Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 05-31-2010, 12:22 PM   #21
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
easysurfer's Avatar
 
Join Date: Jun 2008
Posts: 7,886
Another factor to consider which hasn't been mentioned in detail but is a reality is who knows if you will be around if you wait until a later age? Not saying it's always a better choice to take it early, but life expectancy is a reality.

A real life example, I lost my brother last year from liver cancer. He was 64 years old, getting ready to retire at 65, hadn't even started taking his social security yet. It was quite sad because he had been thinking about going on a vacation with his family, but never made it.
__________________

__________________
easysurfer is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-31-2010, 12:25 PM   #22
Thinks s/he gets paid by the post
73ss454's Avatar
 
Join Date: Oct 2004
Location: LaLa Land
Posts: 4,378
Unless my portfolio takes a sudden move north and gets me back to where I was in Oct of 97, I'll be getting my first check in 11 months. If I live that long!

My original plan was to take it at 64 when DW turns 62.
__________________

__________________
73ss454 is offline   Reply With Quote
Old 05-31-2010, 12:40 PM   #23
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,617
Quote:
Originally Posted by W2R View Post
The payback method seems like a huge PITA in so many ways, including having to amend my tax forms for the intervening years. Avoiding that is worth a lot to me personally so that is one option that I do not intend to pursue.
I used to think that too, but apparently you're able to just submit a claim on your next tax form (for overpayment of earlier taxes) and you don't have to amend previous tax forms. That's especially important considering that you may have overpaid as much as eight years of taxes yet are generally restricted to amending only three previous years of returns.

I may not be correct on this niche filing/claim requirement. I haven't paid too much attention to the whole thing because I figure the loophole will close before 2022, despite the lack of ability of most taxpayers to figure it out. Bob's thread on Bogleheads seems like a harbinger.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 05-31-2010, 12:50 PM   #24
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,102
Nords, I think you are correct in your description of the tax treatment. OAP, a member who actually did the SS payback/restart, described his experience and tax filing in one of the threads a year or so back if anyone wants to search for it.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 05-31-2010, 01:28 PM   #25
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,266
Quote:
Originally Posted by rescueme View Post
I fully agree. It depends on your personal situation.

If you are single, or disabled (e.g. your life expectancy is less than normal), or if you just need the $$$ to survive/live, than take it early.

If you are married, there are other considerations not only for yourself, but also possibly for the benefit of your spouse, along with survivorship income issues. Also the situation of working past age 62 must be considered.

As for my DW/me, both 62 and not taking SS till later, it took a bit of planning. BTW, I'm retired; my wife still wo*ks, but may retire at any time (her personal decision - not a financial one).

In our case, my DW will take her SS at her FRA age of 66. At that time, I will claim a 50% spousal benefit against her, while I let my own benefit accrue additional longevity credits.

At age 70, I'll claim SS. Facing the reality that I will pass before my DW, she will get my full benefit (which is forecast to be 2x her age 66 benefit).

So I "get" SS (by claiming against her) while I delay my SS for a much greater benefit for her in the future.

How did I determine the "best way" for us? Simple, I ran the age 62/66/70 scenarios through FIDO's Retirement Income Plan software, which gives terminal plan values, along with year by year withdrawal rates, forecast taxes, and computation of excess RMD's (RMD in excess of normal withdrawals to support our retirement income requirements). Our plan shows the largest terminal plan value, which also means that we've planned a buffer if the market does not turn out as expected, in the long term.

Again, there is no "automatic answer". You have to run the various scenarios on your situation and make your personal decision, based upon your retirement plan - not others...


Just curious.... but are you SURE that if you start taking spousal benefits that you will continue to accrue on your account From what I have been told by my sister who has been there... she was told she could only file for the highest benefits she qualified... so if your account would pay you more than the 50%... it seems that you could not file for that, but only file under your account....


Her funny story is that she was married to someone for 11 years when she was young... she then started to get spousal benefits... then her husband died and she got survivor benefits.... but then her former husband filed for SS... and his SPOUSAL benefits are higher than her survivor benefits.. so now she gets that amount... and when he dies... she get survivor benefits from HIM.... what a system...
__________________
Texas Proud is online now   Reply With Quote
Old 05-31-2010, 01:57 PM   #26
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,877
Quote:
Originally Posted by Nords View Post
I used to think that too, but apparently you're able to just submit a claim on your next tax form (for overpayment of earlier taxes) and you don't have to amend previous tax forms.
Bah, humbug. It still sounds like a PITA.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is offline   Reply With Quote
Old 05-31-2010, 04:00 PM   #27
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,617
Quote:
Originally Posted by W2R View Post
Bah, humbug. It still sounds like a PITA.
Spouse and I will probably wait until age 70, just to minimize the paperwork while simultaneously having something to live for...
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 05-31-2010, 05:57 PM   #28
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,877
Quote:
Originally Posted by Nords View Post
Spouse and I will probably wait until age 70, just to minimize the paperwork while simultaneously having something to live for...
To me, SS functions as (partial) old age insurance. If I die young, I didn't need it anyway because I had plenty in my portfolio upon which to live.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is offline   Reply With Quote
Old 05-31-2010, 06:09 PM   #29
gone traveling
 
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
Quote:
Originally Posted by Texas Proud View Post
Just curious.... but are you SURE that if you start taking spousal benefits that you will continue to accrue on your account
See the below reference. Detail under the heading "Team Play":

Two Ways To Optimize Social Security Benefits - Columns/Features - IndexUniverse.com - ETFs, Index Funds, Indexes
__________________
rescueme is offline   Reply With Quote
Old 05-31-2010, 08:22 PM   #30
Thinks s/he gets paid by the post
growing_older's Avatar
 
Join Date: Jun 2007
Posts: 2,608
While the minimum age to apply for SS and the maximum age beyond which benefits no longer increase are fixed, the amount of those benefits are dependent partly on your normal retirement age. That means that for those with normal retirement ages of 65, the increased benefit at 70 will be about 5 steps higher than the "full" benefit. For those with normal retirement age of 66, the increased benefit at 70 would only be 4 steps higher. I've seen tables that showed these amounts, but I cannot find such a table on the SS site.
__________________
growing_older is offline   Reply With Quote
Old 06-01-2010, 07:25 AM   #31
gone traveling
 
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
Quote:
Originally Posted by growing_older View Post
While the minimum age to apply for SS and the maximum age beyond which benefits no longer increase are fixed, the amount of those benefits are dependent partly on your normal retirement age. That means that for those with normal retirement ages of 65, the increased benefit at 70 will be about 5 steps higher than the "full" benefit. For those with normal retirement age of 66, the increased benefit at 70 would only be 4 steps higher. I've seen tables that showed these amounts, but I cannot find such a table on the SS site.
Between the ages of 66-70 (SS taken at 70), the increase is 8% per year for those who's FRA is age 66. That's a total of 32% increase for the delay.

Between the ages of 65-70 (SS taken at 70), the increase is 7.5% per year for those who's FRA is age 64. That's a total of 37.5% increase.

There are adjustments made for each two year age period for prior years, per the table below.

Of course, you have no control over when you were born, and your FRA. The only thing you can control is when you file for SS.

From the SS site:

Delayed retirement credits
__________________
rescueme is offline   Reply With Quote
Old 06-01-2010, 07:40 AM   #32
Recycles dryer sheets
shotgunner's Avatar
 
Join Date: Jun 2008
Posts: 454
I am single and have a daughter who is 18. I would like to leave something behind for her, more rather than less. I thought I would take SS at 62 as it would begin offsetting what I am drawing down from my portfolio. When I die she is the beneficiary of my estate, she would get nothing frm my SS benefits. However I realize it's a gamble either way depending on how long I live.
__________________
Never surrender what you really want for what you want right now.
shotgunner is offline   Reply With Quote
Old 06-01-2010, 07:54 AM   #33
Moderator Emeritus
Rich_by_the_Bay's Avatar
 
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
My understanding is that the buy-back is allowed strictly at the discretion of the SSA who, so far, have routinely granted those requests. However, since this is a known loophole (at least to the extent that no interest or penalty applies on the payback amount) and times are tough, I can easily see it being eliminated.

In that case you will be locked into the lower, younger payment schedule. Not a big problem I guess, but you should at least have a Plan B for when you look to pay back 3 - 10 years of payments and reset your benefit amount, and they tell you that option was discontinued.
__________________
Rich
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
Rich_by_the_Bay is offline   Reply With Quote
Old 06-01-2010, 07:57 AM   #34
Full time employment: Posting here.
 
Join Date: Sep 2007
Posts: 716
Quote:
Originally Posted by endthefed View Post
you have the choice to pay it back (or not) and receive the bigger check. that's the beauty of it.

if i live that long, that will be a hard decision. i see many hours of crunching numbers and flipping coins
I agree with W2R. Refiling to get a larger check is a PITA.

Not only that, but when you sit down and dispassionately figure it out, you realize that it's much ado about nothing. It's kinda like getting all excited when you realize that you can swap a one-dollar bill for ten dimes. WOW!!! I give up one thing and get 10 things back----YIPEE!!!

The SSA says it right on their web site (parphrased): "You get the (early) reduced amount for more years. The *total* SS sums collected over the average lifetime are approximately the same, regardless of whether you start collecting at age 62, FRA, or 70."

If you truly want a bigger check later, there's a better way to do it.
Start at age 62 and save/invest the checks instead of spending them. Then when you hit FRA or 70 or whatever, stop the saving and start spending. Take withdrawals from your savings account to suppliment the SS checks----enough so that the total (SS + withdrawal) comes to what the SS amount would be if you hadn't taken it early. EVentually you'll deplete the savings account--that's the break-even point. Question is, how long does it take to break even?

Create this spreadsheet and the results are astounding.
For me, assuming 2% SS COLA and 0% (zero percent) earrnings on the saving account, the BEP was at age 81. 19 years.
At 4% earnings, the BEP was age 89. 27 years.

Plus, when you refile you are starting clean. If you die the next day all the money is gone and you wll have collected nothing. OTOH, if you start early with the side savings account, whenever you die the savings account is still there, for your spouse/heirs to keep.
__________________
rayvt is offline   Reply With Quote
Old 06-01-2010, 10:34 AM   #35
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,266
Quote:
Originally Posted by rescueme View Post

Very interesting.... it answer one question... but does not go all the way IMO...

So.. the husband takes spousal benefits between 66 and 70... and then applies for full benefits. Does the wife now get spousal benefits of his if it would be higher? Is it reduced because she started at 62? When he dies, is her survivor benefits get reduced because she started at 62?

It will not help me at all... but I am talking with my sister who will be deciding this in a couple of more years... but she is 5 years younger than him.. so it would be 62 and 67... and he does not want to wait...
__________________
Texas Proud is online now   Reply With Quote
Old 06-01-2010, 11:19 AM   #36
gone traveling
 
Join Date: May 2008
Posts: 3,864
Take SS at the first opportunity and invest it all in gold?
__________________
Westernskies is offline   Reply With Quote
Old 06-01-2010, 01:14 PM   #37
Recycles dryer sheets
 
Join Date: Dec 2009
Location: Cleveland
Posts: 343
I am planning on using the higher payout at age 70 as my insurance policy that I will live longer than I think and outlive my retirement nest egg. Plan is to retire at 50 and beging spending my retirement assets. If I happen to run out of money sooner than I think I will, at least I will have the maximum social security monthly check to live on. My current projection is $3,100 per month at age 70 and I am pretty sure I can get by on that (even with inflation factored in). Thus in reality, my retirement nest egg really only "needs" to last 20 years (from age 50 to 70).
__________________
skyvue is offline   Reply With Quote
Old 06-01-2010, 07:33 PM   #38
gone traveling
 
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
Quote:
Originally Posted by Texas Proud View Post
When he dies, is her survivor benefits get reduced because she started at 62?
No. Assuming that both spouses are already receiving Social Security benefits, if the spouse with the higher benefit passes away first, the lower benefit spouse will get an increase in her benefit. However if the spouse with the lower benefit passes first, the surviving spouse's benefit will not change.

As far as detail questions you/others may have on the different rules of SS benefits (especially for spousal and family situations) I would recommend you put the question to SSCritic over on the BH forum. He's the "resident expert" on all things related to SS, and can get quite detailed, depending on your specific personal situation.

I used the article to explain how I/DW are going to draw SS, due to our spectific situation (age, income, future income after passing, etc.)...
__________________
rescueme is offline   Reply With Quote
Old 06-01-2010, 09:29 PM   #39
Thinks s/he gets paid by the post
 
Join Date: Feb 2007
Posts: 1,905
Quote:
Originally Posted by skyvue View Post
I am planning on using the higher payout at age 70 as my insurance policy that I will live longer than I think and outlive my retirement nest egg. Plan is to retire at 50 and beging spending my retirement assets. If I happen to run out of money sooner than I think I will, at least I will have the maximum social security monthly check to live on. My current projection is $3,100 per month at age 70 and I am pretty sure I can get by on that (even with inflation factored in). Thus in reality, my retirement nest egg really only "needs" to last 20 years (from age 50 to 70).
Interesting. My thinking goes exactly the opposite. I intend to take it at 62 (I'm currently 60) because I don't know what the future SS rules (means testing etc, or funding availability) will be by 2020.

So I have some hope (and that's all it is) that there maybe some grandfathering virtues. Additionally, my personal rate of return since ER in December 2002, including the current rough patch is a little above 7%. When I apply that 7% compounded to the early SS withdrawal amounts I get pretty close to the payout as currently scheduled for age 70.

Is 7% going forward a reasonable assumption? - who knows
Are the SS rules going to be the same 10 years in the future - who knows

I do hope we can compare notes 10 years hence and see what really happened
__________________
ejman is offline   Reply With Quote
Old 06-01-2010, 10:34 PM   #40
Recycles dryer sheets
 
Join Date: May 2010
Location: houston
Posts: 96
Quote:
Originally Posted by ejman View Post
Interesting. My thinking goes exactly the opposite. I intend to take it at 62 (I'm currently 60) because I don't know what the future SS rules (means testing etc, or funding availability) will be by 2020.

So I have some hope (and that's all it is) that there maybe some grandfathering virtues. Additionally, my personal rate of return since ER in December 2002, including the current rough patch is a little above 7%. When I apply that 7% compounded to the early SS withdrawal amounts I get pretty close to the payout as currently scheduled for age 70.

Is 7% going forward a reasonable assumption? - who knows
Are the SS rules going to be the same 10 years in the future - who knows

I do hope we can compare notes 10 years hence and see what really happened
+1 for this post. i too fear that means testing is in our future.

hate to beat the same drum...but gold and some other some hard assets are off of the radar.

for most people (all paper and real estate) they can calculate your net worth without even putting down their doughnut.
__________________

__________________
endthefed is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 03:02 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.