When to take Social Security - Any new ideas?

[TromboneAl]

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

 

[mathjak107]

Only issue is if your ss was taxable all those years, then its a mess and you would have paid taxes for nothing

 

[OAG]

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).

 

[FIRE'd@51]

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.

 

[freebird5825]

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.

 

[73ss454]

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.

 

[OAG]

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: http://www.early-retirement.org/for...ead-of-waiting-41897.html?highlight=repayment

 

[youbet]

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.

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.

 

[73ss454]

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.

 

[REWahoo]

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

 

[youbet]

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.

 

[73ss454]

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.

 

[REWahoo]

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?

 

[youbet]

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.....

 

[73ss454]

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)

 

[mathjak107]

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).

great!.... nice deal then if even the taxes are credited

 

[mathjak107]

i just heard them discussing this on the radio and they said you can only go back 3 years to re-claim taxes you paid in on the social security your paying back

 

[Dennis]

Well, IMO? IAD..
1. IF you are in Good Health and Prospects Look good your you to make it to like age 85? maybe wait till 65 or later..
2. If you Won't Need it? Your Personal Savings/Investments/Pensions will provide more than eough? Maybe hold off on taking it and let it build
3. If your Investments are going to Make More on it if you take it now and can Invest it? take it At age 62. and invest it..( Use the SS calculators to compare)

I have a Shortened Life expectancy Lifespan and took it at age 62 ( Insulin Diabetic) and we have about a 5-15 yr Less Lifespan.. eventhough I didn;t need it.. Just to use it to add to my Investments.. that my past 10 yrs Rtns on my $ far exceeds waiting till age 66 to get my SS..

And quite frankly? If you have to Depend on SS to Retire early? I think You haven't got enough $ saved up..or enough in other Income to retire early.. I Didn't include my SS for retiring early..It's a Bonus not a Necessity..

 

[Bikerdude]

And quite frankly? If you have to Depend on SS to Retire early? I think You haven't got enough $ saved up..or enough in other Income to retire early.. I Didn't include my SS for retiring early..It's a Bonus not a Necessity..

Going forward for all you RE wannabees, this is good advice.

 

[freebird5825]

... I Didn't include my SS for retiring early..It's a Bonus not a Necessity..

Neither did I. I have my quarters in, my statement arrives in my mailbox every year, and there are numbers printed on it.
Whatever is there when the time comes, I will certainly be grateful for. But I am not holding my breath.

 

[REWahoo]

I didn't have to depend on SS to retire early, but I'm depending on it to stay retired. My second SS check hit the bank today...

 

[Khan]

I didn't have to depend on SS to retire early, but I'm depending on it to stay retired. My second SS check hit the bank today...

Have 3.5 years to go. Haven't decided yet.

 

[Bikerdude]

I didn't have to depend on SS to retire early, but I'm depending on it to stay retired. My second SS check hit the bank today...

My thoughts exactly, although my checks do not begin until the end of this year.

 

[youbet]

REWahoo:

I didn't have to depend on SS to retire early, but I'm depending on it to stay retired. My second SS check hit the bank today...

My thoughts exactly, although my checks do not begin until the end of this year.

Yes indeed. At DOW 14,000, the thought of future SS checks didn't do much to excite me. But at DOW 7,000 the anticipation of my first SS check in August has me all a-twitter! In fact, since I've now made a firm decision to go ahead and get those checks started, I've put a temporarily canceled fishing trip back on the 2009 calendar!

 

[youbet]

And quite frankly? If you have to Depend on SS to Retire early? I think You haven't got enough $ saved up..or enough in other Income to retire early.. I Didn't include my SS for retiring early..It's a Bonus not a Necessity..

You could look at it another way.....

If you don't need SS to RE, you haven't written enough fun activities into your RE budget!