Better To Live On Selling Stocks or Taking Early SS?

[Lsbcal]

Ian,

Please follow the advise of earlier posters and run i-orp using your numbers. It will give you much insight into what is best.
For me, I ended up starting SS at 62 when I said for years I was waiting until 70. I did not understand before how SS was partially taxed if you manage to keep your income on the low side. The amount you pay in taxes can vary a lot depending on when you start SS and draw from your IRS's ect.

I did run i-orp and it helped. But I recall the tax treatment is not very exacting. I contacted the developer and he said that yes, some of the tax issues were beyond the i-orp scope.

It can depend on which state you live in, for instance. Also the taxes, especially at RMD time can depend on if you have deductions or just claim the standard deductions. Complicated but I'd rather be doing this then living in a poor country on subsistence.

 

[mh]

+1. This solution is simple and the logic is sound.

But... Above , others gave reasons why this might not be the best way to go , so why is the logic completely sound ?


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[pb4uski]

Use the taxable until there is a bad down year, then start SS to limit the withdrawal while prices are down.....

+1. This solution is simple and the logic is sound.

I don't think so. The OP's main issue is a lot of tax-deferred and not a lot in taxable. Even if prices are down if you take a withdrawal then you are still improving tax diversification.

In the extreme I would agree... if investment results are poor to an extent that your nestegg is getting uncomfortably low, then SS becomes and option for cash flow that you can exercise and stem the bleeding but a single down year would not likely put the OP in a position where their nestegg becomes uncomfortably low.

 

[Ian S]

I've started to play with the i-orp tool but can't see a way to account for an anticipated inheritance. Anyone know if there's a way?

 

[Dave J]

I've started to play with the i-orp tool but can't see a way to account for an anticipated inheritance. Anyone know if there's a way?

Looking at the input form, MAYBE you could try the Illiquid Asset line item for other, and put age you think you would receive it?
Try it and see what it spits out compared to running it without.
You will then see if it handles it or not according to how you want it to.
This is a guess on my part, YMMV as always.

 

[Ian S]

Looking at the input form, MAYBE you could try the Illiquid Asset line item for other, and put age you think you would receive it?
Try it and see what it spits out compared to running it without.
You will then see if it handles it or not according to how you want it to.
This is a guess on my part, YMMV as always.

Yes, that does appear to be the way to handle it although one needs to put in a cost basis that will yield no capital gains that would be taxed. My first run through seems to make a huge difference in the resulting amount of roth conversions so I need to check that more closely for why that's seems to be the case.

 

[youbet]

And if he is not in good health, it doesn't matter if he takes it at 65 or 70, other than his beneficiaries... So 70 is still a better choice.

A better choice for you in your own circumstances. But, certainly not for everyone.

 

[OrcasIslandBound]

My Fidelity simulations say it is better to wait to take SS, even in a down market. See above.

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