WhooHooo! Signed up for SS today!!

[Hermit]

I am one of those young-uns trying to figure out where my 401k money should go? I am saving the limit for my age, but splitting between Roth and Trad to keep my taxable income within the 25% Fed bracket.
With the benefit of hindsight, what would you have done differently?
Due to diverse income streams, it looks like I will be riding the 25-28% breakpoint until DH's RMDs pile on.
Any thoughts are welcome...

I will turn 67 in February. I have the same problem as Koolau with RMDs and SS at 70. When I started IRAs and 401Ks, there was no Roth option. Later, when they were introduced, the advice I kept finding was that I was too old to make use of the Roth. It would pay better overall to stay with the traditional. I am sure that a lot of the total amount in my accounts is because the savings was all tax deferred. That does not mean it will not hurt when I have to share a large slice with my Uncle. The large income I will show after 70 will also mean a larger amount going back into the government coffers in higher Medicare monthly costs.

As things turned out in my life, I don't think I had as many choices as the younger folks do today. My DW died at 48 and I am receiving SS under her account. If I would take mine before 70, the money I receive on her account would just disappear. I will never be lower than the 25% tax bracket, so there is not a lot of incentive to do Roth conversions which would bump my income into higher Medicare payments and more taxes. The one thing I can do is give the RMDs to my favorite charity in the form of QCDs. Since I was intending to provide a large gift to them anyway, this makes a lot of sense to me. It will keep my income under the Medicare higher cost levels for a least a few years more.

 

[Koolau]

<SNIP> ...so there is not a lot of incentive to do Roth conversions which would bump my income into higher Medicare payments and more taxes. The one thing I can do is give the RMDs to my favorite charity in the form of QCDs. Since I was intending to provide a large gift to them anyway, this makes a lot of sense to me. It will keep my income under the Medicare higher cost levels for a least a few years more.

You are most likely right. One thing to look into is the eventual inheritance of these vehicles. IIRC there are some real tax savings to your heirs to inherit Roths. Probably not worth paying extra now in taxes and higher Medicare premiums, but maybe something to investigate. Once again, what a wonderful problem to have vs not having enough to insure you can stay retired. YMMV

 

[NW-Bound]

It just occurs to me that the survivor of a married couple faces a much higher tax burden.

For a single person, the 25% bracket starts at $48,000 (including standard deduction and personal exemption), while it is $96,000 for a couple. The survivor of a couple loses one SS, but all the 401k and IRA stay the same.

More the reason to up the IRA withdrawal up to the top of 15%, except that one gets hit by the big increase of ACA premium.

 

[Hermit]

It just occurs to me that the survivor of a married couple faces a much higher tax burden.

For a single person, the 25% bracket starts at $48,000 (including standard deduction and personal exemption), while it is $96,000 for a couple. The survivor of a couple loses one SS, but all the 401k and IRA stay the same.

More the reason to up the IRA withdrawal up to the top of 15%, except that one gets hit by the big increase of ACA premium.

These are tough problems to work through, but as Koolau points out its not that bad a problem to have. It sure beats worrying where the cash is going to come from to pay the rent.

 

[spncity]

Heh, heh, I'd like to "repeat" age 69 about 15 times.

Suggest you "repeat" age 70 those15 times and have SS too! Then like a good forum member, post the how-to instructions here...


Sent from my iPhone using Early Retirement Forum

 

[Chuckanut]

I'm curious. How long from applying for SS and giving then all the paperwork they need does it take to get notification of approval? I've been waiting 2 months to start SS under my ex-wife's account.

 

[Katsmeow]

I filed a claim online to start as of January (first payment to be in February a couple of months before I turn 63). I applied on 11/23 and have heard nothing yet.

They haven't asked for any paperwork although mine is very straightforward since I am applying on my own record and they have all the information.

 

[Peter]

I filed a claim online to start as of January (first payment to be in February a couple of months before I turn 63). I applied on 11/23 and have heard nothing yet.

They haven't asked for any paperwork although mine is very straightforward since I am applying on my own record and they have all the information.

I'm in a similar situation. Shortly after I applied, a very helpful SS person called with a couple of questions. After providing the information, I asked when I was likely to hear anything. Reply was: nothing in the mail until early January. But you are in the system and payments will start in February, for the month of January.

 

[braumeister]

You can see when to expect the payment based on the birthday of the person whose SS number is being used.

Day of Birth	Assigned Payment Day
1st – 10th	Second Wednesday of the month
11th – 20th	Third Wednesday of the month
21st – 31st	Fourth Wednesday of the month

https://www.ssa.gov/kc/rp_paybenefits.htm

 

[gerntz]

My Dad just turned 96 and took SS at 62. He doesn't regret it at all.

Well, his FRA was 65.

 

[Running_Man]

I swear this is the only group that thinks that the biggest regret of everyone who dies before 70 is not taking SS early. Maybe I should find a living 90+ person and post that I bet they regretting taking SS at 62 if they did that.


I'm still not basing any financial decisions on the deaths of a few people in the entertainment industry. YMMV.

Well I will say a friend of mine who was diagnosed with pancreatic cancer at age 68 and died a year later regretted not taking SS earlier and going on more trips instead of keeping all his spending extremely conservative. He had a 1.2MM portfolio and took out and lived on 40K per year, if he would have taken SS at age 62 he would have had another $1850 per month to spend but he was looking at the SS as old age annuity protection as it would have been 40K per year and planned on more traveling once he made it to age 70.

It was certainly not his biggest financial regret, but he did regret it, his biggest regret was actually choosing a lump sum of $265,000 over a $1,800 a month non-cola pension. The irony was if he just lived on the pension and the SS alone at age 62 he would have had $43,800 of income and paid less in taxes and his portfolio would have been free to grow. He did file once diagnosed and claimed back 6 months, and he actually did that within one week of the diagnosis so his regret was enough to cause action.

 

[NYEXPAT]

You can see when to expect the payment based on the birthday of the person whose SS number is being used.

Day of Birth	Assigned Payment Day
1st – 10th	Second Wednesday of the month
11th – 20th	Third Wednesday of the month
21st – 31st	Fourth Wednesday of the month

https://www.ssa.gov/kc/rp_paybenefits.htm

Strange, My birthday falls between the 11th and 20th and I get my money the 3rd of every month. Maybe they treat overseas people differently?

 

[braumeister]

Yes, but it's not specific to overseas recipients. There are actually four payment dates each month. The Wednesdays mentioned, and the 3rd of the month. Those falling outside "typical" recipient groups, as well as those who have been receiving SS for a long time are on the 3rd. I guess you just happen to be in that bunch.

 

[Ologist]

How significant is the possibility that means testing will be introduced into the social security system in the future. What I mean is, if your income is high the ss monthly benefit is reduced. If it is a possibility then time to take the money and run.

Retired 1/1/2016 love retirement & enjoy reading this forum. Thanks!

 

[Peter]

How significant is the possibility that means testing will be introduced into the social security system in the future. What I mean is, if your income is high the ss monthly benefit is reduced.

That already happens. Tax on 85% of the benefit, as opposed to tax free. Then there is the IRMAA system where you pay more for Medicare if your income is high enough.

Which is not to say that the level of means testing may increase. Changing 85% to 100% would be an obvious move.

 

[Ologist]

Thanks Peter!

 

[template]

I was planning to register for My Social Security this month and do it online. I am 67.5 and just think it might be good to sign up soon, just in case the Gov't does something negative to those that have not yet signed up. Thats probably unlikely, but better safe than sorry, and only god knows how long I've got left on earth.

I signed up a 3 months before I turned 65. My state does not tax Social Security payments yet. However, the state is in such dire financial condition that they could start taxing SS and retirement pensions.

 

[NW-Bound]

Well I will say a friend of mine who was diagnosed with pancreatic cancer at age 68 and died a year later regretted not taking SS earlier and going on more trips instead of keeping all his spending extremely conservative. He had a 1.2MM portfolio and took out and lived on 40K per year, if he would have taken SS at age 62 he would have had another $1850 per month to spend but he was looking at the SS as old age annuity protection as it would have been 40K per year and planned on more traveling once he made it to age 70.

It was certainly not his biggest financial regret, but he did regret it, his biggest regret was actually choosing a lump sum of $265,000 over a $1,800 a month non-cola pension. The irony was if he just lived on the pension and the SS alone at age 62 he would have had $43,800 of income and paid less in taxes and his portfolio would have been free to grow. He did file once diagnosed and claimed back 6 months, and he actually did that within one week of the diagnosis so his regret was enough to cause action.

Instead of taking SS at 62 for $1850, he would take it at 70 for about $3244 or $39K/year.

Now, the $40K drawn on a 1.2M portfolio is 3.33% WR. If he ran FIRECalc and put in his SS at age 70, it would tell him that it is OK for him to draw $71K a year. That's 6% WR.

His stash would shrink, of course, but when SS comes online 8 years later, he would need to draw only ($71K - $39K) = $32K from his smaller stash, so that the smaller stash would survive for the remaining 22 years.

He would be OK for 30 years, living high on $71K/yr. And if his stash happened to get wiped out when he was really old, he would be down to SS only for $39K, vs the $40K to which he limited himself. And that is the worst case.

FIRECalc is good stuff!