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Old 05-04-2015, 10:05 PM   #41
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I thought he was referring to the fact that at most you are taxed on 75% of SS income.
That would actually be 85%.
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Old 05-06-2015, 08:25 PM   #42
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Originally Posted by woodguy00 View Post
Ticker,

You mention delaying social security a few months next year and I see from another post that suggests you plan on taking SS at age 62. Have you investigated alternate claiming strategies ? Perhaps you would be better using your IRA's early and delaying SS. Most analysis leans in that direction particularly if you have been the higher earning spouse. Food for thought.
Thanks, Woodguy for the suggestion. I have an unusual situation that pretty much boxes me in for the early SS claim. In addition, if I make the claim at 62 or so, I won't have to touch my retirement money until MRD time, giving me a great tax benefit since all of the SS will be untaxed. We are also facing the possibility of reduced SSD benefits for my DW with the pending funding issue, so all signs currently point to a 62+ claim.
But I still have 1 1/2 years to figure it out, and maybe some things may change.
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Old 05-18-2015, 08:58 AM   #43
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Anyone have experience with a companies called RetireIncome.com and Social Security Solutions? I believe that they have the same ownership. They have a product called Retirement Benchmark.

Our spreadsheets show good news for our upcoming FIRE. We would feel a little better getting (another) second or third opinion. We are thinking very seriously about spending money and having them review things.

Some of their ways of helping customers:

Tax efficient spend-down strategy
Optimal Social Security claiming
Detailed withdrawal strategy
Diagnostics and comparisons
Advice on how to allocate assets and where to locate them
more...

Anyone else worked with these guys and have advice?

Thanks.
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Old 05-19-2015, 12:39 PM   #44
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Originally Posted by woodguy00 View Post
Ticker,

You mention delaying social security a few months next year and I see from another post that suggests you plan on taking SS at age 62. Have you investigated alternate claiming strategies ? Perhaps you would be better using your IRA's early and delaying SS. Most analysis leans in that direction particularly if you have been the higher earning spouse. Food for thought.
Woodguy- Help me through this logic-I have taken a cursory look at the numbers and am trying to understand the better way to claim.
Let's assume I need $40k a year to live on.

If I delay SS and start taking money out of my IRA, my only tax relief would be credit for my standard deduction and my 2 exemptions. ($20,300 in 2014). So if I took $40k out of the IRA, $19,700 would be taxed at 10/15%. (40k-20,300 exemptions=19,700, estimated taxes of $2032).

If I took SS early, say my SS benefit is $18k a year, and withdrew $22k from the IRA, my adjusted income would be $1700 since I would exclude the SS income because my adjusted gross income would be less than the $32k floor to make SS taxable. (22k withdrawal-20,300 exclusions=1700, $170 taxes)
The tax savings in this case is more than the 8% increase I would be forgoing for the year, and although it's not compounded, it would be enough for me.

In my instance, I don't see the need to wait. Meanwhile, more of my IRA continues to stay invested.

Am I missing anything here? numbers, especially when it comes to taxes and SS, aren't exactly my strong suit. Anyone with experience on how this strategy would affect my situation when it came time for RMD's?
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Old 05-19-2015, 01:06 PM   #45
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Woodguy- Help me through this logic-I have taken a cursory look at the numbers and am trying to understand the better way to claim.
Let's assume I need $40k a year to live on.

If I delay SS and start taking money out of my IRA, my only tax relief would be credit for my standard deduction and my 2 exemptions. ($20,300 in 2014). So if I took $40k out of the IRA, $19,700 would be taxed at 10/15%. (40k-20,300 exemptions=19,700, estimated taxes of $2032).

If I took SS early, say my SS benefit is $18k a year, and withdrew $22k from the IRA, my adjusted income would be $1700 since I would exclude the SS income because my adjusted gross income would be less than the $32k floor to make SS taxable. (22k withdrawal-20,300 exclusions=1700, $170 taxes)
The tax savings in this case is more than the 8% increase I would be forgoing for the year, and although it's not compounded, it would be enough for me.

In my instance, I don't see the need to wait. Meanwhile, more of my IRA continues to stay invested.

Am I missing anything here? numbers, especially when it comes to taxes and SS, aren't exactly my strong suit. Anyone with experience on how this strategy would affect my situation when it came time for RMD's?

You are comparing the 8% increase to the taxes saved for one year. The 8% increase is for each and every year until you (and spouse if they claim your ss) die.

It gets to the biggest question. When will we die?
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Old 05-19-2015, 01:18 PM   #46
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You are comparing the 8% increase to the taxes saved for one year. The 8% increase is for each and every year until you (and spouse if they claim your ss) die.

It gets to the biggest question. When will we die?
I realize about the increase each year, (that's what I meant about the compounding), but when you take the taxes into consideration ( I just realized that I would need a $42k+/- withdrawal to net the $40k I require), the equation seems to change. Not only do I have to consider the 8% forgone increases, I have to also consider the additional $2k draw down of my IRA to cover the taxes for each year that I delay.
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Old 05-19-2015, 10:49 PM   #47
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Yes, I meant to say taxes on a maximum of 85%, not 75%, on Social Security. Good catch. Thanks.

On a totally separate thing... I mentioned the Social Security benefits reduction to 75 cents on the dollar announced currently to happen in 2033 as the SS trust fund becomes exhausted or drawn down enough to require the reduction in benefits payments to all.

Username change:

BTW, I'm now using "Happily Retired" instead of "ThisIsHowWeRoll" as my Username. I was not able to get any response or help from the Website administrator, so finally decided to just create the new Username and begin using it. I was asking to keep the old account and have them update it or show me how, but no reply on this at all. Is there anyone there monitoring "Contact Us" messages? I tied three times unsuccessfully. This is a free site so that contributes to the reason. Understood.
Anyway, new Username...

I'm really enjoying this website! Thanks for making it available and all the work that goes into running it. Thanks again. ... Happily Retired...
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Old 05-19-2015, 11:01 PM   #48
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Originally Posted by Happily Retired View Post
Yes, I meant to say taxes on a maximum of 85%, not 75%, on Social Security. Good catch. Thanks.

On a totally separate thing... I mentioned the Social Security benefits reduction to 75 cents on the dollar announced currently to happen in 2033 as the SS trust fund becomes exhausted or drawn down enough to require the reduction in benefits payments to all.

Username change:

BTW, I'm now using "Happily Retired" instead of "ThisIsHowWeRoll" as my Username. I was not able to get any response or help from the Website administrator, so finally decided to just create the new Username and begin using it. I was asking to keep the old account and have them update it or show me how, but no reply on this at all. Is there anyone there monitoring "Contact Us" messages? I tied three times unsuccessfully. This is a free site so that contributes to the reason. Understood.
Anyway, new Username...

I'm really enjoying this website! Thanks for making it available and all the work that goes into running it. Thanks again. ... Happily Retired...
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Old 05-19-2015, 11:04 PM   #49
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Just saw your post. The Mod team is looking into the username change as I just brought the post up top.
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Old 05-19-2015, 11:10 PM   #50
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Transfer time in service

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Just saw your post. The Mod team is looking into the username change as I just brought the post up top.
Thanks aja8888 for the reply!

I'd appreciate them transferring a one thing to the new username, if possible:

"Time in service" on the old account.


Thanks.
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Old 05-19-2015, 11:21 PM   #51
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Thanks aja8888 for the reply!

I'd appreciate them transferring a one thing to the new username, if possible:

"Time in service" on the old account.


Thanks.
We may have to get back with you tomorrow as the Mod crew must be off watching the Houston Rockets get beat! I think all that needs to be done is to merge the accounts.
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Old 05-20-2015, 05:47 AM   #52
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......Am I missing anything here? numbers, especially when it comes to taxes and SS, aren't exactly my strong suit. Anyone with experience on how this strategy would affect my situation when it came time for RMD's? ...
You indicate two exemptions, suggesting you are married filing jointly. How will you decision to claim SS at age 62 affect your wife's SS benefits? When will she claim and does her SS exceed 50% of your SS (or vice versa)?

My wife was a SAHM so her SS is less than 50% of mine. By waiting to FRA or even later to age 70, if I pass before her, which is statistically likely, then she would get my higher benefit rather than her own. So as a couple, we will get my higher benefit as long as one of us is still living. The fact that she will get more is part of why I plan to defer.
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Old 05-20-2015, 06:36 AM   #53
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My wife is currently collecting SSD, and her rate is small enough not to impact the numbers I am working with. I don't think that either of us has a leg up on longevity, but spousal benefits are not my top priority-maybe they should be.....
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Old 05-20-2015, 07:58 AM   #54
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Ticker,

Sorry, I didn't notice your posts asking for clarification.

My timing question was also in regard to having a spouse who might benefit through the longevity insurance effect of the higher earning spouse delaying benefits until age 70. I was concerned that you were 'automatically' assuming that claiming at age 62 is best and was only suggesting to investigate alternatives which it seems you have.

I'm sure there are many others here that can jump in with more detailed analysis or a search for delaying SS will find more reading than most of us would ever want. The suggested services above may also be helpful as is pb4uski's comments.
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Old 05-20-2015, 07:59 AM   #55
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Once you file typically her retirement benefit will increase to be 1/2 of your benefit. You don't say how old she is.

If you file at 62 and then die and she inherits your age 62 benefit but loses her benefit, will she have enough to live in the manner she is accustomed to? If not, if you wait until FRA or 70 would she have enough to live?
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