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Old 03-09-2009, 03:11 AM   #21
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Have a few more days to 62. Woooo Hoooo! Haven't signed up for SS and am planning to hold off for 66 or maybe even later. DW who is MUCH older (about 3 months, heh, heh) took early SS on her record. We're figuring the bird-in-hand for her and wait on mine to maximize her survivor benefit on my record - we didn't take the optional pension "insurance" which would have given her half my pension upon my death (she will only get 1/4). So we're trying to cover all the bases as best we can. We could even take the "do-over" for her so that she would get the full 1/2 of my SS benefit. Who knows?

One other thing involved in my decision is that I'm trying to "get rid" of my IRA/401(k) money (converting to Roths) before 70 1/2. The less money we have coming in - say as SS benefits - the more I can convert and stay within a lower tax bracket than I will face when RMDs kick in.

Having said all that, I might change my mind tomorrow. Bird in the hand sounds pretty good right now.
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Old 03-09-2009, 04:00 AM   #22
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as far as taking social security,ill wait as long as i can.. heres my thought:

for evey year i wait its like getting an extra 8% raise...
forget the old school thinking about what if i die or what age will i break even..thats thinking from our parents generation

current thinking is if you have the resourses(assets) to delay taking it, instead of say withdrawing 4% of your inflation adjusted nest egg each year take say 6% right from day 1... why?

because if you live long enough to collect you have the comfort of knowing your nest egg will be replenished with about 30% more in payments later on refilling the extra dough your pulling out now so you have more money each year while your still healthy and able to enjoy alot of things you may not be able to do later on..

think of it as almost as if your buying an annuity with the money you lay out between 62 and 70 that will give you or your spouse a lifetime of higher payments...

your nest egg will be refilled starting at age 70 with a much larger stream of money and that will go on forever...

to me its not about dying with the biggest pile of money but rather living the best darn life we can while we can.


to me retirement isnt about surviving and getting by... its about enjoying the fruits of a lifetime of work,savings and sacrafice and living better now then before
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Old 03-09-2009, 07:21 AM   #23
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Originally Posted by mathjak107 View Post
as far as taking social security,ill wait as long as i can.. heres my thought:

for evey year i wait its like getting an extra 8% raise...
forget the old school thinking about what if i die or what age will i break even..thats thinking from our parents generation

current thinking is if you have the resourses(assets) to delay taking it, instead of say withdrawing 4% of your inflation adjusted nest egg each year take say 6% right from day 1... why?

because if you live long enough to collect you have the comfort of knowing your nest egg will be replenished with about 30% more in payments later on refilling the extra dough your pulling out now so you have more money each year while your still healthy and able to enjoy alot of things you may not be able to do later on..

think of it as almost as if your buying an annuity with the money you lay out between 62 and 70 that will give you or your spouse a lifetime of higher payments...

your nest egg will be refilled starting at age 70 with a much larger stream of money and that will go on forever...

to me its not about dying with the biggest pile of money but rather living the best darn life we can while we can.


to me retirement isnt about surviving and getting by... its about enjoying the fruits of a lifetime of work,savings and sacrafice and living better now then before
Those were my thoughts exactly but I Chicken'd out at 67.5 (my FRA was 65.5). Could have held out for another 17% (my increase per year is a tad smaller). Additionally, by waiting, you are, in fact, deferring a good chunk of taxes (it you are in the 85% taxable neighborhood). However, that may actually turn out to be a bad part of the decision (albeit a small one, depending on what happens to tax rates in the near future).
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Old 03-09-2009, 09:22 AM   #24
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Just an educated guess on my part but I would expect the following to be enacted:

1.) Cap on SS income subject to tax will be lifted.

2.) Means testing will be implemented for very high incomes....to being with.

3.) Age for full benefits will be increased slightly.

4.) Age 62 will be retained as beginning age but with a lower % of full benefit than today.


All they really want to do is kick the can down the road until they are dead and leave the problem to the next generation. Medicare is the BIG problem.
Note that (1) is already happening because the dollars in the tax formula aren't indexed.

(3) and (4) don't apply to people who are turning 62 in the near future.

So (2) is the only unknown for those of us around 62. But I don't know how to factor it into a "when to start SS" decision. Does waiting improve or hurt my position regarding some future means testing rule?
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Old 03-09-2009, 09:54 AM   #25
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Some posters here believe that if you take SS at 62 and keep invested the exta money that you would have withdrawn you'll come out ahead.

However I beleive the risk-normalized tax-normalized optimum stategy for most people is to wait as long as you can to take SS.

It gets involved when you consider spousal benefits and survival benefits.

Here is a great formal analysis that someone posted here a year or two ago... From the analysis you can see that there is no one size fits all stategy for everyone. Your situation may be very different from someone else.
Attached Files
File Type: pdf SS_strategy.pdf (1.50 MB, 51 views)
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Old 03-09-2009, 10:56 AM   #26
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There should be NO debate on this. You are forgetting that you can pay back SS and start over at any point (as OAG mentioned).

So:

1. Take it at 62
2. Re-evaluate annually whether you want to pay it back and start at the new rate
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Old 03-09-2009, 12:39 PM   #27
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Only issue is if your ss was taxable all those years, then its a mess and you would have paid taxes for nothing
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Old 03-09-2009, 12:43 PM   #28
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Only issue is if your ss was taxable all those years, then its a mess and you would have paid taxes for nothing
No Sir, it is pretty simple to do on a single return (the return for the year of repayment). Two methods either a tax deduction or a tax credit (the credit will usually work out the best).
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Old 03-09-2009, 12:45 PM   #29
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Only issue is if your ss was taxable all those years, then its a mess and you would have paid taxes for nothing
According to OAG, you can either get a tax credit for the taxes paid or a deduction for the repayment amount in the year you repay. You don't have to file amended returns.

Edit: Sorry for the redundancy.
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Old 03-09-2009, 12:51 PM   #30
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11.5 years away from age 62.
If there is anything left in the fund by then, and I honestly feel like that is a mighty big IF, I will definitely take it at 62.
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Old 03-09-2009, 12:53 PM   #31
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Only issue is if your ss was taxable all those years, then its a mess and you would have paid taxes for nothing
I'm no expert here and still have 2 years left before I have to decide. But don't you have the advantage of also making money on the money you're holding for that period of time. You may have to pay taxes but it's taxes on earned money from the SS income, no?

I don't believe you have to pay the government back interest while holding the money.
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Old 03-09-2009, 01:12 PM   #32
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I'm no expert here and still have 2 years left before I have to decide. But don't you have the advantage of also making money on the money you're holding for that period of time. You may have to pay taxes but it's taxes on earned money from the SS income, no?

I don't believe you have to pay the government back interest while holding the money.
You are correct you do not repay any interest. You only repay the dollars you received in benefits. You keep any interest you received.

Here is another thread on the subject: Take SS ASAP and Invest it instead of waiting?
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Old 03-09-2009, 01:35 PM   #33
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You are correct you do not repay any interest. You only repay the dollars you received in benefits. You keep any interest you received.
The payback option is taking the stress out of the "start at 62" decision for me. In the near term, starting at 62 helps my cash flow in this down market. Later, if the market turns nicely and the portfolio is up and my health is good, I still have the option of using the payback option and taking the higher payments from that point on.

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MasterBlaster:

It gets involved when you consider spousal benefits and survival benefits.
Yep. In my case, DW cannot collect SS based on my earnings due to the GPO provision. This does impact my decison. If I delay SS and die before collecting, neither of us ever gets anything based on my account. If I collect SS at 62 and invest the money, she benefits from a larger portfolio (due to smaller withdrawals = to the SS income) when I'm gone.
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Old 03-09-2009, 01:49 PM   #34
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After rethinking this you would have to pay taxes on the money you receive each month as income. So if you give it back at some point you've still paid the taxes on the money you had already received. I doubt if the government will give you back your tax money if you give back the SS you already had received.
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Old 03-09-2009, 02:09 PM   #35
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I don't have a dog in this fight as I don't have any plans on using this strategy, but I did run across this, reinforcing what had been posted earlier:

"...when you repay your Social Security benefits, you can claim either an itemized deduction or a tax credit (whichever results in bigger savings to you) for the taxes you paid on your benefits in previous years."

Secret Ways to Boost Your Social Security - Kiplinger.com
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Old 03-09-2009, 02:22 PM   #36
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I doubt if the government will give you back your tax money if you give back the SS you already had received.
Actually, by the current rules, they will. See the Kiplinger article that REWahoo references above. Or read OAG's posts. He has actually done it.
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Old 03-09-2009, 02:25 PM   #37
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If that's the case then I can't see any reason anyone wouldn't take their SS at 62, 2 more years and I'm in at 62.
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Old 03-09-2009, 02:33 PM   #38
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If that's the case then I can't see any reason anyone wouldn't take their SS at 62, 2 more years and I'm in at 62.
One possible glitch is this payback option is beginning to get a lot of attention and may become too good to be true. There is already talk that it benefits only the 'rich' and that could make it ripe for elimination:

...Congress may decide to change the law and eliminate this option, which some consider a loophole for the well-off, who are most able to afford the payback. “This runs counter to the spirit of Social Security,” says Alicia Munnell, director of the Center for Retirement Research at Boston College.

Paying Back Social Security: Does It Make Sense?
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Old 03-09-2009, 02:36 PM   #39
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If that's the case then I can't see any reason anyone wouldn't take their SS at 62, 2 more years and I'm in at 62.

That's what I'm figuring. And if the money I don't withdraw from the portfolio and spend because I'm collecting SS grows nicely between now and 66 - 70 yo, and if my health is good then, I'll pay it back and reset.

If getting the tax refund looks complicated, I'll use a CPA. Even if the CPA costs a kilobuck, it really wouldn't really change things.....
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Old 03-09-2009, 02:46 PM   #40
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I think we've settled it, SS at 62. The way things are going with my port I don't think I'll be using the option of paying it back. (heh)
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