Another Social Security question

qwerty3656

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We turn 62 this year and OpenSocialSecurity has me waiting til 70 and my wife starting this year (she was a SAHM for most of her working years and has a relatively small SS). We have to keep an eye on our taxable income because of ACA insurance. Since Social Security counts toward ACA, but isn't fully taxable (and may not be taxed at all if Trump makes that happen), I'm thinking of having her wait til 65 to burn more IRA income (large SS>Large IRA). I know it's not big numbers either way, but am I thinking about this correctly?
 
You can select any point on the graph at the bottom of the Opensocialsecurity.com output to see how big an impact it is. Generally, it's a very small difference, so ACA premium credits may well be more important.
 
We turn 62 this year and OpenSocialSecurity has me waiting til 70 and my wife starting this year (she was a SAHM for most of her working years and has a relatively small SS). We have to keep an eye on our taxable income because of ACA insurance. Since Social Security counts toward ACA, but isn't fully taxable (and may not be taxed at all if Trump makes that happen), I'm thinking of having her wait til 65 to burn more IRA income (large SS>Large IRA). I know it's not big numbers either way, but am I thinking about this correctly?
It *seems* like OSS recommends this a lot, for one person to take it earlier, and the other later (70 usually). I suspect it doesn't take into account keeping your income low for Roth conversions and/or ACA subsidies. I personally don't trust it, unless I am wrong and it does factor those in.
 
^ OSS does not take into account any ACA or Roth conversion impacts. It only looks at SS benefits in isolation and maximizes those in terms of claiming strategy with respect to life expectancy, survivor benefits, etc.
 
It *seems* like OSS recommends this a lot, for one person to take it earlier, and the other later (70 usually). I suspect it doesn't take into account keeping your income low for Roth conversions and/or ACA subsidies. I personally don't trust it, unless I am wrong and it does factor those in.
Like every tool, Open SS has limits. It optimizes the age for taking SS based on benefits and life expectancies only. It doesn't know anything about the rest of your financial picture.

Within the universe of SS benefits only, Open SS picks age 62 and 1 month for the lower earner and age 70 for the higher earner a lot because those make the most sense for many people. Only the higher earner's benefit continues after one spouse passes, so the age when the higher earner should claim is as late as possible as the odds are strong that at least one of you will live a long time. The lower earner's benefit stops when either spouse passes, so that's a completely different bet and the odds say that date will be somewhat before it pays out for the lower earner to wait. But that bet is very close, so other considerations like ACA or Roth Conversions may be more important.
 
OSS suggested the same for us. We did not have the lower earner claim at 62 specifically because of ACA PTCs and Roth conversion opportunities.
 
All I'll add is that it makes a huge difference which of the various mortality tables you ask the calculator to use.
 
SS counts towards MAGI even if untaxed.
MAGI is adjusted gross income (AGI) plus these, if any: untaxed foreign income, non-taxable Social Security benefits, and tax-exempt interest.
Pretty sure opensocialsecurity doesn't consider ACA subsidy loss in its calcs. Run the numbers yourself to see. I don't know enough about spousal benefits to know if this is reason to delay to 65 for the low earner.
 
For us OSS had me taking at 70 (higher earner) and DH taking it at 68.5 or 69.
I looked carefully at the difference compared to us both waiting until 70 and the projected total lifetime amount difference was less than 1%.
 
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