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Hi, female, no money & should I take Social security income leveling option? Help!
Old 03-20-2018, 06:54 PM   #1
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Hi, female, no money & should I take Social security income leveling option? Help!

Would greatly appreciate any advice here.

I'm eligible in a few months for a monthly pension of $616 with a 3% annual COLA, at age 60.

My estimated SSA award is $1408 at age 66.

I will be taking the pension, but am trying to figure out whether or not I should take the Social Security income leveling option my company offers based on using my age 66 Social Security benefits in calculation.

I'm single and hispanic with some college but no degree or dependents. I had to quit my job 11 yrs ago to take care of both my elderly parents with dementia who became bedridden. I lost all property in the recession and haven't had any income the past decade. I had a family obligation. I basically moved into my parents house and took care of them using their income which just covered them and me and lasted until both died. My dad was the last to die this past summer. Since then, I've been clearing out their house little by little to prepare it for sale. The sales have enabled me to keep the lights on while working on the house which I anticipate being able to sell this summer/spring. The house ownership passed to my sister, and she will receive the money when the house sells. So, I have no income and no assets except $1,000 in a Roth which is unavailable to me for several more years.

No matter what I do, I know that I will have to find a job to supplement whatever retirement income I have from age 60 on. I'm literate but unable to return to past occupations and can't do general labor due to physical limitations, so I'll have trouble finding more than minimum-wage jobs. I can count on having maybe ten more years before I become unable to work due to my health and physical condition. I also lost past eligibility for Social Security disability due to being out of the normal work-force so long.

Yet, after 10 years, my life will finally be my own again. I'll either be living out of a van or finding a cheap room to rent for $300/mth once I sell and vacate the house (local living costs are low here).

My dilemma is whether or not to take the Social Security level income option when I retire shortly, or not? I've seen debilitating old age up close, and it's not for me. I may have to depend on medicaid right now, but I anticipate checking out of the hotel myself before I need personal care.

I'd appreciate any suggestions or perspectives anyone has concerning my situation. Thank-you!
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Old 03-20-2018, 07:06 PM   #2
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Quote:
Originally Posted by rubbermaid View Post
I'm eligible in a few months for a monthly pension of $616 with a 3% annual COLA, at age 60.

My estimated SSA award is $1408 at age 66.

I will be taking the pension, but am trying to figure out whether or not I should take the Social Security income leveling option my company offers based on using my age 66 Social Security benefits in calculation.
How does this "income leveling option" work at your company? What are the details, amounts, timeframes?

Quote:
The house ownership passed to my sister, and she will receive the money when the house sells.
You don't get any of it? Why not?

Quote:
No matter what I do, I know that I will have to find a job to supplement whatever retirement income I have from age 60 on. I'm literate but unable to return to past occupations and can't do general labor due to physical limitations, so I'll have trouble finding more than minimum-wage jobs.
Sounds like you need to get on a payroll as soon as possible.
Depending on how many years you have worked so far, it might also serve to increase the monthly benefit you will eventually receive.

Quote:
I'll either be living out of a van or finding a cheap room to rent for $300/mth once I sell and vacate the house (local living costs are low here).
Maybe you could live with your sister?

Quote:
I anticipate checking out of the hotel myself before I need personal care.
That's not a very good plan.
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Old 03-20-2018, 07:08 PM   #3
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Sorry to hear your situation. Wish I could help. I’m not sure what SS income leveling is. Can you please describe what that is and what happens financially if you do or don’t take it?
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Old 03-20-2018, 07:25 PM   #4
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SSA leveling option is offered with some pension plans. Basically if you collect a company pension before opting into Social Security, the company will take your SSA estimate of what you might get at age 66 for SSA and use it to supplement your monthly company pension monthly amount till age 66 when they will then reduce your company pension amount for the rest of your life.

So, if I opt in I have to do it when I first accept the company pension. I anticipate if I do so, that I'll receive approx $1,300 per month in company pension (instead of $616) till age 66. At age 66 my company pension will drop down close to zero and my full SSA of $1408 per month will kick in. The amounts will vary slightly due to the amounts of both company and SSA COLAS which accumulate by then.

Basically, the incentive for the company is that they pay out the bulk of one's pension obligation upfront and are on the hook for much less past age 66.
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Old 03-20-2018, 07:31 PM   #5
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Reply to Joeea,
My sister gets the house & proceeds because she is a mostly mentally disabled adult and my parents were concerned about providing for her. I got free room and board from my folks while I lived with them and cared for them, so that's that. There is no other family or support.
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Old 03-20-2018, 07:41 PM   #6
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Since then, I've been clearing out their house little by little to prepare it for sale. The sales have enabled me to keep the lights on while working on the house which I anticipate being able to sell this summer/spring. The house ownership passed to my sister, and she will receive the money when the house sells.

I don't understand the above statement.

Why are you spending time ( and money?) to prepare the house for sale if you receive none of the proceeds?
Why are you not receiving any of the proceeds if you had to leave your job for years to care for your parents?
Why did your sister not participate in providing care for your parents?
Why does she not recognize your contribution to their care?
How much will the sale of the home generate in net proceeds?


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Old 03-20-2018, 08:00 PM   #7
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First, I salute you for honoring your parents in helping them.

FWIW, I was offered a similar level income plan (LIP). The offer was no COLA if you took the LIP. Big factor in my decision. I'd double check to see if that might be the case for you.

Any chance an arrangement can be made to stay in the house until 62 when you could draw SSA then. That added to your pension might help.
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Old 03-20-2018, 08:03 PM   #8
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My sister is 70, in decent physical shape right now and may outlive me. She suffered a traumatic event at age 5 which left her emotionally and mentally stunted to the level of a late teenager. She was incapable of helping with the folks, and I will have to supervise her welfare for the rest of her or my life. She works a simple job and I have her set up in her own apartment, but I'm her POA and manage her expenses. She is resentful of this because she is older and doesn't perceive her inadequacies. She knows everything that I have done, but doesn't understand it's significance. She has a small pension and will get a decent SSA award shortly. I've also built up her both her 401k s to just over 100K total. She'll get the house money (maybe $90K, because market values are very low here) too per the wishes of my folks, because whether I'm around or not she can't manage on her own and will ultimately have to pay for personal or nursing care.
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Old 03-20-2018, 08:09 PM   #9
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Hilbilly, thanks for the tip about the COLA. I don't know if that would effect me and will definitely check. What about the SSA COLA in your case.

Unfortunately, can't stay in the house due to maintenance costs. Selling now before roof replacement, etc., is best can do. My anticipated SSA at 62 is 978 which added to 616 is $1594.
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Old 03-20-2018, 08:38 PM   #10
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Phase, I would opt for the larger lifetime income as a protection for longevity
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Old 03-20-2018, 08:43 PM   #11
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I can only speak as to what I would do in your circumstance. If I could get back in the workforce quickly and generate an income before the “live out of the van” Phase, I would opt for the larger lifetime income as a protection for longevity.

Bless you for taking the responsibility for your family’s care
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Old 03-20-2018, 08:44 PM   #12
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If you're going to work for a few years, you would probably be better to keep the higher pension payment for later when you say you'll be unable to continue working.
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Old 03-20-2018, 10:04 PM   #13
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...... She'll get the house money (maybe $90K, because market values are very low here) too per the wishes of my folks, because whether I'm around or not she can't manage on her own and will ultimately have to pay for personal or nursing care.
Are these wishes spelled out in a Will, or just what folks said at times ?

The difference is without a Will, you are entitled to 1/2 the house, and considering your sister didn't help with parents (regardless of reason/excuse) you certainly more than "earned" your half.

As the for need argument, you will need the money more than she, as you have basically nothing.
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Old 03-20-2018, 10:16 PM   #14
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SSA leveling option is offered with some pension plans. Basically if you collect a company pension before opting into Social Security, the company will take your SSA estimate of what you might get at age 66 for SSA and use it to supplement your monthly company pension monthly amount till age 66 when they will then reduce your company pension amount for the rest of your life.

So, if I opt in I have to do it when I first accept the company pension. I anticipate if I do so, that I'll receive approx $1,300 per month in company pension (instead of $616) till age 66. At age 66 my company pension will drop down close to zero and my full SSA of $1408 per month will kick in. The amounts will vary slightly due to the amounts of both company and SSA COLAS which accumulate by then.

Basically, the incentive for the company is that they pay out the bulk of one's pension obligation upfront and are on the hook for much less past age 66.
I think someone may tell you that, but that is not what I think is happening.
A woman who is 65 on avg will live to 86.6 , which is 21.6 yrs of retirement.
https://www.ssa.gov/planners/lifeexpectancy.html

Lets look at a comparison, and assume once you get SS the company pension is not zero but $100 in todays dollars (so 1/6 of company pension), and you live an average lifespan, not a long one.

option 1 pension: $616 * 12 * 21.6 = $159,667.20

option 2 level pension: ($1,300 * 12 * 6) + ($100 * 12 * 15.6) = $112,320

So by taking the leveling option, it looks to me like they will only pay you 70% of your company pension, and a LOT less than that if live longer than average.

So if anyone told you they are simply paying out the pension sooner, they were lying to you. (IMHO)
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Old 03-21-2018, 05:10 AM   #15
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Hilbilly, thanks for the tip about the COLA. I don't know if that would effect me and will definitely check. What about the SSA COLA in your case.

Unfortunately, can't stay in the house due to maintenance costs. Selling now before roof replacement, etc., is best can do. My anticipated SSA at 62 is 978 which added to 616 is $1594.
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Originally Posted by rubbermaid View Post
.

So, if I opt in I have to do it when I first accept the company pension. I anticipate if I do so, that I'll receive approx $1,300 per month in company pension (instead of $616) till age 66. At age 66 my company pension will drop down close to zero and my full SSA of $1408 per month will kick in. The amounts will vary slightly due to the amounts of both company and SSA COLAS which accumulate by then.

Basically, the incentive for the company is that they pay out the bulk of one's pension obligation upfront and are on the hook for much less past age 66.
It looks like you have pretty much answered your own question. Since your pension will drop to zero if you take leveling it appears you would do better with the intact pension and early SS at 62 - only two years away. Struggle by for two years, maybe even find a job in which case you could still hold off SS until FRA at 66 or even 70.
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Old 03-21-2018, 05:29 AM   #16
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Best of wishes in your journey. You write nicely and that may be helpful in your job search. You will always know you took care of your Mom and Dad.
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Old 03-21-2018, 07:01 AM   #17
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Best of wishes in your journey. You write nicely and that may be helpful in your job search. You will always know you took care of your Mom and Dad.
+1.

You should be commended for taking care of your elderly parents and your sister with special needs while sacrificing your own financial needs.

Any possibility of moving in with your sister? combining your pensions and SS might make it doable especially when you live in a low cost of living area?
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Old 03-21-2018, 08:55 AM   #18
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Since your pension will drop to zero if you take leveling it appears you would do better with the intact pension and early SS at 62 - only two years away. Struggle by for two years, maybe even find a job in which case you could still hold off SS until FRA at 66 or even 70.
Quote:

You should be commended for taking care of your elderly parents and your sister with special needs while sacrificing your own financial needs.

Any possibility of moving in with your sister? combining your pensions and SS might make it doable especially when you live in a low cost of living area?
+1 on both of these.
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Old 03-21-2018, 09:21 AM   #19
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Being a caregiver is a very difficult job... I've taken care of my wife for over a year now, 10+ years seems incredible. It must feel like you've lost a portion of your life, but you did the right thing

I'm sorry to hear about your sister's condition... is there any way you can live with her, assisting with her needs in exchange for lowered living expenses for both of you?

I will leave the financial advice to the experts here (they really know a lot and can help you make the best decision), but I wish you the best... you seem like a very nice person.
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Old 03-21-2018, 09:34 AM   #20
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Are these wishes spelled out in a Will, or just what folks said at times ?

The difference is without a Will, you are entitled to 1/2 the house, and considering your sister didn't help with parents (regardless of reason/excuse) you certainly more than "earned" your half.

As the for need argument, you will need the money more than she, as you have basically nothing.
+1 the reality is that you need the money from the house more than your sister. It is unfortunate that your parents didn't recognize that. So unless your parents had a will bequesting the house to your sister, you are entitled to half of the $90k and should take it... if later your sister needs it more than you do you can always give her some of that money.

Would it be feasible for you to move into your sister's apartment or for the both of you to share a different, larger apartment? That may be your best option... if you and your sister combine your resources and incomes you may both be able to live better than if you live separately.

In terms of work, you seem to communicate well so you may be able to get a job as a CSR (customer service representative) somewhere and perhaps even work from home.
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