Investing, Podcast, Retirement, Saving, Social Security
November 20, 2022
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On today’s Suze School, we get a lesson in the history of Social Security, what proposed changes may happen to the program and why it’s so important for us to start saving for retirement, now.
Suze: November 20th, 2022. My goodness. That's only four days from Thanksgiving. The holiday season is once again upon us. Does it just come faster every single year?
Suze: Does it? Sure seems that way to me. Anyway, Welcome to the Women & Money podcast as well as everybody smart enough to listen.
Suze: Today is Suze School. And I just have to say I need a break.
Suze: I need a break from the stock market. The stock market is going to be what the stock market is going to be. And we just need to take the long-term perspective on it, and do everything that we've talked about. So today, I kind of want to go into storytelling mode. I want to talk about,
Suze: and tell the history of Social Security, because it is going to play in to what the future holds for many of you.
Suze: On August 14, 1935, President Roosevelt signed into law
Suze: a new act that created a program designed to pay retired workers age 65 a continuing income.
Suze: When this act first came about, it was named the Economic Security Act. And that was because the committee which drafted the proposal was the Committee on Economic Security. Kind of makes sense to me. But later on Congress changed the name to the Social Security Act. Now, nobody knows for sure why they changed the name.
Suze: There are many different stories about it, but that's what it's called. Here's what I start to find interesting.
Suze: The first person to ever receive a Social Security check. Can you imagine? Was a legal secretary from Ludlow, Vermont by the name of Ida May Fuller. I love that because my mama was a legal secretary. I just loved that.
Suze: Anyway, she retired in November, 1939.
Suze: And she started collecting benefits in January of 1940 at the full retirement age of 65.
Suze: Now. Even though Social Security Act came about in 1935,
Suze: they decided they were not going to pay benefits until 1940. In 1940, when Social Security started to first pay,
Suze: if you had reached age 65 by then,
Suze: they expected that men were only going to live another 12.7 years, and women would live another 14.7 years if you made it to age 65. So what this meant, is that when they calculated benefits for Ida May,
Suze: that she would go on to live until she was like 79 a half year of age. Right around there. And so that is how long they would have to make sure that they could afford to pay people like Ida May.
Suze: So let's have a little quizzie today.
Suze: So the first quizzie is this:
Suze: How much do you think Ida May's Social Security check was for? I'll give you three choices.
Suze: It was $54.35 a month.
Suze: That was A. B) $22.54 a month or C) $61.80 a month.
Suze: Can you imagine?
Suze: Which one of those did Ida May get?
If you answered B $22.54 you were correct.
Suze: However, Ida did not live until 79.7 years of age.
Suze: She actually lived to be 100 years of age, and died in 1975. Now over all those 35 years of her life after she retired,
Suze: she received a total of $9,466.80 in Social Security. You know,
Suze: it was around 1975,
Suze: 1976 that I really started to look at money in a whole different way.
Suze: I was very confused about it, because my girlfriend's brother
Suze: bought a home, and was paying a mortgage of $158 a month.
Suze: But yet Nevin, my girlfriend at the time and myself, were renting an apartment for $220 a month. And I didn't understand why he was paying less to own a home, and I was paying more to rent a home.
Suze: And that is when things started really to escalate financially speaking, but think about Ida.
Suze: Who all the way from 1940 to 1975, things were already starting to get more expensive.
Suze: She was still only getting $22.54 a month in Social Security. Now, you may think, oh Suze, she must have gotten a cost of living increase over all those years. You would think that, right? But no, because it wasn't until the year that she died 1975,
Suze: that Social Security started for the very first time to adjust for the cost-of-living adjustment. Again, that was 35 years after people started receiving social security checks. So as you can see,
Suze: the Social Security Administration or whoever did all of this, Congress, they did not do a great job in number one, projecting life expectancies given the medical cures and treatments that were to come along. But that is why in 1983,
Suze: they decided to raise the full retirement age from 65 to 67. Now. For those of you who don't remember that, there are a lot of you that listen to the Women & Money podcast that have no idea about any of this truthfully,
Suze: that in 1983 they passed a law, that said starting in the year 2000,
Suze: if you were born in the year 1938,
Suze: you would have to wait to take full social security until you were 65 plus two months.
Suze: If you were born in 1939, you would have to wait to take full Social Security till 65 and 4 months. Obviously, if you took it earlier than that, there would be like a 20% reduction in what you would have gotten. If you had waited till full Social Security age. Now.
Suze: The full Social Security age increased two months for every birth year till 1943. So. If you were born in 1943, you would need to be 66 to attain full Social Security age, or what technically is known as your full retirement age. Your FRA.
Suze: So if you were born however from 1943 to 1954, that is 11 years everybody. Your full retirement age stayed at 66. Now it just stays stable there for all those years. I don't know why they did it that way, but they just did.
Suze: Then starting
Suze: if you were born in 1955, full retirement age would be 66 plus two months and it would increase two months every year till 1960. So if you were born 1960 or later, right now your full retirement age is 67. And if you were to take social security at 62,
Suze: there would be a 30% reduction from what you would have gotten at 67. So are we clear on the past on all that everybody?
Suze: So why am I telling you all this?
Suze: So many of you write in, and you say you're afraid. You're afraid that Social Security is going to go bankrupt, that you're not going to get your Social Security check, what are they going to be able to do to save Social Security?
Suze: Well, they're going to most likely do exactly what they did back in 1983.
Suze: So there are a few proposals, one or two that I've read, that have been introduced into Congress.
Suze: And they all talk about raising the full retirement age to 70. So from 67, which is where it is right now, if you were born 1960 or later,
Suze: they are proposing to raise it, not for those who are currently getting social security, they will phase it in slowly like they did before when they went from 65 to 67, but now they are projecting to not raise it just two years from 65 to 67,
Suze: they are proposing to raise it from 67 to 70, which is three years longer.
Suze: And they also have other suggestions that they would add in as well. So again, just so we're clear. So you all aren't panicking, I have no idea when these changes will be enacted, or what they will end up being.
Suze: But again, just like in 1983 where they gave all of you many years to get ready for it, I'm sure they will do the same this time. So again, if you are not currently even close to collecting Social Security, you best pay attention here, because you are the ones that this is really going to effect. And I say that because I remember back in 1983,
Suze: I was 32 years of age and I was working for at that time, Prudential Bache as a Vice President for them. I left Merrill Lynch, and went to Prudential Bache Securities. And I remember thinking, that these changes really don't have a lot to do with me. 32, alright. I have years before I'm going to be old enough to even be thinking about this, or this will affect me.
Suze: And what's so interesting, is that now here I am at 71 years of age.
Suze: And just like I started this podcast saying doesn't Thanksgiving and the holidays come faster and faster every year? The truth of the matter is, years pass as you age faster and faster. They do not slow down.
Suze: And before you know it, you are not 32, you're 42, 52, 62, 72, and so on.
Suze: So when do you start planning for those changes? When do you take what's going to happen sometime in your lifetime,
Suze: seriously? And you plan for those changes right here and right now. And the time that you do it is right here and right now. Because those changes are absolutely coming.
Suze: So, I just want to go over again, a few of the proposals that are on the table. We already talked about how the full retirement age will be raised, most likely from 67 to 70.
Suze: Also on the table is the suspension of spousal and children's benefits for high income wage earners.
Suze: Just think about that for a little bit there now. Really, it kind of makes sense. You know, I'll never forget I was sitting with a celebrity who was older, who had married a younger woman, and they had three kids who were young.
Suze: And he was already in his seventies, collecting Social Security, and because he was collecting Social Security, he got a children's allowance for all three of his kids. And it was for a whole lot of money. And I remember thinking to myself, something is radically wrong with this. It just is. If you're making a lot of money, which he was,
Suze: here we are, Social Security kind of going broke, which it was, and we're paying for his children to get Social Security benefits. Now I totally get it. If you are a low wage earner, you don't have a lot of money.
Suze: But for people with a lot of money, there needs to be a differentiation as to what they get in totality. And having their kids get Social Security benefits, I just don't think that makes a lot of sense given the state of the Social Security coffers. So that is something that they are going to be discussing.
Suze: They're also going to be discussing how lower wage earners hopefully will be paid a significant percentage amount more than they are getting right now.
Suze: So those are just some of the changes that they are thinking about. Now all of that sounds simple enough, but probably it's going to be far more complicated, especially for those collecting or who want to collect at 62.
Suze: Now, earlier I said that when full retirement age was 65, if you collected at 62, you got a 20% reduction. Obviously, if you collected at 63, 64, your reduction was less. But if you collected at 62, the reduction was only 20% back then.
Suze: Then what happened, is when it went to full Social Security age being 67, if you collected at 62, you were born after 1960, you collect at 62,
Suze: your reduction was 30%.
Suze: So what happens now when full retirement age goes to 70, and you want to collect at 62?
Suze: I have absolutely no doubt that the reduction will be far greater than 30%. It very probably could be 50 or 55%.
Suze: And the reason that I bring this up is that really about 30% of all people on social security, I think that percentage is correct, they collect at the age of 62. And they're collecting at 62 because they seriously need the money or otherwise they wouldn't be collecting at 62, unless they had a terminal illness.
Suze: So, how is this all gonna work out? I'm not exactly sure.
Suze: But that is why it's so important that we really get on the saving bandwagon. We really get on the bandwagon or making sure that while we are younger, while we have a choice of what we do with our money, that we really make sure that we are saving it for our retirement years. Because if all of this comes to pass, and who knows what else can come to pass, you
Suze: are going to need that money, especially if you are somebody who is dependent on Social Security. I'm curious on what's going to happen to those people who don't want to take social security at full retirement age, at 70. Are they going to be allowed to wait to take it till 73,
Suze: and do they get an 8% increase for the years, those three years that they wait in the same way that we do now?
Suze: So full retirement age is 67. If you wait until 70, you get an 8% annual increase in your Social Security benefit. Are they going to allow that to happen as well? And if they do,
Suze: then we need to do different calculations, because what's fascinating about what's happening, is the life expectancy in the United States for some reason, when they keep calculating it, it seems like it is going down rather than up.
Suze: So years from now when this happens,
Suze: I don't know. Maybe we don't want to wait until three more years to get an additional 8% a year. We're just going to have to see.
Suze: So I'm telling you all this, and I'm telling you the history of Social Security number one, for you to understand that again, in my opinion, they didn't do a really good job
Suze: in considering life expectancies, how long somebody was really going to be on Social Security. Remember Ida May.
Suze: They didn't do a really good job in figuring out who was going to be paying for Social Security, given the fact that still a lot of salaries will be replaced by artificial intelligence or robots in my opinion.
Suze: They didn't do a good job in calculating everything to keep Social Security going. So how are they going to do it? What are they going to do?
Suze: That is why it is so important in my opinion, that we all become what I call the ultimate savers and investors.
Suze: And I have to say that one of the best ways to do that,
Suze: is to start saving and investing more at an early age than you do even at a later age.
Suze: Because of compounding.
Suze: The key to true financial independence and freedom, starts when you are in your 20s, when you are in your 30s. Because every dollar that you invest gets to earn money.
Suze: Then the earnings of that money, gets to earn money. And then over all the years,
Suze: your money compounds. And you will have more and more money.
Suze: If you wait until you're 40, 50, 60, you have to save so much more money,
Suze: than if you had started in your twenties or early thirties. I can't even begin to tell you. So you've got to take advantage of it.
Suze: Now one way you can take advantage seriously, of saving.
Suze: Is by participating in the Suze Holiday Sweepstakes with Alliant Credit Union. Uh huh. I want to go there. Because starting now, all the way through December 15th, two of you
Suze: who are part of the Alliant Credit Union, the Ultimate Opportunity Savings account, or the checking account, two of you are going to win $10,000 each. And that my friends, is a whole lot of money. It will be deposited directly into your account at Alliant Credit Union.
Suze: If you already have an Ultimate Opportunity Savings account or checking account,
Suze: you have automatically already been entered. You have one entry in to the Suze Holiday Sweepstakes. And most of you if not all of you by now, should have received an email telling you number one that you automatically have an entry, and they will be providing you within that email a personalized link that you can use to send to anyone you want.
Suze: Now if the person that you send that link to,
Suze: happens to join the Ultimate Opportunity savings account, where simply they open up the account, they become a member of Alliant Credit Union that doesn't cost them anything, not only do they currently get 2.5% interest rate, but not only are they entered into the sweepstakes to win $10,000, but you get an additional entry as well.
Suze: Now if you haven't gotten that email link,
Suze: then all you have to do is go to myalliant, A-L-L-I-A-N.-T, .com/suze, S-U-Z-E, and that is where you can get your personalized link. If many of you who are listening right now have never been part of the Ultimate Opportunity Savings account that I created with Alliant Credit Union almost two years ago,
Suze: you would go to myalliant.com. M-Y-A-L-L-I-A-N-T .com,
Suze: and that is where you can become a member of the Alliant Credit Union, and become part of this and you'll automatically be entered into the sweepstakes as well. You then will also be able to get a link that you can send out to people,
Suze: and be part of the holiday giving sweepstakes where two of you will be winning $10,000 each.
Suze: Now I know I just spent a lot of time with that, but I just want everybody to be clear because we’re giving away $10,000. Everybody this is a lot of money, and I don't care what you say. Good luck finding anybody else doing this. Now last year we gave away $20,000. This year we're giving away $20,000. You tell me one other financial institution
Suze: that is giving that kind of money away at a great interest rate on your account, and everything else that Alliant Credit Union is doing, and wait till you hear the things that we have coming up next year, that you are so going to want to be a part of Alliant Credit Union, I cannot even tell you.
Suze: All programs that I'm personally designing with Alliant Credit Union,
Suze: programs that I know you seriously need and will use. So that's why I've taken so much time to tell you about this. Alright. I hope you've learned a little bit about Social Security. I'll keep you more informed as time does go on, one very quick update about the student loan forgiveness program.
Suze: It seems like for now it is seriously stuck in the courts. So now President Biden is thinking about extending the student loan forgiveness moratorium past January 1st of this coming year. So I hope he does that.
Suze: I hope he does that, we’ll have to stay tuned to see if he does. So as I said before, this Thursday is Thanksgiving.
Suze: And I just want to take this time to tell you seriously how grateful I am to all of you, all of you who have been such loyal fans over all these years.
Suze: It really just blows me away. I have goose bumps as I'm saying this right now.
Suze: I mean, millions and millions all over the world have stuck with me for over 30 years now.
Suze: And I just love that we've gotten old together.
Suze: Your children have grown up with me.
Suze: And so I take that as a tremendous responsibility, and I just want to tell you again how grateful I am to all of you. And to those of you who are joining our financial empowerment journey,
Suze: for maybe the first time. I just want to welcome all of you with all my heart.
Suze: You know, I'm so proud to bring you a place
Suze: where I really believe that you can bring your money home to. You can bring your financial problems to. Where you will find the solutions that will truly help you, that are totally unbiased, with nothing for anybody to gain anything out of except for you.
Suze: So, until Thursday,
Suze: there's really only one thing I want for you and your money, and that is for you all to be smart, strong and secure. Now you stay safe, and don't eat too much. All right, everybody, see you on Thursday. Bye bye.
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