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Old 12-29-2015, 10:10 AM   #21
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Originally Posted by Theseus View Post
I've been constructing a spreadsheet model to better understand how the variables might affect us in regard to "timing" SS. And "market timing" is what it seems to amount to in the end. If market returns, interest rates, and inflation were all static the decision would be easy, and the simple straight line breakeven point analysis would be useful. For now I consider wait and see to be a strategy. Spending down assets to delay SS runs a risk of poor sequence of returns/inflation leading to excessive dependence on SS in later years. Or claiming SS early runs the risk of the same issues leading to not having enough assets remaining for potential long term care needs in the later years. Attempting to optimize the decision at this point makes me feel like I'm trying to hit a very small target that is a long, long ways away. Best thing to do, IMHO is to at least be aware of the risks/rewards of making the choice, and delay it until any yet unknown future changes warrant taking a certain path. And I sure hope that time isn't too late to have made the right choice for our situation.
To do it right you really need either a back test or Monte-carlo analysis. You're results would really be a comparison of which approach would likely level you better off. Potentially a lot of work. I just ran a quick set of calculations with taking it early and investing + small Roth conversion and taking it later with larger Roth conversion. I'm going with the Roth conversions and later SS. I did not see the need in my case to go to statistical analysis in my case.

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Originally Posted by marko View Post
This is a valid point for many. In my case, my projected RMD is actually less than my current (age 63) withdrawals.
It actually my be useful to look at this. The bar for paying tax on part of your SS is actually quite low and half of your (and spouse if married) is counted toward the income test for getting to that limit.
For many on this site, paying tax on SS may be unavoidable due to pensions, RMDs, or investment distributions.

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file a federal tax return as an "individual" and your combined income* is
between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
more than $34,000, up to 85 percent of your benefits may be taxable.

file a joint return, and you and your spouse have a combined income* that is
between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits
more than $44,000, up to 85 percent of your benefits may be taxable.
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Old 12-29-2015, 10:22 AM   #22
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Originally Posted by bingybear View Post

It actually my be useful to look at this. The bar for paying tax on part of your SS is actually quite low and half of your (and spouse if married) is counted toward the income test for getting to that limit.
For many on this site, paying tax on SS may be unavoidable due to pensions, RMDs, or investment distributions.
Right but as noted earlier, I automatically pocket 5.15% of tax savings as Mass taxes IRA distributions on a flat tax basis but does not tax SS. Even with a higher income, SS is only taxed at 85% of full value.

My tax savings come out to be about $3700 per year vs taking it from my IRA.
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Social Security Benefits
Old 12-29-2015, 10:56 AM   #23
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Social Security Benefits

I'm thinking the same strategy as OrcasIslandBound. DH retires next May and plans on taking SS at 62. We are the same age, but he was the lower wage earner and it appears may have a shorter life span due to a medical issue. Meanwhile, I will take a "wait and see" approach.


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Old 12-29-2015, 11:26 AM   #24
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I found this chart on Motley Fool. Looks like the differences in benefits between starting at 62 or 70 do not become significant until around 85.
Yes. That is why many of us think of delaying SS to 70 as a form of old age insurance. Like any insurance policy, we may or may not collect on it.
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Old 12-29-2015, 11:31 AM   #25
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Yes. That is why many of us think of delaying SS to 70 as a form of old age insurance. Like any insurance policy, we may or may not collect on it.
If it plays out neutral till age 85, what's the debate?
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Old 12-30-2015, 03:48 AM   #26
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Originally Posted by Red Corvette View Post
I found this chart on Motley Fool. Looks like the differences in benefits between starting at 62 or 70 do not become significant until around 85.
it actually is older than 85 . once you figure in "

the checks you gave up

no more compounding on the invested assets you spent down . just using TIPS TOOK 20 YEARS TO EVEN . A BALANCED FUND 22-23 YEARS

no protection from medicare increases

and in our case my wife does not get a 4200.00 dollar adder to her own early benefit until i file since 1/2 my full is more than her full.


it takes until 90 to see a real significant difference ..

but the larger ss check has no sequence risk so it does make you a lot less dependent on markets and rates .

it all boils down to risk and which you prefer . do you want longevity risk ? or market and interest rate risk ?
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Old 12-30-2015, 06:20 AM   #27
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If you retire at 62, but do not start taking your SS benefit then there is still a benefit from waiting. You might benefit more if you were still working and adding to your total career earnings that are also part of the basis for your benefit, but delaying the start of your payments will increase the benefit, up to age 70.
Is there more to the formula than just the highest 35 years of income? How do total earnings work in determining one's benefits?
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Old 12-30-2015, 06:49 AM   #28
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? How do total earnings work in determining one's benefits?
This explains it: Understanding the Social Security Benefit Calculation
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Old 12-30-2015, 08:05 AM   #29
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If it plays out neutral till age 85, what's the debate?
This 85 does not take into account of higher order effects such as investment gains/losses and money spent on living while waiting to take your SS. But to your question, most of us will not die at 85, some earlier and some later. From the first order analysis, it is better to take SS late if you die after 85 and earlier if you die earlier.
With file and suspend, there were ways for a couple to really increase the amount they receive. This is in the process of being eliminated.. in the transition period now.
The higher order effects really have significant influence of what is better. But many of these like the sequence of investment returns can not be defined before it happens. Much depends upon where assets are located: after tax, IRA, Roth, life insurance (for those using LI as income), etc. Some have to take SS early because they just need it to live. Some try to optimize what they can use after tax and includes withdraw from all accounts.
My FIL took SS @ 65. Seemed early for on with good assets and health. At 67 he had a brain aneurysm go... and he was gone. So the best planning and analysis is easily trumped by an unforeseen health issue or accident.
Many use it as longevity insurance and take it late. This provides the highest payment in later years if they really live long.
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Old 12-30-2015, 09:04 AM   #30
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Originally Posted by Red Corvette View Post
Is there more to the formula than just the highest 35 years of income? How do total earnings work in determining one's benefits?
Earnings outside the 35 high years don't count.
But, earnings are indexed.

The SSA provides a nice example here: https://www.socialsecurity.gov/OACT/...ebenefit1.html
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Old 12-31-2015, 04:17 AM   #31
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our origonal plan was to play it by ear based on markets . i thought if markets were poor for a year or two i would file early rather then spend down investments .

after utilizing fidelity's social security optimizer that would be the wrong thing to do since ss returns are beating my own .

we are better off selling off lower returning cash and bonds , reducing rmd's and delaying .


the optimized plan fidelity came up with is a bit different then i would have come up with if i was delaying on my own .

my wife is 2 years older than me , she has been collecting since 62 and is 65 now .

i am 63.

so their plan has her stopping her early benefit at her fra .

she lets it grow until 70 .

at 67- 10 months i file restricted application for 1/2 hers and she gets a 30% bigger check then she was .

at 70 i file for my own and she gets a spousal benefit of 4200 .00 added to her benefit since half my full is 4200.00 higher then her full .
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