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Another SS question- hypothetical
Old 06-29-2020, 07:07 PM   #1
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Another SS question- hypothetical

I ve read most of the SS forum posts when I started thinking of another option. Hear me out and give me your thoughts on hypothetical idea.

So DH can start SS at FRA of 66 this year. $2506/month OR this hypothetical situation:



He can delay SS for 12 months and instead take $2500 /month from our HELOC at 2.5 % x 12 month.



By delaying SS, the SS amount grows by 8%. $2706 /month in 2021



We pay back HELOC after 12 months- $30,000 principle from a CD that matures in 2021. We write off the interest on Fed taxes.



Break even is 12.5 years later Worth it - If we live to 79 ??
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Old 06-29-2020, 07:21 PM   #2
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Can you write off the interest? My understanding was HELOC interest was only deductible if the loan was spend on home improvements.
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Old 06-29-2020, 07:51 PM   #3
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The loan does not change the underlying economics of SS claiming strategies.

You are not earning a "return" by delaying. That oft-repeated piece of financial advice is just false.

You have to know your longevity to know if your claiming strategy will pay off financially. Though none of us knows that we still can decide it makes sense to delay in order to get a higher monthly payment in the future as insurance. Or we may decide the opposite.

Whether you forego investment gains or borrow in order to delay does not really change the logic. Basically you are spending CD money in order to do this. It is really no different than any other analysis, but your HELOC interest is not deductible when used for living expenses.

So that may change the calculus. It is probably cheaper to cash in the CD early.
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Old 06-29-2020, 10:11 PM   #4
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Quote:
Originally Posted by Octogirl View Post
We write off the interest on Fed taxes.
Even if you were allowed to deduct the interest, you (you'll) have over $24,000 in annual deductions to make it worth itemizing to get the interest deduction versus taking the standard deduction?
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Old 06-29-2020, 11:12 PM   #5
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If your DH is the higher wage earner, then he (IMHO) should go for broke and delay SS until 70.
Because the high amount of SS he gets will last his life, then when he dies you get that amount.
If you die early, then he still gets his SS at the high rate.

That is our plan, and we will take $$ from IRA while waiting for the SS age of 70.
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SS Another option ?
Old 06-30-2020, 10:53 AM   #6
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SS Another option ?

Thanks all for your replies.
True- we can not deduct HELOC interest bec it is not for home improvements.
Yes, DH is the higher wage earner so that was part of our thinking

I 'll have income in 2020 so I am delaying SS



We do not know about SS strategies until later in life



Thanks again !!
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Old 06-30-2020, 11:21 AM   #7
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HELOC interest has not been tax deductible since latest tax revision.
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Old 06-30-2020, 11:28 AM   #8
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Quote:
Originally Posted by Montecfo View Post
The loan does not change the underlying economics of SS claiming strategies.

You are not earning a "return" by delaying. That oft-repeated piece of financial advice is just false.

You have to know your longevity to know if your claiming strategy will pay off financially....
+1
Very well said. I have heard about the "guaranteed 8% return from delaying" too many times.
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