Why am I struggling? - Social Security Question

[Dtail]

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Originally Posted by Throwdownmyaceinthehole I'll chime in from a different viewpoint. Like most on here, I've been very frugal my whole life and had a hard time blowing that dough (RobbieB) thanks! But once we started getting our SS check (we took one at 64 and letting the other grow) I've been able to loosen up on being so fretty about spending. We had the savings, so no worries on meeting our expenses as we had no debt. But I seem to have a clear mental distinction between withdrawing our hard saved funds and that big ole SS check that comes each month. We do a happy dance every third Weds, its like free money and I check Robbie B's posts to see how I can blow it each month. We've got one SS growing, so that's insurance for us. But each month, every month, we get play money. It's mental freedom, just like having no debt.

Yes that's the viewpoint when it truly is extra monies and that is great.
The conceptual SS discussions more surround having the same overall spending whether taking SS at any point in time.

[Dogman]

My Struggle! In comparison to Gumby and RetiredMajor!
Wife was a teacher in California. What a joke! She worked as a nurse until she was 40.
SS discounted her work history from the time she was 18 until 40 and only gave her 940.00 then discounted this amount by about $540.00 to less than $400.00 on her social security. Because of WEP and because she worked as a teacher for 11 years she also cannot receive the surivors benefit or spousal benefit plus her pension for working for a school system. My suggest to any of your children do not work for a school system that does not take out SS!
Now if I wait it does benefit my SS but my wife will be left out in the cold when I die!
With the situation of the country regarding migration and with political system in power, I would suggest you take SS NOW. The threat of "means testing" and reduced benefits are ever more present! Who do you think they will discount first the young and healthy or the old and worthless (to them)!
Take you SS now or define your risk of reduced or means testing!

[Gumby]

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Originally Posted by Dogman My Struggle! In comparison to Gumby and RetiredMajor! Wife was a teacher in California. What a joke! She worked as a nurse until she was 40. SS discounted her work history from the time she was 18 until 40 and only gave her 940.00 then discounted this amount by about $540.00 to less than $400.00 on her social security. Because of WEP and because she worked as a teacher for 11 years she also cannot receive the surivors benefit or spousal benefit plus her pension for working for a school system. My suggest to any of your children do not work for a school system that does not take out SS! Now if I wait it does benefit my SS but my wife will be left out in the cold when I die! With the situation of the country regarding migration and with political system in power, I would suggest you take SS NOW. The threat of "means testing" and reduced benefits are ever more present! Who do you think they will discount first the young and healthy or the old and worthless (to them)! Take you SS now or define your risk of reduced or means testing!

A small nit, if I may:

The WEP is what discounts her own social security, and I find it actually makes some sense, given that social security by design pays a higher percentage to low income earners. So if you have small earnings from a job subject to social security and larger earnings from a job not-subject to social security (teaching), you get a higher percentage on the social security covered earnings than you would if all your earnings were subject to social security.

The GPO is what prevents her from getting a spousal benefit or a survivor benefit. And for that I see no justification. If my wife were a trust fund baby and never worked or paid into social security, she would get my full benefit upon my demise - sort of an insurance policy that I paid for through my social security contributions. So the guy next door and I could pay the same into social security for our working lives, but his wife gets a survivor benefit because she never worked at all and mine doesn't, because she worked as a teacher. As far as I'm concerned, that's unfair to ME, since I paid the same insurance premium as him.

P.S. - I'd leave migration out of this discussion, as it is irrelevant to these issues (and likely will get the thread closed).

[Time2]

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Originally Posted by teejayevans Run your tax program, do a couple of what ifs.

Not sure if you are responding to the OP (me), but my desire is to limit taxes (maximize nest egg?) now and later when I have two SS checks and RMDs.
The has to be by delaying SS and maximizing Roth Conversion while in staying in a tax bracket yet to be known. And the time period for this is from now until I'm 70, 5 years, 72 RMDs, wife is 70, 8 years, and 10 years.

It may be as simple as doing my RMDs up to 22% and forget about it. Or is 12% better.

[pb4uski]

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Originally Posted by Throwdownmyaceinthehole I'll chime in from a different viewpoint. Like most on here, I've been very frugal my whole life and had a hard time blowing that dough (RobbieB) thanks! But once we started getting our SS check (we took one at 64 and letting the other grow) I've been able to loosen up on being so fretty about spending. We had the savings, so no worries on meeting our expenses as we had no debt. But I seem to have a clear mental distinction between withdrawing our hard saved funds and that big ole SS check that comes each month. We do a happy dance every third Weds, its like free money and I check Robbie B's posts to see how I can blow it each month. We've got one SS growing, so that's insurance for us. But each month, every month, we get play money. It's mental freedom, just like having no debt.

Sounds a bit like playing with your zipper to me. I can understand the psychological attraction but at the end of the day money is fungible and if you have enough then you have enough and whether you spend from savings or have SS coming in isn't going to make a difference.

[SJ1_]

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Originally Posted by Retiredmajor I'm soon to be 65 and will sign up for Medicare next month. I'm deciding when to take Social Security. I will either do it when I sign up for Medicare or wait until my FRA of 66 and 4 months. EVERY retirement calculator I use (Firecalc + 3 others) and our Financial Advisor tell me that either way, we are financially fine and, at some point, are splitting hairs. A simple spread sheet tells me that the difference between taking SS at 65 versus 66 is $38,000 over 30 years. I'll be honest, I like the idea of drawing less from our Nest egg each year and taking SS earlier accomplishes that. Plus, I'm hearing that SS may get a fairly large COLA increase in 2022 in the vicinity of 5 to 6%. Of course that makes all my numbers look better, but also makes me feel better about taking SS at age 65. Why am I struggling with this? It seems that I'm letting it become an emotional issue when it's just math! All advice is welcome! Major

I was the same Its a major change in your life. All those years you put in then one day it over. Was hard for me and a lot of people retirement is great

[RunningBum]

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Originally Posted by Throwdownmyaceinthehole But I seem to have a clear mental distinction between withdrawing our hard saved funds and that big ole SS check that comes each month.

It's interesting to hear differing philosophies on financial matters. My thought is that I worked hard to build up my savings and I want to enjoy (spend) it, not just let it sit there.

[FI_RElater]

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Originally Posted by Time2 Not sure if you are responding to the OP (me), but my desire is to limit taxes (maximize nest egg?) now and later when I have two SS checks and RMDs. The has to be by delaying SS and maximizing Roth Conversion while in staying in a tax bracket yet to be known. And the time period for this is from now until I'm 70, 5 years, 72 RMDs, wife is 70, 8 years, and 10 years. It may be as simple as doing my RMDs up to 22% and forget about it. Or is 12% better.

I've mentioned in other threads that up to the top of the 12% bracket is a no-brainer...it then depends on how many years until you start the first (or second) SS and how long before RMD's begin. I also think that leaving enough in the 401k/IRA to be able to fill the lower bracket of 0%/12% in the future (at least until a reasonable expectation of "first to pass", say somewhere around 75-80...(yeah folks, be realistic))
I have a harder time going beyond the 12% since the percentage isn't large (22% vs 25% for not converting) but the loss of flexibility is more concerning. And if we both do live a long time, it'll be more a "first world problem" having "too much" money that we pay taxes beyond the 22% level.


for us, not yet starting SS but eligible for the first (my ever so slightly lower PIA) but having a pension and decent (couple mil) taxable and tax-Deferred money , there's no way that we stay below the 22% bracket so any money at only 12% is a win . Once the first rollover is converted to Roth, then I'll move the 401k into the IRA which then can be pulled from easily to supplement any needs, with taxable funds being used to prevent climbing into higher brackets... or converting some if it makes sense (same bracket or lower) since any surviving spouse would be at either the same bracket (loss of one SS and some of the pension) or at a higher bracket...so those converted funds allow for their spending, when needed, without climbing into a further higher bracket.
(for me, this year and next should allow for the first rollover to be fully converted... and I'm looking at starting SS at just before 67 (after FRA) so as to keep monies in the taxable account for whoever is the survivor.)

ETA: no kids (except "fur babies")... anything would go per our trust to siblings and theirs

[pb4uski]

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Originally Posted by RunningBum It's interesting to hear differing philosophies on financial matters. My thought is that I worked hard to build up my savings and I want to enjoy (spend) it, not just let it sit there.

I was talking with a recently retired friend today and she mentioned that she was living off of savings because she doesn't have a pension... and she said that while it was a bit disconcerting that she kept reminding herself that she saved that money for her retirement and that is what she is doing... I told her that was they right attitude... she save it to spend it, not hoard it.

[street]

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Originally Posted by Winemaker I think the overall improvement in longevity is not because people are living longer, it is because younger people are not dying as early as in the past. Witness the recent change in longevity rates because of the opioid crisis.

I think you are spot on!

[RobbieB]

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Originally Posted by pb4uski Sounds a bit like playing with your zipper to me. I can understand the psychological attraction but at the end of the day money is fungible and if you have enough then you have enough and whether you spend from savings or have SS coming in isn't going to make a difference.

Yeah. Kinda weird though eh? The way the mind works.

Spending your own dough...nah, I'll just save it for when I really need it.

Spending SS dough coming in every month - Manna from heaven!

[Out of Steam]

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Originally Posted by Exchme The tables are also tilted in favor of waiting for couples, since the chance that one out of two will live longer than average is greater than any one person beating the odds. So it often ends up that the one with the larger benefit should wait until 70 since that benefit will continue for the lifetime of the longer lived.

Conventional wisdom for married couples seems to be for one spouse to take at 62, and the other to delay. My wife's benefit is slightly larger than mine, but we decided to wait until we are both 62 next year and then calculate who should file first.

[Out of Steam]

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Originally Posted by Retiredmajor I'm soon to be 65 and will sign up for Medicare next month. I'm deciding when to take Social Security. I will either do it when I sign up for Medicare or wait until my FRA of 66 and 4 months.

Having waited until you're 65, you've already passed by the largest benefit reductions for filing early. You're in the same range as I (or possibly my wife) expect to be, filing between turning 65 and FRA.

[pb4uski]

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Originally Posted by RobbieB Yeah. Kinda weird though eh? The way the mind works. Spending your own dough...nah, I'll just save it for when I really need it. Spending SS dough coming in every month - Manna from heaven!

Yeah, humans can sometimes be a bit silly.

[Koolau]

For most of us here, deciding on when to take SS is just one more in a relatively long list of 1st world problems. I'm thankful for such "problems." YMMV

[daylatedollarshort]

Quote:

Originally Posted by Throwdownmyaceinthehole I'll chime in from a different viewpoint. Like most on here, I've been very frugal my whole life and had a hard time blowing that dough (RobbieB) thanks! But once we started getting our SS check (we took one at 64 and letting the other grow) I've been able to loosen up on being so fretty about spending. We had the savings, so no worries on meeting our expenses as we had no debt. But I seem to have a clear mental distinction between withdrawing our hard saved funds and that big ole SS check that comes each month. We do a happy dance every third Weds, its like free money and I check Robbie B's posts to see how I can blow it each month. We've got one SS growing, so that's insurance for us. But each month, every month, we get play money. It's mental freedom, just like having no debt.

We get 2 Social Security and 3 pension deposits each month and it always feels like happy dance, free money time. Those deposits (plus a little hobby income) more than cover all of our regular expenses, which leaves the portfolio for savings or fun money. There isn't a lot more we want or need for fun money but it sure is nice to know it is there.

We ran the numbers every which way and for us and our goals, taking both SS at 62 and pensions at 55 worked best.

[Sunset]

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Originally Posted by Out of Steam Conventional wisdom for married couples seems to be for one spouse to take at 62, and the other to delay. My wife's benefit is slightly larger than mine, but we decided to wait until we are both 62 next year and then calculate who should file first.

SS gives you a report each year, unless someone is working, the relationship as to which spouse gets more SS won't change.

We are definitely waiting until 70 for the high SS spouse. It's spousal insurance.

[PandaBear]

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Originally Posted by Gumby Yes, actuarially it is a wash in aggregate. But there are some relatively rare circumstances where the math is clear. In my case, the young wife was a public school teacher for 30 years and never paid into social security. So she is not eligible for social security on her own record. Since she gets a government pension as a consequence of her teaching, she is also subject to the GPO (government pension offset). That means that she does not get a spousal benefit based on my record and, crucially, that she will not get a survivor benefit after I die. So when I cease, the social security input to our household budget ceases. Since she is younger and female, from a relatively long lived family, it is likely that she will survive me, only to face a sudden loss of about 25% of our current income. Under those circumstances, it makes more sense for me to take social security at 62 to preserve our nest-egg for her use after I'm gone.

We made the same decision. Dh is 3 1/2 years older than I am and I have a public school teachers pension. He did the math and discovered that he is “ahead” until age 80. So he took his SS at 62 as well. I was in agreement.

[bobbyr]

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Originally Posted by jollystomper After three years of retirement, I have a better handle on our retirement expenses. So I will more likely based when I take SS, in terms of the coverage it adds for our expenses.

I'm 2+ years into retirement and am on the same page about having a better handle on expenses (ours being less than anticipated, some COVID impact I suspect). It's certainly better (for us) to be spending less, than over spending. Thank goodness for a frugal wife.

[LRDave]

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Originally Posted by Gumby The GPO is what prevents her from getting a spousal benefit or a survivor benefit. And for that I see no justification.

GPO does not necessarily prevent a spousal or survivor benefit, but it certainly will reduce it - and quite a bit. Earlier in this thread (and responding to my post) Gumby presented his rock-solid case for taking SS early due to GPO.

DW has a public school pension and also has some years of contribution to SS. I re-ran opensocialsecurity.com and it still suggests we wait to take my SS at 70 and suggests DW take hers at 68.

I can make sense of that.

1) Taking later still provides ME longevity insurance - the best available.

2) If I pass first, DW will still get SOME survivor benefit. That SOME will grow faster as it approaches the payment from deferring to age 70, since the SS payment will grow faster than DW's (COLA'd) pension.

I still have pause for thought. Deferring reduces the nest egg. I try to weigh what is best for DW. If I pass early, I should've taken SS early. If we both live long, the longevity insurance of deferring is mighty compelling. I can't insure against both scenarios. (Well, except for making the nest egg bigger and that ship has happily sailed.)