Should equals take SS at FRA or Early to preserve portfolio?
- TheTimeLord
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Should equals take SS at FRA or Early to preserve portfolio?
My DW and I are approximately the same age and in the eyes of the Social Security Administration have been pretty much equivalent wager earners throughout our work lives. As a result our SS benefit are basically equal. Given that the odds seem to be in favor of one of us dying before 80 and that individual Social Security benefits cease when the beneficiary dies would it be better to take our benefits at FRA or even a couple years early to deplete less of our investment portfolio instead of delaying until 70?
IMHO, Investing should be about living the life you want, not avoiding the life you fear. |
Run, You Clever Boy! [9085]
Re: Should equals take SS at FRA or Early to preserve portfolio?
Assuming you qualify based on date of birth, one of you should take at FRA and the other file a restricted application for spousal, subsequently filing at 70. The odds are that one of you will survive and find the increased annuity payment of SS worth the wait.
Re: Should equals take SS at FRA or Early to preserve portfolio?
It also depends what it means with your tax situation - will it affect potential Roth conversions.
Re: Should equals take SS at FRA or Early to preserve portfolio?
I think it's pretty clear that at least one of you should delay claiming benefits until age 70. Assuming that, I estimated the probable overall value if the other one begins benefits at any of eight possible ages 62 through 70. The results don't vary a lot; but the probable value comes out slightly higher when the other one claims at age 65 or 66.TheTimeLord in original post wrote:... would it be better to take our benefits at FRA [Full Retirement Age] or even a couple years early ... ?
Code: Select all
$ per Month Age 70 Value @ 1%
-------------- --------------------------
Age % PIA < 70 Both < 70 > 70 Total
--- ------ ------ ----- ------ ------- -------
62 72.50% 725 2,005 72,400 361,600 434,000
63 77.50% 775 2,055 67,400 367,700 435,100
64 83.33% 833 2,113 61,800 374,700 436,500
65 90.00% 900 2,180 55,300 382,900 438,200 <--
66 96.67% 967 2,247 47,300 391,000 438,300 <--
67 104.00% 1,040 2,320 38,000 399,800 437,800
68 112.00% 1,120 2,400 27,100 409,600 436,700
69 120.00% 1,200 2,480 14,500 419,300 433,800
70 128.00% 1,280 2,560 0 429,000 429,000
- Both of you live until at least age 70.
- You will only collect benefits based on your own work records, not on that of the spouse.
- You are both the same age.
- You will both have the same Primary Insurance Amount (PIA) at FRA. For the calculation above I'm assuming this is $1,000 per month.
- You both will stop working before claiming benefits.
- For illustration I'm assuming you each have an FRA of 66-1/2 and therefore your early or delayed benefits as a percent of the PIA are as shown on this SSA web page. (I doubt the actual FRA from 66 to 67 would make much difference in the results.)
- Benefits received by the one who claims before age 70 will be invested at a 1% real return until age 70.
- Benefits received after age 70 are survival-weighted according to the SSA 2013 Period Life Table and are discounted at 1% back to an age 70 real value. (I used my longevity estimator for this calculation.)
- The one who retires at age 66 will receive $967 per month for four years. At 1% this will grow to $47,300 in four years as computed with the Excel FV function:
Code: Select all
47,300 = FV(1% / 12, 4 * 12, -967, 0, 0)
- Beginning at age 70 while both of you are alive, the benefit will be $2,247 per month which is the sum of $967 for the one who claims at ate 66 and $1,280 for the one who claims at age 70.
- After one of you dies, the other will receive $1,280 per month. It doesn't make any difference who dies first.
- If the one who dies first was the one who claimed at age 66, the survivor will continue to receive his/her $1,280 benefit.
- If the one who claimed at age 70 dies first, the survivor will begin getting that $1,280 benefit since it is larger.
- The longevity estimator shows these benefits, survival-weighted according to the SSA 2013 Period Life Table, and discounted at 1% to have a present value at age 70 of $391,000.
- The sum of these two values (47,300 and 391,000) is $438,300.
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Re: Should equals take SS at FRA or Early to preserve portfolio?
No. The survivor will always get an amount equal to the higher of the two benefits. If they both have the same benefit then the couple's SS income will be halved when one dies. If one takes early and the other late, family SS would only drop by something like 1/3rd. In my particular case it's only going to be 30%.TheTimeLord wrote:given that ........individual Social Security benefits cease when the beneficiary dies would it be better to take our benefits at FRA or even a couple years early to deplete less of our investment portfolio instead of delaying until 70?
Taxes are the other huge consideration. SS income is highly federal and state tax advantaged. Trading a reduced tax deferred investment portfolio for a bigger SS benefit might cut your taxes in half. Run some scenarios through your tax software.
JW
Retired at Last
- TheTimeLord
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Re: Should equals take SS at FRA or Early to preserve portfolio?
I make the assumption it would be an increase in a Taxable account or optimally a Roth.JW-Retired wrote:No. The survivor will always get an amount equal to the higher of the two benefits. If they both have the same benefit then the couple's SS income will be halved when one dies. If one takes early and the other late, family SS would only drop by something like 1/3rd. In my particular case it's only going to be 30%.TheTimeLord wrote:given that ........individual Social Security benefits cease when the beneficiary dies would it be better to take our benefits at FRA or even a couple years early to deplete less of our investment portfolio instead of delaying until 70?
Taxes are the other huge consideration. SS income is highly federal and state tax advantaged. Trading a reduced tax deferred investment portfolio for a bigger SS benefit might cut your taxes in half. Run some scenarios through your tax software.
JW
IMHO, Investing should be about living the life you want, not avoiding the life you fear. |
Run, You Clever Boy! [9085]
Re: Should equals take SS at FRA or Early to preserve portfolio?
I think you need to more precisely define preferred outcome to determine best approach.
For small nest-egg folks, minimizing risk of outliving portfolio is likely paramount.
For large nest-egg folks, getting the largest possible pay-out from Social Security is likely the priority.
Not an expert, but I'd imagine the two different goals world require different approaches.
For small nest-egg folks, minimizing risk of outliving portfolio is likely paramount.
For large nest-egg folks, getting the largest possible pay-out from Social Security is likely the priority.
Not an expert, but I'd imagine the two different goals world require different approaches.
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Re: Should equals take SS at FRA or Early to preserve portfolio?
I guess I don't understand your situation. Don't you have a sizable tax deferred account that will be subject to RMDs? Many who do would try to get some reduction in that account before age forces them to be drawing both SS and the RMDs at the same time. e.g., perhaps live on the taxable account while you delay SS and do Roth conversions?TheTimeLord wrote:I make the assumption it would be an increase in a Taxable account or optimally a Roth.JW-Retired wrote: Taxes are the other huge consideration. SS income is highly federal and state tax advantaged. Trading a reduced tax deferred investment portfolio for a bigger SS benefit might cut your taxes in half. Run some scenarios through your tax software.
Once all that income is coming in the die is cast.
JW
Retired at Last
- TheTimeLord
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Re: Should equals take SS at FRA or Early to preserve portfolio?
I am hoping I will be able to leverage my mix of Taxable and Tax Deferred accounts I have to minimize taxes once I retire and hopefully end up with only a small portion remaining in tax deferred. Or I am being a dum-dum.JW-Retired wrote:I guess I don't understand your situation. Don't you have a sizable tax deferred account that will be subject to RMDs? Many who do would try to get some reduction in that account before age forces them to be drawing both SS and the RMDs at the same time. e.g., perhaps live on the taxable account while you delay SS and do Roth conversions?TheTimeLord wrote:I make the assumption it would be an increase in a Taxable account or optimally a Roth.JW-Retired wrote: Taxes are the other huge consideration. SS income is highly federal and state tax advantaged. Trading a reduced tax deferred investment portfolio for a bigger SS benefit might cut your taxes in half. Run some scenarios through your tax software.
Once all that income is coming in the die is cast.
JW
IMHO, Investing should be about living the life you want, not avoiding the life you fear. |
Run, You Clever Boy! [9085]
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Re: Should equals take SS at FRA or Early to preserve portfolio?
You say "depleting" like it's a bad thing.
Well yes, if port size is just $100k to start then it could get all used up during delay for higher SS.
But if your portfolio is much larger, then spending down tax deferred funds while delaying SS to 70 allows income smoothing so that your AGI doesn't have a big jump at age 70 when RMDs start.
This is fairly common knowledge around here...
Well yes, if port size is just $100k to start then it could get all used up during delay for higher SS.
But if your portfolio is much larger, then spending down tax deferred funds while delaying SS to 70 allows income smoothing so that your AGI doesn't have a big jump at age 70 when RMDs start.
This is fairly common knowledge around here...
Attempted new signature...
Re: Should equals take SS at FRA or Early to preserve portfolio?
I always see this worded in this manner and I have a question.neilpilot wrote:Assuming you qualify based on date of birth, one of you should take at FRA and the other file a restricted application for spousal, subsequently filing at 70. The odds are that one of you will survive and find the increased annuity payment of SS worth the wait.
Assuming that the older and higher earning spouse qualifies based on date of birth and that the younger spouse claims their benefit one year prior to their FRA.
Can the older spouse still file a restricted application once they reach their FRA age while waiting to take their benefit until the age of 70?
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Re: Should equals take SS at FRA or Early to preserve portfolio?
Can't be very specific without knowing what your income streams are going to look like. But if you are taking SS at the same time, reducing your Tax Deferred accounts by living on them and/or doing Roth conversions can effectively cause some portion of the conversion to be marginal taxed at a high rate (e.g., up to 46.25% + state).TheTimeLord wrote:
I am hoping I will be able to leverage my mix of Taxable and Tax Deferred accounts I have to minimize taxes once I retire and hopefully end up with only a small portion remaining in tax deferred. Or I am being a dum-dum.
Minimum taxes for a couple is to have not very much except SS income. Jointly, they can have the maximum possible $84k in SS and still pay zero in federal or state tax.
In my own case, even when the 85% Federal tax on SS is fully phase in, along with state tax that still amounts to about 2 Federal tax brackets less tax I pay on SS dollars.
JW
Retired at Last
Re: Should equals take SS at FRA or Early to preserve portfolio?
And delaying SS is the best way to do this. If you take SS at 70 rather than 66, you withdraw more from your portfolio in those first four years, but less after that, and eventually the portfolio will catch up. If you happen to live to 100, you will have been able to spend much more without depleting your portfolio by delaying SS.hand wrote:I think you need to more precisely define preferred outcome to determine best approach.
For small nest-egg folks, minimizing risk of outliving portfolio is likely paramount.
This is not a benefit specific to SS; if you have a small portfolio, using some of it to buy an annuity also decreases the risk of outliving your money, at the cost of reducing your inheritance. SS happens to be an unusually good annuity; forgoing $1000 per month at age 66 gets you an extra $80 per month from age 67 on, indexed to inflation.
And here, optimizing expected value makes sense, depending on factors such as your health and who will get whose spousal benefits. For a couple of the same age with the same benefits, it is often best for the wife to take her benefit at FRA and the husband at 70, since the husband is more likely to die first, and if that happens, the widow's benefit will increase to the amount her husband was earning.For large nest-egg folks, getting the largest possible pay-out from Social Security is likely the priority.
Re: Should equals take SS at FRA or Early to preserve portfolio?
Why are you hoping and not calculating? While there are too many variables to be exact, run a few scenarios with your expected retirement expenses coming from various sources between now and age 70. Based on prior posts my sense is that you have a comfortable size nest egg. If a significant percentage is in tax deferred I think you'll still have sizable RMDs and taxes to go with them unless you are doing major Roth conversions between now and age 70.TheTimeLord wrote:and hopefully end up with only a small portion remaining in tax deferred.
I know you've spent a lot of time with the question of do you have enough. The question on how to drawn down form which accounts and when to take SS deserve just as much attention.
"The greatest enemy of a good plan is the dream of a perfect plan" - Carl Von Clausewitz
- TheTimeLord
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Re: Should equals take SS at FRA or Early to preserve portfolio?
I don't disagree but Roth conversions are impractical as long as my DW and I are both working at our current jobs. So until we have more clarity on retirement dates any thoughts about Roth conversions are just a guess. Also, it appears we will have a significant change in the ratio between our taxable and tax deferred accounts in late 2017. Also working on moving more equities into the taxable space in exchange for moving more fixed income into the tax deferred space.BigJohn wrote:Why are you hoping and not calculating? While there are too many variables to be exact, run a few scenarios with your expected retirement expenses coming from various sources between now and age 70. Based on prior posts my sense is that you have a comfortable size nest egg. If a significant percentage is in tax deferred I think you'll still have sizable RMDs and taxes to go with them unless you are doing major Roth conversions between now and age 70.TheTimeLord wrote:and hopefully end up with only a small portion remaining in tax deferred.
I know you've spent a lot of time with the question of do you have enough. The question on how to drawn down form which accounts and when to take SS deserve just as much attention.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. |
Run, You Clever Boy! [9085]
Re: Should equals take SS at FRA or Early to preserve portfolio?
We are in a similar situation now that we still work but are very close to retirement - simulating the best guess and looking at the years left to do Roth conversions is one reason why will likely retire next year. As each year goes by the options get reduced and the ability to control some of the taxes you will see are reduced as well. In specific ways waiting costs more so simulating the future with something like IORP can be an eye opener for what your options are.TheTimeLord wrote:I don't disagree but Roth conversions are impractical as long as my DW and I are both working at our current jobs. So until we have more clarity on retirement dates any thoughts about Roth conversions are just a guess. Also, it appears we will have a significant change in the ratio between our taxable and tax deferred accounts in late 2017. Also working on moving more equities into the taxable space in exchange for moving more fixed income into the tax deferred space.BigJohn wrote:Why are you hoping and not calculating? While there are too many variables to be exact, run a few scenarios with your expected retirement expenses coming from various sources between now and age 70. Based on prior posts my sense is that you have a comfortable size nest egg. If a significant percentage is in tax deferred I think you'll still have sizable RMDs and taxes to go with them unless you are doing major Roth conversions between now and age 70.TheTimeLord wrote:and hopefully end up with only a small portion remaining in tax deferred.
I know you've spent a lot of time with the question of do you have enough. The question on how to drawn down form which accounts and when to take SS deserve just as much attention.
Re: Should equals take SS at FRA or Early to preserve portfolio?
+1neilpilot wrote:Assuming you qualify based on date of birth, one of you should take at FRA and the other file a restricted application for spousal, subsequently filing at 70. The odds are that one of you will survive and find the increased annuity payment of SS worth the wait.
Worked for us. This way we 'split the difference' in our transition into SS. We felt good about getting 'something' between FRA and 70 (DW on her earnings + me on spousal), and we still got the delay to 70 benefit on my earnings. In our case, I was higher earner, but think we would have done the same even if in OP's situation.
Plus, used this period to convert some trad IRA $$ to ROTH $$ as well. My lower spousal SS payments helped here also.
The power of accurate observation is often called cynicism by those who do not have it. ~George Bernard Shaw
- TheTimeLord
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Re: Should equals take SS at FRA or Early to preserve portfolio?
I have been mentally debating whether continuing to work was all that advantageous when current and future taxes are taken into account. But anything additional we save in taxable will help make Roth conversions easier. I am sure it is a topic I should put more effort into.smitcat wrote:We are in a similar situation now that we still work but are very close to retirement - simulating the best guess and looking at the years left to do Roth conversions is one reason why will likely retire next year. As each year goes by the options get reduced and the ability to control some of the taxes you will see are reduced as well. In specific ways waiting costs more so simulating the future with something like IORP can be an eye opener for what your options are.TheTimeLord wrote:I don't disagree but Roth conversions are impractical as long as my DW and I are both working at our current jobs. So until we have more clarity on retirement dates any thoughts about Roth conversions are just a guess. Also, it appears we will have a significant change in the ratio between our taxable and tax deferred accounts in late 2017. Also working on moving more equities into the taxable space in exchange for moving more fixed income into the tax deferred space.BigJohn wrote:Why are you hoping and not calculating? While there are too many variables to be exact, run a few scenarios with your expected retirement expenses coming from various sources between now and age 70. Based on prior posts my sense is that you have a comfortable size nest egg. If a significant percentage is in tax deferred I think you'll still have sizable RMDs and taxes to go with them unless you are doing major Roth conversions between now and age 70.TheTimeLord wrote:and hopefully end up with only a small portion remaining in tax deferred.
I know you've spent a lot of time with the question of do you have enough. The question on how to drawn down form which accounts and when to take SS deserve just as much attention.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. |
Run, You Clever Boy! [9085]
Re: Should equals take SS at FRA or Early to preserve portfolio?
TimeLord, not sure how old you guys are but amount in taxable is just one potential constraint. The other major constraint is having enough years before RMDs and SS kick-in at age 70. After that the lower tax brackets can get filled with just this income which likely leaves no room for economical Roth conversions. It's important to understand the balance between the two so one doesn't become a constraint much sooner than the other.TheTimeLord wrote:But anything additional we save in taxable will help make Roth conversions easier.
"The greatest enemy of a good plan is the dream of a perfect plan" - Carl Von Clausewitz
Re: Should equals take SS at FRA or Early to preserve portfolio?
Delay of SS alone will help preserve our portfolio. I retired at 66 and am delaying SS until 70. The 4 years of using my portfolio is small compared to many years of higher SS income with lower withdrawals needed after taking a larger SS after 70. I am insuring against longevity. Converting traditional iRAs and 401ks to Roth accounts in a judicious manner will further preserve our portfolio.
To date my taxable account has continued to go up despite tapping into it for expenses while awaiting SS and for taxes for conversions.
To date my taxable account has continued to go up despite tapping into it for expenses while awaiting SS and for taxes for conversions.
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Re: Should equals take SS at FRA or Early to preserve portfolio?
Your question has become an "option" question.TheTimeLord wrote:My DW and I are approximately the same age and in the eyes of the Social Security Administration have been pretty much equivalent wager earners throughout our work lives. As a result our SS benefit are basically equal. Given that the odds seem to be in favor of one of us dying before 80 and that individual Social Security benefits cease when the beneficiary dies would it be better to take our benefits at FRA or even a couple years early to deplete less of our investment portfolio instead of delaying until 70?
I asked the same thing (close enough anyway) at our time of decision.
Next question is "how do you value the "option" alternatives? And before that, What are your Option/Alternatives.
YMMV
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Re: Should equals take SS at FRA or Early to preserve portfolio?
Another wrinkle (depending on your state rules) is what happens if one claims at 62 and the other at 70, and the late claimer is unfortunate enough to spend many years in assisted living - enough that LTC/the portfolio are exhausted.
In my state, the late claimer's SS payment (and most of the portfolio) would go to the nursing home, while the early claimer ekes it out on the reduced SS benefit. Both delaying until 70 hedges that (unlikely) scenario.
In my state, the late claimer's SS payment (and most of the portfolio) would go to the nursing home, while the early claimer ekes it out on the reduced SS benefit. Both delaying until 70 hedges that (unlikely) scenario.
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Re: Should equals take SS at FRA or Early to preserve portfolio?
The situation I am outlining deals with couples of approximately the same age and benefits.SGM wrote:Delay of SS alone will help preserve our portfolio. I retired at 66 and am delaying SS until 70. The 4 years of using my portfolio is small compared to many years of higher SS income with lower withdrawals needed after taking a larger SS after 70. I am insuring against longevity. Converting traditional iRAs and 401ks to Roth accounts in a judicious manner will further preserve our portfolio.
To date my taxable account has continued to go up despite tapping into it for expenses while awaiting SS and for taxes for conversions.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. |
Run, You Clever Boy! [9085]
Re: Should equals take SS at FRA or Early to preserve portfolio?
To answer the question of whether to draw down your portfolio or take SS early, run your situation on I-ORP
http://www.I-ORP.com
Be sure to select the LONG FORM (link at the bottom of the home page).
Allow the tool to calculate conversion to ROTH for you (assuming you have some assets in an IRA or 401K with previous employer that could be rolled over to an IRA. That made a big difference for our plans.
http://www.I-ORP.com
Be sure to select the LONG FORM (link at the bottom of the home page).
Allow the tool to calculate conversion to ROTH for you (assuming you have some assets in an IRA or 401K with previous employer that could be rolled over to an IRA. That made a big difference for our plans.
The mightiest Oak is just a nut who stayed the course.
Re: Should equals take SS at FRA or Early to preserve portfolio?
If a couple are both at similar ages and similar incomes then delaying until 70 for one of the couple is still optimal in terms of a widow's benefit. Looking at the difference between the second spouse claiming at 66 vs. 70 would be a difference of about $2500 monthly vs. $3300 monthly. The cost of waitng is about $60k per year x 4 years or $240k. The rationale is not as strong as you would still have the higher widow's benefit with or without the second spouse delaying.
I would look closely at the benefits of conversions between 66 and 70 at the lower incomes with both delaying. Delaying for the second spouse may be helpful, but not necessarily delaying all the way to 70 for the second spouse. I don't think this post adds much to the conversation but just restates the problem. For the second delay I would look at a break even analysis but not for the first delay.
Fortunately, we got in under the wire and are doing a spousal benefit and a file and suspend so one of us is collecting a spousal at 66 and both are collecting their own SS at 70. I saw the handwriting on the wall at a SS research symposium. Presenters were up in arms over the unfairness of some being aware of file and suspend while others were not. Some presenters are against catch up contributions for older workers to 401ks as it tends to be taken by the better off.
I would look closely at the benefits of conversions between 66 and 70 at the lower incomes with both delaying. Delaying for the second spouse may be helpful, but not necessarily delaying all the way to 70 for the second spouse. I don't think this post adds much to the conversation but just restates the problem. For the second delay I would look at a break even analysis but not for the first delay.
Fortunately, we got in under the wire and are doing a spousal benefit and a file and suspend so one of us is collecting a spousal at 66 and both are collecting their own SS at 70. I saw the handwriting on the wall at a SS research symposium. Presenters were up in arms over the unfairness of some being aware of file and suspend while others were not. Some presenters are against catch up contributions for older workers to 401ks as it tends to be taken by the better off.
Re: Should equals take SS at FRA or Early to preserve portfolio?
I do not understand the math on this part....SGM wrote:If a couple are both at similar ages and similar incomes then delaying until 70 for one of the couple is still optimal in terms of a widow's benefit. Looking at the difference between the second spouse claiming at 66 vs. 70 would be a difference of about $2500 monthly vs. $3300 monthly. The cost of waitng is about $60k per year x 4 years or $240k. The rationale is not as strong as you would still have the higher widow's benefit with or without the second spouse delaying.
I would look closely at the benefits of conversions between 66 and 70 at the lower incomes with both delaying. Delaying for the second spouse may be helpful, but not necessarily delaying all the way to 70 for the second spouse. I don't think this post adds much to the conversation but just restates the problem. For the second delay I would look at a break even analysis but not for the first delay.
Fortunately, we got in under the wire and are doing a spousal benefit and a file and suspend so one of us is collecting a spousal at 66 and both are collecting their own SS at 70. I saw the handwriting on the wall at a SS research symposium. Presenters were up in arms over the unfairness of some being aware of file and suspend while others were not. Some presenters are against catch up contributions for older workers to 401ks as it tends to be taken by the better off.
"Looking at the difference between the second spouse claiming at 66 vs. 70 would be a difference of about $2500 monthly vs. $3300 monthly. The cost of waitng is about $60k per year x 4 years or $240k. The rationale is not as strong as you would still have the higher widow's benefit with or without the second spouse delaying.'
Is that not $2500/month or $30K per year for 4 years?
Re: Should equals take SS at FRA or Early to preserve portfolio?
I was looking at both members of a couple delaying. You are correct for the second person delaying alone is $30k per year for both in the couple the delay costs $60k per year. Sorry for the confusion. So the decision about the second member of the couple is $120k additional draw down. One might think again about both delaying until 70 when thinking of a $240k drawdown over 4 years.smitcat wrote:I do not understand the math on this part....SGM wrote:If a couple are both at similar ages and similar incomes then delaying until 70 for one of the couple is still optimal in terms of a widow's benefit. Looking at the difference between the second spouse claiming at 66 vs. 70 would be a difference of about $2500 monthly vs. $3300 monthly. The cost of waitng is about $60k per year x 4 years or $240k. The rationale is not as strong as you would still have the higher widow's benefit with or without the second spouse delaying.
I would look closely at the benefits of conversions between 66 and 70 at the lower incomes with both delaying. Delaying for the second spouse may be helpful, but not necessarily delaying all the way to 70 for the second spouse. I don't think this post adds much to the conversation but just restates the problem. For the second delay I would look at a break even analysis but not for the first delay.
Fortunately, we got in under the wire and are doing a spousal benefit and a file and suspend so one of us is collecting a spousal at 66 and both are collecting their own SS at 70. I saw the handwriting on the wall at a SS research symposium. Presenters were up in arms over the unfairness of some being aware of file and suspend while others were not. Some presenters are against catch up contributions for older workers to 401ks as it tends to be taken by the better off.
"Looking at the difference between the second spouse claiming at 66 vs. 70 would be a difference of about $2500 monthly vs. $3300 monthly. The cost of waitng is about $60k per year x 4 years or $240k. The rationale is not as strong as you would still have the higher widow's benefit with or without the second spouse delaying.'
Is that not $2500/month or $30K per year for 4 years?
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Re: Should equals take SS at FRA or Early to preserve portfolio?
We're in a similar situation although we're a few years away from social security. We did the math and, for us, it would be most advantageous for one to start social security at FRA and the other to wait until 70. If health situations change before that time, we'd re-assess.TheTimeLord wrote:My DW and I are approximately the same age and in the eyes of the Social Security Administration have been pretty much equivalent wager earners throughout our work lives. As a result our SS benefit are basically equal. Given that the odds seem to be in favor of one of us dying before 80 and that individual Social Security benefits cease when the beneficiary dies would it be better to take our benefits at FRA or even a couple years early to deplete less of our investment portfolio instead of delaying until 70?
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Re: Should equals take SS at FRA or Early to preserve portfolio?
Yes. Also, when the older and higher earning spouse takes their benefit at 70, the younger spouse can file for spousal benefit if they reach FRA and the spousal benefit is higher than their own benefit.bikechuck wrote:I always see this worded in this manner and I have a question.neilpilot wrote:Assuming you qualify based on date of birth, one of you should take at FRA and the other file a restricted application for spousal, subsequently filing at 70. The odds are that one of you will survive and find the increased annuity payment of SS worth the wait.
Assuming that the older and higher earning spouse qualifies based on date of birth and that the younger spouse claims their benefit one year prior to their FRA.
Can the older spouse still file a restricted application once they reach their FRA age while waiting to take their benefit until the age of 70?
Re: Should equals take SS at FRA or Early to preserve portfolio?
It is funny how different people can reach different conclusions from essentially similar inputs.SGM wrote:Delay of SS alone will help preserve our portfolio. I retired at 66 and am delaying SS until 70...
I retired at 61 and took SS at the earliest possible opportunity, 62. I think this preserved my portfolio. The SS payments represent money I have not had to take out of my portfolio for living expenses. My 100% stock allocation has done very, very well. I can maintain this aggressive AA because we have pensions, and SS which even with early onset provides a reasonable living.
I know there are lots of folks here who will shout: "you idiot". But, based on actual results, I am far ahead of the game.
Plus, the SS trust fund is going to run out in our lifetimes. This is not a political statement, even the SS Administration realizes this fact. The entire US Congress, the ghosts of all Presidents past, and a convention of wizards can not tell us what is going to happen, but we know something is going to change. The only thing I know for sure is that they are not going to demand repayment of what I have already collected...
Answering a question is easy -- asking the right question is the hard part.
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Re: Should equals take SS at FRA or Early to preserve portfolio?
I'm not sure your inputs are "essentially similar." The case of a single person who already has a 100% stock allocation (and who wishes for an even higher stock allocation) is one of the people who should actually be taking Social Security at 62 even if they don't immediately need the cash.CurlyDave wrote:It is funny how different people can reach different conclusions from essentially similar inputs.SGM wrote:Delay of SS alone will help preserve our portfolio. I retired at 66 and am delaying SS until 70...
I retired at 61 and took SS at the earliest possible opportunity, 62. I think this preserved my portfolio. The SS payments represent money I have not had to take out of my portfolio for living expenses. My 100% stock allocation has done very, very well. I can maintain this aggressive AA because we have pensions, and SS which even with early onset provides a reasonable living.
I know there are lots of folks here who will shout: "you idiot".
In contrast, for most people, a big part of the reason that delaying is advantageous is that exchanging bonds (with their currently low interest rates) for Social Security provides a meaningful increase in expected total spendable dollars over the lifetime.
Mike Piper |
Roth is a name, not an acronym. If you type ROTH, you're just yelling about retirement accounts.