One retirement distraction is playing around in Excel. ...
In this book http://www.amazon.com/The-Great-Divorce-C-Lewis/dp/0060652950Didn't realize you could get a limo to get from heaven to hell. Is that to visit friends?
$750k seems well above the #1 cutoff to me.For someone with little money, say under $750K, they need to take SS as soon as they can. They can't affored to delay, so delaying is not an option for them.
FWIW, CNN says the median net worth for 65 year olds is $232,000.
Actually, that was one of my w*rk distractions.
You do not pay FICA on SS benefits. You may pay Federal Income Tax.I will retire when I turn 63 in January or 2017. We will be completely debt free; with 6-8 months of living expenses. I have two pensions from two different companies, a IRA and a Roth. I will draw SS and then draw from my two pensions and leave the IRA and Roth for later. I am a bit confused about taxes..do they take taxes out of SS?
Are Your Social Security Benefits Taxable?You can do the following quick computation to determine whether some of your benefits may be taxable:
First, add one-half of the total Social Security benefits you received to all your other income, including any tax exempt interest and other exclusions from income.
Then, compare this total to the base amount for your filing status. If the total is more than your base amount, some of your benefits may be taxable.
The 2010 base amounts are:
$32,000 for married couples filing jointly.
$25,000 for single, head of household, qualifying widow/widower with a dependent child, or married individuals filing separately who did not live with their spouses at any time during the year.
$0 for married persons filing separately who lived together during the year.
You do not pay FICA on SS benefits. You may pay Federal Income Tax.
Are Your Social Security Benefits Taxable?
The percent of your SS benefit that gets into your taxable income increases with your income. The formula is hard to explain in a few words, but here's the worksheet. http://apps.irs.gov/app/vita/content/globalmedia/social_security_benefits_worksheet_1040i.pdf
Note from lines 17 and 18 that the maximum fraction that can get into taxable income is 85%.
If your question was about withholding, here's a source: Benefits Planner: Withholding Income Tax From Your Social Security Benefits
Depending on the amount of your SS and two pensions, and the value of your IRA, it may be lower taxes in the long run to start drawing some from your IRA right away(upon retirement). It also may not. You have to run the numbers and see what tax bracket your money will be in , in future years.I will retire when I turn 63 in January or 2017. We will be completely debt free; with 6-8 months of living expenses. I have two pensions from two different companies, a IRA and a Roth. I will draw SS and then draw from my two pensions and leave the IRA and Roth for later. I am a bit confused about taxes..do they take taxes out of SS?
Every time I run the SS scenarios through FireCalc it always tells me I can spend more if I take SS at 62 instead of waiting. At 62 I immediately spend less of my own money.
it may be lower taxes in the long run to start drawing some from your IRA right away(upon retirement). It also may not. You have to run the numbers and see what tax bracket your money will be in , in future years.
We had a long discussion on this a couple years ago. One person said that Firecalc gave him higher spending if he started early. The other said the opposite.Every time I run the SS scenarios through FireCalc it always tells me I can spend more if I take SS at 62 instead of waiting. At 62 I immediately spend less of my own money.
We had a long discussion on this a couple years ago. One person said that Firecalc gave him higher spending if he started early. The other said the opposite.
The best explanation I could come up with was that the first person was 54 and the second was 62. The first person was starting his Firecalc run at 54. Since order of returns is more important after retirement than before, it seemed that the periods of low returns had more impact on the start-at-62 runs.
We had a long discussion on this a couple years ago. One person said that Firecalc gave him higher spending if he started early. The other said the opposite.
The best explanation I could come up with was that the first person was 54 and the second was 62. The first person was starting his Firecalc run at 54. Since order of returns is more important after retirement than before, it seemed that the periods of low returns had more impact on the start-at-62 runs.
When I was running Firecalc 4 years ago (DH was 62 and I was 56) it said we did better if I took SS at 62. (DH was already taking at 62 since we had minor children at the time and they could receive benefits if he did). Now, it has changed and we do slightly better if I take SS at 66.
In our case, we are using the variable spending model on Firecalc since we have higher expenses until our kids get out of school in a couple of years and then our expenses will drop precipitously. As we get closer to only having a couple more years of higher spending, Firecalc is starting to show that we do better with me starting SS at 66 (in reality, I would probably do spousal at 66 then switch to my benefit at 70).
What I really plan to do is run Firecalc again when I get to 62 and see what it says at that time.