Considering Social Security Buyback

[ivinsfan]

Thank you for your comments and the reminder. I actually used this tool and the actual SS site before we retired and have a tab in my spreadsheet that broke down the recommendations.
It recommended that DH take his SS at age 67.3 and for me to claim at 70.
DH has always planned to take his socials at 62, and mine was up for debate when the time came. I did opt to file at 62 knowing in my gut, I was going against conventional wisdom. I made an emotional decision based “a bird in the hand is worth two in the bush”. DH and I had been working and paying into SS since we were both 16 and just wanted to get some of those $ back.
I was fine with the decision until that Wade Pfau interview.
Most likely we will be fine no matter what decision is made on SS, but I will be calling the SS office tomorrow to discuss the Buyback option.
I don’t frequently post on this forum, but read it almost daily for the wisdom and experience.

Thank you!

So Dog did your DH understand all the ins and outs of his taking a check at 62. IMO if you are married taking SS is a joint decision.

I hopeful the SS office is helpful about discussing your buyback option.

 

[OAG]

How did you handle the fact that you (most likely) paid taxes on SS for those 5 years? Did you file amended returns?

Did not have to as I could take a credit for the sum of the repayment amount which was the rule at the time. Believe the IRS made the rule since you ware limited to the number of amended returns you could file. Remember, in my case it involved repayments for 5 tax years.

 

[gwix98]

No, I'm pretty sure that they still allow buybacks within the first 12 months. You're thinking of something different.

https://www.aarp.org/retirement/soc...swers/social-security-going-back-to-work.html

Used to be up to five years. Looking back I wish I had done that.

 

[maingram]

Social Security Payback

You might want to get the process started. Between COVID and the holidays, it may take a while.

Absolutely correct! I was eligible for part B Medicare in August. In May they sent me my new Medicare card and I checked the box off that I was declining it and sent it back with the explanation my husband was still working and I was on his insurance. In July I was told it would take up to 90 days to process the change. Well, since August they have been deducting $144 from my monthly check. I have contacted them monthly since and only this month did they say they took part B off and I would receive a new card. However, I still will have another $144 taken out of my December check because "didn't have time to process the change". It will be January until it is resolved completely. So, start now would be my advice and good luck!

 

[Buckeye]

Upon further investigation I think I will suspend my SS at FRA (66.8 yo) and reapply at 70 instead of pursuing the buyback option and reapplying at FRA. The outcome will be the same with SS paid out at FRA $ amount.

Some background:

DH has heart issues that have convinced him he will be lucky to make it to 80. So, he was adamant we claim our SS at 62 (earlier this year) to enjoy an enhanced lifestyle during our good years.

Our combined SS and his pension cover our core expenses and most discretionary spending. We have a healthy portfolio with about 5% in cash and laddered CDs for emergencies and when the economy and market declines. Our home is paid off and we don’t have any debt.

So, what changed?

I listened to a Boglehead podcast with Dr. Wade Pfau as the guest. He caught my attention with the discussion of probability-based retirement vs safety-first retirement. This was followed by a very rough October with DH in and out of the ER followed by the several weeks of doctor follow-up visits. Thankfully, he seems to be feeling better this past week.

His pension does have spousal benefits at 50%. So, I will not realize too much of a decline of an income base if I can revise my SS to the FRA payout amount. The combination of probability-based and safety-first makes sense to me. I’m not interested in Whole Life Insurance or an annuity which are advocated with the safety-first approach.

We would like to use the portfolio for “extras” in life, LTC expenses, help family/charities and to leave a chunk for DD inheritance.

The only real change in our overall strategy is rethinking my SS.

Any thoughts or comments are appreciated.

Happy Thanksgiving everyone!

That was a really interesting podcast.

 

[Dog]

That was a really interesting podcast.

I agree and listened to it multiple times. As a result I did send in the appropriate form to withdraw my SS application. I will consider the possibility of an annuity down the road when I’m older. Not interested in the Whole Life insurance options or reverse mortgage. We have $ outside of equities if there is a severe market decline.

 

[Dog]

You might want to get the process started. Between COVID and the holidays, it may take a while.

Thank you Dash man. I called the local office and faxed in the appropriate form last week. Verified that they received it. They did say it could take 1-3 months to process and I will continue to receive SS payments until it processes that I will need to pay back (not a problem). She did say that my application date is the date they use, not the approval date, so I should be good as long as the application is approved. Fortunately for me, they never processed my tax withholding form, so I never paid income tax on my SS benefits, so I shouldn’t have a income tax issue to deal with as long as they process the application and receive my payback before SSA- 1099 is sent. Crossing my fingers since I’m dealing with the government.

 

[Buckeye]

Thank you Dash man. I called the local office and faxed in the appropriate form last week. Verified that they received it. They did say it could take 1-3 months to process and I will continue to receive SS payments until it processes that I will need to pay back (not a problem). She did say that my application date is the date they use, not the approval date, so I should be good as long as the application is approved. Fortunately for me, they never processed my tax withholding form, so I never paid income tax on my SS benefits, so I shouldn’t have a income tax issue to deal with as long as they process the application and receive my payback before SSA- 1099 is sent. Crossing my fingers since I’m dealing with the government.

One of the most interesting parts of the podcast was his discussion of whole life and annuities. They went through his 8 (?) rules and one of them was about not having pre-conceived ideas about financial instruments. From what I gathered, he did the math/ran the simulation (based on the safety strategy) and whole life was part of the solution. The tone of his voice made it sound like even he was a little surprised that whole life was part of the solution. I know you're not doing the safety strategy but I found the discussion fascinating.