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Old 08-25-2008, 09:40 AM   #41
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Would that be gross? Say you were getting $10k a year (for round number sakes) and you paid whatever taxes on it.

So at age 70, you pay back $80k to the govt. and they recalculate at higher payments?
That's my understanding and it would be up to you to file tax returns to recoup any taxes paid. But even if you had to hire a CPA to help with that, it would be worth it IMO. Below is some additional info on the subject.

http://www.marketwatch.com/News/Stor...yU-JL_q6Uv1wpA
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Old 08-25-2008, 09:58 AM   #42
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One thing to consider about 62 vs 65 or later...If you take it at 62, (at the lower rate), you get an additional 3 years use of the money to enjoy it. I am not sure where the the break even point is, (think around age 69?), where the total dollar amounts paid to you equal each other, (62 vs 65).

Looking at this realistically in my mind, you might as well enjoy yourself while you can. When you get older, you may be "out of it" and won't be able to enjoy that extra money that you could have had between the ages of 62 and 65. The things people can do really changes between ages 60 to 65. Then when you consider what you can do between ages 65 to 70, I think mobility really begins to drop off, (and our brains, too).

I hope this makes sense...some things cannot be calculated, such as pleasure and making the most of what life you have now, (use it now or you may not be able to enjoy it later...because you may be out of it in a nursing home or some place).
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Old 08-25-2008, 09:59 AM   #43
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That's my understanding and it would be up to you to file tax returns to recoup any taxes paid.
My understanding from previous threads we have had on this topic, is that alternatively, you can also take a deduction on schedule A of the amount paid back, rather than going through the hassle of amending past returns. Also, it seems to me, that this lump deduction would be a nice way to offset the tax effect of the first RMD.

I think this strategy dominates simply delaying until age 70 for either singles or marrieds, as it removes the "early death" penalty altogether.
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Old 08-25-2008, 12:07 PM   #44
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One thing to consider about 62 vs 65 or later...If you take it at 62, (at the lower rate), you get an additional 3 years use of the money to enjoy it. I am not sure where the the break even point is, (think around age 69?), where the total dollar amounts paid to you equal each other, (62 vs 65).

Looking at this realistically in my mind, you might as well enjoy yourself while you can. When you get older, you may be "out of it" and won't be able to enjoy that extra money that you could have had between the ages of 62 and 65. The things people can do really changes between ages 60 to 65. Then when you consider what you can do between ages 65 to 70, I think mobility really begins to drop off, (and our brains, too).

I hope this makes sense...some things cannot be calculated, such as pleasure and making the most of what life you have now, (use it now or you not be able to enjoy it later...because you may be out of it in a nursing home or some place).
What he said! Never been able to figure out the wait till I'm older philosophy....Your prime play time starts now, not when you are 85!!!

The older years are fine for porch sitting, but first......
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Old 08-25-2008, 01:17 PM   #45
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What he said! Never been able to figure out the wait till I'm older philosophy....Your prime play time starts now, not when you are 85!!!

The older years are fine for porch sitting, but first......
Ah ha! - early SS, bacon and and and Viagra! - like the old pharts on the tv ads.

Whoopeee!

heh heh heh -
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Old 08-25-2008, 01:23 PM   #46
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Single here...I will probably take it at 66 because at this point it looks like I have enough money saved to live comfortably from 62 to 66 without taking it. If I took it at 62 it wouldn't have much of an impact on my standard of living so I'll take it at 66 and hope I live into my 90's and am able to take advantage of the increased amount. I invest fairly conservatively so I doubt I can beat the return I would get by taking it at 62 and investing the money...vs. waiting until 66.
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Besides longevity
Old 08-25-2008, 01:38 PM   #47
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Besides longevity

it may pay to take some time to convert IRAs from Traditional to Roth before starting it for tax reasons. Have to look at the tax situation then since nothing is certain but change.
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Old 08-25-2008, 02:14 PM   #48
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I'm not single but the reason for a single to not take SS is the same reason someone might buy an annuity. The only difference is that SS is a much better buy than what you can get in the SPIA market. If you really think you'll beat your longevity tables, delaying SS is the way to go even if you are draining other assets. SS goes up about 8.5% every year and its indexed for inflation. Waiting until 70 really increases your SS check.

The key is living beyond the SS actuarial life span. The gov't uses the "overall" numbers so if you have good health and a decent family longevity history it really is a good deal. If you die early, you're dead and won't care.
I like this post, so I quoted it.

I don't know when I will take SS. My financial plan has me taking it at 66, but really I intend to play it by ear. I will re-examine the problem several times a year until I start taking SS. After all, if 66 then why not 70 or 62? Because of SS's annuity-like properties, sometimes it makes more sense to me to put it off, and get more later rather than less earlier. Then again, I might take it early because a bird in the hand is worth two in the bush.

Although it's fun to politely wrangle back and forth about it a little, I suppose that ultimately it doesn't make a great deal of difference one way or the other for most of us. At least, it doesn't to me.
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Old 08-25-2008, 02:19 PM   #49
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Thats pretty much correct. It matters a lot if you're entering an underfunded retirement, usually because you're suddenly unable to work any longer.

If you're 62 and have only enough money to make it to 70, you'd probably want to hold off on the SS until you're 70, providing you can then live the rest of your life on that amount. Still, it might be smart to take it earlier and try to hold onto at least a nugget of your nest egg.

For someone with a 7 figure portfolio at the age of 62, I doubt the couple of hundred bucks a month one way or the other will matter.

I just hope its still there in 15 years when I get there. I'm going to take it and blow it, each and every month. Pure fun money.
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Old 08-25-2008, 03:06 PM   #50
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Get it at 62...and take your wife/significant other on a cruise to Alaska! Or..."I used to have a drug problem, but now I make enough money to afford it." -- David Lee Roth

I go for the country style bacon...yummmm.
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Old 08-25-2008, 03:42 PM   #51
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Ah ha! - early SS, bacon and and and Viagra! - like the old pharts on the tv ads.

Whoopeee!

heh heh heh -
they're old?

mmmmmmmm, bacon!
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Old 08-25-2008, 03:45 PM   #52
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Since I started the thread I thought I should state what I'm going to do . I'm waiting until 66 to claim my SS because I already started collecting a SS survivor benefit and will swith to my benefit which is 60% higher at 66 . If I was not collecting that I would have started at 62 because I've seen there are no guaranties with life so as Uncle Mick says Party till you puke .
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Old 08-25-2008, 03:48 PM   #53
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they're old?
I had the same reaction. I always thought they were of average age and had the misfortune of suffering from early onset dysfunctionality...
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Old 08-26-2008, 01:45 PM   #54
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I had the same reaction. I always thought they were of average age and had the misfortune of suffering from early onset dysfunctionality...
Nah - great makeup!



heh heh heh - not to mention good camera work. I'm an optimist - thinking ahead of running down those young 65 yr old nurses aid's with my hoverround when I'm 85!
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Old 08-26-2008, 02:16 PM   #55
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Nah - great makeup!



heh heh heh - not to mention good camera work. I'm an optimist - thinking ahead of running down those young 65 yr old nurses aid's with my hoverround when I'm 85!

My grandfather kept wanting to play strip poker with his private nurses .
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Old 08-26-2008, 02:20 PM   #56
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Thats pretty much correct. It matters a lot if you're entering an underfunded retirement, usually because you're suddenly unable to work any longer.

If you're 62 and have only enough money to make it to 70, you'd probably want to hold off on the SS until you're 70, providing you can then live the rest of your life on that amount. Still, it might be smart to take it earlier and try to hold onto at least a nugget of your nest egg.

For someone with a 7 figure portfolio at the age of 62, I doubt the couple of hundred bucks a month one way or the other will matter.

I just hope its still there in 15 years when I get there. I'm going to take it and blow it, each and every month. Pure fun money.
I think CFB is pretty accurate here. But I'll put it in my own words anyway. Deferring SS (like buying a private annuity) amounts to buying longevity insurance. The thing you are trying to insure against is "outliving your assets". This can happen due to a combination of poor investment returns and long life.

High wealth people don't need to worry about this. They can afford to self-insure, simply planning to reduce spending if necessary. Lower wealth people do need to worry, because "reduce spending" means going below some floor.

It's equivalent to saying that a twenty-something may rationally choose a collision deductible of $250 on his $10,000 car because he can't afford to be without the car and he doesn't have the emergency fund to cover a higher deductible. While at the same time his parents, who have significant savings, don't even bother to carry collision coverage on their $10,000 second car.
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Old 08-31-2008, 10:06 AM   #57
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Retiring Earlier

The reason someone might be willing to delay SS is so they can likely retire earlier using this strategy. As we have discussed before, creating larger amounts of retirement income in the form of SS will often significantly reduce the amount of taxes paid over the course of a retirement. And since one is risk-pooling with SS, an individual also needs to save less if they are maximizing their SS benefit. Therefore, between the larger after-tax income and risk-pooling (tradeoff), the majority of individuals willing to delay SS can retire earlier since a smaller nest egg is required. They just use their savings first and delay SS to a later age, such as age 70.
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Old 08-31-2008, 10:16 AM   #58
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On the other hand, taking social security early can help one retire earlier by introducing an income stream that handily offsets the need for a larger portfolio, using SS first and deferring their savings to a later age. This also reduces taxes.

That is of course if one is close enough to 62 to be fairly sure you're going to actually get it.

Do your firecalc runs with it at 62 and again at 70. You'll usually get higher withdrawal rates, better success percentages, and possibly lower initial principal values using 62. Lower initial principal value means an earlier retirement.

Nothing magical about it being SS or the age you take it at. Its simply that the injection of any income stream into an ER plan produces these results.

It may even help create the scenario where you can live comfortably on your combined early SS payments and your available dividends and interest. In that case, portfolio volatility becomes rather disinteresting.

Just shows you that you can skew this argument any way you like to suit your predetermined answer.
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Old 08-31-2008, 10:49 AM   #59
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On the other hand, taking social security early can help one retire earlier by introducing an income stream that handily offsets the need for a larger portfolio, using SS first and deferring their savings to a later age. This also reduces taxes.
This is true with any annuity. Even one of the "buy at 55" SPIAs that I hope we have discredited will give a higher SWR in FIRECalc than depending on the assets to spin off cash flow. The difference is the time frame (usually 30 years) and the inflation adjusted SWR for a 60/40 portfolio of around 4%.

The key always comes down to how long you will actually live and what will the net/after inflation performance of your assets really be. Going out more than 30 years eliminates on of the great market disasters (the 1970's) and almost always gives a higher SWR than at 30. As for investment returns, I have no way of predicting.

Delaying SS only makes sense if you are one of the "immortals" that gets into their late 80's or beyond or you have a spouse that will significantly outlive you. I don't have a way of accurately predicting this for anyone either.

If DW went away, I'd probably jump on SS at 62.

If you are leaning toward an annuity, there isn't a better buy on the market than delaying SS until as late as possible.
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Old 08-31-2008, 11:33 AM   #60
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Going out more than 30 years eliminates on of the great market disasters (the 1970's) and almost always gives a higher SWR than at 30. As for investment returns, I have no way of predicting.
Since this is a nonsensical result, if it is true it can only indicate that Firecalc while fun for obsessives is not what one should hang his hat on.

Ha
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