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Old 07-29-2020, 08:30 AM   #21
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Delay one tax year and run the numbers for Roth conversion.
Then run the numbers for delaying 2 years and run the conversion again.
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Old 07-30-2020, 08:46 AM   #22
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In situations like this, there is insufficient information because no one should base their decision entirely on the math, unless they have no choice. Since then they have no choice, the math is all there is. How old is SM? Will she get SS or is she WEP? How important is leaving the largest amount to heirs or charities or supporting elder parents or sluggo kids or disabled kids etc, etc? What is her reason to have you start @62 vs your reason to delay?

Its been said a thousand times here, there is no right or wrong answer. Just valid or not valid reasons. But personally, I agree with you based on what you have written. We have no need or desire to maintain maximum portfolio at all times. I saved it, to use it, not leave it to someone. Using it means spending some when the time is right. To me, the time is right. I plan on spending from that until I decide I want to claim DW made her choice to claim at 62. I cannot claim until next year at 63, made too much this year on severance. That would be $30k/yr @63. We have pensions as well that pay all the bills, so the long term safe thing for us, since mine is way more than double hers, is to max it in case I croak first for her, but live off my portfolio as if I already was drawing the max. Spending an added $200k over 5-6 years isn’t going to affect using the “wealth” one bit and has the benefit of better Roth conversion and possible long term insurance.

I also couldn’t tell whether the poster meant too high or too low. I really don’t care, but reading here about others investing often makes me think I must have been clueless to only be in the 5% club, regardless of how that measures in the US or world wide. Seems like if you don’t have at least $5M, you are small potatoes. Not pointing at anyone or any posts, just the matter of fact wealth numbers here. Similarly, if you cross post to C-D retirement forum, if you have $1M, you are an evil capitalist. So it’s all relative.
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Old 07-30-2020, 09:25 AM   #23
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Originally Posted by f35phixer View Post
Just got latest SS forecast for Daddy monthly 1993/2817/3605.

using default has daddy taking at 67 9 Mama at 70 for total of 1.3 Mil
Put in your advanced options has Mama taking at 62 1 and daddy at 70 for a total of 930K ??

And i am a non smoker, healthy except high cholesterol. mom died from aneurysm, but dad is 87 and still breaks his age playing golf and being active,,,

what am i missing PB??
I am guessing that the big difference in $ value was from changing the discount rate.

To make comparisons, you should really change one variable at a time. I would suggest keeping the discount rate the same, and only changing between the default mortality table and whatever mortality table is closest to your real situation. (Sounds like 2017 Preferred Non-smoker mortality is appropriate for you.)
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Old 07-30-2020, 09:35 AM   #24
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So?

As long as your expenses are in line with your projected income, you can retire. What difference does it make if someone else has more than you? Hint: someone else will always have more than you!

A high percentage of the people world-wide could be saying the same about you!

-ERD50

Agree, with one difference: A high percentage of the people world-wide are saying the same about you!
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Old 07-30-2020, 10:30 AM   #25
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Quote:
Originally Posted by f35phixer View Post
Just got latest SS forecast for Daddy monthly 1993/2817/3605.

using default has daddy taking at 67 9 Mama at 70 for total of 1.3 Mil
Put in your advanced options has Mama taking at 62 1 and daddy at 70 for a total of 930K ??

And i am a non smoker, healthy except high cholesterol. mom died from aneurysm, but dad is 87 and still breaks his age playing golf and being active,,,

what am i missing PB??
Hard to tell... what inputs and selections did you use in the Advanced Options? Especially for discount rate and mortality.
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Old 07-30-2020, 01:47 PM   #26
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did again at initial default me 67/9 MAMA 70 for 1.3m, next did nonsmoker preferred me 68/4 mama 70 for 1.4, then nonsmoker except made discount 0.0, i'm not going to invest the money i'm going to blow the money 67/10 70 for again 1.3M.

So, one thought is to change my TSP over to L income and take ~ 3%/month gets me 24000/yr pretty much same as my 62 start amount. In theory 3 year return % is 4.79 , i'm still make money and ~ 65 i can then start taking SS and let all our IRAs sit...

But, Then taking $$$ still puts me maybe in a bind for Roth conversions. Right now we are in 24%, with not lots of room for this year and TBD how my lowly pension will give me room in 2020, is 50K/year conversion really worth it

i'll ask this question soon for you experts...

I certainly don't want to make a $140,000 tax payment like Corn18 did!!!
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Old 08-04-2020, 03:53 PM   #27
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Originally Posted by jber1907 View Post
Compromise and take at 64 and invest it aggressively to get more than the 8% return. Money now is better than maybe getting money later.
Not apples to apples. The SS 8% is guaranteed. 8% return these days would be very aggressive, thus very risky. -- Doug
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Old 08-04-2020, 04:45 PM   #28
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I was all set to wait until 70 but changed my mind after a CT scan last November. I had been a heavy smoker and drinker, but quit both a little over 20 years ago. On a whim, I had a low dose CT scan looking for lung cancer because of my history. Good news was no cancer. Bad news was “severe emphysema” which surprised me because I am very active and downhill ski at high altitudes 70 days a year, and have no symptoms. While I don’t plan on checking out anytime soon, this one factor changed the math for me and I immediately took my SS at 67. My wife had a similar experience with a heart valve surgery recently and she took her SS too. If we had it to do over again, we would have both had complete physicals, ct scans, and colonoscopies at 62 instead of trying to outfox the system with a bunch of complicated math.
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Old 08-04-2020, 05:31 PM   #29
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The general rule of thumb is that the spouse with the lower SS benefit can file early and the higher SS benefit person delay as long as possible (hopefully up until age 70) for the highest benefit.
However , if anyone files before their FRA, their SS will be reduced AND until reaching FRA, there is an income cap before being reduced further.
I am an admin for a Facebook group called "Social Security intelligence" that helps answer SS questions.

If healthcare is covered, you BOTH may want to retire now. Starting the year you turn 63, your Modified AGI is used to calculate your Medicare premiums. So you would want to start converting to Roth before that time, especially since the income tax brackets/rate is low.

you may want to consider hiring a fee-only CFP to determine the best withdrawal strategy not only for the two of you but for any heirs.
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Old 08-04-2020, 05:37 PM   #30
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Originally Posted by f35phixer View Post
To not have me take my SS at 62....

Pensions:
Sugar Mama = state employee = 7100/month take home = 85,200 COLA adjusted and health care taken out for life, full survivor benefits, reduced don’t have the amount for either pension.

Slug Daddy = federal employee = 1700/month take home= 20,400 Cola adjusted and health care taken out for life, full survivor benefits

Total year = 105600, expenses ~80k / years

Mama and Daddys IRA’s 2.2Mil total, no Roth’s yet, waiting till I retire in Dec 2020 to start Roth conversions, we made to much (MAMA made to much ;-)

SS 62/66 8 months/70 for Mr. Slug: month 1993/2817/3605, year 23900/33800/43260

So my fidelity roll over dividends for last three years in December is 2017-44.8k, 2018- 51k, 2019-32.5k
Also getting 880/month bond dividends

My TSP (I’m 62 ) I could move over to L Fund income and start a monthly check of XXX > 23900 as an example

I could take the dividends from fidelity and move them into our accounts to use as we see fit
.
My thought is either one of these is better than taking the SS at 62 which she wants me to do.

Thoughts please
Thought #1 - I don't know what state Sugar Mama worked for, but she sure picked a better one than I did! Thought #2 - I thought federal employees did not get social security? Or that if they did, the social security was offset from their pension? But I am not a federal employee so I may be all wrong on that, but my federal retiree friends have led me to believe that was the way it was done, even though that seems unfair to me. But as far as SS at age 62, our financial planners have strongly discouraged it. Your money earns 8% in the government's hands before you file for benefits. You won't get that anywhere else. Are you healthy? Is she worried you might die before your full retirement age?
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Old 08-04-2020, 05:41 PM   #31
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After running through the scenarios on when I should take social security a couple years ago, I came up with basically three categories to guide my decision when it comes.

1) If you need social security at 62 to have a reasonable life style then go ahead and take it at 62.
2) If you don't need the money when you are 62 but you are still concerned about outliving your assets if the market performs poorly compared to historical norms then wait until 70. It's when returns are low in your retirement that the deferral of SS seems to make the most difference if you live past the inflection point as that higher payment will be more impactful.
3) If you currently have plenty to get you through retirement and social security is just extra money for your heirs then it made sense to take it early and invest the hell out of it. If returns are at historical norms you end up better at the end.

This worked for me as I'm single with no known health issues at this time but when I get to 62 I'll have to reconsider which bucket I fall in. Your mileage might vary. If you are married with a spouse that will take SS on your record or you have major health issues this would of course change the conversation.
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Old 08-04-2020, 05:43 PM   #32
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Quote:
Originally Posted by jber1907 View Post
Compromise and take at 64 and invest it aggressively to get more than the 8% return. Money now is better than maybe getting money later.
Quote:
Originally Posted by DougJohnson View Post
Not apples to apples. The SS 8% is guaranteed. 8% return these days would be very aggressive, thus very risky. -- Doug
Pay attention. There is no 8% return to SS. Period.

If you delay SS past your full retirement date then your benefit increases 8% a year. That is 8% simple interest... so if your FRA is 66 your age 70 benefit will be 132% of what your FRA benefit is. If you live to 82.5 you break even... if you live longer then you earn a positive return.

But NOT an 8% return. The table below shows the return of deferring from 66 to 70 assuming a PIA of $1,000/month. You forgo $48,000... $1,000/month from 66 to 70. From 70 on you get $3,840/year more than you would have had you not delayed.

If you live to 85, the return is 2% a year, if you live to 90 the return is 4.2% a year and if you live to 100 the return is 6.1% a year. These are all real returns since benefits increase for COLA are no included in the cash flows.

SS at 70 vs FRA of 66   
AgenCash flowIRR
660  
671-12,000 
682-12,000 
693-12,000 
704-12,000 
7153,840 
7263,840 
7373,840 
7483,840 
7593,840 
76103,840-186.6%
77113,840-9.8%
78123,840-7.0%
79133,840-4.8%
80143,840-3.1%
81153,840-1.7%
82163,840-0.5%
83173,8400.5%
84183,8401.3%
85193,8402.0%
86203,8402.6%
87213,8403.1%
88223,8403.5%
89233,8403.9%
90243,8404.2%
91253,8404.5%
92263,8404.8%
93273,8405.0%
94283,8405.2%
95293,8405.4%
96303,8405.6%
97313,8405.7%
98323,8405.8%
99333,8406.0%
100343,8406.1%
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Old 08-04-2020, 05:45 PM   #33
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Federal employees have been paying into SS - BUT there still may be a period under the old retirement system so there may be a SS offset. A good CFP with experience with government employees & retirement can give you the answer.
BUT, even if you had absolutely no pension and 2.2 net worth and health care coverage, you'd be fine.
When you both retire, you might consider moving to a lower cost area and/or one that does not tax pensions/ SS which will make your money go even further.
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Old 08-04-2020, 05:49 PM   #34
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Not apples to apples. The SS 8% is guaranteed. 8% return these days would be very aggressive, thus very risky. -- Doug
I may be thinking about this wrong but in my mind the 8% annual bump in future payments does not equate to an 8% return. I'm paying something in foregone early SS payments to get the higher payment at 70. Rather I think of it as using what I would have received between ages 62-70 as the payment for the purchase of a inflation protected SPIA at a price I probably couldn't get elsewhere.
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Old 08-04-2020, 06:56 PM   #35
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Originally Posted by imnontrad View Post
Federal employees have been paying into SS - BUT there still may be a period under the old retirement system so there may be a SS offset. A good CFP with experience with government employees & retirement can give you the answer.
BUT, even if you had absolutely no pension and 2.2 net worth and health care coverage, you'd be fine.
When you both retire, you might consider moving to a lower cost area and/or one that does not tax pensions/ SS which will make your money go even further.


The current Federal employee retirement program is FERS. FERS retirees are eligible for SS with no offset because they pay into SS just like anybody else. FERS was initiated in the mid ‘80s. CSRS is the legacy retirement program. CSRS retirees do not contribute and are not eligible for SS. If they qualify for SS due to other employment they would be subject to a benefit reduction. CSRS employees could’ve switched to FERS but I think almost none did since CSRS is generally considered to be better
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Old 08-05-2020, 09:24 AM   #36
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Originally Posted by DFW_M5 View Post
If you don't need the money, let it ride and keep increasing until 70,
If you don't need the money at 62, what is your benefit to getting a larger payout at 70? Even more money that you don't need?
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Old 08-05-2020, 10:26 AM   #37
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thanks all for the comments

Ray has a point, we don't need the money, Sugar Mama has wonderful Pension, my few dollars will keep us going, will be interesting to see what my December dividends will give me this year ...

I need you all to help ME figure out the best way to start Roth conversion, period end. If i'm figuring this out correctly, if by taking ~ 24000 for SS at 62 mean that's 24000 less that i can convert to top of 24% bracket. So for 10 years that's ~240,000 less converted when RMD's start
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Old 08-05-2020, 10:52 AM   #38
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Yup. That is part of the reason that DW will delay to FRA and I will wait until 70.
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Take the Social Security Now
Old 08-05-2020, 01:11 PM   #39
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Take the Social Security Now

Social Security doesn't really penalize you for taking early benefits. The penalty that people incur is spending the benefit early. If you take it and spend it then yes you will have less money later.

If you do an analysis where you take the benefit and invest it, you will see that you need less than a 4% return to match taking the social security later. (that is if you take SS at 62 instead of 67, the income from 5 years of investing social security checks in the stock market will be more than the penalty for taking social security early.

Now if you have fixed spending so by not taking it you draw down other investments, your comparison is between social security and the loss of growth in the other investment. If the money is in the stock market, taking social security early will win. if it is in a checking, savings account, bond, T-bill waiting will win.

Having said that, I don't believe in timing the market but for once I feel this stock market is so overheated I expect a crash. If stock market returns are negative then waiting to take SS is a huge winner.
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Old 08-05-2020, 02:03 PM   #40
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Social Security doesn't really penalize you for taking early benefits. The penalty that people incur is spending the benefit early. If you take it and spend it then yes you will have less money later.

If you do an analysis where you take the benefit and invest it, you will see that you need less than a 4% return to match taking the social security later. (that is if you take SS at 62 instead of 67, the income from 5 years of investing social security checks in the stock market will be more than the penalty for taking social security early. ...
Not really. Below is an example where someone takes SS at 62 and saves it for 5 years and then starts spending their age 62 SS benefit. The other columns are where someone waits until 67, but then starts but takes the extra (over the age 62 benefit that they are spending) and invest it. So both people are spending the same amount.

Assumes 4% return and 2% COLA. After age 80 the person taking at 67 has more money than the person that took at 62 and if they live to 90 they have a lot more.

 Claim at 62FV at Claim at 62Claim at 67Excess of 67 over 62FV atI
628,4008,566   004.00%
638,56817,647   004.00%
648,73927,265   004.00%
658,91437,446   004.00%
669,09248,217   004.00%
67 50,145 9,27413,2493,9754,0534.00%
68 52,151 9,46013,5144,0548,3504.00%
69 54,237 9,64913,7844,13512,9014.00%
70 56,407 9,84214,0604,21817,7194.00%
71 58,663 10,03914,3414,30222,8154.00%
72 61,009 10,24014,6284,38828,2034.00%
73 63,450 10,44414,9204,47633,8964.00%
74 65,988 10,65315,2194,56639,9084.00%
75 68,627 10,86615,5234,65746,2534.00%
76 71,372 11,08415,8344,75052,9484.00%
77 74,227 11,30516,1504,84560,0074.00%
78 77,196 11,53116,4734,94267,4474.00%
79 80,284 11,76216,8035,04175,2854.00%
80 83,496 11,99717,1395,14283,5404.00%
81 86,835 12,23717,4825,24592,2304.00%
82 90,309 12,48217,8315,349101,3754.00%
83 93,921 12,73218,1885,456110,9944.00%
84 97,678 12,98618,5525,566121,1104.00%
85 101,585 13,24618,9235,677131,7434.00%
86 105,649 13,51119,3015,790142,9184.00%
87 109,874 13,78119,6875,906154,6584.00%
88 114,269 14,05720,0816,024166,9884.00%
89 118,840 14,33820,4836,145179,9344.00%
90 123,594 14,62520,8926,268193,5234.00%
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