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Stopping Social Security
Old 01-13-2020, 06:51 AM   #1
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Stopping Social Security

I am going to try and ask this question without seeming too annoyed at DW, but it may be difficult.

After ERing 4 years ago, and managing our money to get HI after my COBRA ran out (I am 63, DW is 62), we decided to start DWs SS after she turned 62 last Sept. We are scheduled to get our first check in Feb.

We have been living on savings, and of course cannot touch IRA $ because of the ACA subsidy limits. Our estimated 2020 income is going to be around $29K, of which about $17,100 will be DWs SS.

My reason for overcoming the difficult decision to start her SS was basically to take advantage of a government program where we receive rather than the paying we have done for 40 years or so. Also, by starting hers and waiting on mine until 65 or 70, we will still do way better, as my estimated SS at 70 will be $3529/mo.

Her new position is this: why not stop her SS and simply make up the exact same amount with IRA w/ds? At this income level, it would be the closest thing to taking IRA money tax-free, and we could do this at least for 2 years or until we are both on Medicare and the ACA subsidies are no longer an issue.

I would appreciate hearing any thoughts, but especially about
1. Are we too late to stop her SS? (we could go to the local office on Wed.)
2. Is her idea about getting more $ tax-free correct?

Thanks,

Mitch
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Old 01-13-2020, 06:57 AM   #2
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I think her suggestion to delay SS and pull from the IRA makes sense, although I’d want to confirm on a spreadsheet. It might also lower your future tax liability by reducing the RMDs.

Can SS be stopped before it starts is a great question, I don’t recall seeing it here ‘til now.
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Old 01-13-2020, 07:16 AM   #3
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You can stop SS within the first 12 months after you begin receiving benefits but you must repay all monies received if you are below full retirement age. Once you are full retirement age you can choose to suspend payments until some point in the future without having to repay.

https://www.ssa.gov/planners/retire/withdrawal.html
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Old 01-13-2020, 08:20 AM   #4
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Also to note that the calculation of MAGI for management of ACA income includes the non taxed portion of SS, thus the whole SS income is used in the calculation.
I am personally going the TIRA route along with after tax savings for ACA management.
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Old 01-13-2020, 08:50 AM   #5
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Originally Posted by BoodaGazelle View Post
We have been living on savings, and of course cannot touch IRA $ because of the ACA subsidy limits. Our estimated 2020 income is going to be around $29K, of which about $17,100 will be DWs SS.

What is the need to keep your income so low ($29K)? That's not even close to the ACA subsidy limit, you would still qualify for an ACA subsidy at a much higher income
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Old 01-13-2020, 09:09 AM   #6
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I think her suggestion to delay SS and pull from the IRA makes sense, although Id want to confirm on a spreadsheet. It might also lower your future tax liability by reducing the RMDs.
+1
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Old 01-13-2020, 09:55 AM   #7
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What is the need to keep your income so low ($29K)? That's not even close to the ACA subsidy limit, you would still qualify for an ACA subsidy at a much higher income
I think that gets you into the best subsidies, below 200% of FPL. We've been doing the same thing with DWs SS of 15k keeping income under 30k. For 2021 I'm going to look at going to 395% to still have a little break and more money to spend.
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Old 01-13-2020, 10:44 AM   #8
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Thanks to all who have replied. We have been working on the assumption that the best strategy, at least until we are both on Medicare, is to keep our MAGI above the Medicaid cut-off, but otherwise as low as possible. We have enough (barely) of non-IRA saving to do so for the next 2 years or so, but we would also like to be able to tap IRA money for a newer vehicle and perhaps a vacation or two....



Mostly, we have all good problems. It would be nice to have had a government or employer provided HI until Medicare kicks in, however.
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Old 01-13-2020, 01:52 PM   #9
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1. As usual, she is right. 2. Just call your SS office and have her benefits suspended.

If it were me, I would do as much as you can in tIRA withdrawals and/or Roth conversions to your target ACA limit.

I would look at both just above 200% FPL and just below 400% FPL can compare the net tax and subsidies to see if it is worth doing tIRA withfdrawals and/or Roth conversions above 200% FPL. IOW, what is your net tax/ACA subsidy at 200% FPL, and at 400% FPL? And what is that difference in relation to the marginal income from 200% FPL to 400% FPL?
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Old 01-13-2020, 02:39 PM   #10
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Originally Posted by BoodaGazelle View Post
I am going to try and ask this question without seeming too annoyed at DW, but it may be difficult.



After ERing 4 years ago, and managing our money to get HI after my COBRA ran out (I am 63, DW is 62), we decided to start DWs SS after she turned 62 last Sept. We are scheduled to get our first check in Feb.



We have been living on savings, and of course cannot touch IRA $ because of the ACA subsidy limits. Our estimated 2020 income is going to be around $29K, of which about $17,100 will be DWs SS.



My reason for overcoming the difficult decision to start her SS was basically to take advantage of a government program where we receive rather than the paying we have done for 40 years or so. Also, by starting hers and waiting on mine until 65 or 70, we will still do way better, as my estimated SS at 70 will be $3529/mo.



Her new position is this: why not stop her SS and simply make up the exact same amount with IRA w/ds? At this income level, it would be the closest thing to taking IRA money tax-free, and we could do this at least for 2 years or until we are both on Medicare and the ACA subsidies are no longer an issue.



I would appreciate hearing any thoughts, but especially about

1. Are we too late to stop her SS? (we could go to the local office on Wed.)

2. Is her idea about getting more $ tax-free correct?



Thanks,



Mitch


Sounds like you got a smart wife. My advice is a) listen to her and b) dont piss her off so she stops giving good advice!
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Old 01-13-2020, 02:43 PM   #11
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The only reason I get annoyed, is that she wants me to do this type of research, and when I go over the options with her, most of the time I am not getting her full attention. Since we normally proceed with what I have determined to be the best course, it is not normally an issue. In this case, she not only changed the course, she did it *after* we went down to the SS office and started her SS!


To her credit, I think she knows she messed up by not paying attention earlier.


But she is pretty smart.
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Old 01-13-2020, 02:49 PM   #12
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... But she is pretty smart.
She married you, right?
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Hmmmm
Old 01-13-2020, 02:53 PM   #13
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Hmmmm

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She married you, right?

True story. We met in Jan 1982, and got married in Nov 1982.


I guess this is a classic YMMV scenario.
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Old 01-13-2020, 03:00 PM   #14
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Wow! That is quick. Hope to see you at the SW FL gathering coming up.
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Old 01-13-2020, 03:01 PM   #15
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Where do I find the details of said gathering?
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Old 01-13-2020, 03:07 PM   #16
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4th Annual SWFL E-R.org Get Together
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Old 01-13-2020, 05:33 PM   #17
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Originally Posted by BoodaGazelle View Post
The only reason I get annoyed, is that she wants me to do this type of research, and when I go over the options with her, most of the time I am not getting her full attention. Since we normally proceed with what I have determined to be the best course, it is not normally an issue. In this case, she not only changed the course, she did it *after* we went down to the SS office and started her SS!


To her credit, I think she knows she messed up by not paying attention earlier.


But she is pretty smart.
It's still fixable, right? Better for her to pipe up now than to wait until it's too late and then say that she knew this, but didn't want to annoy you since you'd already started the process.
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Old 01-13-2020, 09:20 PM   #18
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If you decide to withdraw the SS application, just fill out form SSA-521 and turn it into your local office
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