When to start taking SS?

[ejman]

People looking at what age to start today are looking at the same thing they always have, but with a considerably larger degree of insecurity that may favor taking it sooner rather than later, all other things being equal.

Ha

Yup, you nailed it. That's exactly where I'm at as I look forward to my 61 st birthday. Theoretical calculations of hypothetical SS payouts under current rules are a lot of fun but the trend for public finances doesn't seem to me to be friendly to those that assume that present rules will continue indefinitely into the future.

 

[haha]

What do you think they mean by "highest-earning?" People with the highest salary during their last year of work?

No, adjusted gross income with certain add-backs, as is currently used to determine what a senior pays for Medicare coverage. 99% ikely to be this or a small variant of it.

Ha

 

[TromboneAl]

No, adjusted gross income with certain add-backs, as is currently used to determine what a senior pays for Medicare coverage. 99% ikely to be this or a small variant of it.

Ha

In that case one strategy would be to delay taking SS while you spend down all your assets, right? Reminds me of college financial aid -- with savers being penalized.

I'm not sure that us LBYMers will be in the top 25%, since we only need to take a small amount, say $50k per year from our retirement accounts.

 

[W2R]

I'm not sure that us LBYMers will be in the top 25%, since we only need to take a small amount, say $50k per year from our retirement accounts.

The median income for those over 65 in 2009 was $18,001 according to this link.

 

[TromboneAl]

The median income for those over 65 in 2009 was $18,001 according to this link.

Well, shoot!

 

[Independent]

In that case one strategy would be to delay taking SS while you spend down all your assets, right? Reminds me of college financial aid -- with savers being penalized.

I'm not sure that us LBYMers will be in the top 25%, since we only need to take a small amount, say $50k per year from our retirement accounts.

That's my theory. I figure a means test would be probably be based on non-SS income or assets. If means testing comes, I want to "look not rich". Deferring SS and spending down other assets seems to help with that.

 

[FIRE'd@51]

I figure a means test would be probably be based on non-SS income or assets.

Why do you assume that? The amount of SS income currently subject to taxation depends on provisional income, which includes 50% of SS.

 

[rescueme]

FWIW, the same discussion is being held on the M* IDR forum. For those of you that have access:

social security poll? - Morningstar

 

[pdbphoto]

It seems one must take a good look at one's relatives and how their health has held up over time.

 

[JakeBrake]

I did it. I applied for SS online. The online application is easy to use and self-explanatory. I recommend it highly.

I reached FRA (66) in July. DW will reach FRA in September. DW has some SS, but the maximum on her record would always be much less than half on my record, even at age 70.

I filed for my SS and chose to delay receipt of benefits. This is an easy option with full explanation in the online application.

We filed DW's application to begin in the earliest month without an age-related reduction. This is also an easy option. For her the earliest month is September.

DW will be able to get the maximum spousal benefit and my benefit will continue to grow at an annual 8% rate until I reach 70. The spousal benefit does not increase after FRA is reached. If my resolve weakens I can apply for my benefit anytime. If I should drop dead, DW will get whatever my benefit would be at the time.

If the years between 66 and 70 pass as quickly as the years between 62 and 66, it will seem like tomorrow when I file for my benefit..

 

[Coolius]

This thread has really gotten me off to start planning for when I should take SS. Still have a couple years to go, but it's good to start thinking early.

One question I hope this forum can answer is the amount of taxes that one would have to pay on SS benefits, if one had an income such as below:



Interest income from Banks, CDs: $ 15K

Cap gains, stock dividends: $ 20K

Municipal bond interest: $ 0

IRA interest, dividends, cap gains, etc : $ 10K

SS benefits ( annual ) $ 17,000 ( year 2012 )

Pension & annuity: $ 0

Foreign Income: $ 0

Further assume Married Filing Jointly status. No child deduction or costs.

No earned income from both Husband ( age 63 ) & Wife ( age 58 ). This couple takes the standard deduction.

What would be the tax on SS benefits if the Husband were to take it starting January 2012? Does the IRA earnings have to be included in the calculation?


Thanks in advance!!

 

[km4hr]

Right, and I could be run over by a cement truck on the way home tonight and not even make it to early retirement.

But financial planning generally needs to take a longer view.
I will agree that the extent of one's "bequest motive" may influence how they structure their financial empire.
I personally have minimal concerns about leaving a large estate...

Assuming you'll get run over by a cement truck your heirs will get a big fat check from the subsequent lawsuit . No need for an elaborate estate plan.

 

[FANOFJESUS]

This thread has really gotten me off to start planning for when I should take SS. Still have a couple years to go, but it's good to start thinking early.

One question I hope this forum can answer is the amount of taxes that one would have to pay on SS benefits, if one had an income such as below:



Interest income from Banks, CDs: $ 15K

Cap gains, stock dividends: $ 20K

Municipal bond interest: $ 0

IRA interest, dividends, cap gains, etc : $ 10K

SS benefits ( annual ) $ 17,000 ( year 2012 )

Pension & annuity: $ 0

Foreign Income: $ 0

Further assume Married Filing Jointly status. No child deduction or costs.

No earned income from both Husband ( age 63 ) & Wife ( age 58 ). This couple takes the standard deduction.

What would be the tax on SS benefits if the Husband were to take it starting January 2012? Does the IRA earnings have to be included in the calculation?


Thanks in advance!!

I think this will help you
TurboTax® TaxCaster - Free Tax Calculator - Free Tax Estimator

 

[eytonxav]

The only certainties that I know is that:

1. I don't know when I'll die
2. I don't know how SS will change in the future
3. I don't know how long my nestegg will hold up in this economy we are stuck in (despite what firecalc or other historical simulations say)

I turned 62 this year and was surprised that my SS payout at 62 declined from the prior year's statement since the US wage index declined for the first time. It makes me wonder if we continue to see a decline in this index, how much of the benefit of putting off will be eaten into. Right now, I plan to retire next year and am still trying to figure out whether to take it at 63 or defer for x years. There is no obvious easy answer to this one for me.

 

[Coolius]

I think this will help you
TurboTax® TaxCaster - Free Tax Calculator - Free Tax Estimator

Thank you for the Tax Estimator. I have bookmarked it for future estimates.

C

 

[jdw_fire]

The only certainties that I know is that:

1. I don't know when I'll die
2. I don't know how SS will change in the future
3. I don't know how long my nestegg will hold up in this economy we are stuck in (despite what firecalc or other historical simulations say)

I turned 62 this year and was surprised that my SS payout at 62 declined from the prior year's statement since the US wage index declined for the first time. It makes me wonder if we continue to see a decline in this index, how much of the benefit of putting off will be eaten into. Right now, I plan to retire next year and am still trying to figure out whether to take it at 63 or defer for x years. There is no obvious easy answer to this one for me.

from the ssa Social Security Benefit Amounts

An insured worker becomes eligible for retirement benefits when he or she reaches age 62. If 2011 were the year of eligibility, we would divide the national average wage index for 2009 (40,711.61) by the national average wage index for each year prior to 2009 in which the worker had earnings and multiply each such ratio by the worker's earnings. This would give the indexed earnings for each year prior to 2009. We would consider any earnings in or after 2009 at face value, without indexing. Then we would compute the AIME and use this amount in computing the worker's primary insurance amount for 2011.

so your earnings at the age of 60 are the last earnings that are wage indexed. earnings for age 61 and 62 are used "at face value" in your PIA calculation. your PIA is computed when you reach the age of 62. after you reach the age of 62, each year your PIA will increase by the SS COLA. therefore if you wait to start SS after the age of 62 your benefit wont be impacted by a change in the wage index. it will only change based on your age when you start taking SS and COLAs, both of which can only increase your eligable benefit (i.e. the longer you wait the higher your benefit will be)

 

[dtbach]

All this guessing at this and at that.

I think I'll just slash my wrists. Faster that way . . .

 

[eytonxav]

from the ssa Social Security Benefit Amounts



so your earnings at the age of 60 are the last earnings that are wage indexed. earnings for age 61 and 62 are used "at face value" in your PIA calculation. your PIA is computed when you reach the age of 62. after you reach the age of 62, each year your PIA will increase by the SS COLA. therefore if you wait to start SS after the age of 62 your benefit wont be impacted by a change in the wage index. it will only change based on your age when you start taking SS and COLAs, both of which can only increase your eligable benefit (i.e. the longer you wait the higher your benefit will be)

Thanks again jdw, you've helped me a lot in understanding several SS nuances.

 

[packrat44]

But as the saying goes, "If wishes were horses, beggars would ride", .

Another old Montana saying goes, "If wishes were fishes we would have some to fry; if cow turds were biscuits we could eat till we died."

 

[packrat44]

One would wish/hope that the honor and integrity of our elected politicians would be sufficient to ensure that this could not happen..

 

[W2R]

Glad to provide the evening's entertainment....

 

[prototype]

I'm thinking about splitting the difference and just going with 65 or 66. If it it saves time and and there is less beauracratic(sp?) hassle I may just do my SS and medicare paper work all at the same time. Just turned 56 (class of 2011) so I've got a few years to figure it out.

 

[rescueme]

I may just do my SS and medicare paper work all at the same time.

Remember that you need to apply for Medicare 3 months before the the first of the month that you turn 65, regardless of when you take SS (assuming you take it after the age of 65).

DW will take SS at FRA age of 66; I'm waiting till age 70. However, both of us will apply for Medicare at the proper time (three months before the first of the month each of us turn 65), and will have to pay the separate Part B on a quarterly basis before you start getting SS and the deductions coming out of your SS benefit...

 

[MichaelB]

I'm thinking about splitting the difference and just going with 65 or 66. If it it saves time and and there is less beauracratic(sp?) hassle I may just do my SS and medicare paper work all at the same time. Just turned 56 (class of 2011) so I've got a few years to figure it out.

Not an expert here but I believe you need to file for Medicare 3 months before your 65th b'day.

 

[TheWizard]

Let me ask a silly question: what happens if you DON'T file for Medicare until some months AFTER you are 65?
Do you get terminated early?