Clear article about when to take Social Security

[NoMoreJob]

They don't make it easy to figure out do they.? In it's short form if you have a spouse collecting a spousal sometime the "regular" thinking on SS doesn't apply. In your case it makes more sense to wait since even at 70 your DW will be only 62 so she's not forgoing any spousal checks while waiting for you to turn 70.

Yes, and I want her to have the greatest guaranteed and COLA adjusted income she can after I die and until her death. We can afford to forego SS until I reach 70 (and then she reaches FRA) and Social Security will be our sole 'pension' unless we or she chooses to purchase a SPIA (single premium immediate annuity) at some point.

It is somewhat complicated but understanding the nuances can certainly be beneficial or at least prevent regrets down the road if you learn too late that you missed out on a better opportunity.

 

[Old Microbiologist]

levindb - Many people like us have moved our IRA's completely to accounts such as with TD Ameritrade (it was Scottrade when I did it) and we manage our accounts directly with zero fees. You can't actually Day Trade with them but you can finagle it if you only trade with 1/2 of your account which enables the other half to cover so you can bypass the 72 hour washout. It is still slower than Day Trading though but it is not all that bad. The other thing you can do is to go to cash when the market gets flaky. When we do the RMD's we calculate the tax impact to determine the maximum we can take without causing excess damage and then move it directly to the brokerage account. My point is that if you actively manage it yourself you can do way better than the fund managers and avoid all those excessive fees. I wish we could move it to a Roth but that is illegal if you are not working.

 

[Crabby Mike]

My point is that if you actively manage it yourself you can do way better than the fund managers and avoid all those excessive fees.

Wow. If you feel you can do that, good for you. But that is some of the WORST investment advice possible for most people!

 

[levindb]

Just a question for my own clarity: are you assuming that IRA withdrawals will be completely spent? For example, when we hit RMDs we will not need to spend any or most of the required withdrawal to live on, so we would just reallocate that to CDs and taxable accounts and probably increase the income from taxable accounts we receive. So while we might draw down the IRA, the money - beyond what has to go for taxes - is still there.

Jolly, you are absolutely correct that you do not have to spend your RMD's...you can just transfer your equities to an after tax account...and then pay the appropriate taxes. Your spending money mainly comes from 3 places: SSA, pension, and IRA withdrawals. You can adjust the last one every year based on your needs. You can spend as much or as little as you wish...until you run out of money in you IRA.

 

[levindb]

levindb - ...My point is that if you actively manage it yourself you can do way better than the fund managers and avoid all those excessive fees. I wish we could move it to a Roth but that is illegal if you are not working.

I would rather not be responsible for detecting when things go flakey. I travel a lot and often to places with crappy (technical term) internet, which could leave me in a world of hurt if I were required to do things quickly. I use an advisor, but do not have a lot of managed funds. I am making about 8% after fees which meets my needs.

 

[NoMoreJob]

Wow. If you feel you can do that, good for you. But that is some of the WORST investment advice possible for most people!

I agree with Mike. An individual 'actively managing' investments beyond following an established rebalancing plan is typically a very bad idea. If the poster that mentioned this can do it successfully over the long-term more power to him or her but for the vast majority of people it will typically turn out to be a mistake. Handling your own investments rather than paying high fees can be a very wise decision, but being active in the sense of going in and out of the market can be very dangerous to one's financial health.

 

[Perryinva]

Is this true, can the elder get spousal SS this way? If so that may be an option for us as DW is 5 years younger than me. I could claim spousal on her 62 SS, not a whole lot but still something.

No, its not true if you were born after 1954. SSA will always make you take the larger benefit at the time of filing. Claiming your spouses while allowing yours to continue to grow was only valid for BDs before 1954, and was changed with the last SS rule change.

 

[ShokWaveRider]

No, its not true if you were born after 1954. SSA will always make you take the larger benefit at the time of filing. Claiming your spouses while allowing yours to continue to grow was only valid for BDs before 1954, and was changed with the last SS rule change.

Sad, but thanks for the clarification. I was born in January of 1954...

 

[Rianne]

The podcast "Big Picture Retirement" has several episodes about Social Security and when to claim. But they caution that every case is different.

Thanks, I listen to podcasts everyday. I'll get that one.

 

[joeea]

So, I’m still somewhat confused.

We were both born after 1 Jan 1954, both 65 and plan to start SS next year at my FRA. My wife does not have 40 credits of work.

We don’t need the income, but want to take at FRA and contribute to balanced asset allocation portfolio.

Do I simply file at FRA and, when I die she files, and gets 50% of my FRA amount?

No.

After you file for your benefits at your FRA, your wife should wait until her FRA then file for spousal benefits. That will be 50% of your FRA amount.

If you pass first, she will then change to survivor benefits. That will be 100% of your FRA amount. (If you delayed your benefit until 70, it would be 100% of your age 70 amount).

You may also wish to consider checking out https://opensocialsecurity.com/ to see if you would do better by delaying until 70 or not.

 

[joeea]

Joeea, The causes were multiple but if you consider that this retiree pool would contain service members who could have fought in WWII, Korean War and Vietnam or if older WWI, WWII, and Korea. The lifestyle choices and risks for a soldier in that period was arguably poor. What we call PTSD now was not an honorable disease and was under-reported and for similar reasons not treated. Training safety programs were non-existent and the toll that kind of training has on the human body is enormous. When I was first on active duty in 1971 we still had sergeants who were WWII veterans. My Vietnam era training was horribly unsafe and the service remained that way up until my retirement.

I understand. But for the average age of death to be only 47, many, many had to retire before that and be dead before that. I was in High School in 1971. I knew a bunch of former classmates who died in service very young, but none of them had retired.

In many ways it actually got much worse when in 1979 they started mandating physical fitness tests on all service members twice a year. As a medical personnel I saw (and did CPR) on many "older" soldiers who had cardiac arrests during the PT tests.

But did "older" mean older than 47? And I'm assuming you didn't perform that CPR on retired service members, right?

I can say also that the mean age of death was much lower for enlisted than for officers which IMHO represents lifestyle choices and the much higher risks in combat for soldiers that officers in general don't experience.

Okay. But "risks in combat" implies "not yet retired", right?

I would not be surprised to see the mean age of death to have dropped considerably post-9/11.

Mean age of death for retired service members dropped below 47? I guess I'd be very surprised.

 

[braumeister]

There are many anecdotes on this topic but little actual data. For example, when I was a young lieutenant I heard that the average general officer lifespan after retirement was only two years because they had no life apart from their job and lost interest in living. That was even hard to believe then and I've never seen any data to support it.

There is one study that showed that retired reservists lasted longer than retired active duty folks but that same study also said there was no significant difference between them and the general population.

 

[ivinsfan]

No.

After you file for your benefits at your FRA, your wife should wait until her FRA then file for spousal benefits. That will be 50% of your FRA amount.

If you pass first, she will then change to survivor benefits. That will be 100% of your FRA amount. (If you delayed your benefit until 70, it would be 100% of your age 70 amount).

You may also wish to consider checking out https://opensocialsecurity.com/ to see if you would do better by delaying until 70 or not.

Not necessarily, remember you only get two checks while both of you are still living. If your partner that collects the spousal benefit is between 62 and their FRA, each couple will need to weigh that decision individually. Yes waiting till FRA will get a bigger spousal check, but you have to weigh that against getting no check (spousal) during the waiting period.

 

[BigNick]

A bird in the hand and all that...

I had to make some comparable calculations when I took ER. My w*rkplace pension was worth 44% of my (very nice) salary, because I had 22 years worth of contributions, but by taking it at 52 rather than waiting until 60 (and living off my savings in the meantime) I took a 38% hit (so I ended up with 27% of my very nice salary). I worked out that if I make it to age 72, I should say "darn, why didn't I wait until I was 60 to draw my pension, I'd be net ahead of the game from here on in". But I didn't, because (a) I figured I didn't care, and (b) I learned (from this forum) that expenditure in retirement tends to drop off surprisingly fast as the years go by, especially if (as is my case) healthcare is not an issue.

Similarly, DW is looking at whether to take her French state pension (equivalent to SS) at 62 or 67. It's an absolute no-brainer for us. Take it now and put it in the bank for the grandkids. We don't need it to live on (it will be peanuts anyway because of an assortment of reasons).

 

[CRLLS]

deleted

 

[Just_Steve]

No.

After you file for your benefits at your FRA, your wife should wait until her FRA then file for spousal benefits. That will be 50% of your FRA amount.

If you pass first, she will then change to survivor benefits. That will be 100% of your FRA amount. (If you delayed your benefit until 70, it would be 100% of your age 70 amount).

You may also wish to consider checking out https://opensocialsecurity.com/ to see if you would do better by delaying until 70 or not.

My DW FRA benefit on her own record is more than the 50% spousal, can I assume she will file for her own and not file for spousal?

 

[Perryinva]

Yes, that is correct if she was born 1/2/54 or later. The 2015 law change stated that Deeming was changed if you turned 62 on or after Jan 2, 2016; (ie you were born on 1/2/54 or later) to be required to receive the larger of the two at filing. So Shokwav literally got screwed from that strategy by a few days....ouch. I was also denied that strategy, which we had planned on, but only because while my spouse was born in 1952, I was born in 1958.

 

[ShokWaveRider]

My DW was born in 1958 and I was 1954. Here 62 SS is lmost exactly half of my FRA SS.

 

[LRDave]

My husband is also affected by WEP. His will be much higher at 67 (FRA) than at 62 so unless we really need it we will wait.

The real decider for us is GPO and not WEP. DW will get zero spousal/widower SS benefit based on my earnings because of her pension. I feel like I need to protect the savings nest egg for her in case I take a dirt nap sooner than I hope to do so. I understand this could be to the detriment of my overall SS benefit if things go as planned and we hope.

 

[Perryinva]

Yea, with zero spousal benefit, earlier usually makes more sense.

 

[Old Microbiologist]

Crabby et. al - I fail to understand your idea that controlling your own money is a bad idea. You guys do understand that the entire IRA concept is a scam? It was "acceptable" back in the days when employer's matched but that is now very rare.

From personal experience, it has resulted in excellent returns. If you had moved you IRA's into equity accounts you control yourself and had just simply bought Amazon well you would have at a minimum made 66% this year (2018 price $1169 a share today's price $1950). If you play actively then you can do better than that. We have been conservative and loaded up 50% cash and 50% Amazon for 2 years now and are pleased and it has zero fees.

On the Day Trading front of things my wife does this alone as she is infinitely more patient than I am and sets a goal of $700 a day. Regardless of the timing she quits after that. I am not saying she does that well every day but some days she does a lot better and some days nothing. In general she hasn't lost in years (since 2007) and doesn't use margin accounts ever. Not everyone can do this and I believe for her it is an art. Of course not everyone will do that well but she trades very specific stocks which she has a deep understanding about and understands the market for that particular equity completely. However, as 99% of trades are now done algorithmically you have to consider that impact and what they parameters are. This takes time and experience and a keen sense of what is happening both in the news and in the market. It is serious business and only good for people who are serious about actively managing their assets. I can't believe anyone would pay someone to do that for them. To me that is just nuts.

 

[gayl]

my wife does this alone .... 99% of trades are now done algorithmically you have to consider that impact and what they parameters are ... To me that is just nuts.

Clarifying why by removing a lot of your post ..... it's lot of work (says someone who retired to play and explore other interests) so I'm off options and still manage my own accounts

 

[jcretire77]

Slight tangent, but as I was reading this thread I wondered how to file for Medicare if delaying Social Security. I found this article.

https://money.usnews.com/money/reti...for-medicare-without-claiming-social-security

 

[Rianne]

It's not always what you collect from Social Security but how much of it will be taxed. Always think about the net return on your Social Security. That's the only true way to calculate your break even point. If by collecting early forces higher taxes on your SS as compared to waiting and paying virtually no taxes you win. Spend down your IRA's to avoid high RMD's from forcing you to pay taxes on a higher percentage of my SS.

We'll never get away with paying no taxes but may have figured out the lowest tax hit possible for us. We've very recently got great news. DH received a letter about his pension at 65. It is triple what we thought it would be and our plan now completely changed.

My SS at 65 + DH pension + tIRA w/d until DH reaches 70.
At 70 collects SS and we keep after tax growth stock funds alone.
Make up any RMD from lowered tIRA (which was gradually lowered).
SS survivorship benefits, almost doubled. I think this is the most efficient plan I can come up with.

 

[pb4uski]

...My point is that if you actively manage it yourself you can do way better than the fund managers and avoid all those excessive fees. ...

Yup... the 0.04% ER I pay on VTSAX is really keeping me up at night.