Clear article about when to take Social Security

[Doc0]

My wife is a few years younger. My SS is considerably bigger than hers. Our strategy is for her to taken at 62 while mine grows and will be tapped at my age 70. When she takers at 62 I will claim spousal benefits half of hers. At age my 70 she will continue with her SS and I will claim my full age 70 retirement. I will likely die first and upon my death she can claim survivor benefits on mine which amounts to about my age 66 FRA benefit. Over the course till age 90 the maneuver I figure the maneuver gains me 170K including 20 years of reduced stress on my portfolio. This way we are splitting the risk. SS is paying something from age 62, at my 70 if I live a long time its pays a lot if I die it pays her at a much better rate for the course of her life.

[NoMoreJob]

An additional consideration for those with a spouse who will draw on a primary earner's account is that the survivor's benefit is calculated on the primary earner's actual benefit.

So in my case my wife who earned considerably less will draw on my account. Since I am older and male I will likely die first. The longer I wait to draw up to age 70 the greater her continuing benefit will be. If I die before age 70 her benefit will be calculated based on my benefit at the age that I die. In our case my wife won't reach her full retirement age until after I reach age 70.

[bberris]

Quote:

Originally Posted by Rianne This exact point DH/me discussing yesterday. At what point does the higher SS kick you into a 22% tax bracket. One reason we're waiting until 65 for SS is the ACA cliff. After that, it's managing SS + WD + investment income tax to stay in 12% bracket. Once on medicare you can no longer contribute to HSA. Thus, $8K deduction gone. BTW, I did mean survivorship benefits. Thanks for correcting.

If both of you are over 55, the combined HSA contribution limit in 2019 is $9K. You need to put at least 1,000 of that in the spousal account.

[GZHolthus]

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.

[stephenson]

I always thought this would be simple ... but, after reading experiences and thoughts from this and other fora ...

I was going to initially simply wait till 70 ... because it was simple and offered the "it's more money."

Wife and I both 65 ... will be in the 24% bracket in 2019. Income from military pension and corporate pension, with some paid for rentals. Old IRAs and 401K transfers from megacorp with about 25% Roth.

Couple of things hanging on me re SS:
1. Things could change wrt solvency - low probability
2. Things could change wrt means testing - more probable
3. The SS "crisis" is getting closer - and, our start date could fall right when it hits - some probability
4. Psychology of "not saving" - yeah, weird thought, but we have done it for so long we still discuss ... perhaps wistfully? :-)

We only have control of 3. and 4., above ... since 66 is next year, we can mitigate 3., by taking SS at FRA. This would also help with the psych of "saving" since we would likely dollar cost average into a mix of equities and bonds.

Hard .... grrrrrr...

[joeea]

Quote:

Originally Posted by Doc0 Our strategy is for her to taken at 62 while mine grows and will be tapped at my age 70. When she takers at 62 I will claim spousal benefits half of hers.

I assume you were born on or before 1/1/54?

Quote:

I will likely die first and upon my death she can claim survivor benefits on mine which amounts to about my age 66 FRA benefit.

If she waits until at least her FRA to start her survivor benefits, then her survivor benefit will equal your actual (presumably age 70) benefit, not your FRA benefit.

[joeea]

Quote:

Originally Posted by stephenson Wife and I both 65 3. The SS "crisis" is getting closer - and, our start date could fall right when it hits - some probability

Unless you are planning to delay your benefits until you are about 80, then there is no chance that your start date could fall right when some SS "crisis" hits.

Assuming the higher earner was born on or before 1/1/54...
IMHO, the lower earner should claim their benefits at FRA, the higher earner should claim spousal benefits at that point.
Then at 70, the higher earner should claim their own benefits, at which point the lower earner should claim spousal benefits if that results in more.

[stephenson]

We’re both later than 1/1/54 ...

And, my point on “crisis” is not when it runs out of money, but when the system starts making corrections like means testing, percentage payment, etc.

[joeea]

Quote:

Originally Posted by stephenson And, my point on “crisis” is not when it runs out of money, but when the system starts making corrections like means testing, percentage payment, etc.

That "crisis" is not likely to happen any time soon.

[stephenson]

Agree ... “some probability.”

[joeea]

Quote:

Originally Posted by stephenson Agree ... “some probability.”

If ~0% chance is "some" then I guess we agree.

[stephenson]

Sounds like you need to win, so, sure.

[unixfreak]

I'll definitely be taking my SS at 62. at 2k per month vs. 2.6k for the FRA it will take me 20 years to break even. I will also avoid any or much draw down during 62 to 67.

[imnontrad]

Quote:

Originally Posted by Doc0 My wife is a few years younger. My SS is considerably bigger than hers. Our strategy is for her to taken at 62 while mine grows and will be tapped at my age 70. When she takers at 62 I will claim spousal benefits half of hers.

Uhhh. The ability to "File and suspend" so you can get the spousal while your benefit continues to grow went away. Unless you made the age cutoff for this, you will need to rethink your plan. The strategy should be that she claims and you wait until 70. This is not really for your benefit but for her since upon your death (assuming you die first), she can then claim the surviving spouse rate immediately.

[Old Microbiologist]

I took at 62 and my wife who didn't work 40 quarters but is 6 years older started at the same time. What I didn't realize is her 50% is calculated as if I retired at her age which at the time was 67. I have a military pension to boot so we live on these and still don't spend it all. We saved roughly a million in IRA's, brokerage accounts and cash which we have yet to tap into and maybe never will. We are taking the RMD's now but only moving it into the brokerage account for day trading. We are traveling as much as possible now as we both notice declining age issues so have accelerated the travel part to do the strenuous stuff earlier assuming it will be impossible fairly soon.

[imnontrad]

Everyone keep in mind that the "average life expectancy" for anyone born in a certain year includes all those who dies shortly after birth, when young, and all of your classmates that dies early.
You need to look up the life expectancy for someone who is already your age. The probability that someone who is 60 will live to 90 is a LOT more likely. So if you use the "break even" calculation to decide when to take Social Security, you need to base it on that revised life expectancy, not for someone born in a certain year.
Also, if you have a spouse and their income was less than yours, meaning their SS was less, you may want to consider how taking yours early will affect them for the rest of their life. Upon your death (assuming you die first), they can claim the higher of their benefit or yours. If you take yours at 62, they will lose out on this money for life.

[Old Microbiologist]

Imnontrad makes a good point. You must also consider genetics as well. In my family only on my mother's side do they have long life expectancies but only the women and then 100 is not unusual even if they have chronic disease. However, the men on both sides of my family the longest any have ever lived was 82 and the mean is 67 for the past 4 generations. In point of fact life expectancy has not really changed all that much if you live past a certain point. What has changed was infant mortality and deaths due to diseases in children. Lifestyle choices effect this a great deal but the basic problem is genetics.

On my wife's side the women also reach the late 90's fairly frequently again despite major health problems and then all of her family (Russians) die from ischemic events such as heart attacks or strokes. Cancer in her family is very rare but in mine it is a major problem. I have already had 2 melanomas for example. But the men in my family generally die from either aneurysms or hear attacks.

So, looking at probabilities I agree, my wife, despite major health problems (R atrial fibrillation) has better chances to living to old age. My mother is still alive at 95 but my father died at 75 from a host of issues. He actually was found to have non-Hodgkins lymphoma while undergoing an aneurysm repair but it was the chemotherapy which killed him by killing off his bone marrow and Medicare wouldn't pay for a bone marrow transplant at his age. I am naturally protected from ischemic events by a genetic coagulation defect which prevents platelet aggregation so all cuts bleed profusely for about 30 minutes. My wife is on Elequis (anticoagulant) to get the same effect. So, for both of use ischemic events are unlikely which leaves cancer or something unusual to kill us off. So, it is a crap shoot.

I put a lot of thought into this as I was detailed back in 71 to work on an Army project studying longevity of retirees. In 1971 the average age of death for male retirees was 47. That has changed a lot since but it is still lower than the general population and something they use to calculate future budgeting issues. But working on that study got me thinking about this early. When I hit 47 (my age of retirement from active duty) it made me consider my life with respect to longevity and how it all calculates out. Believe me, the US government establishes retirement ages so that the minimum amount is dispersed the same as insurance companies do. Actuarial science is based on calculating maximum profit or in the case of the government minimum liabilities. I know a lot of friends who didn't live to use their retirement benefits or didn't live long after they started. So, for me the earliest the better made the most sense.

[levindb]

There have been a lot of comments about SSA benefits being somewhat the same in your lifetime, no matter when you start them...so, let's go with that.

When you add in a spouse, then things are different. Unless you are in a significant accident, one of you will live longer than the other...it is just the way it is.

You will not really have more money to spend each month if you take SSA early. You will always have your SSA amount + pensions + IRA withdrawals. You can adjust your withdrawals to make your early spending more or less. What changes, however, is when you run out of IRA funds...and that will be based on how much you withdraw each year and how the market does...you control your withdrawals but not the market.

If you are still with me, and some may have dozed off already, your SSA and pensions should be relatively SAFE money. If you can live comfortably off of that, then your IRA funds are just fun money and legacy dollars. If you need those IRS funds to live comfortably, then you have a situation that requires some thought. You have to decide how much of your budget comes from SAFE money and how much comes from the MARKET. Take your SSA early, and in the later years of your life, a smaller percentage of your budget may come from SAFE money. Take your SSA later, and you are increasing your SAFE money, but you have drawn down your IRA funds. Things become real personal when doing the arithmetic at this point, because the amount of money you need to live comfortably, your IRA balance, your Asset Allocation, your SSA/pension benefit all come into play to determine your tax situation and when you will run out of money. Motley Fools cannot determine what is right for you...and you may not be able to determine what is right for you either. Take a guess at how long you will live, add a few more years just for good measure, try a few online calculators...maybe even talk to some financial advisors...then decide when SSA should start for you and your family. Your numbers and priorities are probably different than mine...

For me, I like the idea of an inflation protected, tax advantaged income that SSA offers...so I am maximizing that. I may do better or worse by having more funds in an IRA impacted by market conditions...but that bothers me, because if something bad happens, I cannot go back and change my mind. So, I am in the wait to 70 group.

[joeea]

Quote:

Originally Posted by Old Microbiologist In 1971 the average age of death for male retirees was 47.

The average age that male military retirees died was 47 back in 1971?

I'm assuming this didn't include war deaths, since they wouldn't have been considered retirees yet, right?

What was the cause of all these extremely young deaths? I can't imagine those numbers still hold true today, or are even close.

[stephenson]

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?