Independent, Fee-Only Financial Advisor

Independent, Fee-Only Financial Advisor

Monday, July 26, 2021

Money Talks: Social Security

This episode of MPB's Money Talks originally aired June 22, 2021 and is available online at

My favorite thing about our radio show is the callers. While each week we prepare a guest or a topic to discuss, brush up on a few points and hope to keep the conversation lively, the show really is nothing without the listeners who call in. Some have a personal question, a general curiosity or just a comment on the topic, but each becomes part of the show.

A perennial favorite show is when we talk about Social Security. Our guest is usually Shawn Mercer, District Manager from the Social Security Administration. This is always an excellent show because we get so many people calling in with questions!

The first question he tackled was my own. We have been talking a lot about inflation and the rising cost of living, and I wanted him to explain how that impacted Social Security benefits.

Shawn explained that since 1975 COLA has been automatic and based on the CPI. He recommended that we check out for good more explanation. It is an automatic adjustment that happens around October or November each year.

While Shawn likes to remind folks that a phone call or an account can answer a lot of their specific questions, we still got a lot of excellent calls:

Q: Lisa from Jackson asked about how getting married would impact her social security benefits. Both she and her fiancé currently receive social security, would getting married have an impact?

A: As long as it is regular social security, and not Supplemental Security Income, getting married will not decrease either of their benefits since they received the benefits independently. You do need to report to Social Security that you got married though. As long as she was drawing benefits from her record, it would not be impacted.

Q: James was our next caller. He asked about unemployment benefits. This has been another popular topic in the last year or so, and we have had the Mississippi Unemployment office on the show a few times. He asked why benefits in Mississippi were cut off while the rest of the country still had additional federal funds.

A: This was tricky, Mississippi did cut benefits, though it was not clear why his was cut in particular.

Q: After our first break, we got a call from Jefferson County. The caller explained that she was on disability/SSI and wanted to know if she could sign up for regular Social Security now that she was 62.

A: Shawn said that the Social Security Administration should automatically reach out to her if she is eligible. If she has enough quarters of work for retirement benefits then she would be eligible. He noted that the way that they measure worked quarters is a little different for Retirement vs SSI benefits. Nancy prompted Shawn to remind the audience that you must work 40 quarters to qualify for social security retirement benefits. To qualify for SSI, you must have worked 20 quarters of the last 40.

Q: Our next caller was a man named Joseph. Joseph was still working at age 64 and considering taking his benefit. He wanted to know how much money he could make while receiving his retirement benefit

A: The limit this year to earn without penalty is $18,960. There is a reduction of $1 of benefit for every $2 that he earns over that limit. Once he reaches full retirement age, he will not have a reduction in his benefit. An important note from might clear up some confusion in the call:

It is important to note that any benefits withheld while you continue to work are not "lost". Once you reach NRA, your monthly benefit will be increased permanently to account for the months in which benefits were withheld.

Q: Joe from Magnolia called in next. He wanted to know if there would be an increase in SSDI (SSI), he was hearing about a $200 increase. 

A: Shawn said that there might be a cost of living increase, as discussed before, but that would be a percentage, not a dollar amount across the board.

Q: Gary from Oxford called with a treat, saying "everyone can get involved in a little bit" with his question. When are you required to start taking withdrawals from Deferred Compensation and what are the social security implications. 

A: I was able to take the first part. Required Minimum Distributions start at age 72 for pretty much any deferred income account. Shawn noted that social security is "not a sole means of support" and he was glad to hear of someone having other means of support. Withdrawals would not affect his Social Security benefit as it was earned income that went against his income. Nancy was able to chime on on this as well - noting that because he would be 72 when taking the required distributions, those limits would not apply anyway.

Q: Myra from Jackson called in asking if there was a limit of time after working in which you can apply for disability.

A: Yes. Essentially a 5-year period. Sometimes they can do a longer one. More information about applying can be found at

Q: Annette in Madison tried to stump Shawn. She was married for 16 years at an early age, eventually re-married. She asked if she could receive income from her first husband.

A: Shawn explained that when she re-married, she gave up the right to benefits from her first spouse. If her second marriage was "not in force" they could go back and look at that first marriage for benefits. You must be married for at least 10 years to be eligible for benefits rom a previous spouse. They would look at her own benefits first.

Q: Michael called in from Mobile to ask if he passed away before his wife, would his wife receive his benefits?

A: Yes, they will look at that. They would look at both benefits for her and give her the higher of the two. As long as they were both above the full retirement age, then she would be eligible for the higher of the two. Shawn noted that this was a net loss to the household, as she would not be drawing both benefits. This is an important consideration that we make when making a recommendation on someone's social security, as the death benefit may be an important part of one partner's income.

Shawn noted that spousal benefits can start at age 60 for the surviving spouse.

Q: Robert called in from Florence. His wife takes an RMD from her retirement funds and he wanted to know how long that would come for.

A: Nancy took this question. The RMD is designed to last for your whole life, though you can take more than the required distribution, and funds could run out more quickly that way.

Q: Diane from Batesville called next on behalf of a friend. Her friend was on SSI and had been in a wheelchair since age 13. The SSI was $500/mo. Is there any additional help that she can get?

A: SSI is not based on work, but need. The maximum benefit was $794/mo this year. Shawn suggested checking if she has a disabled or deceased parent that she could draw an additional benefit on.

Q: James called in from Summit. He is between 62 and his full retirement age, and wants to know what the social security year is.

A: It is a calendar year. Also noted that in the year that you attain full retirement age, there is a higher income limit that your benefit goes against.

Q: Dale called in from Grenada. He gets his benefit paid on the second Wednesday of each month, and would prefer to receive it on the first Wednesday. Why can't they do that?

A: Shawn explained that they used to send everything out the first of the month, so they started payment cycling several years ago. If your birthday is on the 1st-10th of the month, you would receive your benefit on the  second Wednesday of the month, if your birthday is on the 11th-20th of the month, you would receive your benefit on the third Wednesday of the month, if your birthday is on the 21st-31st of the month, you would receive your benefit on the fourth Wednesday of the month. That is a fixed schedule that they cannot change. A calendar for 2021 can be found here.

Q: Janet called in from Starkville. She was married for 30 years and is now divorced. When could she get benefits on her ex-husband's record? She also asked why she had to sign up for Medicare at age 65 even though she has health benefits through work already.

A: When they check benefits on her own record, they would also look to see if she could draw up to 50% of his benefit (at full retirement age). Drawing benefits from an ex-spouse would not impact his benefit, nor could he do anything to stop her. As for having to sign up for Medicare, employers can require that employees sign up for Medicare to continue receiving other healthcare benefits.

Don't forget to tune in or subscribe to Money Talks at 9 AM every Tuesday on Mississippi Public Broadcasting, or online at This episode is available online.

Friday, July 23, 2021

On the Up and Up?

Prices go up, prices go down. Why? Nobody knows.

Everyone understands the concept of inflation - we see rising gas prices on our daily commute, we listen to stories about how our parents bought their first house for a fraction of what we paid for ours, and every now and then we notice that our grocery bill has crept up a little. Inflation is rising prices - the inexorable march upwards of prices hitting our pocketbooks. As an economic indicator, measured by the BLS, it is meant to broadly capture the change in price of goods to the American consumer.

If you put all of these goods in a basket, you generally see that basket get more and more expensive every year.

At the same time that we see prices rising, though, we also see prices fall. Last year, we saw the price of oil plummet, and saw a somewhat correlated drop in the price of gas. Every year Apple announces a new iPhone that is better, faster, and stronger than last year, and the one we bought last year drops in price. Over the years, online shopping has constantly yielded newer, faster and cheaper shopping options.

Inflation can be sneaky. Sellers change the size of packages to charge the same price for less, but they also pack more features into our cars and technology and sell it at the same price. The cost of living tends to rise every year, but the quality of living often rises too. How to we measure that? The BLS adjusts the prices it sees in all different ways, and one of those ways is "hedonic adjustments" or adjustments that take into account the fact that we sometimes get more for the our dollar as products improve.

Click here to listen to this fantastic radio report on how inflation is measured.

So how does inflation affect us?

Since time and inflation affect different products in different ways, any individual will not see their budget grow in line with the published inflation number. Houses in my neighborhood that were priced at $120/sqft a year ago are $140/sqft today. The new laptop I bought for $1,500 six months ago is $1,100 on Amazon today. An EpiPen that was $400 six years ago is $700 today, though you can buy a generic version for $120 for a two pack. Gas prices are volatile and food can range from fine dining to off-brand ramen. None of this is readily obvious if I only told you that CPI was up 24% in the last 10 years.

What do all of these have in common?
Nothing... really.

Unexpected or high inflation is bad. If prices rise too quick, companies may not be able to keep up with expenses and consumers may have to cut their discretionary spending harshly.

Gentle inflation is generally encouraged in the economy, as rising prices encourage businesses to invest and consumers to innovate. Over time, a gentle rise in price and a corresponding rise in quality of life is good for the businesses selling the products and good for the consumers enjoying them. The Federal Reserve targets 2% inflation over time.

So what is going on right now?

In the news today, we hear there is high inflation. We have all seen prices rise for transportation, homes and meals out. We also hear that this is transient. Does this mean that we will get relief in our pocketbooks soon? No. The inflation is just the increase in prices. The prices may stop going up, but they don't have to come down.

Is this high inflation going to be a problem?

A lot of the current inflation is due to bottlenecks in the supply chain. Last year, factories shut down due to sick workers, mandated lockdowns or lack or raw materials. This meant that there were fewer products, namely building supplies, cars and electronics, to be sold. As the federal government stepped in to support it's citizens, demand rebounded quickly, outstripping supply. More money was competing for fewer goods, raising the prices sharply. Bottlenecks lead to more bottlenecks. 

Bottlenecks are not the only factor right now. Many raw materials and commodity prices are up. Wages and other labor costs appear to be rising. Even if other bottlenecks were freed up, these other expenses may continue to support higher prices.

Will prices keep going up forever? 

Federal government investments in infrastructure may help ease some of the bottlenecks. That should slow the rise in prices. A lot of the factors that are contributing to inflation right now do truly appear temporary. How long is this temporary? I don't know. Prices will continue to rise until supply can meet this pent up demand, or demand settles down to meet the given supply.