You should take SS at 62

[gerntz]

I always find it odd people assume SS will be cut. I find it more likely the taxes will be increased.

I find it odd that people think increased taxes always produce more revenue. Now if you're specifically talking taxes on a benefit, SS, you're likely right. But then benefits are cut.

 

[LRDave]

i think the reality is that most who can afford to retire early and delay ss are going to be over the limit income wise for a subsidy.

i was hoping to see a subsidy this year , my first year going in to retirement at 62 but even living on mostly cash will not bring us down to a level where i can get a subsidy on health insurance.

i think most who do have a choice to retire and delay will have the incomes to go with that choice.

The bolded statement above piqued my interest. Without being too nosey, is this because your income from taxable investments is too high? Or is it because your expenses are high and the part that is not "mostly cash" kicks you up above a subsidy level?

One of the most exciting things I have learned this year (here and on Bogleheads) is about relatively high-net-worth retirees playing the "MAGI game" using taxable funds (cash) to cover most living expenses up to 65, thereby minimizing taxation and maximizing ACA subsidies. I hope I am not missing some major point.....

 

[dallas27]

I find it odd that people think increased taxes always produce more revenue. Now if you're specifically talking taxes on a benefit, SS, you're likely right. But then benefits are cut.

I didn't use a superlative, you did. You are putting words in my mouth.


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[Big_Hitter]

There are only a few tools in the box to "fix" SS.


A haircut to those not in pay status would probably be most popular.

 

[devans0]

I don't expect huge cuts to SS until the can cannot be kicked down the road to be the other political party's problem. Balancing by a thousand small cuts looks more likely.

Back to the topic.

My plans have been persuaded to a new approach thanks to thoughtful posts. All or nothing are the answers that most give about their plans. I will probably be in the middle area between 66 to 70. I have enough in 401k and IRA's to roll over to Roths and use up the available smaller tax brackets, assuming average returns are forthcoming. A bad sequence of returns early on will complete the rollovers earlier, putting me in the middle area. Taxes will be too high if I hit RMDs at where I am now. My nest eggs are split among cash/taxable, IRA's and Roths somewhat evenly. I have a SO and child and grandchildren to gift or pass to, making Roth doubly enticing. That is when I will file for SS. If I can, will probably suspend so SO can file off of my vested SS. I have read about the possibility of her restricting her benefits to spousal, but keeping her earned benefits suspended. I have more to learn about in that area, and it may close before we reach that point anyway.

 

[martyb]

I agree with you, Marko. Take the money and protect your nest egg. What if they cut it down the road? At least you know you have your money still. But my opinion doesn't mean much.... I will draw at 62 and collect my $110 monthly check instead of delaying until 70 for $170 or whatever pittance it will still be.


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Same here, Mulligan. Due to WEP, my SS will be at most $250 @ 62. I'll be grabbing it then. Should be enough for gas money for fishing.

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[Texas Proud]

Look, we don't even know for sure that the Trust Fund exhaustion will take place as projected. The SSA projections for the economy have typically been pessimistic. The main problem over the past seven years has been the severe recession and slow recovery. When folks don't work, they don't pay FICA. Wage stagnation hasn't helped either.

Regardless, it seems strange to me that we have no problem spending trillions on a couple of wars and bailing out crooked bankers but then talk about cutting Granny's meager retirement funds. Maybe when the kids find they have a choice between shelling out a bit more in taxes to keep Granny independent or having poor Granny move in with them, the answer will be a bit clearer.

Not to get too far off topic, but the gvmt actually made pretty good money on their bank bailout.... not every investment paid off, but as a portfolio it was pretty good...

 

[Texas Proud]

Is this info direct from the SS admin, I have a friend whose sister was a multiple marriage type... I helped her do some reading up on this and my understanding is if you are no longer married to the person and wanting to collect the spousal benefit that one of the rules is you cannot actually be re-married to another person. Or in other words, once you remarry you have given up the right to collect survivor bennies from another spouse. You can either be divorced and not remarried, or a widower/widow of someone to qualify for a survivor benny.

Does anybody else have experience with this?

She was told this directly from SS... be aware that BOTH of her husbands must be dead.... if her second husband was still alive and her first died, she would only get spousal from her current husbands account....

So far he is still living, so we do not know for sure if she will get anything...

 

[ivinsfan]

She was told this directly from SS... be aware that BOTH of her husbands must be dead.... if her second husband was still alive and her first died, she would only get spousal from her current husbands account....

So far he is still living, so we do not know for sure if she will get anything...

Thanks for that info, so for my friend's sister ALL of her husbands must be dead,I don't think that's going to work out for her! No wonder the rule book for SS payments is so big.

 

[mathjak107]

The bolded statement above piqued my interest. Without being too nosey, is this because your income from taxable investments is too high? Or is it because your expenses are high and the part that is not "mostly cash" kicks you up above a subsidy level?

One of the most exciting things I have learned this year (here and on Bogleheads) is about relatively high-net-worth retirees playing the "MAGI game" using taxable funds (cash) to cover most living expenses up to 65, thereby minimizing taxation and maximizing ACA subsidies. I hope I am not missing some major point.....

this is our first year going in to retirement so we have about 2 years cash in place but the income we do get from investments has us up above the threshold for a medical subsidy.

 

[Big_Hitter]

^ IB Porky!

 

[Mulligan]

Same here, Mulligan. Due to WEP, my SS will be at most $250 @ 62. I'll be grabbing it then. Should be enough for gas money for fishing.

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Marty my pension system says they are fighting for us to get our rightful share of security and repealing the WEP ( they been saying this for years though). I have to admit many years ago I thought I was "getting screwed". Then when I took the time to actually research it, I have no qualms with WEP.
It is quite disingenuous I think for it to be advertised as WEP "ripping people off". Most people have no clue about bend points and such of SS.


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[daylatedollarshort]

One of the most exciting things I have learned this year (here and on Bogleheads) is about relatively high-net-worth retirees playing the "MAGI game" using taxable funds (cash) to cover most living expenses up to 65, thereby minimizing taxation and maximizing ACA subsidies. I hope I am not missing some major point.....

We play the MAGI and FAFSA games. The prizes are amazing. Our limiting factor on expenses is not so much income itself but AGI. HSA accounts, business expenses, credit card games (untaxable income), product reviews, utility company rebates, energy conservation - they are all parts of interesting math / tax program / AGI limit challenges at my house.

 

[Texas Proud]

Thanks for that info, so for my friend's sister ALL of her husbands must be dead,I don't think that's going to work out for her! No wonder the rule book for SS payments is so big.

I am not going to say 'all' if there are more than 2.... I think the current one and the one you want to claim from has to be dead... I would think a third could still be alive... but this is a wild guess....

Remember, you have to have 10 years to qualify... my sister has a friend who was also a teacher and she got divorced at 9 years 8ish months... she said if she only knew she would have waited a few months.... I do not think she ever got remarried, so she only has her pension...

 

[Mulligan]

I am not going to say 'all' if there are more than 2.... I think the current one and the one you want to claim from has to be dead... I would think a third could still be alive... but this is a wild guess....

Remember, you have to have 10 years to qualify... my sister has a friend who was also a teacher and she got divorced at 9 years 8ish months... she said if she only knew she would have waited a few months.... I do not think she ever got remarried, so she only has her pension...

What is interesting about the above sisters friend is if she had lived in my state it probably wouldn't have even mattered. The WEP would have got her here on her own pension and the GPO would have smacked her the other way, so little benefit would have occurred being married the 10 years. There are a few states where teachers do not contribute to SS and that creates a big misunderstanding of SS spousal benefits in those locations.


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[Texas Proud]

What is interesting about the above sisters friend is if she had lived in my state it probably wouldn't have even mattered. The WEP would have got her here on her own pension and the GPO would have smacked her the other way, so little benefit would have occurred being married the 10 years. There are a few states where teachers do not contribute to SS and that creates a big misunderstanding of SS spousal benefits in those locations.


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Nope, she retired before that came into play.... my sister is getting her pension and survivor SS.... once you started, they did not take it away...

 

[gerntz]

I didn't use a superlative, you did. You are putting words in my mouth.

OK, you didn't use the word "always".

 

[Independent]

Look, we don't even know for sure that the Trust Fund exhaustion will take place as projected. The SSA projections for the economy have typically been pessimistic. The main problem over the past seven years has been the severe recession and slow recovery. When folks don't work, they don't pay FICA. Wage stagnation hasn't helped either.

I want to avoid making a political statement about what I think we should do about SS, and stick to a technical comment about projections.

We certainly don't know the exact year when the Trust Fund will be exhausted. All we have are estimates.

However, I'm pretty sure that the SSA projections for the economy have not typically been pessimistic. If they were, the Trust Fund exhaustion year would typically move out in successive Trustees Reports. Those dates do vary, but not in just one direction.

The trustees assume a future of "normal" economies.
When unemployment is low and tax revenues go up, the Trust Fund builds up and that date moves later.
When unemployment is high and tax revenues go down, the Trust Fund doesn't build as quickly, and that date moves sooner.

Here's the actual history of projection dates from various Trustees Reports:

RptYear	OldAge	DI.......	Combined
2014	2034	2016	2033
2013	2035	2016	2033
2012	2035	2016	2033
2011	2038	2018	2036
2010	2040	2018	2037
2009	2039	2020	2037
2008	2042	2025	2041
2007	2042	2026	2041
2006	2042	2025	2040
2005	2043	2027	2041
2004	2044	2029	2042
2003	2044	2028	2042
2002	2043	2028	2041
2001	2040	2026	2038
2000	2039	2023	2027
1999	2036	2020	2034
1998	2034	2019	2032
1997	2031	2015	2029
1996	2031	2015	2029

The trustees' and actuaries' work is examined and critique'd by various outsiders, and the CBO runs it's own, alternate projection. I don't know of anyone who thinks the projections are either perfect, or so far off that the system will just hum along indefinitely.

We do know, that the actual "cost rate" exceeded the actual "income rate" in each of the four years from 2010 thru 2013.

 

[timo2]

People seem to be worried about SS having issues, and thus want to take it early. What about the opposite hypothetical view: the banks are much more likely to crash the economy again, which would leave SS as the only money left fro retirees. So the resulting logic is to spend one's money in the banks first and leave SS and I bonds to last.

 

[kimcdougc]

Originally Posted by Chuckanut I have no problem with people taking SS at 62 as long as they don't start squawking a few years down the road about how poor they are, and how the government should take some $$ from those who get the larger checks in order to help those who cashed in at 62.




That is why we have our portfolio is gaged to not get any ss. It will be gravy on the top of what we have saved.

 

[Mags438]

If they cut the benefits of seniors, what are they going to do, march on Washington in their walkers?

Yep.

 

[Sunset]

this is our first year going in to retirement so we have about 2 years cash in place but the income we do get from investments has us up above the threshold for a medical subsidy.

Don't know if its an interest to you or not, but wouldn't it be possible for you to change a bunch of those investments into very tax friendly ones, example BRK.B (or even VTI etf) ?

 

[RunningBum]

Don't know if its an interest to you or not, but wouldn't it be possible for you to change a bunch of those investments into very tax friendly ones, example BRK.B (or even VTI etf) ?

Can't speak for mathjak but for me, it would be a huge tax hit to exchange investments like that. The subsidy at age 53 wouldn't be all that much for me anyway. If subsidies are still in place as I get closer to 65 and premiums go up I may do enough of that one year and stop my Roth conversions to get the subsidy.

 

[Mulligan]

People seem to be worried about SS having issues, and thus want to take it early. What about the opposite hypothetical view: the banks are much more likely to crash the economy again, which would leave SS as the only money left fro retirees. So the resulting logic is to spend one's money in the banks first and leave SS and I bonds to last.

I do not think these people are worried about the system just going belly up and disappearing. More concerned with means testing, taxing of benefits, reduced benefits etc. which would negate the comparison. For some people, the allure to hold unto ones own money is a powerful incentive to alter SS payouts to an earlier date. It maybe more of an emotional satisfier for some, but I can understand the feeling.


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[Independent]

I consider the possibility of means testing as one reason to defer SS.

If "means" is defined as assets and/or non-SS income, I reduce my after age 70 "means" by spending down assets between 62 and 70.