Delaying SS OR take IRA distributions early

[Independent]

Quote:

Originally Posted by RetiringAt55 But SS income has dropped as well. So income is less and taxes are more. In addition, non-housing expenses would probably not be cut in half. Food is probably more than half as there may be more waste. In retirement, you may have assumed one car for you both to share. So transportation may stay the same. Travel is more expensive as a single person. I suggest people actually run both the budget numbers and the tax numbers.

"Waste"? In our household, my wife and I eat different things for most meals. Sometimes we share. Any leftovers go in the fridge or freezer and get eaten later.
Travel for one is more than 1/2 the cost of travel for two. But, I'm the traveler in the family. If I weren't here, she'd prefer to stay home.
We have two cars. Most of our in-town driving is separate. And, frankly, that's not much money. She would save about 1/2 our combined in-town expense as soon as she sold my car.

OTOH, if world travel is a big chunk of your budget, and the surviving spouse would continue to travel, while not sharing expenses with a friend or relative, that would need to be covered.

You're correct, people should look at their actual spending patterns, note exactly what they spend, and make their own estimates. I think I've done that for us, and for planning purposes, the estimate I made seems valid.

[Animorph]

The single spouse passing was the toughest scenario for our retirement finances. Housing, HOA, utilities, communications, landscaping, house cleaning, pool, repairs and improvement expenses stay the same. That's the majority of our common expenses. We get rid of one car, half the groceries, eating out, medical, and travel, though some of those won't cut a full half. We lose one SS benefit out of two that are close to equal, and maybe half that in a non-COLA pension. Taxes go up to the single rates. And most likely DW survives me and hasn't bothered to pay attention to the financial stuff I've been trying to impart to her. It was definitely worse for us than both of us living past 100. Obviously it depends on your specific circumstances.

[BigFoot48]

Quote:

Originally Posted by Options +1 re probably seeking professional help. Losing my mind around estimating taxes due to RMD's and desire to delay SS to 70. Already have more than $2 of every 3 in after tax accounts, with a bit of that in roth. Considering tIRA to roth conversions from age 60-70. And spreadsheets? They are not my friend...

I created an easy to use Excel model for analyzing the Roth conversion decision, and it includes RMD calculations and tax calculations. A link to it on Bogleheads can be found in my profile.

[Options]

Quote:

Originally Posted by BigFoot48 I created an easy to use Excel model for analyzing the Roth conversion decision, and it includes RMD calculations and tax calculations. A link to it on Bogleheads can be found in my profile.

I just looked at it and I love it. Will definitely use it when I start conversions next year. Great tool!

[BigFoot48]

Quote:

Originally Posted by Options I just looked at it and I love it. Will definitely use it when I start conversions next year. Great tool!

Glad you like it! My plan is to update it for 2014 tax rates etc. in January, so look for a new version then.

[Z3Dreamer]

Maximum OMAGI is a rounded $62,000. Personal Exemption & Standared Deduction is a rounded $22,000. If your OMAGI includes some SS that is only partially taxed, you will have taxable income of about $35,000. This leaves about $37,000 of the 15% bracket on the table, which equates to a tax cost of $3,700. But it saves you almost $10,000 in PPACA credits.

So a plan could be to convert to Roth (up to 15% maximum) while still qualifying for PPACA. Then when the magic SS dates of 62, 66 and 70 hit remodel.