Review my SS numbers?

[stephenson]

Hi All,

Reviewing social security options - been dreading it

No major health issues, spouse has no major health issues, parents died younger due to smoking related illnesses, no diabetes, walk - workout- stay active, travel, good attitudes, etc.

Have retirement income from military, megacorp, and rental properties. Everything paid for - no loans, etc.

My FRA is 66 - in 2020. My expected PIA is $2899
Wife's FRA is 66 - in 2020. Her PIA is 0.

I set age at death parameter for me at 85, and for spouse at 95.

opensocialsecurity.com tells me - we should both file in 2024 in my birth month - she is two months younger than I.

I played with the alternatives approach - but, the only on that is strategically different is the collect as soon as possible at FRA in 2020. It says there is a net loss of $72K in predicted cumulative income.

OK - that seems to make sense ... so $72K over 20 years (from now) for my death is $3,600 a year. Wife would get a bit less over the next 10 years because we started earlier than age 70.

If so, there is "only" a difference of ~$3,600 a year over my remaining lifetime?

So - no surprise - the loss of the difference of $3,600 a year is about 5.5%.

And, as long as I make 5.5% a year on what I do receive, we break even, but start receiving at 66 vs 70 years of age.

Does this all sound broadly accurate - didn't put the actual numbers, but should not matter much as long as I have provided the differences?

Thanks!

 

[AmigaDude]

...
If so, there is "only" a difference of ~$3,600 a year over my remaining lifetime?
..
Does this all sound broadly accurate - didn't put the actual numbers, but should not matter much as long as I have provided the differences?

My 2¢ -

1. YES, about as accurate as anything I've seen around here.

2. My approach will be to maximize her $$ once I am gone, unless we need the money earlier.
Using your PIA of 2899, I get yearly numbers of -

Age 70 = $63,314 for both of you, and $45,920 if you pass 1st.
Age 66 = $51,940 for both of you, and $34,788 if you pass 1st.
​

So, I will probably use the 1st option, and give her max $ that she does not have to think about. And, if I live long enough convert much of tIRAs to annuities.

 

[Perryinva]

The difference based on cumulative return has never been enough to make the decision over, IMHO. Since you don’t know day of departure, it is all guesswork and really provides no useful results. What matters is how much income is required and where you desire it to come from. Since everyone has different circumstances and income sources, how relevant each decision is, is wildly different.

What I fail to fully comprehend in the OPs conclusion “as long as I make 5.5% a year on what I do receive, we break even, but start receiving at 66 vs 70 years of age.” is, besides the obvious tax error of treating both incomes equal, if he is Just “breaking even” then why is it better to file early when there are so many obvious benefits to filing later beyond “break even”. Why is collecting at 66 vs 70 such a big positive? If the cost of delaying 4 years (roughly $190k) for the added annuity is too much, (which doesn’t seem to be the case) then that could make sense. He has done the hard part, wait until FRA, so both could get their total non reduced SS of $4350/m, which is certainly a lot to “pass” on while waiting, but delaying until 70, provides an increase of a bit over $11000/yr, with the accompanying COLA increases for life, and is the amount his younger spouse would get should he pass first. Or perhaps the maintained portfolio size for heirs is more important. But even going one more year, provides the largest percentage increase, since it is 8% of PIA added each year (plus COLA).

You simply can not compare the tax advantaged COLA, very low risk SS income with a fully taxed far more risky market return. At the OPs age, he certainly understands his risk level, so perhaps he is very comfortable with that as is his spouse. It is FAR easier to downplay the market risk after 10 years of mostly stellar returns. Ut without knowing sources of OPs current income, the relative importance of the added annuity can not be weighed.

We have $60k in pensions, of which 30% is COLA and DW already collects SS ($15k), & no need for ACA, so our situation leans far more heavily towards delaying my filing for the superior annuity and Roth conversion headroom. Delaying to 70 provides a $16k COLA increase in tax advantaged (no state & reduced federal) income. I spend today (@62) assuming that income is part of the equation and FINALLY get to SPEND from my after tax accounts instead of force feeding them and growing them during my working years. Neither of our pensions is inheritable to each other, with mine the lions share. so that makes the fixed income far more important than a slightly larger portfolio. If DW passes before I am 70, then that changes the rules of the game and my decisions will change accordingly. End of life portfolio size for heirs is of zero importance to us.