enough. This one's going to be hard to find evidence in the Palms and the Program Operations Manual system, which is the, The. The instruction manual for how Social Security works. Um, but I'll see if. See what I can find. My guts telling me, though, that, yes, if she claims at 62, that's going to linger with her indefinitely, even though she's going to have the child and care designation. Uh,
Speaker D: all right. Wow, we stumped the synset.
Speaker C: That one's tricky. I will. That one's. That one's. That's not a scenario that I've run across specifically.
Speaker D: See, See what happens when you tell me to find one more email and I randomly click what looks to be a short email.
Speaker C: I mean, I stuck my neck out and at least gave my. My gut reaction to it, which. Take that for what?
Speaker D: As you can see, folks, this is just totally shooting from the hips here. Um, but it's kind of how we do things on the show, so. Very good, Chris. Uh, anyways, listeners, thanks. We have to wrap up. Joe needs to get out of the office quickly. It's the holiday weekend, so Chris needs to get this tour. I just want to wish everybody a happy. Well, by time you listen to. This is probably the 4th of July weekend or past the 4th of July weekend. Hope you had a great time. Wherever you are and whatever you're doing, whether it's something extravagant or similar to what my family will be doing, we're just going to be taking things easy. Grilling some swordfish and, um, relaxing but hope whatever you're doing is pleasurable. And as Chris will say, we're back with you next week with a brand new show.
Speaker C: Yes, we will. You stole my. You stole my.
Speaker D: I did. I stole your thunder this time.
Speaker C: Uh, it's all good. It's all Good. So happy 4th of July everybody.
Speaker B: You have listened to Jim on the radio, read his quotes in the media, and enjoyed his banter on itunes. But even now you may wonder what sets Jim Salmier and Associates apart from other financial planning companies. The answer is quite simple. Jim's diverse team of professionals specializes in retirement planning. They form a lifelong relationship with you and um, measure their success not through product sales, but through the security and prosperity you may achieve in your retirement. Jim's entire team shares his unwavering commitment to placing their clients best interests first while the offering their services at fair prices with full disclosures. The professionals at Jim Saulnier and Associates are available to assist you with your retirement planning needs. Visit jimhelps.com that's Jim H E L P S.com or call 970-530-0556.
Speaker A: The retirement denier Ratio represents the words and views of the show hosts exclusively and should not be construed as investment, legal or tax advice. All information is believed to be from reliable sources however, we make no represent as to its completeness or accuracy. All economic and performance information is historical in nature and is not indicative of any future results. Any indices mentioned on the show are unmanaged and cannot be invested indirectly. Diversification and asset allocation strategies do not assure profit or protect against loss. Never make any investment or financial decisions based on information offered on this show without first consulting your financial, legal or tax advisor. Financial Planning Services offered through Jim Solnier Associates, LLC, a registered investment advisor.
Speaker D: This podcast episode includes a discussion on
Speaker C: annuities, which are insurance products that involve
Speaker D: fees, expenses and investment risk, including the possible loss of principal for variable annuities. Annuities often have complex features. Surrender charges and holding period requirements and
Speaker C: withdrawals may be subject to taxes and penalties.
Speaker D: Any references to protection, benefits or lifetime
Speaker C: income generally refer to fixed insurance products, not securities or investment products. Guarantees are backed by the financial strength
Speaker D: and claims paying ability of the issuing insurance company. This content is for informational purposes only and should not be considered investment advice
Speaker C: or a recommendation to purchase any specific product.
Speaker B: For additional information regarding annuities, please consult
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