Trying to understand the SS age 70 wait

zaqxsw said:
If you have a low earning spouse, it makes a difference how both of you file, plus your spouse's benefits never really go up after you reach your PIO, except as your PIO slowly goes up:
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I meant PIA (Primary Insurance Amount).
 
zaqxsw said:
If you have a low earning spouse, it makes a difference how both of you file, plus your spouse's benefits never really go up after you reach your PIO, except as your PIO slowly goes up:

https://www.kitces.com/blog/why-it-rarely-pays-for-both-spouses-to-delay-social-security-benefits/

Just a heads up on anyone looking to file. SS is swamped. I filed three months in advance and it might happen on my effective date, but my DW filed for spousal benefits a week after I applied. It takes a phone appointment to file for spousal benefits. Her "phone" appointment is in two months! Yep, benefits are retroactive, but still, amazing...
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Excellent points.
If one REALLY needs their SS to live on NOW or within the next 3months, then file ASAP due to SS's backlog. IIRC when you file you can request a start date up to 3 months in the future......which will become the past if SS takes over 3mo to process :(
 
SnowballCamper said:
Yes, if one plans on living a long time (past a break even age), and has the funds to live on between 62 and 70, then delaying SS payments is, generally, the thing to do.
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That's what it comes down to more than anything. If you can afford to wait, and you expect to live past the breakeven age, odds are you'll do better waiting. Some of us have a very good idea re: our longevity probabilities. Mine is very long...and planning on exceptions is foolish ('what if I get hit by a bus') but some people here love to raise it.
 
Midpack said:
That's what it comes down to more than anything. If you can afford to wait, and you expect to live past the breakeven age, odds are you'll do better waiting. Some of us have a very good idea re: our longevity probabilities. Mine is very long...and planning on exceptions is foolish ('what if I get hit by a bus') but some people here love to raise it.
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I have often raised the issue of early demise (both here and with my FA) but I do not see it as the ONLY issue in the decision. "Planning on it" is not the same as assigning that risk some imputed financial cost......whether to one's self in terms of added $$ to enhance one's lifestyle or to one's heirs as part of their estate.
DW and I can afford to wait, but the decision to maximize total net (after-tax) SS benefits over both of our predicted lifetimes is not as simple as just "wait until 70".
 
I started SS at 62 (2 years ago). My wife has her own SS so survival benefits were not a consideration. My calculated breakeven point was between 80 to 85 dependent on ROI. The kicker for me was Legislation Risk. My assumption was I cannot count on the government not changing the rules for the next 25 years.
 
I was pretty much in the wait until 70 camp reserving my option to reevaluate each year based on market conditions. I finally applied for benefits as a single on August 5 with a start date of November 1. I received an email on Nov 3 advising me of an update on my application and to sign on to MySSA for status. New status was that I was approved on Nov 2 and a letter should be received with details within 10 to 15 days.

This will make my start date at age 68 years and 5 month. I already live on less than my projected SS payment and now will enjoy having no state or federal taxes so in effect, a substantial increase in income. Not sure whether to crank back my automatic transfers from my IRA or not as they are currently at a 3% WR. Keeping the same rate will bump my Fed taxes back up but they will anyway when I start RMDs in 4 years. I never realized retirement required so much math.

I did some quick calculations on the payback for continuing to wait for my SS but decided it just wasn't worth delaying any further. I'm not trying to squeeze out every last dime I can, just looking a a secure and comfortable retirement. I'm 9 years and 9 months into retirement so I think I have a handle on expenses at this point. I can see both sides of the issue of when to collect SS as I have been in both camps at one time or another.
 
5Miler said:
This will make my start date at age 68 years and 5 month. I already live on less than my projected SS payment and now will enjoy having no state or federal taxes so in effect, a substantial increase in income. Not sure whether to crank back my automatic transfers from my IRA or not as they are currently at a 3% WR. Keeping the same rate will bump my Fed taxes back up but they will anyway when I start RMDs in 4 years. I never realized retirement required so much math.
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Consider converting your current rate of tIRA withdrawals to a Roth IRA. You'll pay the tax now but the growth will be free. It won't make a big impact but it'll be something.
 
On the other hand, those conversions might just put some or all of your SS benefit into being taxed--the dreaded SS tax hump. It's worth running tax estimates to see the effect. Maybe you don't do any withdrawal/conversions from your tIRA while you don't have to.
 
RunningBum said:
On the other hand, those conversions might just put some or all of your SS benefit into being taxed--the dreaded SS tax hump. It's worth running tax estimates to see the effect. Maybe you don't do any withdrawal/conversions from your tIRA while you don't have to.
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I will have to take a closer look at the Roth conversions. It won't do much to alleviate my RMD issues as I have been earning much more than my withdrawals but every little bit helps. A cursory view shows keeping my same IRA withdrawal will put me well into the 22% bracket from my current 12% but with a bit of breathing room until 24%. I would like to avoid IRMAA as that income level is also close to me losing my real estate tax exemptions for schools which cuts my tax by two thirds. So many moving parts to all of this.
 
In that case it is probably easy money to convet to the top of the 12% tax bracket... pay 12% or less to avoid 22% or more later.

Now extending that into the current 22% tax bracket is less lucrative as even if that rates revert as scheduled you would be paying 22% now to avoid paying 25% later.
 
jkern said:
I started SS at 62 (2 years ago). My wife has her own SS so survival benefits were not a consideration. My calculated breakeven point was between 80 to 85 dependent on ROI. The kicker for me was Legislation Risk. My assumption was I cannot count on the government not changing the rules for the next 25 years.
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IIRC, the last time major SS changes were in the air in Congress, those (voters) 55+ would not bet affected. Of course, that’s no guarantee about future changes, so if Congress makes changes to me (I’m 55), then I will do some combination of pounding sand, holding my breath until I pass out and turning blue in the face.
 
Our decision is based on the best survivor benefits for DW who is 4 years younger.
It also dovetails with keeping income low for doing Roth conversions.
Between those two things we can keep her retirement simple and without RMDs, should she survive me.
It was really never about maximizing the SS benefit, it was always about providing the best steady check for her.
 
pb4uski said:
In that case it is probably easy money to convet to the top of the 12% tax bracket... pay 12% or less to avoid 22% or more later.

Now extending that into the current 22% tax bracket is less lucrative as even if that rates revert as scheduled you would be paying 22% now to avoid paying 25% later.
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Thanks. You and Runningbum prodded me into putting together a rudimentary spreadsheet this morning to calculate the cost for completing a Roth conversion at different amounts and it looks like I can convert $20K before slipping into the 22% bracket. This will do very little to change my RMD picture but it is a relatively cheap conversion at 12% so makes great sense. Next year will be more interesting as SS income becomes a major factor.

Sorry for the short thread hijack but I appreciate the content.
 
I guess it is that I am always reading about strategies to begin SS benefits based on high earner, low earner, age difference of spouse, etc...The only strategy we have is every man for him/herself! Haha...
 
wearefinishedworking said:
No one ever talks about married couples who are the same age and have roughly the same SS benefit.
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For the most part, in that case the decision is not different from if they were single because any spousal benefits would be negligible in the situation that you describe.

For single life situations like that, health and family longevity are key factors to consider.
 
jkern said:
I started SS at 62 (2 years ago). My wife has her own SS so survival benefits were not a consideration. .....
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True if you are the lower wage earner, but if you are the high wage earner, it's not true.

We both worked, but my SS will be lower than DW's. I could take it early and not affect her survival benefit (none) , but for me I'll keep waiting on the hope I live long with a maxed out SS payment :popcorn:
 
Very helpful discussion. An ignorant question: SS is by the year from one's date of birth to next date of birth, not by calendar year, correct? E.g. say your birthday is Nov. 6, does it mean if you start taking SS on September 30 this year (when you are age x), you'll get less than if you start taking it Dec. 1 (when you are age x+1)?
 
wearefinishedworking said:
I guess it is that I am always reading about strategies to begin SS benefits based on high earner, low earner, age difference of spouse, etc...The only strategy we have is every man for him/herself! Haha...
Click to expand...

You could look at current health and family history. The one with the shorter life expectancy could start first with SS, the 2nd wait until age 70 so when the one with the shorter life expecting dies then less of the income is lost. My wife and I were born the same year but she is much healthier than I am at present plus her family is much longer lived than mine is. (We are both age 66)

It’s all just guesstimates at the end of the day.
 
pastoral said:
Very helpful discussion. An ignorant question: SS is by the year from one's date of birth to next date of birth, not by calendar year, correct? E.g. say your birthday is Nov. 6, does it mean if you start taking SS on September 30 this year (when you are age x), you'll get less than if you start taking it Dec. 1 (when you are age x+1)?
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The amount you get in SS is adjusted monthly. If you take SS in November you will get less than if you took it in December.
 
My family history is Mom passed at 64 (Stroke) and Pop at 76 (Heart attack). BUT they did not have all the advantages of today's Tech.

I would have been six foot under pushing up daisies at 52 (Electrical AV Node Failure in the Heart) if it was not for Pacemaker Technology, I am now 68 and on my second pacemaker. Ok, Cholesterol is a little high and I do take BP meds to keeps that checked, but otherwise relatively healthy.

DW is 63. According to OpenSS, DW should take at 62 (She Did) and I should wait till 70 (I am), Hopefully it will not be a bad choice. DW's SS is ~1/3rd of mine so, if I Kark it early she will get mine (I assume) and lose hers.

Regardless it is a crap shoot. Let us hope I miss the crap.
 
ShokWaveRider said:
My family history is Mom passed at 64 (Stroke) and Pop at 76 (Heart attack). BUT they did not have all the advantages of today's Tech.
Click to expand...

+1

Both of my grandfather's died in their early 50's. They endured a Great Depression, and two World Wars. They had it far tougher than I, and even my father (who lived to almost 90).
 
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