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Newly retired at 60(me) and wife at 62
Old 05-24-2012, 05:19 PM   #1
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Newly retired at 60(me) and wife at 62

My wife retired in August 2011 and I retired in January 2012. We both received a year's salary, bonuses, our pensions( I have a cash balance pension), 401(k)s, variable annuities, traditional and Roth IRAs, mutual funds and no major debt. Financial planners have calculated we are good to go into our 90s with enough left over to leave inheritances to our children based on conservative growth and the stock market continuing in the pattern it is now. We both have health insurance coverage until we are eligible for Medicare. I was the higher wage earner but we both have 35 years of paying into Social Security, respectively. Our employer paid the SS taxes on our earned income in 2011 and 2012. We do NOT need to take social security to live on now! We are in great health so far and are very active physically!
Our questions are:
1. Should my wife take her social security benefits in 2013 and invest the net after taxes?
2. Wait until she turns 66 and then she files for it to supplement our living cost and let our investments continue to grow?
3. I take it at 66 and she claims spousal benefits on my portion?
4. Can one calculate what my SS benefit will be when I turn 66 if I did not have earned income for 6 years?
5. Any other strategies are welcome!

This is a great website!
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Old 05-24-2012, 06:26 PM   #2
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Welcome aboard, there are lots of knowledgeable folks here willing to share. I found this very helpful (thanks to homestead) for the question you're grappling with Social Security calculator: retirement options for you and spouse..
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Old 05-24-2012, 06:32 PM   #3
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Hi, and welcome to the Early Retirement Forum.

I'll leave your Social Security questions for others to answer or address, since most of them know a lot more than I do about Social Security strategies for married couples.

Congratulations on your retirement!
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Old 05-24-2012, 09:19 PM   #4
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Welcome. Since it sounds like you expect to live long and you don't need it currently for living expenses, I think it is better to wait. Suggest you check out socialsecuritysolutions.com.
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Old 05-25-2012, 02:28 AM   #5
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I agree.
Quote:
Originally Posted by pb4uski View Post
Since it sounds like you expect to live long and you don't need it currently for living expenses, I think it is better to wait.
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Old 05-26-2012, 09:43 PM   #6
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Quote:
Originally Posted by wbowhunt View Post

1. Should my wife take her social security benefits in 2013 and invest the net after taxes?

3. I take it at 66 and she claims spousal benefits on my portion?
1. No. Each year she waits results in an increase in her SS benefit of about 8%. Since SS is COLA-adjusted, that increase is real and it's also risk-free. It would be hard to beat that by investing.

3. You don't have to receive benefits at your FRA in order to enable her to collect a spousal benefit. You can file and suspend at FRA enabling yourself to earn Delayed Retirement Credits up until age 70. What she can collect depends on her age, her FRA, and her own earned Primary Insurance Amount. What the best strategy is depends on these factors plus whether her spousal benefit is greater than her PIA.
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Old 05-26-2012, 10:04 PM   #7
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Originally Posted by Khufu View Post
1. No. Each year she waits results in an increase in her SS benefit of about 8%. Since SS is COLA-adjusted, that increase is real and it's also risk-free.
The only risk is if you stop breathing.
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Old 05-28-2012, 10:13 AM   #8
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Congratulations. Both financially independent and healthy is a great place to be.

The nice thing about the SS decision is that there is no wrong answer. Since you don't need SS to cover living expenses, the "wrong" decision isn't a disaster.

You're just trying to maximize the amount your kids inherit. That will depend on two unknowns, how long you live and investment returns. The SS adjustment factors are very crudely neutral. That is, it you live to about your life expectancy, and if you earn about inflation plus 3%, your kids will inherit the same amount either way.

So again, your prospective decision is going to be a close call. For a couple, there are multiple options as you've already seen, and if you want to push the numbers you'll need good benefit estimates.

Regarding #4, if you've already got an estimate for your SS benefit if you work until age 66, you'll probably find that not working for the next 6 years will have minimal impact.

To get better numbers, try the official SS calculator: Retirement Estimator
It lets you try different scenarios.

If you are comfortable with formulas, you can get an idea of how the calculation works here: Is SS amount reduced by retiring before age 62?
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Old 05-28-2012, 10:14 AM   #9
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The only risk is if you stop breathing.
That's not a risk. Money is for the living, not the dead ...
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Old 05-28-2012, 10:16 AM   #10
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Originally Posted by Khufu View Post
1. No. Each year she waits results in an increase in her SS benefit of about 8%.
Only between the ages of 66 and 70 (assuming FRA age of 66).

Reference:

Delayed retirement credits
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my SS benefit
Old 05-28-2012, 11:02 AM   #11
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my SS benefit

Quote:
Originally Posted by wbowhunt View Post
4. Can one calculate what my SS benefit will be when I turn 66 if I did not have earned income for 6 years?
5. Any other strategies are welcome!
4. My SS benefit (estimates) did not change much since I FIREd in 2005 and started collecting SS in 2012 @ 62. Once you have the 35 years under your SS belt and quit working, it is only COLA that changes the estimates IMHO.
5. I do not use FA it usually saves me money. Even free adviser like Cramer can be deadly! Many time he yells 'sell, sell - dive, dive' and next time he is 'disappointed' with the market, eats crow and changes his tune. So take the long term view, monitor your burn rate and remember YMMV.
You are in a great shape, enjoy FI
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Old 05-28-2012, 02:05 PM   #12
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You may want to look at RMD (Required Minimum Distributions) at 70.5, if you have a lot of $401k, tIRA's. You may want to convert to Roth's, or maybe not before 70.5.
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