SS and Medicare

[BoodaGazelle]

I will be starting Medicare in May. I am pretty sure I will be getting a Medicare Supplement plan (G or H).

For the last 2 years of ER, DW and I have been on ACA, and hence have been living off our savings. She will not turn 65 until Sept. 2022.

I have been figuring I would wait until she was on Medicare then start SS. I don't need it to live on, but would rather live on that money than my own. I do not want to restart any discussion about when to take SS. My view is that it is like an annuity but with no residual value at your death. I do not plan to leave any money to anyone.

It is my idea that DWs SS (when she starts it in a year or two) should cover all of our Medicare Supplement costs plus any miscellaneous healthcare expenses.

My SS is almost the max allowed, and we have plenty of money saved according to Fidelity.

Having said all of this, is there any other reason NOT to start my SS right away, so that it takes care of my Medicare payment and (for now) DW's ACA plan?

 

[Exchme]

It's often best for the high earner to wait until 70 to get the maximum benefit as that larger benefit will continue until both of you pass away. Opensocialsecurity.com has a great calculator to investigate options for when each of you should claim.

 

[Bamaman]

If you're in very good health, your best bet will be to put SS off as long as possible--age 70. Putting it off might be your best investment this year.

When I turned 62, I wasn't in the position to put mine off and I regret starting my SS.

Often healthcare is something we cannot afford to be without. And in the case of the ACA, many cannot afford the deductibles and/or co-pays.

Thankfully you have Medicare in sight. We had Plan G supplement last year and didn't have to pay much out of pocket. I switched to Plan F in November as I need a new $6850 insulin pump and my wife was getting a $2500 electric wheelchair with pending foot surgery. Plan F covers the 20% deductibles on Plan B, but it's expensive. At least $2400 per quarter insulin has been moved to Plan D with a max. $35 per month co-pay.

 

[BoodaGazelle]

Thanks for that reminder. Since DW's SS will be pretty large, I don't think about her. ;-)

 

[bada bing]

Having said all of this, is there any other reason NOT to start my SS right away, so that it takes care of my Medicare payment and (for now) DW's ACA plan?

Roth conversions ?

If there is money in savings available to allow choice, a general oversimplified rule of thumb is that taking SS early causes bigger final estate, with a lower "safe" retirement spending number. Delaying SS allows greater spending because more of the income uncertainty is eliminated, but it requires spending from the stash early on to get there.

If you have no estate legacy concerns, it's likely that delaying SS would allow a higher "safe" spending rate. My plan is to delay SS (and pension) to do Roth conversions and also spend more, particularly in the early retirement years.

 

[mn54]

agree with roth conversions. if you have a large tIRA savings you would want to max out your roth conversions before taking ss either up to the 22 or 24% bracket depending on your situation.

 

[pb4uski]

+1 I turned 65 last year and started Medicare. Similar to the OP we have Medigap supplemental plans and we were previously on ACA.

However, I didn't start SS because we don't need it, delaying is bargain-priced longevity insurance for us and it also would bite into the amount that I can do in low tax cost Roth conversions.

I think it is pointless to think of income sources of covering this or covering that...money is fungible and income can be used for anything.

We have money in HSAs and use that money to reimburse ourselves for Medicare Part B and Part D premiums.

 

[BoodaGazelle]

Thanks all... I already have about $80K in two Roth accounts (I wish I had done even more before). I do want to do more, but due to ACA income limits I have not been able to. If I delay SS, once DW is on Medicare, is that when people are suggesting I can still do more tIRA conversions?

 

[pb4uski]

Yes, once your DW is off and you have no constraints on the amount of income you can have and that is an ideal time to do Roth conversions.

That assumes that you and DW are in good health (it would't typically make sense to defer SS if one is in poor health).

So to take an extreme example, let's say that you have no income and no constraints on income. In 2021 you could have $108,850 of Roth conversions and would pay $9,328 in federal income tax... a very reasonable 8.6% effective tax rate on the $108,850 converted.

So assuming that you were in the 28% tax bracket when you deferred that income then you'll have saved $21,150... if you will be in the 22% tax bracket once your SS starts then you'll save $14,619.

 

[BoodaGazelle]

Thankfully so far, so good, health-wise.... just a normal list of getting-older complaints. Oh, and my artificial hip and pacemaker, but I don't really think of those as problems.

 

[ivinsfan]

Well hold on, you just said you don't want to restart any discussions about when to take SS?

So do you or don't you... I'm always up for a good SS age starting "discussion"

 

[pb4uski]

opensocialsecurity.com also recommends an optimal strategy for us of my deferring until I'm 70, which dovetails nicely with my desire to do as much low tax-cost Roth converison before my SS starts.

 

[geerman]

Early Filing Hiccup

Have enjoyed the wisdom of this site over the years. Only posted a couple of times. This seemed like the right place to maybe ask a question. DW just filed online for early SS age 62, benefit somewhere around $700. I will be waiting til at least 68. Just got our first piece of mail, acknowledging the filing but contesting 1982 W-2's. Apparently 2 different W-2's were submitted in differing amounts of $600. The letter asks for an explanation, and if they get none, it sounded as if they will disqualify all or part of the income. Total of both W-2's is about 5K. We don't of course have these 38 year old records and a quick attempt at an online effort was fruitless. She did explain this, in the return letter. Any advice here, or rough estimate this may do to the expected benefit?