My Social Security Age evaluation based on my circumstances, your situation is likely different

[camfused]

Thanks,
I have seen 19, 21 and 23% in various places. 23% would be better to have a WC number

I appreciate the feedback

Yeah. Lately, I have been thinking that the SS "fix" will probably mean about a 10% reduction (probably gotta be something for us folks with some assets) in benefits, and a slight reduction in COLA amounts. But, it is best to plan for a 23% cut, since that is the only "data" we have right now.

 

[TickTock]

Since I am not filthy rich, I fear running out of money before I die much more than leaving some SS dollars on the table. I also like to sleep well at night.

Therefore I chose SS at 70.

Yep, the two main motivations (unless SS income is needed immediately), 1. Maximize lifetime SS income vs., 2. Longevity insurance.

 

[ShokWaveRider]

69 was the right time for me. That was a few years ago and I do not regret it. It is not all about the money.

 

[Flieger]

I decided to do some quick math.

Starting my SS at 63 gives me about $38k/yr income for the 4 years prior to FRA of 67, for a total of around $150k that I would not have to WD from my retirement accounts.

Waiting until FRA gives me about another $13k/year once I would start at 67.

Calculation says it would take about 12 years to make up the difference in income and start gaining from waiting. This ignores the survivors benefit improvement for DW. It also ignores potential increased earnings for the retirement funds I do not WD due to taking SS.

Running the same calc for each successive year (@64 and @65) seems to stay right around a 12 year payback.

It really for me boils down to the Survivor benefit difference for DW. more things to consider....

Flieger

 

[TheWizard]

I decided to do some quick math.

Starting my SS at 63 gives me about $38k/yr income for the 4 years prior to FRA of 67, for a total of around $150k that I would not have to WD from my retirement accounts...

It depends on the size of your retirement accounts compared to $150k or whatever the number is.
People with "large" tax-deferred accounts do well in their early 60s by pulling money out of tax-deferred for spending and Roth conversions.

This helps levelize their AGI in the long run by keeping RMDs moderate...

 

[Flieger]

It depends on the size of your retirement accounts compared to $150k or whatever the number is.
People with "large" tax-deferred accounts do well in their early 60s by pulling money out of tax-deferred for spending and Roth conversions.

This helps levelize their AGI in the long run by keeping RMDs moderate...

True. For me, the RMD is/will not be significant as I don't have the multi million $ amounts in my IRA some here seem to have.

Flieger

 

[Dtail]

It depends on the size of your retirement accounts compared to $150k or whatever the number is.
People with "large" tax-deferred accounts do well in their early 60s by pulling money out of tax-deferred for spending and Roth conversions.

This helps levelize their AGI in the long run by keeping RMDs moderate...

We have a large TIRA, so all asset withdrawals come from the TIRAs.

 

[gayl]

Im not what most would call rich. But my pension was enough and parents lived into 90s so I delayed

 

[skyking1]

I am spending on the house fast enough that I eyeball it as an impulse action LOL. Steady on !

 

[KingMota]

I am thinking in our situation I missed an obvious opportunity. We had originally planned on waiting until 70 to max my SS benefit at around $4,960 and for DW to collect spousal at 67 (she is 4.2 years younger). Her own benefit at FRA is only $1,200.

It is my understanding her spousal benefit will be based on age she files spousal benefits (expected to be FRA 67) and not the age she files for her own benefit. So isn't filing now for her own SS benefit effectively extra/free money? Won't her benefit after filing for spousal benefits at her FRA be she same whether she filed for both her own SS and spousal SS at FRA, or as now planned for her own benefit at age 64 10 months and spousal at age 67?

Am I missing anything? I do realize once I file my own SS in March 2027 at age 70 she may implicitly be deemed filing for spousal at age 65 10 months. If so, I can live with the 6% or so reduction if that is the total reduction.

Because of this I started the process today for her own retirement benefit. We have to do it over the telephone because I recently signed her up for Medicare to start May 1 (without SS retirement). That messes up online retirement filing for now.

 

[Flieger]

I am thinking in our situation I missed an obvious opportunity. We had originally planned on waiting until 70 to max my SS benefit at around $4,960 and for DW to collect spousal at 67 (she is 4.2 years younger). Her own benefit at FRA is only $1,200.

It is my understanding her spousal benefit will be based on age she files spousal benefits (expected to be FRA 67) and not the age she files for her own benefit. So isn't filing now for her own SS benefit effectively extra/free money? Won't her benefit after filing for spousal benefits at her FRA be she same whether she filed for both her own SS and spousal SS at FRA, or as now planned for her own benefit at age 64 10 months and spousal at age 67?

Am I missing anything? I do realize once I file my own SS in March 2027 at age 70 she may implicitly be deemed filing for spousal at age 65 10 months. If so, I can live with the 6% or so reduction if that is the total reduction.

Because of this I started the process today for her own retirement benefit. We have to do it over the telephone because I recently signed her up for Medicare to start May 1 (without SS retirement). That messes up online retirement filing for now.

Her spousal will be reduced if she files for her own prior to her FRA. See Post 11.

Flieger

 

[KingMota]

Well, I put my info into opensocialsecurity.com and it recommended exactly what I am doing. I also think if I had checked that site sooner, it would have recommended I file SS for lower earner, younger DW immediately. More importantly, I put in a scenario where I had her file for her own benefit later and her spousal benefit portion was unchanged. However, what I didn't consider is you do subtract her full PIA as part of the calculation, so the total benefit (own + spousal roundup) is reduced some by her filing early.

I think the post #11 example you referenced was where the spouse had already filed, and in that case when you file for your own benefits you are deemed to also be automatically filing for spousal benefits.

So, I don't think this falls into the category or no-brainer or free money, but I definitely regret not filing sooner for her benefit since a) the percentage reduction of her individual benefit isn't that great in total dollars per month b) recent health concerns make the breakeven age look less likely anyway.

Pralana, which has my total financial picture actually recommends I file my own SS now. But I have already done Roth conversions @ expected 12% and capital gains harvesting @ expected 0% this year.

 

[Exchme]

Pralana, which has my total financial picture actually recommends I file my own SS now.

As much as I love Pralana, this is an area where the program makes it hard to follow expert advice. Mike Piper (opensocialsecurity.com) recommends, quite sensibly, that the best comparison when looking at deferring SS is to spend down your bonds (ideally TIPS) while waiting to claim SS. The reasoning is that since the increased SS benefits most closely resemble long term TIPS (guaranteed and inflation adjusted), the best comparison is made using the long term TIPS rate. Put differently, an early claimer could have bought a TIPS ladder with the money received early and then the comparison is easy - you simply look at which way gives you the biggest paycheck at age 70.

If you keep your portfolio asset allocation the same every year, then you are essentially evaluating the cost of deferral at the hoped-for rate of return of your risky portfolio, not at the lower rate of guaranteed, inflation adjusted return of TIPS.

So to emulate the best comparison in Pralana, you have to figure out how your asset allocation would shift if you spent down only bonds, year by year, while waiting to claim SS and then enter that in the allowed asset allocation changes. (There are only four allowed asset allocation changes, so if you looking at more than 5 years, you would have to approximate).

 

[Flieger]

Won't her benefit after filing for spousal benefits at her FRA be she same whether she filed for both her own SS and spousal SS at FRA, or as now planned for her own benefit at age 64 10 months and spousal at age 67?

I was basing my response on this part of your statement.

Flieger

 

[sengsational]

I decided to do some quick math.

Never a good idea when considering maximizing lifetime available spending+bequest. You need an all-years calculator and ignore these individual back of the envelope bits, as interesting and informative as they seem.

Mike Piper (opensocialsecurity.com) recommends, quite sensibly, that the best comparison when looking at deferring SS is to spend down your bonds (ideally TIPS)

For the best apples to apples comparison he's right, but the reality for most of us is that the money not spent (because you're taking SS early) is invested at whatever your asset allocation targets are. In many cases delaying SS drags people into being more conservative than they want/need to be, and what their target asset allocation indicates.

@Romer , the generally accepted SS haircut amount is 23%, not 19%, in case you want to adjust and rerun your numbers.

I saw that the OWL tool on GitHub added the ability to model the SS haircut, but I haven't been back into the tool to see how/if that works as expected. This is an all-years comprehensive planner.

 

[Flieger]

Never a good idea when considering maximizing lifetime available spending+bequest. You need an all-years calculator and ignore these individual back of the envelope bits, as interesting and informative as they seem.

Yes, If I want to maximize (potential) lifetime spending benefit I would definitely follow the claim at 70 mantra. But since I don't know my expiration date, and doing the 70 Mantra would give me ~ $70k more lifetime benefit (less than 1.5 years of our total SS income), I may choose to have more spending availability during my Go-Go years. I haven't decided yet though.

Flieger

 

[camfused]

@sengsational , I was just reading today that the new estimate is 28% cut, and now in 2032. Source: Social Security faces earlier depletion date, report finds

 

[sengsational]

more spending availability

This is one that an all-years model takes into account. If you know there are big SS checks in the future, you're "allowed" to spend more now. In other words, you level-spend across all years. This doesn't work if the retiree adds an additional restriction that they will only spend dividends and interest. In that case, there is a cash flow problem, but self imposed. The models I've seen don't have that additional restriction.

 

[RunningBum]

@sengsational , I was just reading today that the new estimate is 28% cut, and now in 2032. Source: Social Security faces earlier depletion date, report finds

Thanks for that update. I turn 65 later this year and go off subsidized ACA, so the SS decision becomes real for me next year. I have an old spreadsheet that compares taking SS at 62, 67, and 70, with or without benefit cuts when the trust fund is depleted. I've just updated it with this new info, but I'm seeing at least one minor flaw to fix before using it to make my decision. Of course I have opensocialsecurity.com to use as well.

It would appear that waiting until 70 might still win out as I approach age 100, even with cuts. While living that long may be unlikely, I'm not sure how likely it is that cuts will be made across the board.

Another factor is to look at the impact of continuing to sell more investments for living expenses on my estate plan, since heirs will get stepped up basis. Would it be better to start SS sooner so I wouldn't have to sell as much? Yet another wrinkle for the spreadsheet. Also, deferring SS gives me more years of Roth conversions at an attractive rate.

 

[Koolau]

@sengsational , I was just reading today that the new estimate is 28% cut, and now in 2032. Source: Social Security faces earlier depletion date, report finds

Yeah, the hits just keep on coming.

I (sorta) console myself that I may well be dead by then. Actually, I'm building it into my ever-flexible plan.

 

[Flieger]

The recent market has me looking at SS timing. Not jumping to a decision as I will wait at least 4-6 months to let things settle out, but just considering/analyzing.

Our "plan" was the typical lower earning spouse takes early (at 62.5) while I waited to FRA to have higher total annual plus higher Survivor benefit. Earlier start was always a possibility/plan for SORR etc negative cases.

Reviewing by the $'s, and considering a best guess on longevity (based on family history and prior cancer), I looked at the 20 yr difference from FRA (living to 87) for various earlier SS starts. IOW, if I start prior to FRA, how much difference is there in total $'s from starting at FRA in 20 years (age 87). Something I also noticed and found interesting is that my numbers changed (lower benefit) on SS.GOV estimate by about $35/month from last year to this year. I'm assuming because of income change. Wondering if this change will continue or accelerate...

I then took in to account that I would reduce IRA WD's based on this earlier SS start (the whole reason for and earlier SS start), and reduced the 20 yr Diff value by that amount. Actually, I only reduced it by 80% of that assuming I may still take about 20% WD of what I would have without the early SS start for a little conservatism. I also did not include COLA increases for SS, or any earnings on the IRA funds not withdrawn. Partly for conservatism and partly because I was running down many additional input rabbit holes. This is what I show at 87. Still a positive (gain) for each early SS start scenario.

The remaining consideration (and not a small one) is the Survivor benefit difference. It's capped at about $12k/year, but not insignificant.

Flieger

 

[camfused]

@Flieger , did you take into account the now 28% estimated haircut to SS in 6 years? Also, what about Roth conversions?

 

[Flieger]

@Flieger , did you take into account the now 28% estimated haircut to SS in 6 years? Also, what about Roth conversions?

With my already very low Effective Tax rate - I'm not sure I will do much Roth Conversion.

As for 28% cut, I am of the opinion it won't happen (like last time). But assuming it does:

• I get the higher amount for longer
• The difference between a SS start of 64 vs FRA, after a 28% haircut, is ~$7,800/yr from in income standpoint.
• The actual numbers for each scenario actually looks better

Flieger

 

[mcso]

I do realize no one in charge is reading this but a few things that strike me as being needed to be rectified.
1- We were forced to pay SS tax to fund an account with our name attached so that each name would have some type of retirement fund. (I'm not here to argue if it will be enough to retire on). So regarding the "up to 85%" issue how is it right that we will be taxed on what we were forced to pay into our individual accounts. Said another way, we will be taxed on our taxes paid when we start to draw out our own money.
2- I paid SS on every dime I made. How is it correct that those making over $176,000.00 a year that they only pay SS up to that level and no more?
3- the income threshold amounts for individuals/couples have remained stagnant since inception. Shouldnt they have been/be adjusted for inflation. Don't quote me on numbers but 44k for a couple in 1986 is laughable in 2026.

Rehtorical.....I needed to vent.

Regards

 

[Dtail]

Took mine at 66 y.o.
Have longevity in the genes, but wanted to lessen the effect on the portfolio in the short to medium term.