Clear article about when to take Social Security

[meleana]

I look at SS as an annuity. We do not have any annuities with any insurance companies, so we consider SS will fill in that hole.

 

[Montecfo]

Yes, and I want her to have the greatest guaranteed and COLA adjusted income she can after I die and until her death. We can afford to forego SS until I reach 70 (and then she reaches FRA) and Social Security will be our sole 'pension' unless we or she chooses to purchase a SPIA (single premium immediate annuity) at some point.

I admit to perhaps having thought less about this than many. SS is not a big portion of my retirement needs and I recognize there is no single "right" answer since no one knows when they or their spouse will pass. There are only conditional statements and opinions.

Having said that, my thinking has been similar to yours as far as strategy.

But upon reflection, if I max the size of DWs annuity, then unless I pass after my respective break even point, I will also be leaving her a smaller nestegg.

Are we good with that?

 

[Old Microbiologist]

gayl - yes, it is a lot of work with some stress. She slacked off a lot this year as we have realized we don't and are unlikely to touch any of this money. Our pensions are $96k a year and our expenses are $24k a year so we aren't sure who we are earning this money for. We also have $350k in cash from our last (and final) house sale back in the US. That is kept in reserve for medical emergencies which has turned out to be something we overestimated on living here in Hungary where excellent medical is cheap.

Speaking on that as it pertains to Medicare is another whole entire conversation. Being retired military with the Tricare For Life as an option it was a difficult choice to make. In order to keep TFL you must enroll in and pay for Medicare Part B. That is currently $135 a month per person. Medicare is useless if you live outside the US and as it turns out so is Tricare Overseas. We tried to use it but it is so poorly run the error rate is over 400% for claims. You pay out of pocket and file a claim to get 60% back if they approve it. New wrinkles are you now must pay by check or credit card for medical claims. Here in Hungary it is 100% cash for the state run medical systems or even private doctors. Checks are not used anywhere outside the US so that isn't an option either so basically none of our claims meet their requirements and are rejected. So, to keep Medicare in the event that we return to the US requires paying $3,240 a year. Our medical expenses never exceed $3000 a year (including an episode in the Cardiac Intensive Care for Right Atrial Fibrillation - 2 weeks at the Cardiac Trauma center which happens to be just down the street) and most years is a lot less than $1000. So, we made the tough determination that we are never returning to the US and will continue to utilize the Hungarian and worst case German medical systems and pay in cash. I will be getting my Hungarian citizenship next year and can then enroll in the national health insurance which covers 100% of everything BUT you have to wait for services (similar to Canada or the UK). My wife is Russian so she has that option as well which isn't bad. The monthly cost for the Hungarian Medical is a tad under $25 a month and covers everything (normal) and major discounts on pharmaceuticals which are already 90% less than in the US. For actual services I would continue to pay cash if I need something major quickly and we have the cash reserves to cover serious problems. I only mention all of this for ex-patriate American retired military facing this decision when they hit 65.

 

[joeea]

Yes waiting till FRA will get a bigger spousal check, but you have to weigh that against getting no check (spousal) during the waiting period.

And not waiting until FRA to start survivor benefits will reduce the survivor check.

Lots of things to consider. Don't do it individually, do them together.

Use https://opensocialsecurity.com/ or https://maximizemysocialsecurity.com/

 

[joeea]

But I didn't, because (a) I figured I didn't care

If you don't care, then no other reasons matter.

 

[joeea]

My DW FRA benefit on her own record is more than the 50% spousal, can I assume she will file for her own and not file for spousal?

Probably.

If she was born before 1/1/1954, there are other strategies that could make taking spousal early while waiting for her own benefit to max out at 70.

Check out https://maximizemysocialsecurity.com/ or https://opensocialsecurity.com/

 

[joeea]

Crabby et. al - I fail to understand your idea that controlling your own money is a bad idea. You guys do understand that the entire IRA concept is a scam?

A scam? LOL!

It was "acceptable" back in the days when employer's matched but that is now very rare.

Match an IRA? Did you mean a 401k? If so, it's not at all very rare for an employer match.

 

[jollystomper]

Jolly, you are absolutely correct that you do not have to spend your RMD's...you can just transfer your equities to an after tax account...and then pay the appropriate taxes. Your spending money mainly comes from 3 places: SSA, pension, and IRA withdrawals. You can adjust the last one every year based on your needs. You can spend as much or as little as you wish...until you run out of money in you IRA.

Thanks. I guess I do not look at my IRA as separate "spending" money, as I see it along with my investments. For me I see my spending money choices as pension, cash (I have enough to not have to take from after tax accounts or IRA at least until SS), taxable account dividends, SS, taxable accounts, and IRA. IRA right now is more a movement of funds to taxable accounts than spending. I might spend some of my investments and IRA if they have had a good run and we choose to expand our lifestyle, but that is not a primary consideration. But I better understand what you are getting at, thanks for the clarification.

 

[ivinsfan]

And not waiting until FRA to start survivor benefits will reduce the survivor check.

Lots of things to consider. Don't do it individually, do them together.

Use https://opensocialsecurity.com/ or https://maximizemysocialsecurity.com/

I was clearly talking about waiting to kick in the spousal benefit....not the survivor benefit. Why do you feel the need to always add unnecessary corrections to people's comments?

 

[ncbill]

gayl - yes, it is a lot of work with some stress. She slacked off a lot this year as we have realized we don't and are unlikely to touch any of this money. Our pensions are $96k a year and our expenses are $24k a year so we aren't sure who we are earning this money for. We also have $350k in cash from our last (and final) house sale back in the US. That is kept in reserve for medical emergencies which has turned out to be something we overestimated on living here in Hungary where excellent medical is cheap.

Speaking on that as it pertains to Medicare is another whole entire conversation. Being retired military with the Tricare For Life as an option it was a difficult choice to make. In order to keep TFL you must enroll in and pay for Medicare Part B. That is currently $135 a month per person. Medicare is useless if you live outside the US and as it turns out so is Tricare Overseas. We tried to use it but it is so poorly run the error rate is over 400% for claims. You pay out of pocket and file a claim to get 60% back if they approve it. New wrinkles are you now must pay by check or credit card for medical claims. Here in Hungary it is 100% cash for the state run medical systems or even private doctors. Checks are not used anywhere outside the US so that isn't an option either so basically none of our claims meet their requirements and are rejected. So, to keep Medicare in the event that we return to the US requires paying $3,240 a year. Our medical expenses never exceed $3000 a year (including an episode in the Cardiac Intensive Care for Right Atrial Fibrillation - 2 weeks at the Cardiac Trauma center which happens to be just down the street) and most years is a lot less than $1000. So, we made the tough determination that we are never returning to the US and will continue to utilize the Hungarian and worst case German medical systems and pay in cash. I will be getting my Hungarian citizenship next year and can then enroll in the national health insurance which covers 100% of everything BUT you have to wait for services (similar to Canada or the UK). My wife is Russian so she has that option as well which isn't bad. The monthly cost for the Hungarian Medical is a tad under $25 a month and covers everything (normal) and major discounts on pharmaceuticals which are already 90% less than in the US. For actual services I would continue to pay cash if I need something major quickly and we have the cash reserves to cover serious problems. I only mention all of this for ex-patriate American retired military facing this decision when they hit 65.

Are you still in good enough health to be a candidate for organ transplant?

I read years ago of an expat to Mexico who was glad he had kept paying Part B when he needed a liver transplant (only available back in the U.S.)

A close relative of mine recently received a kidney transplant in his late 70s & paid almost nothing out of pocket thanks to Part B & a generous supplemental retirement health plan (& as a veteran, the VA covers his most expensive meds related to the transplant for $0)

 

[Crabby Mike]

Old Microbiologist, I'm happy for you and your DW if you can outwit the market, and outperform professional fund managers, on a consistent basis. But my concern is that most people couldn't, and would likely lose money trying.

 

[youbet]

No, it really doesn't, because it doesn't show how much the $12K you'd leave in your investment account would be earning if you took SS at 62. It's a very simple picture, and it doesn't do a real world comparison.

+1.

I've told my happy story about starting SS at 62 so won't repeat it again. But, indeed, the fabulous investment returns of the past decade have put me ahead of where I'd have been had I waited until 70.

I didn't wait because I was hoping for great returns on the early SS dollars. I did it to protect DW (GPO victim). But it turned out well from an investment return standpoint.

Of course, it could have gone against me. But it didn't.........

Analysis that omits the time value of the early SS dollars (and some statement of the risks involved in any assumption regarding returns) are faulty.

 

[stephenson]

Crabby,

I'm not following your reasoning - especially given that most analysis points to an AA with low cost index funds outperforming most, and almost all, managed approaches over a few years ... mainly because the managed funds have a good year or good guessing, followed by a few years of bad guessing - that combined with 1% plus fees, and then if there is an FA involved, another 1% fee ... I'm not trying to sound like a Boglehead .... but ...

Help us understand, better, please?

 

[joeea]

I was clearly talking about waiting to kick in the spousal benefit....not the survivor benefit. Why do you feel the need to always add unnecessary corrections to people's comments?

You wrote "Yes waiting till FRA will get a bigger spousal check, but you have to weigh that against getting no check (spousal) during the waiting period."

It may have been clear to you, but I wanted to remind people that you have to weigh more than just spousal benefits against getting no check for a while. I felt that was necessary.

 

[Chuckanut]

major discounts on pharmaceuticals which are already 90% less than in the US.

This is perhaps the most interesting comment made in the OM's posting. I would love to get a clear, unbiased analysis of drug prices from country to country. I'm sure fear of high medical costs keeps a lot of people from FIREing. It certainly pushed me to work another few years.

I returned from a trip to Central/Eastern Europe a few weeks ago. To help with some knee pain, I paid about $20 for a large OTC tube of a topical NSAID while there. A tube 1/5 the size bought in the USA requires an Rx, and cost an acquaintance at least $40 a few years ago.

 

[youbet]

The real decider for us is GPO and not WEP. DW will get zero spousal/widower SS benefit based on my earnings because of her pension. I feel like I need to protect the savings nest egg for her in case I take a dirt nap sooner than I hope to do so. I understand this could be to the detriment of my overall SS benefit if things go as planned and we hope.

Lotsa folks getting WEP and GPO confused. Glad you have it right!

I started SS at 62 because GPO prevents DW from collecting any of my SS as either a spousal or survivor benefit. I just started my SS at 62 and invested the money monthly so it will be there for her. Had I delayed SS and died before collecting, neither of us would have ever gotten any benefits.

 

[ShokWaveRider]

This is perhaps the most interesting comment made in the OM's posting. I would love to get a clear, unbiased analysis of drug prices from country to country. I'm sure fear of high medical costs keeps a lot of people from FIREing. It certainly pushed me to work another few years.

I returned from a trip to Central/Eastern Europe a few weeks ago. To help with some knee pain, I paid about $20 for a large OTC tube of a topical NSAID while there. A tube 1/5 the size bought in the USA requires an Rx, and cost an acquaintance at least $40 a few years ago.

A lot of other countries do NOT allow advertising for drugs. I am sure that helps.

 

[ivinsfan]

You wrote "Yes waiting till FRA will get a bigger spousal check, but you have to weigh that against getting no check (spousal) during the waiting period."

It may have been clear to you, but I wanted to remind people that you have to weigh more than just spousal benefits against getting no check for a while. I felt that was necessary.

In the future, please refrain from editing or making editorial comments on any of my posts. I consider the way you go about this rude. Put me on ignore if that might make it easier. I'm perfectly capable of editing or adding to my posts, if another poster has a question. Thanks...

 

[CardsFan]

Does any one else think it is ironic that a post titled "clear article about when to take social security" can generate over 190 responses? Mostly disagreeing with one another?

Just an observation.

 

[joeea]

In the future, please refrain from editing or making editorial comments on any of my posts. I consider the way you go about this rude. Put me on ignore if that might make it easier. I'm perfectly capable of editing or adding to my posts, if another poster has a question. Thanks...

I can't edit your posts. I will comment on everything I decide needs clarification or correction. You don't get to decide what I write. That's how this forum works.

I'll look into the Ignore feature.

Thanks.

 

[Dtail]

Does any one else think it is ironic that a post titled "clear article about when to take social security" can generate over 190 responses? Mostly disagreeing with one another?

Just an observation.

Well it is the number 1 debated subject on this forum with no clear "winning" responses except in a few set situations.

 

[Markola]

Does any one else think it is ironic that a post titled "clear article about when to take social security" can generate over 190 responses? Mostly disagreeing with one another?



Just an observation.

Now that’s funny. And I’m the guy who posted the article! It seemed among the more clear pieces I’ve read about SS and, admittedly, validated what opensocialsecurity.com calculated as the best route for DW and me, so I decided to share it. Turns out there are a few other legit and not so legit perspectives! LOL. I appreciate all the responses but am not about to weigh in on which I think are which, though, as I’m all about taking the pearls and leaving the rest.

 

[Perryinva]

All anyone can do is is explain what their own filing plan is/was and their logic behind that. This will at least illustrate for others that have not made a decision that it is not an easy peasy decision as described and give them food for informed thought for their own individual circumstances.

 

[Old Microbiologist]

Montefco - I think there are nuances to the benefits. In my case my wife is 6 years older than I am and she didn't work her required 40 quarters so she doesn't qualify for SSA on her own. However, she gets 50% of mine which she started collecting when I started myself at the earliest day possible. Her amount though is 50% of what I would receive if I start collecting at her age which would be 66 or the normal full retirement pension. So, I took a reduced amount BUT she started as if I was 66 years old and got 6 years more of her 50% which she wouldn't have gotten at all if I waited until age 66 to file. I ran the numbers and we would earn more if we both live to 78. But before that we earn more taking it earlier. As always it is a gamble and each family has different circumstances. For us it worked out better to take it early. We don't actually need the money and certainly could have waited but as I worked for the military all my life, I have learned to take what you can as much as possible from the government as they certainly will screw you at every opportunity.

 

[Montecfo]

Old Microbiologist- I follow. Just making the point that you are placing a bet by deciding to defer benefits in favor of the larger future payment. In your case that may be more compelling than some due to your relative earning positions.

In SS there is no free lunch it seems. Not should there be, right?