Business Innovators Radio - Interview with James Edward Durden Jr, Owner of Edward Financial Group Discussing Social Security

Episode Date: August 14, 2024

James Edward Durden Jr. is the owner of Edward Financial Group and a seasoned financial professional with a strong educational background. He holds a double bachelor’s degree in Finance and Risk Management, equipping him with a comprehensive understanding of financial markets and risk assessment. Known for his high ethical standards and passion for his work, James is dedicated to providing clients with reliable and informed financial guidance. Outside of the office, he enjoys hiking, bike riding, and watching NFL football, balancing his professional life with a love for outdoor activities and sports.If you’re ready to take control of your retirement planning and secure a bright financial future, we’re here to help. Visit our website at Edward Financial Group.com or call us at 404-919-8916 to schedule a free consultation. Don’t wait—start your journey to financial confidence today!”Learn more:https://edwardfinancialgroup.comInfluential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-james-edward-durden-jr-owner-of-edward-financial-group-discussing-social-security

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have back with us James Edward Durdon Jr. who's the owner of Edward Financial Group and will be talking about social security. James, welcome back to the program. Thank you, Mike. Again, three times a charm.

Yeah, and I think this is an interesting topic because we can probably speak for two days straight about this one topic. So let's just kind of dive into what I would venture to say the elephant in the room is or the big burning question that you probably get from a lot of clients. Is Social Security going to be around when I need it? Yeah, so I always have, you know, I struggle. with answering this question. So I answer it this way. And I think it was 2009. And I may have my ears wrong.

But everybody's received the little green Social Security statement. And if you have it, go to ssa.gov. And on ssa.gov, click on get benefit estimate. It'll walk you through how to sign up for it. And you can take a look at it. But anyway, there was a paper in 2009, it said that Social Security has enough money to take care of the threshold, I think, and don't let me wrong on this. I think it was 2043, something like that, right? Then in 2011, it said Social Security had enough money.

essentially to take care of the benefits until 2035, right? And then in 2014, it said Social Security has enough money to take care of the benefits to 2033. Okay. And then afterwards, it's going to pay 75 cents on the dollar. Okay. And so typically, you know, this is one of the classes that I teach here at a local college and I start off that way. And the reason I start off that way is to basically say that, hey, listen, it's two things. One, Social Security is kind of on shaky ground based upon what Social Security itself says about what's going on, right? And so this isn't a political angle. It's just, hey, here's what it's saying. Interestingly enough, it doesn't say that anymore. They took that out completely. So when you read it, it's gone. Right? Think about that for a second. And So, however, it is, you know, it is said that the trust fund should last to 23 and 34. And when I say the trust fund should last, afterwards, it has enough money to pay 75 cents on a dollar. Okay. So do I think Social Security is going to be here?

Yes, I do. Now, will the benefits be reduced or will taxes be increased? To make sure that we go from 75 to 100. That is correct. Yeah. You know, yeah, is either they're going to increase taxes to take it to 100 or they're going to reduce benefits and leave it at 75 cents on a dollar, okay? Which we can't ever predict, like we've said before, we don't have a crystal ball. But I would venture to say that there is a huge, huge percentage of the Americans that need and will live on Social Security.

So they cannot, it's like back in the economic crisis, it's too big to fail. well, this is too big of a demographic to allow to fail. So the government has to make sure of it. But if that report is accurate that you're referring to, maybe the worst case scenario is you take a 25% haircut, but it's not going to go away. Yeah, man, that's that that's my thought process on it. But, but watch this now, Mike. When I talk about Social Security, I talk about it in comparison with retirement. If you don't want to finance professional, that's not having a conversation with you about Social Security and retirement, then you've got to find another financial professional. And the reason is, is because for the average earner, Social Security is about 40% of your income. If you earn a little bit more than that, than the average earner, Social Security is less than that, but it's still a significant portion of your retirement income, right? And if you earn lower than average income, Social Security is it. Okay. And so as a result of that, whoever you're dealing with as a financial should be able to plan along with, you know, your other assets and telling which, you know, which one is better to, you know, better to go first or last when it comes to income. In other words, do I turn my Social Security on? When do I turn it on?

How do I turn it on? How much will it impact me? if I do it at this date, what does it look like, so on and so forth. Well, let's get into that because I think that's another question is, when should I take it? Because it's like this sliding scale, right? I mean, it's like you can take it at 62 or 64 or 66 or 7. How does that start working? Yeah.

So Social Security, so first, like everything with financial, you know, all financial advice, it really depends on the person. So let's say that up top. I wish there was an exact answer. that I can give everybody, but it isn't. But the conversation is really, really important. So, for example, if someone wants to take it at 62, is there a prior, is there a health issue? Right.

So if somebody's got a lowered mortality, then taking it at 62 may be a good idea. However, if you're healthy and you live longer, you want to understand that if you take it at 66 or 67, mathematically, or if you have a normal lifespan, then taking it later will actually give you more ink, come later, right? And so, you know, that it depends on the person, depends on the family, depends on the strategy as you take it. But that conversation is definitely one that you should have definitely with your financial profession. And let's talk a little bit about that, because isn't there a specific number that if you waited from this age to that age, that your benefits will go up by X percent? So you can kind of go, can I hold off till this? Because

it's going to go up by this amount. Yeah. So if you take it at 62, typically it's about a 20% reduction at 66 or 67, depending on your birthday. That's what they call FRA. You'll see that a lot. That's full retirement age for Social Security. So if you take it at 26 or 67, typically you're going to get a 30% higher benefit than at 62. And if you wait to age 70, which is the last time, no one should wait past age 70, even if you don't need the income, go ahead and take it, right? And so if you wait to age 70, then typically you're about a 30 to 40 percent increase higher than you are at 67. So it's so so so and then those are rough numbers obviously. And that's not a huge amount of time, you know, from 67 to 70. We're not talking about a decade. So if I guess again,

you've got to sit down with someone that can help you figure out, can you survive? you know, in retirement with just what you currently have without taking Social Security. And what if the answer is no? I don't have any other assets. I've got health issues. I have to take it. Then that decision becomes easy. But what if you have some little side this or extra investment income that you can put it off? Then that's a pretty big chunk of an increase just for waiting a handful of years. Right. It sure can be. And obviously, there are many strategies to be taken with inside it. I think, and so I say that to say that there's a lot of, you know, there's some folks that maybe send back and saying, well, if I take it at 62, can I take this amount and invest it? And if I did,

will it be more? And, you know, and so those are, there are a lot of questions to be asked surrounding that. And I guess I would answer that particular question, like, okay, well, where's the money going? is there, you know, how much risk is involved and how would it benefit your overall plan, right? And so there is such a thing. There's a risk reward factor, right? And so if the risk is too great, or if you're kind of on an easy street, all you got to do is keep doing what you're doing in order to meet your financial goals, then maybe the risk is not worth it. And so this is why those questions are really, really important to do with the financial professional and consultation with retirement. When somebody talks to me about Social Security, I start talking to them about retirement.

It all goes together. It really does. It's almost like it's just one extra pillar of retirement funds, right? I mean, I don't know the percentage and I don't know that anyone would know. But what percentage of Americans live fully, you know, and can survive comfortably on only their security benefits? you know, there's a lot of people that would go, well, that's a nice amount, but I've got this cash flow from an annuity or whatever the case is. So I think that's a huge consideration. And I love how you make sure that it is tied into the retirement conversation and calculation.

Yeah, yeah, definitely. And even those folks, right? And so Social Security and taxes, you know, you have that conversation. One of the reasons that I tie Social Security up with retirement is, you know, it's really just about how much other income do I have coming in. And if I take Social Security at this point, how much more in taxes do I have to pay? Right. And so there's a tax conversation. That's included with that because believe it or not, there's some folks that because of Social Security, they're actually receiving net less than what they would because they got to pay Uncle Sam.

And so this is another reason why I say Social Security and Retirement is all to together, you should have what I call a written income plan. Everyone should have one. And all a written income plan does is strategically places out one's the best time for you to take your Social Security along with all your other assets. And what is your, watch this now, net income. Yeah. Not your gross, right? Because mentally you would think, oh, it would just give me more and everything and work yourself out. That may not be the case. Because having a little side income from a part-time job and having this investment income and then having Social Security could kick you into some other tier where now you're taxed more harshly. And then all of a sudden it's like, man, if I just waited or structured it differently, I'd have more money in my packets.

So net is where it's at. That's right. Yes, sir. 100%. So how are benefits actually calculated? Is it simply I'm an American, give me my benefits? or is it, you know, you made this much money throughout your whole career, so it's a sliding scale?

Yeah, so it's called a primary insurance amount or PIA, and it takes the highest 35 years that you've worked and essentially averages it out. Okay. And so sometimes I get a question, well, if I, you know, is it possible for me to continue working and increase my social security benefit? Yeah, yeah, because if you, for example, you know, when we're older, a lot of times that we're making the most that we ever made. So hypothetically, say, I don't know, I'm making $100,000 a year now. And 35 years ago, I was making $20,000 a year. Well, if I work one more

year, that $100,000 replaces that $25,000 year. And now I have a higher primary insurance amount, which could increase my social security income. Absolutely could. Now, if you're working while you're retired taking Social Security benefits, isn't there a number? Like, if you make under X number of dollars, then that's fine. But if you make more than that, then something happens. What does that look like? Yeah. And that's a biggie. So sometimes folks, when they take Social Security at 62, their thought process is, well, I'm going to have this amount of money coming in. And well, if you make more than, and Mike, and I definitely could be wrong on the amount, but I think it's $23,000 and some change this year. But if you make more than $23,000 and some change, and Social

is going to withhold some of your benefits during the time. Social Security wants you to get Social Security at FRA for retirement age or later. So, you know, I think sometimes I go over this in a class. Social Security has got like 2,600 rules and like 587 different calculations. And so at the end of the day, if you take it, but the primary goal is for them to get you to actually take it a little bit later, if at all possible. Got it. So let's think about, I've heard some examples of, you know, like we've been talking about, you know, will Social Security benefits be enough to support me retirement? Well, that's what we've been saying. You need to sit down and figure it out, work with someone that can help you show these ways. But are there some kind of, I don't know, unique or unknown or little known social security benefits where people are like, oh, I didn't think about that, but a good financial professional will ask the right questions and pull that out. What are some of those things that you've seen? Yeah, here's one of my famous stories.

So I had a nurse, and she was doing very well. So money-wise, she was doing very well. She had, she saved. She was married for a long time. And, I mean, she was ahead of the curve. And I came in and see me. And every now and then I get one of these clients where I'm like, man, this is just awesome. The amount of money that she was able to save, she was in a good place.

She didn't want to retire until she was. she was 70, not because she needed to work. It's just because she loved what she was doing. And so just a joy of a person. But long and story, short, we had these different conversations. And I was asking her a couple of questions. And turns out our husband was deceased. And so I kept asking these questions.

And it was funny. She was like, oh, why do you keep on ask me about my deceased husband? You know, and I was that, well, here's why. I'm actually about your deceased husband. Long story short, she was able to claim a severaborship benefit that she didn't claim, and she was able to get some retroactive benefits from that as well. But, you know, so there's a clause in Social Security. Essentially, she was married over a certain period of time.

She was able to get those survivorship benefits. In other words, she was able to get his Social Security up until she was 70, then switched to hers. Now, remember I said she was already in good shape. this took her to a next level. And so these, you know, like I said, it's really, really good to work with financial professional because their job is essentially to make your, you know, your retirement better. And we were able to help her tremendously, although, you know, like I said, she was already in pretty good shape.

Yep, that's a good, that's a good story. And I think that there's things that people just don't know or know think about like, oh, my ex-husband. Oh, my spouse that passed away. Oh, my grandchild that has special needs and I take care of them and I've got custom or whatever those are. And they might not think enough to, you know, file one thing or check the right box. But I think being able to have you with these examples like, oh, I had a client wants that. And then you're looking for that to provide that extra, you know, clarification for your clients. Right.

Right. Absolutely. So what are you finding are some of the opportunities where you have someone comes in and goes, hey, I just wanted to pick your brain. But I think I'm going to do it this way and this way and this way. And you start asking questions and discover that, wow, this is a common misconception. But boy, if you just did it this way, it's going to maximize that. What are some of the things that people should keep in mind in that respect? Well, what's coming to the top of my head is more along the income planning stream where they're wanting to do.

take Social Security, even at 67 years old, right? So I want to take Social Security at 67 years old. I'm able to take Social Security at 67 years old when I take this Social Security, but they're currently working, right? And so if they got a, especially if they got a higher income job, well, and taking that Social Security, there's going to be a lot of that. This is going to go to Uncle Sam. And so since you're thinking about retiring at 70, it's probably better to wait in this case to pull this income than necessarily need it up front. Now, obviously, that's a case by case basis. But that's one of those things where my tax burden is higher than it's worth, especially for somebody who's in this case relatively healthy. That's one of the things that

sticks out on the top of my head. It's just when do I take Social Security and, you know, and how does it go into my overall plan, if that makes sense. Yeah. Yeah, again, coming back to that overall plan, you can't, it's not, is not, Social Security is not an island. because it has impact on other things and you can't just view it like check the box, give me my funds. Right. Right. Exactly.

Exactly. So again, this is, you know, I think Social Security is, you know, it's one of those things that people have a lot of questions about. And, you know, I guess what we, and we help our clients at no cost, right? Yeah. This doesn't cost anything. Nothing costs anything. We just want to get in there and help you.

And one of the reasons that we do that is because we know the total impact. And this guy's case that I was telling you about that we ended up waiting, the overall impact to his portfolio was near seven figures, assuming that he lives to life expectancy. Okay. So he was going to make a seven figure mistake and didn't know it. Now, keep in mind, keep in mind that he was, so keep in mind in his case, he probably, you know, he probably wouldn't, not to say that he would miss it, but he would just think, oh, you know, you know, I didn't get it. I hate you, Uncle Sam, and write that check every week and not really knowing the total impact to his overall deal, which is why that written income plan is super important. because it's not going to tell you just a yearly amount that you have to pay, which may seem minor, it's going to tell you the cumulative amount for making whatever decision that you want to make at that moment.

Yeah, yeah, that's a huge point. And it's kind of like you don't know what you don't know, but then when you do know it, let's take some action about it. And you said something really powerful written plan. It's not just like, oh, I had a conversation with someone, but did you remember it the right way? having a plan in place is key. Having a written plan in place is key because you can then refer back to it and then adjust it and maybe in the annual review make a little tweaks to it.

So I think that just makes so much sense. Right. And the goal is you see it. You know what your original goal is. And you know if you overcame that goal, you fail short. And if you fail short, then how do you make that up and so on and so forth? And so written plan is what you want to happen. And it's just following up with it and making sure it happens.

Yep. You got it. Well, I tell you, James, it's been enlightening once again, just chatting with you. If someone is interested and reach out and connected with you just to give them some good guidance on Social Security Claiming, what's the best way that they can do that? Yeah, they can go to www. edwardfinancial group.com. Again, that's www. edwardfinancialgroup.com. There's a link. The top right corner says, let's talk. If you click that, that'll give us a 15-minute conversation. I'll kind of take down an info, take your information. get to know you a little bit, and that I'll start the process. Excellent. Well, thank you so much.

I really appreciate you coming back on. Mike, I really appreciate it. Third Times a charm. I really, really love what you doing with your podcast. Awesome. Thanks. Thanks so much. You've been listening to Influential Entrepreneurs with Mike Saunders.

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