Decoding Social Security: A Dentist's Guide to Maximizing Retirement Income

Announcer:
Hello everyone. Welcome to the Millionaire Dentist Podcast, brought to you by Four Quadrants Advisory. On this podcast, we break down the world of dentistry, finances, and business practices to help you become the millionaire dentist you deserve to be. Please be advised we do speak with an honest tongue and may not be safe for work.

Casey Hiers:
Hello and welcome. This is Casey Hiers back at the Millionaire Dentist Podcast in studio with co-host Jarrod Bridgeman, out as always.

Jarrod Bridgeman:
Casey, how are you?

Casey Hiers:
Thriving.

Jarrod Bridgeman:
Well, we've got Will Chrisman today at Fort Quadrants Advisory. He is the Planning Onboarding specialist. You also have a lot of letters after your name. Casey, can you run through all the letters that he's got?

Casey Hiers:
AWMA, ABFP, CFP.

Jarrod Bridgeman:
All right.

Casey Hiers:
What are those?

Will Chrisman:
Firstly, I got my CFP in November, and I was officially a-

Casey Hiers:
Certified Financial Planner.

Will Chrisman:
Yep. Certified financial planner. Before that, I got my accreditation for an accredited wealth management advisor. That would be the AWMA. Then I also picked up what they call the ABFP, which is just an accreditation for behavioral finance.

Casey Hiers:
What that means for our listeners is the topic we're going to cover today, we have a lot of expertise on some technicals that I would say Jarrod and I know on a high level, but Will can get into some of the details, and what do you want to talk about today?

Will Chrisman:
Yeah, so I really just wanted to touch base on Social Security. It's something that's kind of become a buzzword in the media, talking about viability.

Casey Hiers:
Since the forties.

Will Chrisman:
Since the forties, yeah. I wanted to discuss that. Some of the

Jarrod Bridgeman:
Hashtags, Social Security, and back on the old newspapers.

Will Chrisman:
Periodicals. But I just wanted to touch on Social Security and just go over some of the hot topics that I'm seeing in the news. I know many individuals who are coming up into retirement might have questions on, and then people that are my age that might have a few questions on and how it works.

Casey Hiers:
Take it away.

Will Chrisman:
One of the major things that happened when Social Security started there was a study done at Stanford and the National Bureau of Economics, and it's a 1977 study, so it's a little dated. It might be more of your guys' speed that year.

Jarrod Bridgeman:
That's older than me. Come on now.

Casey Hiers:
I was going to make fun of Stanford, quite frankly, the worst mascot in the history of mascots. It's a moron in a tree outfit-

Will Chrisman:
In a tree.

Casey Hiers:
But yet they're the cardinal. But you went for our age; it was a personal attack. I was going to attack Stanford. Will's coming after us. All right, prison rules. Let's go.

Will Chrisman:
I'm so sorry. So sorry. Don't talk about my hairline on the podcast, but what happened.

Casey Hiers:
You're too tall. I can't see it. What are you, about 5'11"?

Will Chrisman:
No, only 6'6". Michael Jordan and I share that together, but when they were looking at ages as a percentage just in the labor force, you had ages 55 to 59. In 1957, 91% of those individuals were still working. You go down the line to 1974, and it's down to 85.7%.

Jarrod Bridgeman:
A larger percentage of people were able to retire.

Will Chrisman:
Exactly. Exactly.

Casey Hiers:
Thanks for the history lesson, Will.

Will Chrisman:
Yeah, yeah. But it's important to know how to use Social Security for our own advantage as well.

Casey Hiers:
Yeah, let's get into that.

Will Chrisman:
With Social Security, there come different rules. There's different full retirement ages. Just typically, for when you're born, if you were born after 1960, your full retirement age is 67 years of age. Now, you can still take that benefit at age 62, but if you take it at 62 your first year, your benefit's going to be cut by 30% from what it would be at full retirement age.

Jarrod Bridgeman:
For those of us listening who are maybe 30, 40-ish years old, taking the benefit again, you're saying tapping into and withdrawing your retirement money from Social Security.

Will Chrisman:
Exactly. Let's say you are full retirement age, your benefit's going to be a thousand dollars. Just so I can do some quick math, 30% you're going to be receiving $700 a month at age 62 compared to a thousand dollars at age 67. That's how that aspect works. Those benefits cut every month before 67 that you receive it. If you're looking at it purely mathematically, you would get five-ninths of every 1% for every month you started it early, that gets cut. A lot of math out there. I encourage everybody to check on their Social Security benefit. You can do that-

Jarrod Bridgeman:
Five-ninths of a percent.

Will Chrisman:
Five-ninths of 1% per month. Yes, it's very, very.

Jarrod Bridgeman:
A little more than half a percent.

Will Chrisman:
Yep.

Jarrod Bridgeman:
Okay.

Will Chrisman:
Yep. But when you're taking a look at that, if you don't start your Social Security benefit until, say, age 70, they actually bump you up because you're going past that full retirement age. That's something that starts to be a big subject for retirees. There's a lot of cases where taking it early makes sense. There's a lot of cases where waiting makes a lot of sense, and it all depends on the goals of an individual and their families and what they're trying to do with their funds.

Jarrod Bridgeman:
What would be a benefit of saying, waiting until maybe you're 70 instead of 67 to take your benefits?

Will Chrisman:
Yeah, great question, Jarrod.

Jarrod Bridgeman:
Thank you.

Will Chrisman:
When you're taking a look at delaying your Social Security benefit, you're going to get 8% each full year you delay the benefit. That's why it sometimes makes sense to actually delay it a little bit more. But after age 70, if you wait until 71, you're not getting any extra benefit, not receiving your benefit.

Jarrod Bridgeman:
What is the benefits and disadvantages for a practice owner who may have retired early with let's say at 55? Would you recommend holding off? Would you recommend taking it early? Hopefully, if they retired at 55, they've got a pretty good nest egg.

Will Chrisman:
Yeah, absolutely. People's situations differ in a lot of different ways. A portfolio draw with Social Security changes that. If you wanted to take Social Security a little bit earlier, it probably would depend on your asset base that you have to retire on, and that nest egg, and then how risk-averse you are to withdrawing from that portfolio. One of the interesting things when you retire, people assume, "I'm going to be spending less money in retirement. I'm not going to be really doing anything. I'm going to be watching the NFL on Sundays. When that ends, I have the NBA I'm going to watch, and then in the summer I'm going to hang out by the pool."

Jarrod Bridgeman:
But now you have to subscribe to 18 different things to catch all that, so that's already tripling your price. But Casey and I have talked about that before. If you're sitting around at home with really nothing to do, your mind's going to boggle. People are going to go do things.

Will Chrisman:
Think of it in retirement to a normal person who works a 40-hour week, and for practice owners, you're probably working 60. That big hourly shift that you have to put in to make sure the business operates well.

Jarrod Bridgeman:
Yeah. Not just in the chair, but running your books and all that stuff.

Will Chrisman:
Absolutely. Think about all the time you spend doing that now has to be filled with some sort of activity because most of us aren't able to sit on a couch and relax, or maybe just go for a walk. There tend to be more vacations. There tends to be, even going out to eat becomes something that starts to really eat away at monthly expenses just because there's not that 40 to 60 hours that you have to fill that you were making money.

Casey Hiers:
Well, you hit on something important. When I'm not working, I tend to spend more money. Our clients, we want them to have a better lifestyle in retirement and not use the bullshit excuse of, "Well, I'm just going to spend less," and you're rationalizing why you've undersaved, or you're not going to be strategic. Then your retirement plan is, in my opinion, call it mediocre. The goal is, as a dentist, to have provided such good dentistry and to have mastered the business tax and all the sides of your practice, that you have so much in retirement that your lifestyle is better.

Social Security, you forget about because it's icing on the cake, and it's really a non-issue. Unfortunately, people that haven't mastered the business side of dentistry, I'll hear them all the time, "Well, I won't have as many of expenses, and I won't have as much debt or any debt, and I'm just not going to spend more, and I can downsize, and I'm going to get Social Security." All those things may be true, but if that's your plan, yikes. Well, let's get to the elephant in the room. What's the viability of Social Security?

Will Chrisman:
Yeah. I really think that Social Security is going to continue into the future to the extent that it is today, I'm not sure. I don't think anybody can give you a clear-cut answer because there's obviously some expense that comes with Social Security that we as the American taxpayer are paying, and we'll see how that translates into the future. But I don't necessarily think it would ever be a hundred percent cut in the future.

Casey Hiers:
Listen, some people depend on it, but I'm sorry. If you're a practice-owning dentist and specialist and you depend on that, you've done something wrong.

Jarrod Bridgeman:
Correct.

Casey Hiers:
Which again points to you are going to practice dentistry for 10, 20, or 30 years. Don't be the dentist who retires with three and a half million dollars. Be the dentist that retires with eight, 10, $12 million because you've treated the business side of your practice with the same expertise that you treat the clinical. This should just be icing on the cake. Selling your practice should be icing on the cake. Social Security should be an afterthought because you've done the right things. You've had good cash flow, you've saved, you've had a plan. To me, that's what all this screams, because again, I hate the phone calls with practice owners who talk about the sale of their practice, and Social Security and living a reduced lifestyle is their plan. To me, that's not a plan. To me, you've been derelict in your duty, or you haven't had the right people helping you, and now you have fewer options. This is your plan by default, not by preference.

Jarrod Bridgeman:
Well, overall, this is one of those situations where we've asked you a couple of questions that we thought would be yes or no questions, and they were, "Well, it depends." This is not to be taken lightly. This is a situation that should be spoken to with your team or your financial planner. Did you talk to a tax guy about this stuff?

Will Chrisman:
Yeah, absolutely.

Jarrod Bridgeman:
Okay, sure. Talk to your whole team, and if you don't have a team or your team is just like, "I don't know, you'll live for a while, I guess." You need to talk to somebody. You can call Casey. You can fill out a form on our website and all that kind of stuff. Will, is there anything else that we need that's super pertinent today, or should we bring it back to part two in 30 years to see where Social Security is?

Will Chrisman:
It won't be that long.
2032. Yeah. Just to piggyback off your point, Jarrod, which is sad to say that I'm off of Jared, but one of the things that I believe with Social Security and with retirement as a whole is working with a professional and making sure you're covered for any given situation because there's so much that we didn't cover on Social Security, as well. These are really just the high points. But to work with a professional and make sure that you're covered for any type of situation, to make sure your goals are lining up with what you want to use your Social Security benefit for, and making it advantageous to you is extremely important. My situation is going to be different than both of yours. One, because I'll probably be paying your guys' benefits, and then it will go away.

Jarrod Bridgeman:
You're the home... You're the home caretaker.

Will Chrisman:
Yeah, absolutely. Absolutely. But everybody's benefit is going to be different. It's important to get advice that is catered to your situation and don't get just blanket statements and-

Jarrod Bridgeman:
Hope for the best.

Will Chrisman:
Hope for the best, exactly. Work with your financial team and professionals.

Jarrod Bridgeman:
Well, thank you so much for coming in. Casey, I wanted to bring up something real quick that I know you're excited about. You're going to be presenting at the Thomas P. Hinman Dental meeting in March, and that's in Atlanta, Georgia. I know you're pretty excited about that, but the night before the whole event, the whole meeting kicks off, and we are hosting a social.

Casey Hiers:
Yeah, we just did one of these before the Yankee as well. It's a lot of fun. We run out a private room, do a bourbon tasting, eat some filet and tomahawk, and seafood towers. Then we talk about who we are for 10 minutes and our impact. We had people come up going, "I just came because it's a cool restaurant, but I need what you guys do. Can we talk?" Absolutely, that's part of the reason why we do it, is to meet good people. But yeah, we'll be doing that in the Buckhead area.

Jarrod Bridgeman:
That's right.

Casey Hiers:
Yep.

Jarrod Bridgeman:
If you are in the Atlanta area or you're going to the Hinman, you can go visit fourquadrantsadvisory.com/events, and you can register for the social, or if you're going to be in the Hinman, if it hasn't sold out yet, sign up for Casey's course.

Casey Hiers:
Beautiful.

Announcer:
Hello, everyone. Welcome to the Millionaire Dentist Podcast, brought to you by Four Quadrants Advisory. On this podcast, we break down the world of dentistry finances and business practices to help you become the millionaire dentist you deserve to be. Please be advised, we do speak with an honest tongue and may not be safe for work.