Suze Orman SS payments advice

[Time2]

Assuming they don't increase FRA, we'll be taking it at full retirement age (67) for both of us...one on their own record plus 50% spouse.

Using various calculators for our specific situation shows there's no point in waiting until age 70, as that adds a trivial amount over our expected lifetimes.

Will that tax 85% of your SS at 22 or 24% brackets.
Can you do Roth conversions to lower your RMDs before you're
72. If you can you wouldn't want to add SS to your income.
This question is very difficult because of so many variables.
Not to mention you don't know when you are going to die.

 

[CRLLS]

I think this is why the break even point matters for one who doesn’t need the $ at early retirement age, but wants to make an informed decision based on their personal life expectancy.

Agreed. Let's face it. For those who need the money early, they take the early SS payments and don't even think about breakeven age or personal life expectancy. I believe that it is only those who can make ends meet are considering the breakeven age.

 

[Perryinva]

Yes, while true, virtually none (that post on forums like this) ever say that. They always claim the break even argument. DW filed at 62. Her only reason was “because I want it now”. It’s her mad money. I had no say in it. I can see the “I’m tired of waiting for it” reason, especially when you start not collecting $40k a year...

 

[bobbyr]

Also, I'm waiting until 70, because my bride is about 5 years younger, and

I want that that larger benefit for her if I die before her.

That is similar to our situation. My wife is 57 in July, me 62 in August. I anticipate taking it at 66 to 70 depending on how things are looking. The larger monthly benefit for her is my target, her family has longevity.

 

[PatrickA5]

I'll finally be 62 in two months (assuming I can avoid the virus). I'll decide then if I'm going to take it or not. Most calculators have me taking early (62-64) and DW taking at 70 (she's the higher earner). The NPV of just about any scenario is within 1%-2% of each other, so it really doesn't make any difference when I take it - assuming she waits until 70.

We'll just have wait and see how this all plays out. I imagine a lot of people will end up taking their SS this year as the layoffs mount.

 

[ivinsfan]

I'll finally be 62 in two months (assuming I can avoid the virus). I'll decide then if I'm going to take it or not. Most calculators have me taking early (62-64) and DW taking at 70 (she's the higher earner). The NPV of just about any scenario is within 1%-2% of each other, so it really doesn't make any difference when I take it - assuming she waits until 70.

We'll just have wait and see how this all plays out. I imagine a lot of people will end up taking their SS this year as the layoffs mount.

Depends on the age at layoff doesn't it...and if you are over 62 you have the enhanced unemployment to help bridge that gap. I see the market's problems and the feeling of " something bad could happen to me anytime" as bigger factors in people claiming SS sooner rather then later.

 

[PatrickA5]

Depends on the age at layoff doesn't it...and if you are over 62 you have the enhanced unemployment to help bridge that gap. I see the market's problems and the feeling of " something bad could happen to me anytime" as bigger factors in people claiming SS sooner rather then later.

Agreed.

In our case, DW will likely lose her oil-related job. She can take unemployment but even with the extra $600 per week wouldn't be close to what she's making now. So, we'd have a decision to make on whether I would want to start SS early to help with the lost income. I don't thing we'd want to have 100% of our income coming out of our retirement accounts this early in retirement - although I think we could probably manage just fine.

I personally know a lot of early 60's people that could be out of a job soon, with little hope of finding something else. Don't know how many would need/want to take SS early.

 

[pb4uski]

... I personally know a lot of early 60's people that could be out of a job soon, with little hope of finding something else. Don't know how many would need/want to take SS early.

If this little tidbit is true then probably a boatload. Sad.

According to the Government Accountability Office (GAO), about half of households age 55 and older have no retirement savings (such as in a 401(k) plan or an IRA).

 

[ivinsfan]

Agreed.

In our case, DW will likely lose her oil-related job. She can take unemployment but even with the extra $600 per week wouldn't be close to what she's making now. So, we'd have a decision to make on whether I would want to start SS early to help with the lost income. I don't thing we'd want to have 100% of our income coming out of our retirement accounts this early in retirement - although I think we could probably manage just fine.

I personally know a lot of early 60's people that could be out of a job soon, with little hope of finding something else. Don't know how many would need/want to take SS early.

Sorry about your DW situation but if you need HI from the market although the unemployment wouldn't cover her wage loss, it might be just the ticket for ACA subsidy factors. Adding SS income to UI income might not be a good thing. A sharp pencil will be needed. With her wage you might be over the cliff for this year but perhaps pull retirement money to live on next year before 2021

 

[PatrickA5]

If this little tidbit is true then probably a boatload. Sad.

DW and I have been in the oil industry for 30+ years each. Most of our friends are in oil related jobs. In our neck of the woods (Oklahoma), the oil bust is even worse than the Corona virus - at least for higher paying workers. Fortunately, for us I'm retired and she is mainly working because she likes it.

DS, on the other hand, is pretty much screwed. He's graduating this year with his Accounting degree (like mom and dad) and nobody is hiring.

 

[PatrickA5]

Sorry about your DW situation but if you need HI from the market although the unemployment wouldn't cover her wage loss, it might be just the ticket for ACA subsidy factors. Adding SS income to UI income might not be a good thing. A sharp pencil will be needed. With her wage you might be over the cliff for this year but perhaps pull retirement money to live on next year before 2021

Yep, health insurance is the wild card. We could always go on Cobra for awhile, if needed. I've never had to look into ACA before, but could see us going that route.

 

[harley]

DS, on the other hand, is pretty much screwed. He's graduating this year with his Accounting degree (like mom and dad) and nobody is hiring.

I'm sure it's not much consolation, but my nephew graduated law school in 2009, which had the largest percentage of unemployed new lawyers ever. He had to hustle for work, even working for an ambulance chasing shyster that he eventually had to sue for back wages. But now he's got a successful practice and is doing quite well. It may start out bad, but hopefully it will pull together in time.

 

[pb4uski]

.... DS, on the other hand, is pretty much screwed. He's graduating this year with his Accounting degree (like mom and dad) and nobody is hiring.

It will be easier for him if he is willing to move.

Has he had any interviews? At my school, the firms came and interviewed in the fall and early winter.

What is he interested in? Public? Industry?

 

[ivinsfan]

Yep, health insurance is the wild card. We could always go on Cobra for awhile, if needed. I've never had to look into ACA before, but could see us going that route.

Cobra won't get you through until Medicare but you have a while to get this figured out.

 

[PatrickA5]

It will be easier for him if he is willing to move.

Has he had any interviews? At my school, the firms came and interviewed in the fall and early winter.

What is he interested in? Public? Industry?

He had a few interviews last Fall/Winter, but no offers. A lot of the offers (locally) that did go out last winter are being delayed or rescinded altogether.

He won't be moving since his GF lives with him and has another year left to get her masters. We've been helping her out over the years with subsidized rent/utilities. It's like we basically have two kids in college, but she's wonderful and we don't mind helping out.

He talked to a counselor about getting a finance degree in addition to his accounting degree. He would have to take 18 hours of finance. Not only would those hours possibly open up new opportunities, but it would get him up to the 150 hours needed to sit for the CPA exam - if he wants to go that route. We've got just enough left in his 529 plan to pay for one more year of college, so we'll probably go that route and see what the market is like next year.

 

[PatrickA5]

I'm sure it's not much consolation, but my nephew graduated law school in 2009, which had the largest percentage of unemployed new lawyers ever. He had to hustle for work, even working for an ambulance chasing shyster that he eventually had to sue for back wages. But now he's got a successful practice and is doing quite well. It may start out bad, but hopefully it will pull together in time.

Yep, oldest daughter graduated in 2009 with her masters. Slim pickins for a couple of years, but has since landed a great job. She will be starting a full-ride Phd program at Purdue next Fall, so she'll once again be a starving college student - just not on my dime!

DW and I should have planned the timing of our kids a little better.

 

[statsman]

DW is 6+ years older than I am, and we have similar work records toward SS. Mine will be higher if I take it at age 64 or later (I'm 61 now). But because of the age difference and SS work records, there was no advantage for DW to wait until age 70 to take it because my own record would be higher than 50% of her maximum.

When DW was laid off a few months prior to turning 65, she started SS. This was her preference. Along with my modest pension that I started at the same time, ACA was pretty much out of the question. It didn't matter anyway since I had access to an under-65 retiree medical plan (which required starting the pension) that, while not a Cadillac plan, had much better maximum cost scenarios than with ACA, even with the subsidies considered. Not having to play the ACA tax game was a plus as far as I was concerned.

For myself, I am left with the decision of when to start SS. I could wait until 70, but family age history is not my friend. Also, DW's SS will always be higher than 50% of whatever I end up with on SS, so no benefit for her by waiting. I am leaning toward doing the same as her, starting at near 65 and have Medicare premiums taken out of that payment.

 

[PatrickA5]

DW is 6+ years older than I am, and we have similar work records toward SS. Mine will be higher if I take it at age 64 or later (I'm 61 now). But because of the age difference and SS work records, there was no advantage for DW to wait until age 70 to take it because my own record would be higher than 50% of her maximum.

When DW was laid off a few months prior to turning 65, she started SS. This was her preference. Along with my modest pension that I started at the same time, ACA was pretty much out of the question. It didn't matter anyway since I had access to an under-65 retiree medical plan (which required starting the pension) that, while not a Cadillac plan, had much better maximum cost scenarios than with ACA, even with the subsidies considered. Not having to play the ACA tax game was a plus as far as I was concerned.

For myself, I am left with the decision of when to start SS. I could wait until 70, but family age history is not my friend. Also, DW's SS will always be higher than 50% of whatever I end up with on SS, so no benefit for her by waiting. I am leaning toward doing the same as her, starting at near 65 and have Medicare premiums taken out of that payment.

If you died, wouldn't she be entitled to 100% of your benefit - not 50%?

 

[youbet]

my feeling is to do a true comparison you have to keep it as nominal numbers without any what ifs throw in.

But your feeling makes your number completely worthless. Nominal numbers do keep things "simple." But between the always changing levels of inflation and investment returns, I've never lived through a period where "nominal numbers" held, with the exception of very short periods of time.

Why would you ignore inflation and earnings in your analysis? That's not what happens in the real world.

 

[stevemac]

I want that that larger benefit for her if I die before her.

Q: If you're waiting to claim at 70 just for this situation but die before then, does SS use the date of your death, or the closest trigger date, e.g., 62 or FRA (I assume not upward to 70 )?

 

[ncbill]

Will that tax 85% of your SS at 22 or 24% brackets.
Can you do Roth conversions to lower your RMDs before you're
72. If you can you wouldn't want to add SS to your income.
This question is very difficult because of so many variables.
Not to mention you don't know when you are going to die.

I expect our SS will not be taxed at all...we'll have a relatively low combined SS income in retirement.

Cashing in and paying LT capital gains on investments when needed.

 

[Perryinva]

Spousal death benefit is amount entitled to based on the date of your death if after FRA.

So if you are already living exactly as you would if you were collecting at 70, by spending down say tIRA, tou have lost no quality of life by delaying. Assuming you have more than enough to delay, then the small amount used from savings essentially bought an annuity for your spouse. The reduction in portfolio is peanuts compared to the larger tax preferred benefit when the survivor is mow paying Taxes as Single.

 

[N02L84ER]

Q: If you're waiting to claim at 70 just for this situation but die before then, does SS use the date of your death, or the closest trigger date, e.g., 62 or FRA (I assume not upward to 70 )?

It would be calculated based on your age the month of your death.

 

[Montecfo]

The 8% is NOT a return... it is the increase in your monthly SS if you defer benefits for a year... but not anything close to a return.

Thanks for posting that. In my opinion, the idea that deferring social security generates a return and that return is guaranteed is, in my view, possibly the most misleading piece of frequently dispersed financial "advice" there is.

 

[Perryinva]

Absolutely agree. You are purchasing an annuity or insurance. There is no real ROI.