audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
SS will kick us into higher tax brackets. I’m using the time before 70 to reposition investments such that we hopefully have a lower tax torpedo.
Well, after many years of perusing seemingly hundreds of threads on the subject I'm incredibly happy that the age old question "SS 62 vs 70" has been finally answered (at least for single persons) and the answer is: 62 WINS (marginally) of course, I knew it all along yada, yada
Let's Say you retire this year at age 62 with the $1 Million Portfolio and decide to take a 4% SWR. You get Social Security of $19,476 per year at age 62 and delaying to age 70 would get you $34,092 per year. Let's assume no inflation for ease of calculations.
Scenario age 62. Your SWR is $40K per year and Social Security of $19,476 gets you a Spending total of $59,476 for each year of your retirement period.
Scenario age 70. You stash 8 years of $34,092 from your portfolio into a savings account for a total of $272,736. Your portfolio is now down to $727,264. Your 4% SWR is now $29,090 per year and you remove $34,092 from your savings account giving you a total of $63,182 to spend each year for the rest of your 30 year retirement period.
The Delay to age 70 gives you $3,706 more every year starting at age 62 with no more increased risk.
No need for any stupid 'break even analysis'.
If your WR is more conservative, such as a majority of the people here and myself, the results are even more compelling. At a 3% WR plus SS at age 62 scenario is a total of $49,476 and the age 70 scenario is $55,910. The delay of SS to age 70 now increases your annual spending by $6,434.
If the government wanted you to take it at 70, then you would be taking it at 70.I think it is a big conspiracy theory.
The Gubment wants you to take it at 70
Sure. Life expectancy is "low" (huh?). But it could be getting better., as the average life expectancy is low in the USA and could actually be getting lower compared to other civilized countries with proper healthcare, sensible diets, less drug use and lower obesity levels. So if it sponsors articles encouraging the later the better theorists, then, "they" will be better off. More
That's correct.As best as I can tell, the benefit estimate given by the annual SS summary is the amount projected before the WEP reduction is applied.
The possibilities are unlimited. It wouldn't make any sense for an article to try to include all possible future actions. The value could be more, it could be less, it could be unaltered.The article also forgets to include any possible future actions by the Government that could alter the value of your future payments.
You may want to read up about Survivor Benefits.The spousal benefit is the only reason I'd consider waiting to take SS at FRA. Open Source Social Security made that pretty clear. As long as portfolio performs well, it really doesn't matter, but that's not a guarantee. Even if SS takes a 25% haircut, that spousal benefit is something to consider.
Edit: The best spousal benefit is DH at 70. Not going to happen.
If the government wanted you to take it at 70, then you would be taking it at 70.
Instead, they offer you the option of getting less as early as 62 and let you figure out what's best. Some conspiracy.
"not deferring" or "deferring"?another reason that we are not deferring is that to start SS would reduce the headroom that we have for low-cost tIRA withdrawals or Roth conversions from age 62 to FRA/70.
BTW, I did mean survivorship benefits. Thanks for correcting.
You may want to read up about Survivor Benefits.
I would like to thank the OP for posting this as it does give one the real numbers for different scenarios. That is valuable. Thank you! It is another piece of ammo in the arsenal of SS decision making.
+1,000The choice of starting ages is a plus for SS, IMHO. We all don’t have the same needs.
I plan on taking one at 62 if this is the case. Something at 62 is better than -zero- at 70.
I plan on taking one at 62 if this is the case. Something at 62 is better than -zero- at 70.
I can see the complexity with the seemingly simple question, and indiviudal/couple/family experiences/expectations is part of the evaluation.
Here's my generic question - with a few assumtions/givens -
1 - Retiring in 50s, and relying on a mix of traditional, Roth and brokerage accounts for retirement (let's say 1/3 of each, $3M total invested)
2 - Expected annual living expenditures is estimated to be $8k per year - (so 1/3 of that could be from traditional ($32k), 1/3 tax free Roths, and 1/3 - captial gains from brokerage account). Brokerage account has $20k in dividend payments per year.
3 - If electing to take SS at 62, would that then permit more investsment to remain invested - and therefore the opportunity cost is really expected annual rate of return of investments? Depending on tax sitation, the mix of traditional, capital gains (brokerage) and Roths vary...
Would that swing the decision heavily towards SS at 62?
That makes sense BUT the major portion of DH tIRA is in bond funds. I'm thinking spend/pay taxes on those + some cash + some CD (stay under the 12% cliff) , keep the stock index funds until 70, which is the major part of after tax portfolio. That would easily get us to 70. Then, after tax stock index funds + Roth IRA + CD's + SS. Should be able to maintain the 12% tax bracket. Our combined SS will be > $50K. With the 25% haircut SS, still in good shape.That's how I see it. If I spend "their money" or as someone earlier put it, "The House's Money" that's less of my money I need to spend. I am just as rich as before but spending the amount. Years from now when my "Coulda'/shoulda'" SS check would have been bigger I will be getting the lion's share of that money anyway plus all that money I would have spent is still there, plus "interest".
When to apply for SS is a personal decision for each person. Math and break even points don't really address the reasons some people file early, and some file later. Once you know the amount at different ages, I think most grown ups can decide when to apply. But then we have to throw in spousal benefits, survivor benefits, possible payment reductions in 2035..... What seems like
an easy decision gets complicated quickly. I would also like to know how many people who took the age 62 route actually invested the extra money without spending any of it. If it works for you, go for it.
I can see the complexity with the seemingly simple question, and indiviudal/couple/family experiences/expectations is part of the evaluation.
Here's my generic question - with a few assumtions/givens -
1 - Retiring in 50s, and relying on a mix of traditional, Roth and brokerage accounts for retirement (let's say 1/3 of each, $3M total invested)
2 - Expected annual living expenditures is estimated to be $8k per year - (so 1/3 of that could be from traditional ($32k), 1/3 tax free Roths, and 1/3 - captial gains from brokerage account). Brokerage account has $20k in dividend payments per year.
3 - If electing to take SS at 62, would that then permit more investsment to remain invested - and therefore the opportunity cost is really expected annual rate of return of investments? Depending on tax sitation, the mix of traditional, capital gains (brokerage) and Roths vary...
Would that swing the decision heavily towards SS at 62?