Are You a Victim of These Social Security Myths?

Mismanaging your benefits could cost you $180,000

Ric Edelman: It's Tuesday, September 12th. Yesterday I talked about the coming social security crisis. Bottom line, if Congress takes no action, Social Security benefits are going to be cut about 23% starting around 2032.

This is a fact. It's not a myth. But there are some myths or really mistakes about Social Security that people are making. And I want to dispel them for you. The first mistake and this is the most common one, thinking that you should start your benefits as soon as you're eligible. That's age 62. More than 95% of retirees start getting Social Security at 62, and almost every single one of them is wrong. If you start at 62, you're only going to get 70% of what you would get if you waited till 66. And that's only about half of what you'll get if you waited until 70.

If you think you're going to live beyond age 85, waiting until age 70 to start your Social Security is the better option. We're talking about an extra $180 grand in lifetime income, compared to starting at 62. Do you really want to throw away $180,000?

Another mistake is looking at your age and income when calculating your Social Security benefits and when to start. You really need to also consider your marital status, your spouse's age, whether or not your spouse works and their income and your dependents. And I say marital status separate from your spouse's info. If you're widowed or divorced, those factors can be more important than your age in deciding when to start collecting Social Security.

One big myth is thinking that you need to start Social Security now so that you get the cost of living adjustment. Not true. Your future benefits are adjusted to reflect inflation, so don't worry about it.

Another big myth is thinking that Social Security benefits are not taxed. That's true for low income retirees, but pretty much everybody else does have to pay taxes on their Social Security up to 50% of your Social Security if your income is $25,000 to $34,000, or if you're married with incomes of $32,000 to $44,000. And if you earn more than that, you'll pay taxes on up to 85% of your Social Security benefits.

And finally, many people think that their local Social Security office will help them get the maximum benefit. Wrong. If you want to maximize your benefits, then get advice from a financial advisor. The Social Security Administration and the people who work in their local offices will only tell you the rules. They won't tell you the strategies to help you get the most out of those rules.

Well, none of that's really fun to talk about. So let's talk about something that is fun. Video games. This is not just fun. It's big business and a great investment opportunity. Millions of people and not just teenage boys anymore now spend hours every day playing video games, hanging out in video game sites and making money in virtual experiences. 80% of Gen Z are gamers. 75% of millennials, 42% of baby boomers play video games, and they all do it for an average of about an hour a day. Three and four say they play with others, and that means gaming is a very social activity. All told, consumers will spend $185 billion on video games this year. 

That's five times more than what they'll spend at the movies. 70% more than what they'll spend on Netflix. 3.2 billion people play video games. That's 40% of the global population. And the number is rising. And in rich countries, two thirds play video games. Half of them are women. There are now more players in their 30s and 40s than in their teens and 20s. The Walking Dead is now an interactive video game. The latest Harry Potter generated $850 million for Warner Brothers, but for its video game, not the movies. We've got musicians performing concerts in Fortnite and fitness videos. Forget it. They are now fitness games.

This is creating entirely new business models, free to play games that feature ads in-game purchases. Now there are subscriptions - Apple, Netflix, Sony, Google, The New York Times. They're all offering video games. Seven of the ten most valuable tech firms are active in gaming. It's the future of home entertainment. Gen Z - those are the people under age 25 - they rank their favorite home entertainment as video games, not TVs.

If you want to invest in the video game technology and companies that are in this industry, take a look at the Global X Video Games and eSports ETF. The symbol is HERO. It invests in companies that are developing or publishing video games streaming or distributing video gaming or esports content operating competitive esports leagues or producing hardware that are used in video games and esports, including augmented and virtual reality. The Global X Video Games and eSports ETF, Symbol HERO. You can learn more about it at Global X ETFs.com or talk to your financial advisor.

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