Ellie Robison (Host): Welcome to Paladin Financial Talk. I am your substitute host, Ellie Robison, and I am joined today by my fellow advisor, co-worker, Jack Ekholm. Hi, Jack.

Jack Ekholm (Guest): Hello. Hello. Where is Nikki? What’s going on?

Ellie Robison (Host): You know what? She and her lovely husband, Jeff Foley, are doing a 36-hour hike race. It’s a race, right, in Idaho.

Jack Ekholm (Guest): Yes. I think they have to do it within a certain period of time. So, it’s a challenge called Everest, and I don’t know the exact details, but they’re in Idaho. They’re on the mountain. Starts tomorrow, but they’re out there getting prepped up for it. And they have to go up and down the mountain I think like 12 times or something. Within the course of 24 hours.

Ellie Robison (Host): So, you have more information than I do. I know it’s more than 24 hours, though.

Jack Ekholm (Guest): Oh, is it?

Ellie Robison (Host): Yeah. I’m pretty sure it’s like a 36-hour type of deal. And they’re planning on sleeping only like 3 hours in this entire like race, which is insane. They’re crazy. I love them, but they’re crazy.

Jack Ekholm (Guest): Yeah, it’s quite a challenge. And I like the title of it, Everest, goes back to the length that they’ll traverse on the mountain going up and down that many times is equivalent to the distance if they were actually hiking Mount Everest. And they’re doing it all within 36 hours or whatever the time frame is.

Ellie Robison (Host): So, I look up to them.

Jack Ekholm (Guest): Props to them.

Ellie Robison (Host): I know, right? So, we’ll be missing them, but that’s why I’m stepping in today and interviewing you, Jack.

Jack Ekholm (Guest): Can’t wait.

Ellie Robison (Host): Anything new on a personal level? Let’s just chat one-on-one as friends. What’s going on?

Jack Ekholm (Guest): Not a ton new. I passed the CFP exam recently, so I’m excited to have

Ellie Robison (Host): Congratulations.

Jack Ekholm (Guest): Thank you. Thank you. Otherwise, celebrated my birthday over the weekend, so

Ellie Robison (Host): That’s right. We both had birthdays, actually.

Jack Ekholm (Guest): Yes. Yes. Yours this week, right, yesterday. So, happy birthday. Belated.

Ellie Robison (Host): Thank you. Thank you. It’s funny because we all give each other cards here in the office and everyone, you know, writes a little note to each other in the card and Jeff Foley put in a dad joke. And what was it exactly? It was…

Jack Ekholm (Guest): related to your chickens.

Ellie Robison (Host): Yes. Why did the chicken join Paladin Financial?

And then the punchline was because she was great at building a nest egg or something like that. And I laughed. Yeah. So, for the listeners out there, I don’t know if I’ve mentioned it yet to the public, but I do own chickens now. It was against my will. This was something my fiance wanted and I was roped into it.

Jack Ekholm (Guest): But you are enjoying it, right?

Ellie Robison (Host): I am enjoying it. There’s a lot of chicken talk around the office now for whatever reason, but yes.

Jack Ekholm (Guest): And you wouldn’t expect it statistically, but one of our other co-workers does also own chickens, right?

Ellie Robison (Host): Yes. And no one harasses him about his chickens. It’s just me for some reason.

Jack Ekholm (Guest): You’re the chicken lady now. And forever.

Ellie Robison (Host): I don’t want to be branded like that. Today I’m the substitute host. So, today we will begin a six-part series in which we’re breaking down social security piece by piece. Social security can be one of the most important pieces of your retirement plan, but understanding how it works isn’t always easy. So, today we’ll just start with the basics. I think this will be a really good episode. In later episodes, Nikki will dive further into exploring like worker dependent survivor and disability benefits and also how social security is taxed because there’s a different formula to it. Most people don’t know and so we do want to cover that at some point. And finally, claiming decisions that can have a significant impact of your retirement income and really focusing on that at some point. So our goal is simple. Help you better understand the system, know the benefits available to you, and make more informed social security decisions as a part of your overall financial plan. So, Jack, yes. What is the most popular question you get on social security and what is your response?

Jack Ekholm (Guest): Yep. So, it you kind of mentioned it there briefly and it’s a topic that we’re going to dive deeper into in a future episode, but far and away it’s when do I file for my Social Security benefits? And my answer and our answer as advisers and people don’t like to hear this is that it depends. But it really does depend. It’s vague, but it is different for everyone and it’s due to a number of different factors including but not limited to your health and your lifespan expectations. What previous members of your family and their experiences might indicate for you. Your retirement income plan. So how much income do you need? When do you need it? What other sources do you have available to provide that income? If you’re married, it becomes important to compare the size of your benefit to that of your spouse. And those play into the timing decisions for both of you, the condition of the market and your investment portfolio, your tax plan, especially including Roth conversions. And we have to consider how filing for benefits and once you start receiving those, how they’re going to be taxed, how they might eliminate some of your Roth conversion budget this year and in future years, and so on. So, there’s a lot that plays into it.

Ellie Robison (Host): I mean, I agree. Nobody likes to hear it when we say, “it depends,” but everything that you just rattled off is exactly what’s going through our brains when people ask us those questions.

Jack Ekholm (Guest): Yep. Yep. And you’ll look at social media and that’s how people get attention is they’re going to give you one answer. Whether it’s take your social security benefits right away is the best answer for everyone or delay till 70 is the best for everyone. But it really depends.

Ellie Robison (Host): It really does.

Jack Ekholm (Guest): So our approach when we’re answering that question for clients is we’re going to look at it first from a purely mathematic point of view. So we use a software in our office that’s going to factor in cost of living adjustments in the future on your benefits. Your life expectancy expectations, the social security earnings test. So if you’re continuing to work past age 62 and before your full retirement age, your benefits might get reduced as a result of your earned income. And other factors as well. And that software is determining for you the optimal age at which to file to maximize your total lifetime benefits. But then we have to weigh that outcome and the magnitude of benefits lost if we’re filing at different ages in the context of all the factors that I just mentioned which are specific to your plan to make a final decision. And then even when we have that final decision, as we explained to clients, we have this point in time picked out and for good reason. But social security timing is somewhat a play it by ear decision and we’re going to revisit it over time because your health and the market and your plans to continue working, they might be one way right now, but they can change and as a result, so too might your filing plan. So when we recommend and decide on a filing plan, it’s always written in pencil rather than etched in stone.

Ellie Robison (Host): I love it. For many Americans, Social Security serves as a cornerstone of their retirement income, providing essentially a guaranteed source of funds. According to the July 2026 Social Security monthly statistical snapshot, nearly 58 million people from the baby boomer and silent generations are currently receiving Social Security retirement benefits, totaling more than $117 billion in benefits each month, which is crazy.

Jack Ekholm (Guest): Wow. So much.

Ellie Robison (Host): But retirement benefits aren’t the only ones provided by Social Security. So, in fact, there’s another roughly 18 million beneficiaries that receive another $21 billion or so of monthly benefits from other programs. So, Jack, could you expand a little bit on that?

Jack Ekholm (Guest): Yeah. So, when most people think of Social Security, they’re thinking about the benefits that a worker gets for themselves as early as age 62, can delay it as late as age 70 based on their own earnings history. But assuming qualifications are met, and many people don’t know this, that worker’s spouse and children can also receive benefits based on their record. If the worker passes away and qualifications are met, social security also pays benefits to survivors including their surviving spouse, children, and even their dependent parent or parents. And then separate is social security disability that pays benefits to disabled workers. So they have a certain definition, a social security disability definition that the worker has to meet. And assuming they’re still disabled after a five-month waiting period. They get benefits through Social Security disability and also potentially entitled to benefits are their qualified spouse and children as well. And then even separate from that, we have supplemental security income, which many people know better as SSI, but it’s another program that provides monthly benefits to people with disabilities and older adults who have little or no income or assets. So many components to the program and it’s important to know all of these because we see situations all the time with clients where they might not know about a benefit that they or their family are actually entitled to. And so we want to educate you on that and make sure that you’re taking best advantage of benefits that you can get.

Ellie Robison (Host): And so how does one become eligible for retirement benefits?

Jack Ekholm (Guest): Yes. So it’s all based on what are called social security credits. So workers earn social security credits by having earnings that are subject to social security or self-employment taxes. So in 2026, you get one credit by having $1,890 subject to social security or self-employment tax. That gets you one credit. And then that amount is subject to change each year. Generally, it increases. It was a lower amount last year. It’ll likely be a higher amount next year. And you can accumulate up to four credits per year. So, retirement benefits require you to be fully insured, which means having 40 credits. So, assuming you’re getting your four credits each year, that means at least 10 years of work to be fully insured and entitled to your retirement benefits for yourself and for your family as well. So, a fully insured worker can start their own retirement benefits, as I mentioned, as early as 62, as late as 70. They receive their full what’s called primary insurance amount at their full retirement age. That’s their monthly benefit. And your full retirement age can be anywhere between age 65 and age 67 depending on when you were born. And the way that’s calculated, it’s based on an average of your 35 highest earning years throughout the course of your career. They index those for inflation and they only account in each of those years the earnings up to what’s called the social security wage base. So this year it’s $184,500, but it was lower in previous years and generally goes up each year as well. So there is a limit to how large your benefit can be regardless of how much money you’re making. And we’ll get to the specifics on that later, but benefits taken prior to full retirement age are reduced for each month that you take them early relative to your full retirement age. So if you take it at the earliest possible age of 62, your benefit is 70% of that primary insurance amount. And then benefits taken after receive a delayed credit for each month that you delay them. Excuse me. So if you file at age 70, as late as you can, you get 124% of your primary insurance amount, and that’s where your benefit maxes out. So once you start your benefits, it’s important to note that amount is locked in. So filing earlier gets you more checks, but that check is going to be permanently reduced. And benefits are usually increased each year with the Social Security’s cost of living adjustments. So you’ll get a slight bump to your benefits thereafter, but nothing like the bump you’d get from delaying your benefits and starting them later.

Ellie Robison (Host): Yeah. So what about a family? How might retirement benefits affect people who are married and/or raising children under their roof?

Jack Ekholm (Guest): Yep. So separate from the worker, that worker spouse can qualify for spousal benefits in two ways. So the first way is they can qualify based on age and this is the more common example. So they can file as early as age 62 for spousal benefits. If they do at that point, they get 32.5% of the worker’s primary insurance amount and they can delay it as late as their full retirement age, at which point they would get 50% of the worker’s PIA. And the second way they can qualify is by caring for an unmarried dependent child that’s either under 16 or disabled before the age of 22. And if they qualify in that way, they get 50% of the worker’s primary insurance amount. And then a worker’s child can qualify for child benefits. Those benefits are 50% of the worker’s PIA by being unmarried and either 18 or under. They can be up to 19 if they’re in high school or disabled before the age of 22. And it’s important to note too, they can’t receive benefits until the worker starts their own benefits. So, even if your spouse is 62 and they’re, you know, ready to claim benefits, they can’t on your record until you’ve started your own retirement benefits.

Ellie Robison (Host): Well said.

Jack Ekholm (Guest): With the child.

Ellie Robison (Host): Yeah. Well said. It actually was something that affected my family growing up. So, my dad filed for Social Security and my sister and I were still in high school.

Jack Ekholm (Guest): Okay.

Ellie Robison (Host): And so, we got family benefits and he optimized his filing strategy by doing that.

Jack Ekholm (Guest): Nice. That’s awesome.

Ellie Robison (Host): And he didn’t even realize that he was doing it. He was like, he got laid off in the ’08 recession, okay? And he was like, you know what? I’m just going to retire. And so he filed for Social Security and ended up getting additional benefits because of us.

Jack Ekholm (Guest): So there you go. Worked out.

Ellie Robison (Host): It did work out. But for listeners out there, maybe let’s do an assessment before you just wing it.

Jack Ekholm (Guest): Exactly. [Laughter] Yes. It’s an important decision.

Ellie Robison (Host): That’s just scratching the surface on family benefits. Truly. So let’s put some dollars around Social Security. What does the average retiree receive and how large can that benefit actually be?

Jack Ekholm (Guest): So, in terms of the average retiree, as of July of this year, the average benefit for retired workers that are currently receiving benefits is $2,085 a month. That’s the average. For spousal benefits, the average is $986 a month. And for child benefits, the average is $960 a month. But in terms of what that can go up to, as I mentioned in the calculation of a worker’s primary insurance amount, which drives the amount of their benefit and any benefit that their spouse or children get, their historical earnings that were subject to social security or self-employment taxes are only counted up to a certain amount each year, that social security wage base. So, as a result, there is a maximum primary insurance amount, which you could only get if in the calculation, they’re looking back on your 35 highest earning years if you hit up the up to the Social Security wage base in each of those 35 years in terms of your Social Security or self-employment taxed earnings. And assuming that you did that for a worker that’s starting their benefits this year in 2026, that maximum benefit, assuming they’re filing at their full retirement age is $4,152 a month. If they were filing at age 62, it would be $2,969 a month. And the maximum absolute benefit if they were starting this year at their latest possible age of 70 is $5,181 a month. So you can see already in just in that situation how much variety there is based on the filing age. If we look at 62, they’re getting about $35,000 a year in benefits. Whereas if they delay to 70, yes, they haven’t been getting benefits for eight years, but now their benefit is going to be $62,000 roughly a year. So there’s a big variety there.

Ellie Robison (Host): Yeah, huge difference. So where does all of this money come from to pay for these social security benefits?

Jack Ekholm (Guest): Yep. So, three different sources that we’ll talk about. The primary one is income for the government from current social security and self-employment taxes that are being collected from workers that are currently earning and in the workforce. Right now, that funds about 90% of benefits. So, you might hear the social security system referred to as a pay as you go system. And basically, that means that the current benefits that retirees and others are receiving are funded by current workers. So, you know, you pay into the system over the course of your career from your wages to entitle yourself to benefits in the future, but you might be surprised to know they’re not just taking the taxes that you’re paying in and putting them in some sort of safe account to pay to you in the future. Those are getting taken and pretty much immediately paid out to those that are receiving benefits right now. So, that’s why they call it pay as you go. Other sources though, first the taxation of benefits. So about 4% of benefits are funded by income taxes on social security checks. So it’s not applicable to everyone. It depends on how much other income you have. And that’ll be a future episode topic too in terms of the taxability of social security. But only up to 85% of benefits are taxable. But those taxes charged on it are then used to fund back into the program as well. And then any remaining shortfall comes from the social security trust fund. So that trust fund was built up over the years from funding surpluses from prior years. So in the past we had years where the taxes being charged, the social security and self-employment taxes were actually more than they needed to pay out benefits owed to those that were collecting. So those went into the trust fund and that built up over the years. That trust fund is invested in US Treasury securities. So safe investments that are generating interest that can be used to fund benefits. But now we’re getting to a point as we’ll talk about where running into funding deficits. We’re having to tap into the trust fund rather than adding to it each year.

Ellie Robison (Host): Yeah. You don’t have to work in finance to have heard through the grapevine that there might be a shortfall coming soon. One of the biggest questions people have when they come through our door is like will there be social security for me when I go to file someday? So what actually is happening with the social security trust fund?

Jack Ekholm (Guest): Yep. So, as I mentioned, total costs began to exceed Social Security’s income in 2021, and that trend is expected to continue indefinitely. So, we’re not adding to the trust fund anymore. Instead, we’re depleting it over time, pulling from it to fund shortfalls of benefits owed relative to income that we have coming in to the program from the taxes that are charged on current workers earnings. According to the 2026 annual report directly from the board of trustees of the social security program, the trust fund is projected to be depleted in the fourth quarter of 2032. So they can project out and basically, you know, expectation of how much benefits we’re going to owe in each year, how much income we’re going to have coming in, how much we’re going to have to take from the trust fund, and their expectation is that trust fund is going to be fully used up by basically the end of 2032 after it’s depleted. The projected income that the program will still have coming in from the taxes will still cover 78% of scheduled benefits. So, will Social Security be there for you? No one can say with 100% certainty, but I would say very confidently yes, the system isn’t going anywhere. But considering this, your benefits, if you’re filing in the future, might look different than they do now. Luckily, the administration is aware of the funding challenges. They know they’re not going to have full funding of those benefits in the future. And so as a result, they have time to get creative and figure out a way to make things work.

Ellie Robison (Host): Yeah. I’m constantly trying to remind my own clients about that. I’m like, it’s not the end of the world. Something will change. But let’s say they do reduce everyone’s benefits by 22% once the trust fund runs out. Then what?

Jack Ekholm (Guest): Yeah. So, it’s certainly a possibility and it’s kind of a worst case scenario. But the reason I personally don’t believe that would happen is because that would have pretty nasty implications just on the American public. So, a 2026 survey by the Senior Citizens League reported that roughly 44% of seniors depend on Social Security for 100% of their income. Now, tax linked records suggest the number is actually a lot lower. A lot of those seniors, yes, might be getting 100% of their income from social security, but if they lost that income, they do have other income or assets that they could tap into. But either way, if you see benefits reduced by 22%, you’re going to see lots of seniors either pushed into poverty or at least strain to the point where they’re now having to make choices about food, housing, medical care, and other needs. That’s not a good look. Politicians don’t want this, and so I think they’re going to try and find a way around it. So when we think about solutions that they could put in place to still fully fund benefits, one is they can increase the taxes that they’re charging on current workers earnings to try and basically raise the income lever. They might also eliminate that social security wage base. So really high earning people even wages beyond that amount are still subject to social security or self-employment taxes. Or they might just eliminate that wage base altogether or they might raise it and that would support continued unreduced benefits. They might increase the full retirement age to match rising life expectancy. So even though you’re entitled to the same benefit, it wouldn’t be until a later point in the future until a later age. They might, you know, put in place additional government borrowing. As we know, our government loves to borrow and issue debt. So additional borrowing might play a part in meeting funding needs. They might somehow reduce benefits for wealthier and higher income people who don’t need it as much to try and protect those groups that I was talking about. The seniors that rely more on social security for their financial well-being and try to keep their benefits unaffected but reduce it for those who need it less. They might reduce the annual cost of living adjustments, try and slow the growth of benefits over time or a number of other solutions or some combination of those. Who knows? But there are options out there and I think they’ll get creative and trying to figure out a way to make it work.

Ellie Robison (Host): I agree. Well, Jack, this has been a fantastic starting point to our Social Security series and understanding the foundation of the administration and just the benefits that come along with it. Based on our discussion today, I’d like to emphasize two key takeaways that I’ve heard from you. So, Social Security is more complex and more comprehensive than many people realize. There’s more to the program than simply your own retirement benefits. Understanding your eligibility, your family’s potential eligibility for benefits and strategies available to maximize your benefits can be complicated. And work with an adviser who incorporates an optimized social security strategy into your overall retirement plan, right? I think that is crucial. And then like what we kind of said on the latter half of this episode is don’t panic about the future of Social Security, right? There’s a lot of uncertainty surrounding the program, but that doesn’t mean that you should make decisions based off of fear. Instead, let’s just plan accordingly. Social Security might look different in the future, but we find it important to build a plan that accounts for that possibility. So, Jack, do you have any recommended resources for someone listening today?

Jack Ekholm (Guest): Yes. So, if you want to take the next step, be sure to check out our download that goes along with this series. If you’re a regular listener of the podcast, you know, for each new series, we have a new resource available for you. So, for this series, we’re offering a complimentary Social Security maximization report personalized to you. So, you remember when I talked earlier about that mathematic aspect of the filing decision and the software that we use and look at for our clients? This is that report coming from the software that we actually use. So, we’ll provide a sample report that’s available on paladinfinancialtalk.com. So, you can see the value this report can provide. If you want it personalized, we do need to know some information about you. So, you can book a 15-minute phone call with us and request that report and we can gather the information that we need to run it for you.

Ellie Robison (Host): And so, if you’re sitting there thinking, “This sounds like me,” or you just want a second opinion on where you stand, we do offer that 15 minutes no obligation conversation to help you get clarity. Visit our website at paladinfinancial.com. Then click the booking tool in the top right-hand corner or just give us a call 651-842-8406. You can also follow along with us on our social media platforms where we have gotten way more fun lately on it. So we have insights, resources, and upcoming content. You can find us on YouTube, Facebook, Instagram, LinkedIn, and more. So thanks for listening again and we’ll see you next episode.

Jack Ekholm (Guest): Thanks, Ellie. This was a blast.