Timing Social Security and Taming Scary Markets

Introduction

Dr. Chris Mullis, PhD, CFP®: Hi there, Dr. Chris here. Before we dive into today’s show, I wanted to mention that if you’re looking for professional retirement planning, I’d love to see if my firm’s expertise is the right fit for your needs. We provide highly customized investment, retirement, and tax planning to help you evaluate what we do.

We offer a free retirement assessment. Which includes a deep dive into your tax strategy, investments, and overall retirement health. To learn more, head over to retirement Isn’t rocket science.com and click free assessment in the top right corner now onto our show.

Dr. Chris Mullis, PhD, CFP®: Most people think of social security as simply a monthly check, but for a diligent saver like you, it could easily be a one and a half million dollar asset.

Today we’re looking at why you’re claiming age isn’t just a date on the calendar. It’s a high stakes calculation of life expectancy, tax strategy, and survivor protection that can determine whether your retirement achieves its highest orbit or runs out fuel too soon.

Retirement Briefing Room

Dr. Chris Mullis, PhD, CFP®: Welcome back to Retirement Isn’t Rocket Science. I’m Dr. Chris Mullis. I spent my first career as an astrophysicist, mapping the cosmos with NASA’s space telescopes now as a certified financial planner with 21 years of experience.

I help you navigate the universe of retirement. Our mission is clear, lower your taxes, strengthen your portfolio, and give you the confidence and the capacity to spend more. Buckle up. We’re going to master your money and explore the mysteries of the universe along the way.

 Dr. Chris Mullis, PhD, CFP®: In today’s show is your social security strategy on the right trajectory, or are you fueling a crash with all the uncertainty in the world and the scary headlines? Are you worried about your portfolio and should you be doing something about it? And they say two heads are better than one, but what happens when the head in question is a glowing, cosmic brain?

Floating thousands of light years away. Today we’re looking at a star that is literally using its head to plan, its final act.

Dr. Chris Mullis, PhD, CFP®: Welcome to the Retirement Briefing Room. This is where we huddle up to take a close look at important aspects of your financial life, spotlight pathways of success, and think about how to integrate these into your retirement mission plan. Today we’re talking about social security. Before we launch into advanced strategies, we have to understand our base coordinates In the Social Security universe, everything revolves around your full retirement age, FRA.

The Social Security Administration, like NASA loves a good acronym, FRA. Your full retirement age is 67. If you were born in 1960 or later. You can ignite your benefits as early as age 62, but there’s a heavy cost. Claiming at 62 can result in a permanent reduction of up to 30% of your monthly benefit.

Think of it as a permanent drag on your financial thrusters. On the flip side, if you delay past your full retirement age, your benefit grows by approximately 8% For every year, you wait until you hit age 70. There is no benefit for waiting past age 70, so this timing decision is a longevity bet. Waiting until age 70 provides a guaranteed return that is incredibly hard to find in any other investment.

There are some navigation hazards to be aware of. If you’re planning a pre-retirement, maybe doing some consulting or part-time work, be careful about claiming early if you claim before your full retirement age and continue to work, social security might withhold some of your benefits if you earn over a certain limit.

The good news. Once you hit full retirement age, that limit disappears. You can earn as much as you want without a reduction in social security benefits, and those withheld benefits aren’t lost forever. They are slowly paid back to you once you reach your full retirement age.

We often underestimate the scale of social security as a financial asset. An average single person can receive in excess of $600,000 in benefits over a 25 year retirement. And for married couples who are strong earners, you’re looking at a lifetime value that could probably reach one and a half million dollars.

So this is a big deal. Let’s look at singles. Your primary mission objective is longevity. Statistically, a 65-year-old woman has a 75% chance of reaching age 85. If you’re in good health, waiting typically yields more cumulative dollars. For married couples, there’s an extra layer of complexity. This is where the strategy gets multi staged.

You have to consider joint life expectancy. When one spouse passes away, the smaller social security check disappears, and the survivor keeps the larger of the two. Because of this, retirement planners like myself suggest that the higher earner should delay until age 70. This maximizes the survivor benefit.

For the remaining spouse ensuring their financial trajectory remains stable through the end.

Now let’s talk about some special missions, special divorced and widowed strategies. Let’s start with divorcees. If you were married for at least 10 years and are currently age 62 or older, you are probably eligible to claim based on your ex-spouse’s record. Crucially, this does not affect your ex-spouse’s benefit. Or that ex-spouse’s current spouse,

And in general, that spousal benefit under your ex’s record maxes out when you reach your full retirement age. And let’s talk about widows and widowers. This is a unique scenario. A widow, or widower, can actually start a survivor benefit as early as age 60, albeit at a reduced rate, and then let their own retirement benefit continue to grow until age 70. And we would be remiss if we didn’t talk about the tax planning angle of social security claiming again, taxes intersect with every financial decision you’ll ever make.

There is a tax torpedo here. We’re taking benefits early while having other income can cause up to 85% of your social security to be taxed.

1. Smart Maneuver. Is to use your gap years. These are the years between when you retire and when you are forced to take required minimum distributions or social security. During these years, you might have a very low tax bracket. This is a perfect window for Roth conversions, which can reduce your tax burden later in life. So are there situations where it makes sense to claim social security early? Now? Most advisors, like myself, advocate, waiting. But there are a couple places where it can make particular sense to claim early . For example, health concerns. If your biological hardware is failing and you have a shorter life expectancy, it probably makes better financial sense to claim your social security benefit. Earlier than later. A second scenario is around immediate cash flow. If you need the money to cover your basic expenses and needs to survive or to supercharge your early go-go years of retirement while you’re healthy, then that could be a case for claiming earlier than later.

And one final pro tip here, I wanna remind you, there’s a six month social security mulligan. A do-over this. Do-over allows you to go back and undo your decision to claim Social Security within six months of that decision. So if you have recently claimed Social Security and listened to this episode and realize, wait a second, maybe I shouldn’t have done that.

Think about that. Mulligan

Your best Social security claiming strategy is a big deal and admittedly, there’s a lot of moving parts to help you think through this in an organized fashion, I’ve developed four resources for you. One comprehensive checklist in three decision flowcharts. That first checklist is entitled, what issues should I consider with My Social Security Retirement Benefits?

And then the three flow charts are Social Security benefits for spouses, social security benefits for surviving spouses and social security benefits for divorced spouses. You’ll find a link to these free resources in our weekly newsletter called the Launch. You can sign up for the launch at retirement.

Isn’t rocket science.com?

Remember, social security is 50% data and 50% personal comfort. Whether you decide to launch at 62 or wait for the maximum thrust at age 70. The goal is to ensure your plan is tailored to your specific health, your taxes, and your family’s needs. It’s not just about the biggest check, it’s about the best life after all.

Retirement isn’t rocket science, but it does require a good flight plan.

Now let’s head over to Mission Control to answer your financial questions and get you retirement ready.

Ask Mission Control

Welcome to Ask Mission Control. This week’s question comes from listener Joyce. With all the uncertainty in the world and the scary headlines, I’m worried about my portfolio, should I be doing something? Well, Joyce, first off, thank you for being so honest. If you weren’t a little concerned, I’d be worried you turned off your sensors entirely.

You’ve spent decades building a multimillion dollar payload for this mission of retirement. It’s perfectly natural to want to protect it when the evening news sounds like a disaster movie trailer. As a former rocket scientist, I can tell you there’s a massive difference between turbulence and structural failure.

When a rocket heads into orbit, it shakes, it’s loud. It’s terrifying if you look out the window. But the engineers at Mission Control aren’t looking out the window. They’re monitoring the structural integrity and the trajectory. Most of what you see on the news is just market weather.

It’s windy, but it doesn’t mean the mission is scrubbed. Now, should you be doing something, I often remind my clients that the market is a beautiful mechanism for moving wealth from the impatient to the patient. If you have a diversified portfolio, you aren’t just owning stocks, you own a piece of the global economy to believe the headlines are a reason to sell, is to believe human ingenuity and global commerce are permanently breaking down. History suggests that’s a bad bet. However, doing nothing doesn’t mean being passive. We need to be flexible and opportunistic.

Your core plan is your solid foundation, but you should have levers you can pull if the market is down. Maybe you don’t sell stocks to fund your vacation this year. Instead, you pull from your cash bucket. If you built your plan correctly, specifically your income plan and its connection to your investment plan, you should have multiple years of spending needs in your war, chest of bonds and cash. When the headlines get scary, you can look at that war chest and say. I don’t care what the s and p 500 is doing today because my retirement paycheck for this year and next year and way beyond is already locked in.

Joyce, if you’re feeling the urge to take action, let’s talk about some productive actions, maybe some silver linings in the volatility.

When the market dips, that is actually the best time to look at tax lost harvesting or Roth conversions. If your portfolio value is temporarily lower, moving money from a traditional IRA to our Roth IRA might cost you less taxes today. Allowing that money to grow tax free for as the market recovers.

That’s how I, as a retirement planner, help my clients take the scary news and turn it into mathematical advantage.

And I’ll add, for a family that has a very healthy nest egg of a million dollars or multimillion dollars, the biggest risk isn’t a 10% market correction or a 20% bear market decline. It’s inflation eating away at your purchasing power or a massive tax bill because you didn’t plan your income distributions smartly.

So Joyce, here’s my suggestions for you. Number one, check your life support. That is your cash flow. Do you have enough cash and bonds to weather a multi-year storm without selling your long-term growth engines while they’re down? Number two, review your heat shield.

That’s your tax planning. Can we use this volatility to lower your future tax bill? And number three, audit your navigation. That is your insurance and estate planning. Is your plan set up so even if the weather gets worse, your family is protected In retirement planning, just like in space flight, we don’t change the destination just because there’s a storm on the launchpad.

We trust the physics. We trust the prep work, and we stay the course. The last thought here, those scary headlines are designed to sell papers and get clicks. Your financial plan is designed to sell you a life of freedom. Don’t let the noise of the former drown out the music of the ladder. Joyce, thanks again for your thoughtful and timely question.

If you’ve got a retirement question you’d like us to answer on the show, head over to retirement isn’t rocket science.com and click Ask a question. Or even better, you can skip to the front of the line by calling Mission Control at 7 0 4. 2, 3, 4, six , 5, 5 0 and record your audio question

Now let’s broaden our perspective and head over to look at a dying star and what the exposed cranium Nebula teaches us about transitions.

Retirement Big Picture

Dr. Chris Mullis, PhD, CFP®: Welcome to the Retirement Big Picture part of our show. This is where we look up and look out to expand our appreciation and understanding of our amazing universe. A long time ago in a galaxy not far, far away, I spent nearly two decades studying the cosmos as an observational astrophysicist.

So this subject is near and dear to my heart. Today we’re talking about a brand new image that has the astronomy world and honestly, the anatomy world doing a double take. We’re heading deep into the southern sky to look at the Nebula PMR one. Now that’s a bit of a dry name for something so spectacular, which is why the team at NASA has given it a much more cool nickname, the exposed cranium.

This Nebula isn’t exactly new to us, but it’s never been seen quite like this. It was originally detected in 1983 by I Rra s, the infrared astronomical satellite, which was launched in January of 1983 and operated for approximately 10 months, concluding its mission in November. When its liquid, helium coolant was depleted.

It was the first space telescope to perform an all sky survey, an infrared mapping 96% of the sky

The IRS mission is very special to me because it was the first space mission I was ever involved with that being during my high school senior project at Johns Hopkins University. So IRS first detected it, but we got our first detailed look at, at about a decade ago by the Spitzer Space Telescope. Now for those who don’t follow NASA’s roster like I do, Spitzer was a workhorse. It was an infrared telescope that eventually ran outta coolant and was retired in 2020 after a stellar 16 year career on orbit.

Think of Spitzer as the first draft of a retirement plan. It gave us the general shape. It told us, Hey, there’s something interesting over there in the Constellation Bayla. It took the James Webb space telescope, JWST, with its massive gold mirrors and advanced technology to really put the exposed cranium under the microscope.

So where in the world or the universe is this? If you’re listening to us in the United States and you’re reaching for your backyard telescope, I’ve got a bit of bad news for you. Nebula pmr one resides in the Constellation vala, which represents the sails of a ship because of its position in the far southern hemisphere.

It’s not visible from the US or Europe, even if you live in Australia or Chile. You would not be able to see the brain structure with your naked eye or even a standard amateur telescope. This nebula is a master of disguise. It hides behind curtains of cosmic dust. To see it, you’ll need infrared vision, which is exactly why we sent web into orbit.

While ground-based professional telescopes can see the faint glow of stars, they can’t pierce the veil the way Webc can.

So this brain in the sky, what is JWST showing us? The recent images from web are actually a two for one deal. They use two different cameras on board near cam, which stands for near infrared in Miri, which stands for mid-infrared. Near cam is like the big picture lens. It shows thousands of background galaxies and stars that were previously invisible.

Mary is the specialist. It focuses on the dust, the gray matter of the brain, if you will. What makes this look like a brain is a distinctive dark lane, running right down the middle, creating a left and right hemisphere. Webb’s high resolution revealed that this split is likely caused by twin jets of gas screaming out of the central star in opposite directions.

It’s a violent, beautiful mess that happens when a star begins to run out of fuel

This brings us to the life story of this star. This Nebula is actually a star’s final act. It has spent billions of years burning hydrogen, but it’s now in its decline. It’s shedding its outer layers. First, a shell of hydrogen, then a mix of heavier gases, creating that transparent skull effect in cosmic terms, this process is incredibly fast.

Though for us it takes thousands of years. We are witnessing a moment in time for that star. The big question for astronomers now is what happens next? It all comes down to mass first. There’s the supernova path. If the star is heavy enough, it’s going to go out with a literal bang,

a supernova explosion that will seed the galaxy with heavy elements. The second path is the white dwarf path. If it’s a sun-like star, that means it’s relatively low in mass, it will continue to shed layers until only its hot, dense core remains. That’s a white dwarf. It will then spin eons, cooling down like a glowing emperor in a fireplace.

So let’s bring this back to earth. When we look at the exposed cranium, we can’t help but think about how we approach our own end of career transitions. We spend decades, quote, burning the fuel, working the nine to five accumulating assets, building that nest egg. Then we’ve reached the point where the outer layers of our old life start to shed our identity as manager or engineer or director drifts away, and we have to figure out what the core looks like.

Just like the astronomers studying PR one, you need the right tools 2 C through the dust. You can’t just rely on visible light, for example, a quick Google search. You need the infrared perspective, the ability to see the complexities of taxes, estate planning, and health to make sure your trajectory is strong and sustainable. Whether you’re destined for a supernova sized adventure or a peaceful cooling, white dwarf retirement.

Having the data makes all the difference. Web is solving the mysteries of our solar system and beyond probing the origins of the universe and our place in it. And here on Earth, we’re doing the same for your financial universe. You’ll find the jwst image of the exposed cranium in this week’s newsletter. The launch. You can sign up for the launch at retirement. Isn’t rocket science.com.

Conclusion

Dr. Chris Mullis, PhD, CFP®: We’ve spent today probing the multidimensional universe of social security decisions. It’s time to open the hatch . This is your space walk. You’re stepping out of the routine and into the void to turn today’s insights into a successful mission. This isn’t just a stroll. It’s where the work gets done to move from theory to reality.

Here are your mission objectives. Number one, check your trajectory. Log into the Social Security administration website to get your current primary insurance amount and verify your full retirement age. Number two, conduct the health audit. Honestly, assess your life expectancy. If you have a high probability of living past age 85, run the numbers on waiting until age 70 to maximize your longevity insurance.

Number three, grab those four, free social security checklists and flow charts that I’ve created for you. You’ll find them in this week’s newsletter or directly at retirement. Isn’t rocket science.com. Slash 12. And finally number four, don’t be afraid to get professional help.

 Sit down with a certified financial planner and run a claiming decision. Deep dive. Don’t just look at the monthly check. Look at the total survivor benefit and how your Social Security timing impacts your tax bracket and your Roth conversion opportunities.

If you’re approaching retirement or already enjoying it and wanna hand creating a unified income plan so you can focus on what matters most to you. My team and I would welcome the opportunity to connect and see if we are the right fit.

I challenge you to take one idea from today’s show and put it into practice this week to make your retirement even better. Thank you very much for joining me. Remember, you’ve done the hard work of saving. Now let’s do the smart work of planning. Until next time, keep your eyes on the horizon.

Enjoy the adventure you are. Go for retirement.

Credits

Dr. Chris Mullis, PhD, CFP®: We thank the National Aeronautics and Space Administration for providing the radio communications between the space shuttle astronauts and the flight controllers.

Disclaimer

This show is for informational and entertainment purposes only. It is not specific tax, legal or investment advice. Before considering acting on anything you hear in this show, first consult your own tax, legal, or financial advisor.