Social Security at 70

[Out-to-Lunch]

My main quibble with the previous quote in question was not leaving an estate if delaying SS until 70.

My main quibble with the previous quote is that we simply don't know whether the estate will be larger or smaller if you claim early or late. If you claim early, and live a long time, the estate would be worse off than if you claim late and live a long time.

Contrariwise, if you claim late and die soon thereafter at age 70.5, the estate will be smaller than if you claim early and die at 70.5.

 

[TheWizard]

Do people actually sit around worrying about likely estate size when deciding about SS or other retirement questions? I didn't/don't...

 

[Irishgirlyc58]

Social security was never in my plans as I worked 20 years for a local government agency that did not participate in SS.
Fast forward and I went to 2 other local agencies that did participate.
I realized a few years ago that I would get some although not much.
I’m single so not leaving it for anyone else but I am leaving a portion of my monthly pension to my kids. Causing my pension to be reduced so I took SS at retirement to make up the difference at age 63.5.
I’m happy with that decision.

 

[harllee]

DH (his health is not as good as mine) took SS at 62 and then at 66 I was able to take spousal SS (can't do that anymore under the rules). I waited until age 70 to take my own SS and have been receiving my SS for about 6 months now. Between us we get about $5000 per month. We can easily live on our SS (but we do spend often more than that on some extravagances) so the ups and downs of the market does not make much difference to us.

 

[copyright1997reloaded]

My original intention when I retired at 51 was to take SS fairly early after doing traditional IRA->Roth conversions. Then I ended up going back to w*rk as an adjunct and then the next thing I know full time.

So here I am at 64 and not taking SS and not having done any conversions.

So the new plan is when I retire again (for good!?!) to try to max out Roth conversions which in turn makes me likely to defer SS to 70.

 

[Irishgirlyc58]

Perfectly healthy a 62 and considering waiting until 70. I decided to take it at 62. Next week I'm having major cancer surgery. I was probably brilliant. Why don't I feel it.

I hope your surgery goes well.
Positive vibes for a good outcome.

 

[jollystomper]

The main reason I am delaying my SS as long as possible is to maximize the survivors benefit for my DW. I am fortunate to be getting the maximum payment possible. A secondary reason related to that is to give us "headroom" for Roth conversions before RMD time.

I have used the monthly tables to do some analysis. Looking at both my pension survivor benefits plus SS survivor benefits, the annual amount crosses $90K in less than a year, $95K at my FRA (66 years 8 months), and $100K at 68 years 2 months. Even at the same (inflation adjusted) expense level the SWR would be below 2%. So likely I would not have to wait until 70 to provide her with a good life if I die first. But I will reassess as the years pass along with any health changes.

 

[oldtimer]

DW will be at FRA this year (66 & 4 months). Given the current market I think we’re going to go ahead and star her SS by year end unless the market does some miraculous recovery. Her going on SS will reduce our withdraw rate (WR) from about 5% to 3.2%. That seems prudent at this juncture versus waiting any longer.

The next decision is mine. I turn 62 next year. Even at that lowest payout, me starting SS will take our WR from about 3% to 1.5%. I really like that WR but we’ll see how things go and call that one on the fly. Market conditions like we’re experiencing tend to refocus my thoughts on portfolio preservation so that may rule the decision.

But what will RMD income do to tax brackets and IRMAA tiers when each reach 72?

 

[RobbieB]

It doesn't matter. You will still have more dough unless the tax is 100%

 

[Jerry1]

But what will RMD income do to tax brackets and IRMAA tiers when each reach 72?

Honestly, I don’t know. I’m doing conversions up to the 12% bracket. Some things in life fall under, I’ll cross that bridge when I get there. My simpleton calculations suggest I’ll exceed the 12% bracket (or whatever it is at that time) but won’t go too far into the next bracket.

I’m also looking with anticipation on the new limits being discussed in Congress. Maybe when I actually have to take RMD’s, I’ll have already got my money converted or withdrawn for my retirement accounts.

Taxes can be managed, not avoided. Hopefully, if I’m paying at a higher percentage/bracket, that means I’ll be spending at an above average level.

 

[TheWizard]

But what will RMD income do to tax brackets and IRMAA tiers when each reach 72?

It's possible to project your AGI year by year up through your mid 70s using a spreadsheet. You can then do Roth conversions in the years prior to starting SS and RMDs to raise your AGI in those earlier years with the goal of lowering your eventual RMD a bit and having an almost seamless transition in AGI across age 72.

This is what I've done.
But it's a bit of a moving target since we can't accurately project where a stock-heavy tax-deferred account will be in X years.
And while you can tweak your Roth conversion amount for the year each December based on market performance to date, you may have limits due to higher taxes and IRMAA thresholds...

 

[teejayevans]

If I’m on my early death bed, I doubt I’ll be thinking about my decision to defer SS until 70.
However if I live until 90+, the thought of me maximizing my SS earnings will bring a smile to my face.

 

[ImThinkin2019]

We are waiting to 70 to take SS because we wanted a few years of low income to do Roth rollovers. This was our plan for maybe 10 years before we fully retired.

DW was fortunate to work a Megacorp job where she could defer up to 50% of her salary. She did. On top of normal 401K and IRA savings. That's what we're using to fund the 5 years till SS starts.

My FIL (90) took SS at 62 and regrets it now. He has told me that on multiple occasions.

Everyone has their own situation and must make their own decision. It is so useful to hear everyone's thinking and experience!!

 

[harllee]

But what will RMD income do to tax brackets and IRMAA tiers when each reach 72?

We do a lot of charitable giving and now that we are old enough we are doing that from our IRAs and that will reduce our RMDs, so no problem with tax brackets or IRMAA for us.

 

[NotCreativeName]

DW (born before 1954) took spousal at FRA, and just converted to her own at age 70. I did a file/suspend, so DW could get spousal, and took mine at 70.

By waiting longer, we were able to sell appreciated stock at 0% capital gains and also do some sizeable Roth conversions between 62 and 70. It is important to look at a broad picture of income and taxes and other things that may be important to you (legacy, charities, etc.) when you are making the SSA decision.

Looking just at your breakeven may not be broad enough for many.

Is there a tool you used to analyze this? Right now I haven't looked past 65 in order to maximize ACA subsidy. I'm not sure how to model beyond that.

 

[levindb]

Is there a tool you used to analyze this? Right now I haven't looked past 65 in order to maximize ACA subsidy. I'm not sure how to model beyond that.

About 15 years ago when we started to look into the future, there was not a great tool that took into account all aspects of our financial situation...so I just made an excel model that looked at our potential income stream each year.

We forecast how much we COULD spend each year to deplete our savings at age 105. Then watched how much that amount would change if we drew SSA at 62, 66, and 70. If we assumed a low investment ROI (~3%), then taking SSA later was the best option. If we assumed a strong ROI (>8%), then taking SSA early and investing was the best option.

Taxes were the most difficult to try and predict, although there are calculators available today that would be useful in helping solve for the lowest tax...however, your assumptions (ROI, inflation, longevity) and congress can alter the outcome significantly, so you need to rerun the model to see what would best meet your needs.

For us, healthcare was being subsidized by previous employer, so we did not have to deal with ACA.

Finally, you have to decide how important legacy is to you and your family.

 

[Chuckanut]

I don't follow your line of reasoning and believe you are wrong, especially in my case...

Two things:

1. I was speaking in general, not at anybody's specific case. This is simply one more piece of information. We all have different life situations. Take what you wish and leave the rest.

2. While not everybody can or will want to do this, here's the math:

Maximize SS how much you get to spend​

Here is a pretty simple calculation for those that wish to spend more money in retirement and do not care about leaving an estate. For those that have a Big enough Portfolio and can afford to wait until 70 to take SS, you'll have more to spend every year of retirement.

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 ... '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.


https://www.early-retirement.org/forums/f28/laurence-kotlikoff-maximize-my-ss-com-77660.html#post1604411

 

[Chuckanut]

My priority is taking care of the older DH and myself if still around. This may mean that the bulk of assets goes to senior care, however, I don't see that my timing of taking SS will preclude leaving an estate. The way I see it, long term senior care is the biggest "risk" factor to depletion. Tapping SS later (even at a reduced rate); as well as triggering two smallish annunity streams (at age 70 or later) in addition to DH's pension and primary annunity stream should offer some inflation protection and offset some potential extra senior care costs.

I do agree with some of your thinking. In my case, taking SS at 70 was part of my plan to deal with potential LTC expenses.

 

[badatmath]

Perfectly healthy a 62 and considering waiting until 70. I decided to take it at 62. Next week I'm having major cancer surgery. I was probably brilliant. Why don't I feel it.

Best wishes for your recovery!

 

[Jerry1]

I’m not sure it’s quite that simple. The SS will increase based on inflation. The savings account may not keep up. The simple math looks good and gives you a good starting point, but there’s always the external factors of portfolio return and inflation.

 

[TheWizard]

I do agree with some of your thinking. In my case, taking SS at 70 was part of my plan to deal with potential LTC expenses.

Same here.

But I should point out that not all retirement income needs to be SPENT in the current year.
I'm talking about pension/annuity income, SS, and withdrawals from tax-deferred (including RMDs).
Obviously one wouldn't withdraw funds from a Roth of taxable account unless intending to spend it, so that's different.

This, of course, is a moot point for folks with low retirement income who could use every additional penny.

Now in my case, I took a major hit to my possible portfolio balance when I retired in 2013 and chose a pension/annuity for a portion of my 403(b) accumulation rather than retaining it in my tax-deferred account.

But now, with age 70 SS included, I have excess retirement income almost every month which I invest in stock funds in my taxable account...

 

[zinger1457]

May not help the OP much but a bill is currently going through the House that has bipartisan support that will raise the RMD to 75 but in steps over a number of years.
https://www.barrons.com/articles/secure-act-2-0-retirement-rmd-requirements-51648594141

Raising the age at which seniors must take required minimum distributions, or RMDs, from their retirement savings accounts to 73 from 72, effective next Jan. 1. The bill will raise the age to 74 starting in 2030 and to 75 starting in 2033.

 

[googily]

I hope others don't have to use my approach to waiting until 70 to take mine, which is that I'll be starting my survivor benefits at 60.

 

[GravitySucks]

I hope others don't have to use my approach to waiting until 70 to take mine, which is that I'll be starting my survivor benefits at 60.

Agree. It's a hell of a way to make the decision, but it's pretty much a made for you decision unless your health is real bad.
Started survivors at 60 taking my substantionally larger benefit at 70.

 

[googily]

Al
Started survivors at 60 taking my substantionally larger benefit at 70.

Condolences on being in the club.