I applied for Social Security!

[rescueme]

as SS will be exhausted.....

I doubt it. Adjustments will be made (as they were over the years for me/DW).

 

[packrat44]

I also signed up today. It won't start for a while. I am not clear whether I will get my first payment the month after my birthday month, or if that month (birthday +1) is the first month for which I earn a benefit, and the actual payment will hit my account late in the following month. I may drop by the office and ask.

Ha

Weren't you going to wait until 70 and isn't that about 4 years away? What changed your mind regarding when to start the draw?

 

[haha]

Weren't you going to wait until 70 and isn't that about 4 years away? What changed your mind regarding when to start the draw?

Nothing changed my mind, I am almost 70.

Ha

 

[rescueme]

I also signed up today. It won't start for a while. I am not clear whether I will get my first payment the month after my birthday month, or if that month (birthday +1) is the first month for which I earn a benefit, and the actual payment will hit my account late in the following month. I may drop by the office and ask.

Ha

You "earn" your SS benefit during a full month and receive your "check" the following.

For instance, my birthday is January 3rd. When I claim (at age 70) I will not have a full month of "earnings" until February is completed.

I will receive my "check" in the second week of March (checks are delivered/deposited on the 2nd, 3rd, or 4th Wednesday of the month, depending on your birthdate), per:

2011 Schedule of Social Security Benefit Payments

Birthdate 01-10: 2nd Wednesday
Birthdate 11-20: 3rd Wednesday
Birthdate 21-31: 4th Wednesday

 

[haha]

You "earn" your SS benefit during a full month and receive your "check" the following.

For instance, my birthday is January 3rd. I will not have a full month of "earnings" until February is completed.

I will receive my "check" in the second week of March (checks are delivered/deposited on the 2nd, 3rd, or 4th Wednesday of the month, depending on your birthdate), per:

2011 Schedule of Social Security Benefit Payments

Birthdate 01-10: 2nd Wednesday
Birthdate 11-20: 3rd Wednesday
Birthdate 21-31: 4th Wednesday

Thanks. I should get a check toward the end of June. At least when I was getting them before, they came on 4th Wednesday, and from your explanation it seems that is what I should expect once more.

One other question if you can help again- say my check comes in June, for benefits "earned" in May. I will thus get 7 checks in 2011. But I will have had 8 months of accruals- will my 1099 show income from the 7 months that I received, or the 8 months that I accrued?

Thanks again.

Ha

 

[73ss454]

73SS454
how did your neighbor's wife & son get benefits? never heard of anything like this.

Take a look at REW's post under yours and that will give you all the info you need.

 

[rescueme]

One other question if you can help again...

Sorry, I'm not that smart ...

You could ask "sscritic" over on Bogleheads. He's the "expert" in all kinds of SS scenerios.

However, my stupid opinion is that you can't get a 1099 for a benefit you did not receive. Think of when you wor*ed. Depending on pay cycle, your last week of December would not be paid till the next year. However, that accrued earnings would not be shown on your W2 for the current year, when you did not receive those earnings, even though they were owed to you.

 

[73ss454]

Yes, but FIRE and collecting SS can be mutually exclusive events, or in the case of us younger folks, WILL be mutually exclusive events........as SS will be exhausted by those 10,000 boomers a day turning 65 this year.........

Yup!

 

[FIRE'd@51]

One other question if you can help again- say my check comes in June, for benefits "earned" in May. I will thus get 7 checks in 2011. But I will have had 8 months of accruals- will my 1099 show income from the 7 months that I received, or the 8 months that I accrued?

The 1099 shows benefits actually received, since those are the ones you pay tax on, so for your case the 1099 will show 7, not 8

 

[haha]

Thanks FIRE'd@.

Ha

 

[DeborahB]

You "earn" your SS benefit during a full month and receive your "check" the following.

For instance, my birthday is January 3rd. When I claim (at age 70) I will not have a full month of "earnings" until February is completed.

I will receive my "check" in the second week of March (checks are delivered/deposited on the 2nd, 3rd, or 4th Wednesday of the month, depending on your birthdate), per:

2011 Schedule of Social Security Benefit Payments

Birthdate 01-10: 2nd Wednesday
Birthdate 11-20: 3rd Wednesday
Birthdate 21-31: 4th Wednesday

It sounds as though no matter when you apply for SS in January (could wait until Jan. 31), your first check will be for the full month of Feb. and received in March. Is this right?

 

[REWahoo]

It sounds as though no matter when you apply for SS in January (could wait until Jan. 31), your first check will be for the full month of Feb. and received in March. Is this right?

I thought that was the case but it appears Jake46 applied in August and received his first check in September...

 

[DeborahB]

I thought that was the case but it appears Jake46 applied in August and received his first check in September...

I applied online - I'll call them after a few days and see what they say. They said wait 5 days for it to get into the system.

 

[FIRE'd@51]

Interesting tidbit here is that attached to the recent Health Insurance Bill is a feature that removes indexing of that $85,000 first step and the higher steps also that are used to increase one's Medicare premium. This will make a big difference over time in how much we are forced to pay for Medicare.

This is exactly what happened with the AMT when they didn't inflation-index the deduction. It began to trap the middle class. And this will too. BTW, the provisional income thresholds for the taxation of SS aren't inflation-indexed either.

 

[rescueme]

It sounds as though no matter when you apply for SS in January (could wait until Jan. 31), your first check will be for the full month of Feb. and received in March. Is this right?

Normally, SS is applied for three months before your SS start date (to allow for paperwork and gathering whatever records are required - such as a DD214 for older folks that served in the military). If I would apply in January, the clock would not start for eligibility for three months and would receive my first deposit around May-June.

In my case, I'll put in an SS claim (spousal only) around October 1st of 2013. The same 3-month timetable as when I file for Medicare except for a year earlier, in October of next year, in 2012 (if you are not on SS, Medicare is not automatic; you must apply for it and set up your payments for part B, which are normally taken out of your SS check). In my case, I'll be paying my Part B (quarterly) for four years until I actually claim my own SS benefit at age 70.

 

[FIRE'd@51]

In my case, I'll be paying my Part B (quarterly) for four years until I actually claim my own SS benefit at age 70.

This has had some bizarre effects, as well. Medicare Part B premiums have been frozen for the past two years for those on SS (who didn't trigger the means-testing increases). So today you have 67 year-olds (or older) paying $96.40 per month for Medicare Part B if they have been on SS for two years, and $115 per month if they have not.

 

[haha]

This has had some bizarre effects, as well. Medicare Part B premiums have been frozen for the past two years for those on SS (who didn't trigger the means-testing increases). So today you have 67 year-olds (or older) paying $96.40 per month for Medicare Part B if they have been on SS for two years, and $115 per month if they have not.

Yes; mine will jump from $96.40 to $115, because I paid back and refiled-therefor I was not receiving an SS check at year end 2010, so the "hold harmless" provision no longer applies to me.

Ha

 

[W2R]

Yes; mine will jump from $96.40 to $115, because I paid back and refiled-therefor I was not receiving an SS check at year end 2010, so the "hold harmless" provision no longer applies to me.

Ha

Oof!! What an unpleasant turn of events.

 

[obgyn65]

Hello thinker25 - Both dates are correct. I plan to retire early in 2012 (age 47). The SS claim date will be in 17 years (age 62). Apologies for any confusion.

Your profile says you're retiring in 2012...

 

[rescueme]

So today you have 67 year-olds (or older) paying $96.40 per month for Medicare Part B if they have been on SS for two years, and $115 per month if they have not.

Or 40 year old disabled folks (like my son, on SSD).

Higher/lower Part B rate dosen't bother me at all. It will still be much less expensive than the medical insurance (co-funded from previous employer) I'm currently paying. Less is more ...

 

[Budman]

I applied yesterday

Thinker,
I applied for SS yesterday. I turn 62 next month. Several months ago I ran an aftertax, discounted cashflow analysis that indicated I was better off taking it at 62 rather than waiting until 70. I used a conservative aftertax portfolio rate as the discount rate in the npv function when evaluating and comparing the two cashflow streams. In doing so, the breakeven point was pushed to age 88 from about 78. Both of my parents died at age 84. This was a very decisive analysis for me, since I had been in the previous "wait til 70" school of thought. A couple of days ago, I read another thread on this forum which performed a somewhat similar calculation confirming that my analysis was on track. It also helped that before I retired, I worked in a finance dept and evaluated capital project cashflows, so I had some experience at it.

 

[DeborahB]

Thinker,
I applied for SS yesterday. I turn 62 next month. Several months ago I ran an aftertax, discounted cashflow analysis that indicated I was better off taking it at 62 rather than waiting until 70. I used a conservative aftertax portfolio rate as the discount rate in the npv function when evaluating and comparing the two cashflow streams. In doing so, the breakeven point was pushed to age 88 from about 78. Both of my parents died at age 84. This was a very decisive analysis for me, since I had been in the previous "wait til 70" school of thought. A couple of days ago, I read another thread on this forum which performed a somewhat similar calculation confirming that my analysis was on track. It also helped that before I retired, I worked in a finance dept and evaluated capital project cashflows, so I had some experience at it.

I had planned to wait, too. I didn't bother to do a complex calculation (too much like a job? maybe). Interesting that when you calculated the growth on the money it made the breakeven point much later.

I am comfortable with what I have chosen. And to hear that you don't break even until 88.... hope I live that long. My dad just turned 90, mom died at 85. But my own health history isn't good. I really needed to retire, partly for health/stress reasons.

I have an MBA, worked in finance in IT... just would have to do to much work (w*rk...) to do the calculations you did... Lazy, too, these days!

Thanks a lot for sharing the information. It pretty much throws out the theory of wait, wait, wait... that the financial planners keep throwing out. Anyhow I'm making more than 8% on my money these days (of course I can't count on it forever... etc.) so why settle. That occurred to me too.

 

[Zero]

I had planned to wait, too. I didn't bother to do a complex calculation (too much like a job? maybe). Interesting that when you calculated the growth on the money it made the breakeven point much later.

I am comfortable with what I have chosen. And to hear that you don't break even until 88.... hope I live that long. My dad just turned 90, mom died at 85. But my own health history isn't good. I really needed to retire, partly for health/stress reasons.

I have an MBA, worked in finance in IT... just would have to do to much work (w*rk...) to do the calculations you did... Lazy, too, these days!

Thanks a lot for sharing the information. It pretty much throws out the theory of wait, wait, wait... that the financial planners keep throwing out. Anyhow I'm making more than 8% on my money these days (of course I can't count on it forever... etc.) so why settle. That occurred to me too.

I sometime wonder if the planners just always assume folks will have a spouse to consider in the calculations.

As you point out, taking social security allows you to leave money in the portfolio and grow for 8 more years, and none of the gurus seem to factor in the growth on that money.

Factoring in the growth pushes the breakeven out to about 85-87 range.

 

[haha]

Factoring in the growth pushes the breakeven out to about 85-87 range.

This is actually an involved problem with critical assumptions, though the procedure is straightforward once you have decided what you are trying to find out. If it weren't involved, opinion wouldn't rocket back and forth every time someone new comes along with a black box and tells us what to do. The explanation for this can only be that most of us do not understand what are the relevant factors in our individual cases, or how to process them, for this important decision.

One way to approach it, is to assume that you are going to either buy an inflation adjusted annuity at age 70 with the money that you have saved up and its earnings over the 8 years from age 62, or you are going to accept the annuity given to you by SS at that age. To fund this you could take out a new CD with every monthly payment you get, less the tax that will be owed on annually, each CD to mature on your 70th birthday. You can only guess how much money you will have, or how much annuity that will buy when you are 70. But take your best shot, and then compare it to what you know you will get in real terms from accepting SS at age 70. With interest rates what they are, a reasonable guess is that there will be no after tax real return, and in fact there may not even be any real return before tax. Given this, you can also assume that you will get neither a better or worse annuity for your money 8 years hence at your age 70, than someone who is age 70 today would get.

One more step- call up Vanguard and tell them you are 70, and you have $xyz,000, and you want an inflation adjusted annuity to begin immediately. Write down what she tells you will be the monthly rate, and promise to call her back.

Then take that number and compare to what SS says you will receive, in 2010 dollars, if you wait until 70.

Subtract one from the other. Decide.

Breakeven age is only relevant in the case where your dominant goal is to leave the minimum money in your account with SS. That may be someone's dominant goal, but that is a bit hard to understand. If you die early, be proud that you were able to make a modest contribution to the solvency of social security.

Ha

 

[73ss454]

Everyone has to make their own decision and the arguments both ways are good. But Ha, I worked and paid most of my life and would not be happy to wait, die early and be proud to leave my money to a government that will find other things to do with it. Actually I'd be pissed if I waited, died and didn't get a dime. (heh)

I'd never talk to myself again.