Reconsidering both waiting until 70 to claim SS

[Midpack]

I've been playing with https://opensocialsecurity.com and noticed it's pretty hard to get it to recommend we both wait until 70 to claim social security. When I choose their highest longevity set case (non smoker super preferred) it recommends I claim at 70 and DW claim much sooner at 66y 11m. Digging deeper, non smoker super preferred is based on me living to 87.5 and DW to 90. No matter how much I manually extend DW's longevity, it never recommends she wait to claim at 70. And if I manually extend my longevity, I have to live to 98 for her to claim at 70. Turns out if we both live to 90 or more, then it recommends we both claim at 70. There's a good chance we'll both live past 90 if our parents are any indication. I was just surprised how long you have to live to to make both claiming at 70 the financially preferred option...maybe I'm the last one to figure it out.

My PIA is about 160% of DW's, and I am about 2 years older than her. I am already 69, but it would be rude to disclose DW's age.

 

[audreyh1]

In our case the difference between DH taking it now (he’s past FRA) and waiting to 70 is 0.7%. I used opensocialsecurity.com and used non-smoker tables. So I figured it didn’t matter much and am paying attention to managing annual income. I have the higher lifetime earnings and am 4.5 years younger. I plan to wait until 70 to maximize DH’s benefit and that’s what opensocialsecurity.com recommends for me to do.

 

[rodi]

Since DH started collecting at 62 when he retired AND we had kids under 18, we can't undo that. (Still probably came out ahead with the beneficiary benefits we got for the boys till they graduated high school).

My PIA is higher than his.

opensocialsecurity says I should claim when I turn 70.

That's my tentative plan... but I plan to stay flexible... if we have an extended downturn, the 'sleep at night' factor might kick in and make claiming earlier more attractive. ... If I get a DX of cancer that will adjust my decision, though probably push it later, since larger survivor benefits for him come into play. Making Roth conversions and total income for the year is a factor. Medicare hold harmless (limits how much medicare increases can be) may factor in...

Who knows what I'll end up doing... but for now, tentatively, I'm waiting till 70.

 

[all4j]

I I was just surprised how long you have to live to to make both claiming at 70 the financially preferred option...

Mike Piper knows considerably more about SS than I & I think his calculator is highly useful as a result. But I think the intent of the tool is to only go so far & it wasn’t the only data point I considered. I would be surprised if he claimed it gave the ‘financially preferred option’; I acknowledge that may be a way of distinguishing between this perspective & the non-financial view. It does provide a point in time net present value. But, at least for us, for a financially preferred option, we looked more broadly. I may be wrong about the calculator & hope someone corrects me if so.

First up is taxes. Assume a benefit of $1000. I think the calculator computes a npv on $1000. However, in our case in round terms, I’d need to pay about $150 income tax, so I’d really need to know the npv of $850. (realizing there are other considerations such as roth conversions, irmaa, et al).

Second is what we’d do with the money. In our case, we likely wouldn’t spend, but invest. The tool assumes the money would be ‘replacing’ some of the bond portion of the portfolio (for understandable reasons). In our situation, we wouldn’t be changing our allocation & so our effective discount rate would be different. Also, assume we got a 5% (nominal) return on our $850. That would give about another $250 (annualized), pre-tax that would need to be included in the npv.

Not to say that is a comprehensive list, but rather to say looking at the entire picture includes several variables that will change from person to person as well as over time. However, my experience has been that the difference in results is likely within the margin for error of the assumed variables.

 

[walkinwood]

Midpack,


Aren't you doing aggressive ROTH conversions? Wouldn't taking SS earlier than age 70 impact those calculations? Or is the impact pretty small?


Time to do ROTH conversions is the driving factor for both of us waiting for 70. The OpenSocialSecurty site says the difference in PV is very small if we both wait v/s using their optimal strategy.

 

[Alan]

I've been playing with https://opensocialsecurity.com and noticed it's pretty hard to get it to recommend we both wait until 70 to claim social security. When I choose their highest longevity set case (non smoker super preferred) it recommends I claim at 70 and DW claim much sooner at 66y 11m.

That’s pretty much what it recommended for us as well so DW started taking hers a couple of years ago at age 66 and I’ll take mine at age 70 in 18 months time. I have the added incentive that I am still paying FICA taxes, increasing the number of years of contributions which in turn reduces the impact of WEP (I have foreign pensions). For every year I defer, the WEP penalty drops by about $600/year, and by age 70 I will have accumulated 28 years of payments. I will continue paying FICA (and Medicare) after age 70 so I hope that the WEP reduction will go to zero but I’m not sure of that.

 

[skyking1]

It suggests DW take hers at 62 and 4 months. I am good with that plan, as it provides for a nice COLA to our income stream. Our PIA is virtually identical.

 

[Midpack]

Midpack,


Aren't you doing aggressive ROTH conversions? Wouldn't taking SS earlier than age 70 impact those calculations? Or is the impact pretty small?


Time to do ROTH conversions is the driving factor for both of us waiting for 70. The OpenSocialSecurty site says the difference in PV is very small if we both wait v/s using their optimal strategy.

Yes, but I turn 70 next year, so I won't be able to avoid scaling back Roth conversions for 2024 anyway. And our plan was to wait until DW turns 70 anyway, I was just surprised at how hard it was to get the app to recommend same.

 

[Markola]

It says DW should take SS precisely at 62.7 yo and me at 70. Shocker. I’ll have to run that by our Vanguard advisor to double check with their software.

 

[MarieIG]

Yes, it recommends that DH takes at 70 and I take at 62. I'm not gonna do that. It (seems to me to) consider maximizing the SS income received by the couple - based upon statistical likelihoods, without taking individual factors (and potential risks) into consideration.

I reserve my right to change my mind at any time!

 

[Texas Proud]

Mine is so easy....


DW has no SS credits so I file at 70 and DW files at 62...


I am kinda surprised at how much we will be getting... that is without any reduction if SS is not fixed...

 

[Romer]

Mine is so easy....


DW has no SS credits so I file at 70 and DW files at 62...


I am kinda surprised at how much we will be getting... that is without any reduction if SS is not fixed...

Have you considered the spousal Benefit wich tops out at 67, half of your FRA amount?

 

[Markola]

Mine is so easy....


DW has no SS credits so I file at 70 and DW files at 62...


I am kinda surprised at how much we will be getting... that is without any reduction if SS is not fixed...

After watching the latest debt ceiling near-death experience and seeing which programs were completely off the table, I am 100% not going to worry about SS not getting fixed.

 

[gauss]

I've been playing with https://opensocialsecurity.com and noticed it's pretty hard to get it to recommend we both wait until 70 to claim social security. When I choose their highest longevity set case (non smoker super preferred) it recommends I claim at 70 and DW claim much sooner at 66y 11m. Digging deeper, non smoker super preferred is based on me living to 87.5 and DW to 90. No matter how much I manually extend DW's longevity, it never recommends she wait to claim at 70. And if I manually extend my longevity, I have to live to 98 for her to claim at 70. Turns out if we both live to 90 or more, then it recommends we both claim at 70. There's a good chance we'll both live past 90 if our parents are any indication. I was just surprised how long you have to live to to make both claiming at 70 the financially preferred option...maybe I'm the last one to figure it out.

My PIA is about 160% of DW's, and I am about 2 years older than her. I am already 69, but it would be rude to disclose DW's age.

I haven't studied opensocialsecurity.com, but I would suspect that their advice is based on averages.

I don't consider myself to be average in any sense of the word. Very well off financially - happily married - no health issues nor prescription drugs taken.

I expect for both of us to live much longer than average even their highest healthy average.

As such, I will continue my plan to purchase the world's cheapest annuity by delaying SS until age 70 for both of us.

I also plan to defer drawing my small corporate pension until age 72 (age-adjusted) now that the government allows this (ie Secure x.0 act) and happily my company has adopted the changes to allow it also.

Now the caveat - we did take DW's corporate pension early (age 53), but the company actually subsidized early retirement quite generously by adjusting for age at only 3% per year (vs the normal 7% per year) and the availability of a social security bridge / early retirement supplement that will last until she reaches age 62.

-gauss

 

[Midpack]

I haven't studied opensocialsecurity.com, but I would suspect that their advice is based on averages.

In fairness to open social security.com, they allow for way more than “averages.” Give it a look, you’d be surprised at all the tweaks users can use.

 

[Rianne]

Opensocialsecurity keeps giving me incorrect numbers. I enter myself, as a spouse, taking SS on 9/2022. I was 65 when I took it. I'm making more than OSS says already. Everything I entered is correct but the numbers they give are wrong, ~$1500/year less than I'm really getting. That skews all of the projected benefits.

 

[Sunset]

Opensocialsecurity keeps giving me incorrect numbers. I enter myself, as a spouse, taking SS on 9/2022. I was 65 when I took it. I'm making more than OSS says already. Everything I entered is correct but the numbers they give are wrong, ~$1500/year less than I'm really getting. That skews all of the projected benefits.

I wonder if the numbers are wrong, if that is simply that it's not up to date with the last increase ~9%.

Regardless, if that is why the number is off, then for people comparing, it doesn't matter as it would be proportionally off by the same percentage. So a person could still compare various outcomes to see which is "best" for them.

 

[Midpack]

Opensocialsecurity keeps giving me incorrect numbers. I enter myself, as a spouse, taking SS on 9/2022. I was 65 when I took it. I'm making more than OSS says already. Everything I entered is correct but the numbers they give are wrong, ~$1500/year less than I'm really getting. That skews all of the projected benefits.

Did you enter your current benefit for PIA? That would understate your benefit calculation since you retired a year or so before FRA. Just guessing since I don't know specifics, and I am not asking.

 

[Trooper]

I've been playing with https://opensocialsecurity.com and noticed it's pretty hard to get it to recommend we both wait until 70 to claim social security. When I choose their highest longevity set case (non smoker super preferred) it recommends I claim at 70 and DW claim much sooner at 66y 11m.

Thanks for posting this, Midpack. I played around with opensocialsecurity.com last month and found similar results, although my wife's PIA and mine are nearly identical (hers is slightly higher). I also though the best strategy was for us both to wait until 70 before receiving benefits. We will likely still wait, since there are tax implications (mainly Roth conversion ability) if we receive earlier.

Have you plugged the numbers into Firecalc to see if the results are similar?

 

[EastWest Gal]

One of the problems I have with Social Security retirement calculators is that they do not take into account the amount I need to withdraw from my portfolio for living expenses between FRA and age 70. That is money that could remain invested. That more than offsets the difference between ages 66-10/12 and 70 in terms of the amount of money being left on the table, assuming we live into our late 80s.

 

[Time2]

We are planning on taking social security on Jan 1 2025, I'll be 69yrs, 10 months, and my wife will be 64yr, 5 months. Until then Roth-ing as fast as I can! I have my tax deferred down to $195k and hers is $280k. I'll have 3 years to whittle mine down with Roth Conversions and 7 or 8 yrs for hers before RMDs start. There was a time when they were growing faster than I could Roth convert! I miss those times.

 

[Midpack]

One of the problems I have with Social Security retirement calculators is that they do not take into account the amount I need to withdraw from my portfolio for living expenses between FRA and age 70. That is money that could remain invested. That more than offsets the difference between ages 66-10/12 and 70 in terms of the amount of money being left on the table, assuming we live into our late 80s.

FIRECALC will let you model that situation...

 

[gauss]

We are planning on taking social security on Jan 1 2025, I'll be 69yrs, 10 months, and my wife will be 64yr, 5 months. Until then Roth-ing as fast as I can! I have my tax deferred down to $195k and hers is $280k. I'll have 3 years to whittle mine down with Roth Conversions and 7 or 8 yrs for hers before RMDs start. There was a time when they were growing faster than I could Roth convert! I miss those times.

If you would like to be able to donate to charity and get a tax deduction, while still taking the Standard Deduction, you might not want to run the accounts all the way down to zero.

Under current law, if you are age 70 or greater, you can donate to charities via a Qualified Charitable Distribution (QCD) from your IRA and not pay income tax on the distribution if it is done properly.

I was on the glide path to convert all of my tax-deferred accounts also until I realized this.

YMMV

-gauss

 

[Time2]

If you would like to be able to donate to charity and get a tax deduction, while still taking the Standard Deduction, you might not want to run the accounts all the way down to zero.

Under current law, if you are age 70 or greater, you can donate to charities via a Qualified Charitable Distribution (QCD) from your IRA and not pay income tax on the distribution if it is done properly.

I was on the glide path to convert all of my tax-deferred accounts also until I realized this.

YMMV

-gauss

I know a lot of people will donate 76% to save 24%, because it's a charity. In my case, I would rather donate to my kids. I already donated/gifted about $300k to one to get her through dental school, and I expect in the next couple years I'll get my son into his own home. I'll start a thread about the best way to do that.

 

[Koolau]

Too late for us as we've made our decisions. I wanted to do some modeling but DW insisted she was taking SS at 62, period. She was concerned that the funds would run out. Even though I assured her (as much as I could), there was no persuading her. SO, the die was cast and I took SS at 70 to guarantee her the best survivor benefit. YMMV