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View Poll Results: I plan to take (or took) SS starting at age
62 88 62.86%
66 29 20.71%
70 17 12.14%
Other 6 4.29%
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Re: When I'll Take SS
Old 09-15-2006, 11:17 AM   #21
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Re: When I'll Take SS

Quote:
Originally Posted by New Thinking
Keep in mind that the permanent reduction between 62 and 70 is a real 25%. Many calculators misguide here. Its more like a 33% cut if you assume a 3% COLA.

Also, the survivor benefit (as many, but not all seem to understand) is based on the higher benefit at the death of the first spouse. So delaying a benefit could benefit your spouse too.

Bosco, the reason that there is a tax benefit by delaying SS to 70 is that SS income counts at a 50% rate in the calculation of SS taxes. Thus your RMDs are taxed less and perhaps even at a lower rate.
A question on this one... I was discussing with my sister who is closer to getting it...

If the spouse dies and was getting a higher SS benefit.. does the surviving spouse get thier full amount or only half

Also, Bosco... think about taking money out of your IRA during those years you do not get SS if there is a tax advantage to doing so.. might as well pay low tax on income if you can before it goes up..
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Re: When I'll Take SS
Old 09-15-2006, 11:30 AM   #22
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Re: When I'll Take SS

Bosco - Admittedly, this is confusing. Yes, once the forumula is calculated, if income is over a certain amount (32k married/25k single), SS can be taxed up to 50% and then over a second threshold (44k/34k), then up to 85% is taxed..But you have to take it back a step to say how much of each income type GOES INTO THE FORMULA (knowns as Combined Income or Provisional Income). This formula only counts SS at a 50% rate.

Texas Proud - The surviving spouse gets the full amount. Example: Husband getting $1600/mo. and wife getting $950/mo. Husband dies. Wife "drops" her $950 and received $1600 going forward.
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Re: When I'll Take SS
Old 09-15-2006, 12:03 PM   #23
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Re: When I'll Take SS

I have always thought that I would delay taking SS until age 70 or so, but more recently I am thinking that somewhere between 66 and 70 may be the best way to go.

For me, taking it at 62 just does not make a bit of sense. For others it is the best, maybe the only, choice.

I appreciate the opprtunity to delay taking my SS as long as possible and being rewarded for delaying it. As long as I clearly understand the risk that I am taking (die too early) vs. a life-long larger monthly check, I can easily manage it.
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Re: When I'll Take SS
Old 09-15-2006, 01:23 PM   #24
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Re: When I'll Take SS

Texas Proud

"If the spouse dies and was getting a higher SS benefit.. does the surviving spouse get thier full amount or only half"

The lower wage spouse gets the higher wage full retirement benefit if the higher wage spouse has not started social security yet. If the higher wage spouse has started, the lower wage spouse will lose their SS but will step up to whatever their spouse was making. That is why the higher wage spouse's SS is like a joint annuity and is the most important of the two to handle correctly. Lower wage spouse's SS goes away when EITHER spouse dies. The reverse is just the opposite, higher wage spouse's SS continues until BOTH of the couple are gone.
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Re: When I'll Take SS
Old 09-15-2006, 01:29 PM   #25
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Re: When I'll Take SS

Everyone knows that after 62 you can start SS at any time?
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Re: When I'll Take SS
Old 09-15-2006, 02:14 PM   #26
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Re: When I'll Take SS

Of course, you can take advange of the following option, if it is still available in the future. Start collecting any time after 62 with the intent of giving back all your past payments for let's say, 3 years (needed to ammend your IRS returns) if you have the cash. You can then restart the clock to begin collecting the higher monthly payments 3 years later, if you feel confident that the gubment will continue to honor its promises.
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Re: When I'll Take SS
Old 09-15-2006, 02:47 PM   #27
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Re: When I'll Take SS

WilliamG and New Thinking

I thought that if the lower wage spouse took SS at 62 and the higher wage spouse took SS at full retirement age, the surviving lower wage spouse was dinged on the higher wage spouse's full retirement. If this is not the case, I will be very happy.
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Re: When I'll Take SS
Old 09-15-2006, 02:50 PM   #28
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Re: When I'll Take SS

Quote:
Originally Posted by mickeyd
the risk that I am taking (die too early)
Not a risk at all.* I doubt if you will be concerned about not getting your "share" once you're gone*

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Re: When I'll Take SS
Old 09-15-2006, 03:14 PM   #29
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Re: When I'll Take SS

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Of course, you can take advange of the following option, if it is still available in the future. Start collecting any time after 62 with the intent of giving back all your past payments for let's say, 3 years (needed to ammend your IRS returns) if you have the cash. You can then restart the clock to begin collecting the higher monthly payments 3 years later, if you feel confident that the gubment will continue to honor its promises.
Now that right there was worth the cost of admission! Thank you!

Do you have to pay back with interest and if so, how much?
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Re: When I'll Take SS
Old 09-15-2006, 03:22 PM   #30
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Re: When I'll Take SS

I plan to delay taking SS until age 70. * Regular retirement date would have been *age 66 and 10 months. DH is 13 years older than I and took his at 62. *My SS is the higher of the two. We are using his to pay for health care until he hits 65 and medicare kicks in. *After that we will use it for his medigap policy and my health insurance premimums. *Our other expences are covered by his savings and investments. *I will start dipping into my stuff when I reach *59 1/2. *I have no need to touch SS early at this point.

*Our main concern going forward is continuing to live at home and bring in services as needed as DH and I age. Health insurance and long term care insurance does not cover everything you need. Holding off on taking SS until 70 may make the difference when it comes to hiring staff to take care of us at home.
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Re: When I'll Take SS
Old 09-15-2006, 03:30 PM   #31
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Re: When I'll Take SS

Quote:
Originally Posted by vagabond
Of course, you can take advange of the following option, if it is still available in the future. Start collecting any time after 62 with the intent of giving back all your past payments for let's say, 3 years (needed to ammend your IRS returns) if you have the cash. You can then restart the clock to begin collecting the higher monthly payments 3 years later, if you feel confident that the gubment will continue to honor its promises.
Does that also give you the opportunity to pay tax on teh same monet twice?
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Old 09-15-2006, 04:10 PM   #32
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Tadpole

Tadpole - You need to be a little clearer on your question. I'll take a guess nonetheless. As far as the survivor benefit, the spouse steps up to the deceased's benefit (100% of what he/she was receiving).

For a spousal benefit when both are living, it gets more complicated and this could be what you are thinking of. A lower-earning spouse could start her/his own SS at age 62 and lock in a permanent reduced benefit. Then, it is possible in some circumstances that a spousal benefit is available once the higher earning spouse retires and files for benefits. In this case the "early" benefit at 62 is indeed carved out (dinged to use your terminology) and a spousal benefit is paid on top of that other benefit (and this could be a full benefit or a reduced benefit depending on the age at that point).
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Re: When I'll Take SS
Old 09-15-2006, 11:44 PM   #33
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Re: When I'll Take SS

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Originally Posted by donheff
Does that also give you the opportunity to pay tax on teh same monet twice?
As I understand it, no. That's why you ammend your tax returns to recoup any tax you may have paid because of the additional SS income. That is also why you want to do it only for no more than 3 years since you can only ammend no more than the last 3 year returns. I don't know if you can do this option more then once. If you could, you can start at 62, restart at 65, then again at 68, and finally at 70.
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Re: When I'll Take SS
Old 09-16-2006, 12:33 AM   #34
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Re: When I'll Take SS

I'm not entirely certain I follow some of the posts here regarding the surviving spouse's benefit, but you may want to check this thread for a detailed discussion from a few months ago.
http://early-retirement.org/forums/i...p?topic=6327.0
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Re: When I'll Take SS
Old 09-16-2006, 07:55 PM   #35
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Re: When I'll Take SS

Just to spell out clearly the retire at 70 game plan just look at what happens to a dollar of taxes when you are above the threshold.

On that dollar of extra income you pay.

1) Income taxes on that dollar
2) Plus up to 85 percent (either 50 or 85 percent) of the income from a dollar of SS income which has just become taxable.

So, for example, if you are in a federal bracket of 25 percent you get taxed for that extra dollar at 25 % regular income taxes plus 85 percent of the (over the threshold SS income) for a net tax rate on that extra income of 25 + 0.85 * 25% = 46.25 percent marginal tax rate. That rate isn't even applied to people with million or even billion dollar income.

Now Throw in your state tax cut and it's even a worse deal for those with "extra" income.

So the retire at 70 game plan just says delay SS and spend down some of that IRA/401k/after tax stash so that when you get SS at 70 less of your income is taxed at that 46 percent (or higher considering state taxes) marginal rate.
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Re: When I'll Take SS
Old 09-16-2006, 10:28 PM   #36
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Re: When I'll Take SS

I used to be in the "take the money and run at 62" camp.* I worry about what future legislation might do to our benefits.

Waiting to collect clearly provides more value if you live a long life.* Nothing helps reduce longevity risk as much as a COLA'd benefit.* On the other hand, it's not about maximizing the payout, it's about maximizing your own comfort and enjoyment.* I'm not sure the 70 year old me will get nearly as much of either as the 62 year old me.*

So now, I think we will use the marriage advantage.* Our current plan is to start taking DW's ss when she reaches age 62.* Her benefit is slightly less than mine will be.* Then, we will start taking mine at a later date (age 65 or later depending on our portfolio performance and needs).*
If we both die before the actuarial tables predict, we will at least have gotten something from the system.* If we both live a long, healthy life, then we will have at least maximized a portion of our COLA'd benefit.* If one of us dies earlier than the other, the survivor has to option to take the higher of the two benefits.

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Re: When I'll Take SS
Old 09-17-2006, 01:55 AM   #37
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Re: When I'll Take SS

Quote:
Originally Posted by MasterBlaster
Just to spell out clearly the retire at 70 game plan just look at what happens to a dollar of taxes when you are above the threshold.

On that dollar of extra income you pay.

1) Income taxes on that dollar
2) Plus up to 85 percent (either 50 or 85 percent) of the income from a dollar of SS income which has just become taxable.
....
So the retire at 70 game plan just says delay SS and spend down some of that IRA/401k/after tax stash so that when you get SS at 70 less of your income is taxed at that 46 percent (or higher considering state taxes) marginal rate.
Does this mean that if your income each year will be much higher then the threshold so that you are paying taxes on the full amount of SS, that you will be screwed enjoy that higher tax rate forever? Sort of defeats the benefits of SS doesn't it, if your required expenses put your income at a significantly higher level.

Second question: In other posts, the comment was made to spend your taxable accounts before the IRAs/401ks, ostensibly to minimze the tax bite and allow that money to earn additional income for you. Given the above scenario, where the IRA/401k moneys are taxes at earnings rate, and the assuming the taxable accounts are cap gains, with a lower tax rate, it appears intuitively that is exactly opposite of what I would want to do. What am I missing?
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Re: When I'll Take SS
Old 09-17-2006, 06:27 AM   #38
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Re: When I'll Take SS

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Originally Posted by whitestick
Does this mean that if your income each year will be much higher then the threshold so that you are paying taxes on the full amount of SS, that you will be screwed enjoy that higher tax rate forever? Sort of defeats the benefits of SS doesn't it, if your required expenses put your income at a significantly higher level.

Second question: In other posts, the comment was made to spend your taxable accounts before the IRAs/401ks, ostensibly to minimze the tax bite and allow that money to earn additional income for you. Given the above scenario, where the IRA/401k moneys are taxes at earnings rate, and the assuming the taxable accounts are cap gains, with a lower tax rate, it appears intuitively that is exactly opposite of what I would want to do. What am I missing?
Before answering your question... I think that most people on this board will have income so 'all' of their SS is taxed no matter what strategy they use.. "all" is whatever percent Congress deems should be taxed.. which I think will go to 100% with the reforms that are to come...

But yes, IMO you should take out from your IRA first until you get to the 25% rate... or close to it. then start to use your taxable money... let your ROTH grow like crazy... This assumes no pension coming in.. if so, then you just treat that as your first 'withdrawl' then IRA etc...
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Re: When I'll Take SS
Old 09-17-2006, 08:51 AM   #39
 
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Re: When I'll Take SS

Quote:
Originally Posted by whitestick
Sort of defeats the benefits of SS doesn't it, if your required expenses put your income at a significantly higher level.
Well by your logic, then having any income at all, if taxed, would defeat the benefit of that income! I'll still take my SS, even if I have to pay taxes on it.

The way I understand it, is that 85% of it is taxed, if you exceed the limit of 44K for a married couple.

Also, remember that the amount you earn in your IRAs is not counted as income, until you withdraw it. So only the amounts in the Taxable Accounts earning income(dividends, interest) would add to the $44K limit. Not the amount you withdraw from your taxable accounts!
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Re: When I'll Take SS
Old 09-17-2006, 11:39 AM   #40
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Re: When I'll Take SS

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Originally Posted by Cut-Throat
Also, remember that the amount you earn in your IRAs is not counted as income, until you withdraw it. So only the amounts in the Taxable Accounts earning income(dividends, interest) would add to the $44K limit.
If the IRA withdrawals come from a Roth then they're not even counted as income.
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