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11-26-2020, 12:05 PM
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#21
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Full time employment: Posting here.
Join Date: Apr 2006
Posts: 880
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Quote:
Originally Posted by Sunset
OP - What is the Pension suvivorship set to, after your DH dies does it pay you 100% or did your DH also want that at 0% survivorship to maximize the spending now.
Currently you are quite possibly going to be 80+ with low SS (since claimed at 62) , what pension will you get ?
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It is a FERS pension. I will get 50% survivorship (cola’d). I’m also covered under his insurance until Medicare in 2..2 years. My current SS benefits and the 50% survivorship would cover current core fixed living expenses. We do have a healthy nest egg at 75x expenses.
Also, DH and I make our decisions jointly, but I manage our finances.
__________________
"Tell me, what is it you plan to do with your one wild and precious life?" - Mary Oliver
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Considering Social Security Buyback
11-26-2020, 03:18 PM
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#22
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Full time employment: Posting here.
Join Date: Apr 2006
Posts: 880
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Considering Social Security Buyback
Quote:
Originally Posted by pb4uski
What I would suggest is that you spend some time with opensocialsecurity.com
Check the additional input box at the top of the page as that will allow you to select the mortality tables used for the calculations. You can select one of the CSO mortality tables for you and an assumed at at death of 80 for your DH.
What the program does is based on the information that you input and assumptions that you can override it calculates the "expected" cash flow of each month as the projected benefit if your alive time the actuarial likelihood that you are alive to receive it. It will then discount the expected cash flows at the real discount rate that you provide unless you use the default rate of -.49%. I personally think think -.49% is too conservative and 0% or 1-2% is better depending on your AA.
The tool will show you both the optimal claiming strategy given your inputs. At the bottom there is a graphic showing alternative claiming strategies (your age/his age combnations) and how the EPV for that combination compares to the optimal EPV so you can get an idea as to how sensitive the EPV is for different claimin strategies.
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Thank you for your comments and the reminder. I actually used this tool and the actual SS site before we retired and have a tab in my spreadsheet that broke down the recommendations.
It recommended that DH take his SS at age 67.3 and for me to claim at 70.
DH has always planned to take his socials at 62, and mine was up for debate when the time came. I did opt to file at 62 knowing in my gut, I was going against conventional wisdom. I made an emotional decision based “a bird in the hand is worth two in the bush”. DH and I had been working and paying into SS since we were both 16 and just wanted to get some of those $ back.
I was fine with the decision until that Wade Pfau interview.
Most likely we will be fine no matter what decision is made on SS, but I will be calling the SS office tomorrow to discuss the Buyback option.
I don’t frequently post on this forum, but read it almost daily for the wisdom and experience.
Thank you!
__________________
"Tell me, what is it you plan to do with your one wild and precious life?" - Mary Oliver
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11-28-2020, 06:57 PM
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#23
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gone traveling
Join Date: Aug 2020
Posts: 682
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Quote:
Originally Posted by pb4uski
chassis, opensocialsecurity.com can provide answers.
For example, a female born 1/1/1960 with a $1,000 PIA. 2% real discount rate and 2017 Non-smoker Preferred mortality.... expected present values:
Claim at 61 & 1 month: $155,479..... 90.9%
Claim at FRA of 67: $167,257..... 97.8%
Optimal (69 & 6 mos) $171,089... 100.0%
As late as possible..70 $170,871..... 99.9%
Obviously, if PIA is $2,500 then multiply above numbers by 2.5 but %s will not change.
Below are two graphs... the top is with 2% discount rate and the bottom is with 0% discount rate.
How to read the graphs:
- At 2% discount rate: Mid-to-late 2029 is the sweet spot but anytime between late 2027 and age to are good. Earlier than late 2027 is increasingly suboptimal.
- At 0% discount rate: Best to take near age 70 in 2029; before that is increasingly suboptimal.
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@pb4uski Thanks, as I said, I get it. What happens if you (or the OP) gets hit by a bus at age 62?
@Dog What present value dollar amount is represented by your proposed choice?
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11-28-2020, 09:53 PM
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#24
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,375
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Quote:
Originally Posted by chassis
@pb4uski Thanks, as I said, I get it. What happens if you (or the OP) gets hit by a bus at age 62?...
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Pretty much the same as if you were vested in a defined benefit retirement plan and had not yet started retirement benefits and got hit by a bus at 62.
You lose... life ain't fair so put on your big boy pants and live with it... also, watch out for busses, milk trucks and beer trucks. The other side is that if you avoid those busses and trucks and live long, you win.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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11-28-2020, 11:41 PM
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#25
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Recycles dryer sheets
Join Date: Feb 2014
Location: Austin
Posts: 247
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I used to think I had a good understanding of SS, but the more I looked at it the more complicated it became. It turns out that none of the rules of thumb you hear about applied to my case, and the advise of so called experts was nothing more than overgeneralizations.
I agree that taking a probability-based approach to handling financial decisions is a good one. Unfortunately, the best strategy for taking Social Security very much depends on the specific situation of the people involved. For example, if your spouse was the higher earner, the benefit of you waiting to 70 is diminished. One question is how is the money you would pay back to social security invested now? If it is in low interest rate CDs or a bank account, then by all means pay back the money if you can. If it is invested or partly invested in the stock market, that is a much more complicated situation.
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11-29-2020, 08:36 AM
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#26
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2007
Posts: 9,962
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Quote:
Originally Posted by Dog
Thank you for your comments and the reminder. I actually used this tool and the actual SS site before we retired and have a tab in my spreadsheet that broke down the recommendations.
It recommended that DH take his SS at age 67.3 and for me to claim at 70.
DH has always planned to take his socials at 62, and mine was up for debate when the time came. I did opt to file at 62 knowing in my gut, I was going against conventional wisdom. I made an emotional decision based “a bird in the hand is worth two in the bush”. DH and I had been working and paying into SS since we were both 16 and just wanted to get some of those $ back.
I was fine with the decision until that Wade Pfau interview.
Most likely we will be fine no matter what decision is made on SS, but I will be calling the SS office tomorrow to discuss the Buyback option.
I don’t frequently post on this forum, but read it almost daily for the wisdom and experience.
Thank you!
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So Dog did your DH understand all the ins and outs of his taking a check at 62. IMO if you are married taking SS is a joint decision.
I hopeful the SS office is helpful about discussing your buyback option.
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11-29-2020, 09:40 AM
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#27
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Thinks s/he gets paid by the post
Join Date: Jun 2006
Location: Central, Ohio, USA
Posts: 2,635
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Quote:
Originally Posted by PatrickA5
How did you handle the fact that you (most likely) paid taxes on SS for those 5 years? Did you file amended returns?
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Did not have to as I could take a credit for the sum of the repayment amount which was the rule at the time. Believe the IRS made the rule since you ware limited to the number of amended returns you could file. Remember, in my case it involved repayments for 5 tax years.
__________________
Vietnam Veteran, CW4 USA, Retired 1979
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12-04-2020, 04:14 PM
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#28
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Recycles dryer sheets
Join Date: Oct 2004
Location: Seattle area
Posts: 136
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Quote:
Originally Posted by pb4uski
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Used to be up to five years. Looking back I wish I had done that.
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12-05-2020, 04:40 AM
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#29
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Dryer sheet wannabe
Join Date: Apr 2018
Location: Central PA
Posts: 13
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Social Security Payback
Quote:
Originally Posted by Dash man
You might want to get the process started. Between COVID and the holidays, it may take a while.
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Absolutely correct! I was eligible for part B Medicare in August. In May they sent me my new Medicare card and I checked the box off that I was declining it and sent it back with the explanation my husband was still working and I was on his insurance. In July I was told it would take up to 90 days to process the change. Well, since August they have been deducting $144 from my monthly check. I have contacted them monthly since and only this month did they say they took part B off and I would receive a new card. However, I still will have another $144 taken out of my December check because "didn't have time to process the change". It will be January until it is resolved completely. So, start now would be my advice and good luck!
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12-07-2020, 11:47 AM
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#30
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Thinks s/he gets paid by the post
Join Date: May 2006
Location: Orlando
Posts: 2,657
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Quote:
Originally Posted by Dog
Upon further investigation I think I will suspend my SS at FRA (66.8 yo) and reapply at 70 instead of pursuing the buyback option and reapplying at FRA. The outcome will be the same with SS paid out at FRA $ amount.
Some background:
DH has heart issues that have convinced him he will be lucky to make it to 80. So, he was adamant we claim our SS at 62 (earlier this year) to enjoy an enhanced lifestyle during our good years.
Our combined SS and his pension cover our core expenses and most discretionary spending. We have a healthy portfolio with about 5% in cash and laddered CDs for emergencies and when the economy and market declines. Our home is paid off and we don’t have any debt.
So, what changed?
I listened to a Boglehead podcast with Dr. Wade Pfau as the guest. He caught my attention with the discussion of probability-based retirement vs safety-first retirement. This was followed by a very rough October with DH in and out of the ER followed by the several weeks of doctor follow-up visits. Thankfully, he seems to be feeling better this past week.
His pension does have spousal benefits at 50%. So, I will not realize too much of a decline of an income base if I can revise my SS to the FRA payout amount. The combination of probability-based and safety-first makes sense to me. I’m not interested in Whole Life Insurance or an annuity which are advocated with the safety-first approach.
We would like to use the portfolio for “extras” in life, LTC expenses, help family/charities and to leave a chunk for DD inheritance.
The only real change in our overall strategy is rethinking my SS.
Any thoughts or comments are appreciated.
Happy Thanksgiving everyone!
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That was a really interesting podcast.
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12-07-2020, 02:01 PM
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#31
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Full time employment: Posting here.
Join Date: Apr 2006
Posts: 880
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Quote:
Originally Posted by Buckeye
That was a really interesting podcast.
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I agree and listened to it multiple times. As a result I did send in the appropriate form to withdraw my SS application. I will consider the possibility of an annuity down the road when I’m older. Not interested in the Whole Life insurance options or reverse mortgage. We have $ outside of equities if there is a severe market decline.
__________________
"Tell me, what is it you plan to do with your one wild and precious life?" - Mary Oliver
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12-07-2020, 02:12 PM
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#32
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Full time employment: Posting here.
Join Date: Apr 2006
Posts: 880
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Quote:
Originally Posted by Dash man
You might want to get the process started. Between COVID and the holidays, it may take a while.
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Thank you Dash man. I called the local office and faxed in the appropriate form last week. Verified that they received it. They did say it could take 1-3 months to process and I will continue to receive SS payments until it processes that I will need to pay back (not a problem). She did say that my application date is the date they use, not the approval date, so I should be good as long as the application is approved. Fortunately for me, they never processed my tax withholding form, so I never paid income tax on my SS benefits, so I shouldn’t have a income tax issue to deal with as long as they process the application and receive my payback before SSA- 1099 is sent. Crossing my fingers since I’m dealing with the government.
__________________
"Tell me, what is it you plan to do with your one wild and precious life?" - Mary Oliver
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12-07-2020, 05:00 PM
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#33
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Thinks s/he gets paid by the post
Join Date: May 2006
Location: Orlando
Posts: 2,657
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Quote:
Originally Posted by Dog
Thank you Dash man. I called the local office and faxed in the appropriate form last week. Verified that they received it. They did say it could take 1-3 months to process and I will continue to receive SS payments until it processes that I will need to pay back (not a problem). She did say that my application date is the date they use, not the approval date, so I should be good as long as the application is approved. Fortunately for me, they never processed my tax withholding form, so I never paid income tax on my SS benefits, so I shouldn’t have a income tax issue to deal with as long as they process the application and receive my payback before SSA- 1099 is sent. Crossing my fingers since I’m dealing with the government.
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One of the most interesting parts of the podcast was his discussion of whole life and annuities. They went through his 8 (?) rules and one of them was about not having pre-conceived ideas about financial instruments. From what I gathered, he did the math/ran the simulation (based on the safety strategy) and whole life was part of the solution. The tone of his voice made it sound like even he was a little surprised that whole life was part of the solution. I know you're not doing the safety strategy but I found the discussion fascinating.
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