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Old 06-02-2021, 12:11 PM   #201
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I just got off the phone with Social Security and am officially signed up effective this month. He was very helpful and even took all the information to help get my ex quickly set up when she applied. They’re even sending her a letter encouraging her to apply. My son has been trying to get her to apply because she’s behind on her utility bills. She’s a bit stubborn.
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Old 06-02-2021, 12:31 PM   #202
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That's where I'm at. Going back to my parents (71, 56) and grandparents (93, 66, 65, 61), only one lived past 71. Now at age 62, I am already older than two were when they passed away.

To be fair, in the case of everyone except my 93 year-old grandparent, all had various degrees of failing health for years leading up to their deaths. But family history is not on my side.
I've read variations on this argument several times here before. I don't subscribe to it for the following reasons:

1. The ages of one's immediate ancestors are not particularly predictive of one's own life expectancy, despite it seeming like they should be.

2. Life expectancy is positively correlated with both wealth and educational attainment. Many here are wealthier and have higher educational attainment than our parents and grandparents.

3. Medical technology and medical knowledge have progressed and people are (with the exception of the obesity issue) are living longer on average.

A related anecdote is that my father made the same decision on similar logic. He took SS at 55 because most of the men in his lineage died around 55 or so. He celebrated his 85th birthday a few weeks ago and shows no signs of slowing down.

My Mom, on the other hand, probably should have lived to 95 based on her family history, but she died at 77 due to a random lung disease.
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Old 06-02-2021, 12:45 PM   #203
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I hear you, and I hope you are right. Nothing is guaranteed, but so far, I haven't had any of the serious health issues that parents/grandparents suffered through.

Looked at in a vacuum, many would say to start SS now at 62 because of this history. I've already decided to wait until 65, at which time I likely will start. But I could always change my mind and go out further.
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Old 06-02-2021, 12:49 PM   #204
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That's where I'm at. Going back to my parents (71, 56) and grandparents (93, 66, 65, 61), only one lived past 71. Now at age 62, I am already older than two were when they passed away.

To be fair, in the case of everyone except my 93 year-old grandparent, all had various degrees of failing health for years leading up to their deaths. But family history is not on my side.
True, although past performance is not a guarantee of future results also applies here, too.
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Old 06-02-2021, 01:36 PM   #205
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....A related anecdote is that my father made the same decision on similar logic. He took SS at 55 because most of the men in his lineage died around 55 or so. He celebrated his 85th birthday a few weeks ago and shows no signs of slowing down. ...
Did you mean 65 rather than 55? Or 62?
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Old 06-02-2021, 01:52 PM   #206
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Did you mean 65 rather than 55? Or 62?
Oh, good question.

He retired from his main job about 32 days after his 55th birthday back in 1991; I think that's why I wrote 55 in my previous post.

It looks like the earliest he could have taken SS at that time would have been 62. Early claiming appears to be part of a 1983 SS law (I think the famous Reagan/O'Neill bill).

So he probably took it at age 62. I know he took it at the earliest age possible at the time and chose to accept the discounted amount for early claiming.
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Old 06-02-2021, 01:58 PM   #207
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It would seem like the deciding factor would be related to how your invested funds are taxed - specifically whether your additional funds are taxable or tax-deferred. For funds that are taxed, waiting could be beneficial since your SWR is only subject to capital gains tax as the cost of doing business.

For tax deferred accounts, the cost can be punishing. Withdrawals are subject to income taxes whenever funds are used. The cost is in both the cost of the tax, and the reduction in health care subsidies from having a higher taxable income. For this reason, my accountant has told me it's better to wait until I can qualify for Medicare before I tap into my IRAs. It's a very good reason to take SS early - and save the problematic IRA for later in life. Right now, our property rentals provide solid cash flow, and amazing tax benefits that keep our taxable income low.

For me, it would seem that taking SS now, and letting funds compound tax-deferred, would provide a benefit that could easily exceed the difference in monthly SS payout over the long-term. Especially, like myself, when entering the SS eligibility window with long-term health issues.
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Old 06-02-2021, 02:00 PM   #208
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As far as the deferred tax issue goes, a friend of mine and I have both added a column to our net worth spreadsheets subtracting our deferred tax liability from our current tIRA values. If the value is $1M it's a good reminder to see that $780K (or whatever the current tax rate is) to keep us honest.
That depends on how you figure what retirement income fills up your lower tax brackets.
A single person, for instance, doesn't get into the 22% Federal tax bracket until after $53,000 of AGI.

In my case, my pension/annuity is more than that, so all withdrawals from tax-deferred are taxed at 22% or more, yes...
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Old 06-02-2021, 02:14 PM   #209
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It would seem like the deciding factor would be related to how your invested funds are taxed - specifically whether your additional funds are taxable or tax-deferred. For funds that are taxed, waiting could be beneficial since your SWR is only subject to capital gains tax as the cost of doing business.

For tax deferred accounts, the cost can be punishing. Withdrawals are subject to income taxes whenever funds are used. The cost is in both the cost of the tax, and the reduction in health care subsidies from having a higher taxable income. For this reason, my accountant has told me it's better to wait until I can qualify for Medicare before I tap into my IRAs. It's a very good reason to take SS early - and save the problematic IRA for later in life. Right now, our property rentals provide solid cash flow, and amazing tax benefits that keep our taxable income low.

For me, it would seem that taking SS now, and letting funds compound tax-deferred, would provide a benefit that could easily exceed the difference in monthly SS payout over the long-term. Especially, like myself, when entering the SS eligibility window with long-term health issues.
No, the benefit of tax deferral is negligible unless your current tax rate is lower than your future tax rate. Let me use an example. Joe has $10,000 of tax-deferred money, $2,000 of taxable account funds and expects to be subject to 20% in tax... now or later. Option 1 is that he converst the tax-deferred money into a Roth and pays the 20% tax which exhausts his taxable account. The $10,000 Roth doubles over the next 10 years and he has $20,000 available to spend. Alternatively, he doesn't do anything and over the next 10 years the tax-deferred account doubles to $20,000 and the taxable account doubles to $4,000... he withdraws the tax-deferred money, pays the $4,000 in taxes and has $20,000 to spend. Either way, at the end of 10 years he has $20,000 to spend so tax-deferral has no benefit for him.

Where tax deferral is advantageous is where his tax rate today is more than his tax rate later... like if his tax rate was 30% when he deferred the income and is now 20%.
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Old 06-02-2021, 02:21 PM   #210
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It would seem like the deciding factor would be related to how your invested funds are taxed - specifically whether your additional funds are taxable or tax-deferred. For funds that are taxed, waiting could be beneficial since your SWR is only subject to capital gains tax as the cost of doing business.

For tax deferred accounts, the cost can be punishing. Withdrawals are subject to income taxes whenever funds are used. The cost is in both the cost of the tax, and the reduction in health care subsidies from having a higher taxable income. For this reason, my accountant has told me it's better to wait until I can qualify for Medicare before I tap into my IRAs. It's a very good reason to take SS early - and save the problematic IRA for later in life. Right now, our property rentals provide solid cash flow, and amazing tax benefits that keep our taxable income low.

For me, it would seem that taking SS now, and letting funds compound tax-deferred, would provide a benefit that could easily exceed the difference in monthly SS payout over the long-term. Especially, like myself, when entering the SS eligibility window with long-term health issues.
I don't think the part I bolded is a valid factor. The full social security benefit (not just taxable SS) is counted in MAGI for ACA subsidy calculations. Whether you get $25K in SS benefits or withdraw $25K from your tIRA, you have the same impact on subsidies. If you're getting enough tax flow from your rentals maybe you don't even need the full social security amount, and you could get a larger subsidy, or use some of that space for Roth conversions.

Also, unless you keep those rentals until you die (and heirs don't lose the stepped-up basis benefit), you've got a ticking income tax bomb coming your way, with huge gains on the sales (to recapture the depreciation that helped keep your taxes low) plus larger RMDs.

You may have other factors like your long-term health issue you mentioned that favor taking at 62, but I don't think you made a good argument in your second paragraph. Maybe you can show me the numbers how that would benefit.
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Old 06-02-2021, 05:02 PM   #211
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Depend on your health and your luck. You do not want to wait until 70 and die of a heart attack at 70-1/2. Collecting at 62 is ok if you always had bad luck and you are not in good health. I decided to collect at 66 so at least I am half way right or half way wrong. I try not to overthink SS and my health was good according to my doctor ....but not excellent. My luck is average since I win 50% and lose 50% at the casinos. Hence collecting at FRA of 66 made sense to me.
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Old 06-02-2021, 05:32 PM   #212
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That's been my plan. The year after FRA.
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Old 06-02-2021, 05:48 PM   #213
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If I die of a heart attack at 70-1/2 I won't care if I took SS at 62 or 70.

If I live to 95, then I'll care. At least a little bit.
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Old 06-02-2021, 07:09 PM   #214
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Depend on your health and your luck. You do not want to wait until 70 and die of a heart attack at 70-1/2. Collecting at 62 is ok if you always had bad luck and you are not in good health. I decided to collect at 66 so at least I am half way right or half way wrong. I try not to overthink SS and my health was good according to my doctor ....but not excellent. My luck is average since I win 50% and lose 50% at the casinos. Hence collecting at FRA of 66 made sense to me.
I agree.
Do not die the year after starting SS...
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Old 06-02-2021, 07:43 PM   #215
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If I die of a heart attack at 70-1/2 I won't care if I took SS at 62 or 70.

If I live to 95, then I'll care. At least a little bit.
I agree with this. What I want to know in the Roth conversion and SS age discussion is - how much will I care?

The litmus test for me is to compare net worth over time. All potential actions, such as Roth conversions and SS claiming age scenarios, need to be calculated in terms of net worth by year. That is the most sensible way in my mind of evaluating the decisions.

SS age claiming is pretty easy to calculate and forecast. Roth conversions are a pain in the backside to calculate, but I am working on it, and making progress.

So far, if there are any advantages to me for a Roth conversion, or delaying SS beyond age 62, they are very small. I think this is the case for a large number of people evaluating these decisions.
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Old 06-02-2021, 08:11 PM   #216
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I agree with this. What I want to know in the Roth conversion and SS age discussion is - how much will I care?
I tried to provide my answer to this question in post #141 on this thread. I think I care about 10 times as much about Roth conversions vs. SS claiming.
But I also noted several limitations to my answer.

Once one has the answer, though, the effort to implement the answer is probably negligible. So for me, if it appears to be worth more than $1K a year or so, I'll probably follow the path I think is best rather than being indifferent or doing something contrary to plan for any non-financial reason (such as feelings or convenience).
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Old 06-02-2021, 08:13 PM   #217
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I agree.
Do not die the year after starting SS...
Definitely part of my plan.
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Old 06-02-2021, 08:25 PM   #218
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I agree.
Do not die the year after starting SS...
+2

If this happened to me, I wouldn't be able to live with myself.
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Old 06-02-2021, 08:48 PM   #219
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I agree with this. What I want to know in the Roth conversion and SS age discussion is - how much will I care?

The litmus test for me is to compare net worth over time. All potential actions, such as Roth conversions and SS claiming age scenarios, need to be calculated in terms of net worth by year. That is the most sensible way in my mind of evaluating the decisions.

SS age claiming is pretty easy to calculate and forecast(as long as you know when you will die). Roth conversions are a pain in the backside to calculate, but I am working on it, and making progress.

So far, if there are any advantages to me for a Roth conversion, or delaying SS beyond age 62, they are very small. I think this is the case for a large number of people evaluating these decisions.
See my thought above on how easy it is to claim SS
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Old 09-16-2021, 01:40 PM   #220
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Here's something I've been working on after seeing someone else's SS spreadsheet. I was trying to help the non-mathematially inclined visualize the impact that taking SS late or early or at FRA would have over the years. I've tweaked it quite a bit after showing it to a few non-mathematically inclined loved ones, now you can put in your estimated benefit and see your own projections.

https://docs.google.com/spreadsheets...it?usp=sharing
Thanks for posting the spreadsheet. I compared to the following online calculator and it aligns almost exactly.

https://www.broadridgeadvisor.com/we...C30B832ECA46AF
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