Pension and Social Security

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D Newton
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Pension and Social Security

Post by D Newton » Thu Apr 26, 2018 7:53 pm

Hello,
Long-time lurker here; have learned a lot from the forum. Cannot thank you all enough.

Quick question: My wife is considering taking her pension now and if so, we were wondering if that impacts her social security benefit in the future. Wife is 54 and recently stopped working; she may be interested in working again but also plans to retire when i do. I am 61 and plan to work another 2 yrs, perhaps part-time afterwards.

Any thoughts on the pros and cons of taking the pension now would be appreciated. Thanks again,
Doug
Regards, | Doug

rkhusky
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Re: Pension and Social Security

Post by rkhusky » Thu Apr 26, 2018 8:05 pm

D Newton wrote:
Thu Apr 26, 2018 7:53 pm
Hello,
Long-time lurker here; have learned a lot from the forum. Cannot thank you all enough.

Quick question: My wife is considering taking her pension now and if so, we were wondering if that impacts her social security benefit in the future. Wife is 54 and recently stopped working; she may be interested in working again but also plans to retire when i do. I am 61 and plan to work another 2 yrs, perhaps part-time afterwards.

Any thoughts on the pros and cons of taking the pension now would be appreciated. Thanks again,
Doug
Pension should not affect SS. SS benefit is affected by contributions and timing of receipt of benefits. Not working and therefore not contributing does affect the SS benefit. The size of the pension does affect the taxation of SS, but that only happens once she starts to receive SS.

Can your wife take the pension now without penalty? If so, I don't see why she wouldn't take it.

D Newton
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Location: Down by the sea...

Re: Pension and Social Security

Post by D Newton » Thu Apr 26, 2018 8:24 pm

Thanks RK. That's what i thought too. Now the big question is whether to take a Lump Sum payment or monthly payment for life.
Regards, | Doug

Minty
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Re: Pension and Social Security

Post by Minty » Thu Apr 26, 2018 8:49 pm

Doesn't it depend on whether the pension was earned while not paying in to Social Security? https://www.ssa.gov/planners/retire/wep.html My understanding is that if a person collects a pension based on work which is exempt from Social Security, SS benefits may be reduced.
Core Four with nominal bonds and TIPS.

bberris
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Re: Pension and Social Security

Post by bberris » Thu Apr 26, 2018 9:23 pm

D Newton wrote:
Thu Apr 26, 2018 8:24 pm
Thanks RK. That's what i thought too. Now the big question is whether to take a Lump Sum payment or monthly payment for life.
That one is easy. Just get a quote for how much you would have to pay for an SPIA that pays what the pension does. Unless you know something about your longevity ...

Anyway, the answer is always to take the annuity when you compare prices, because of selection bias.

Hillview
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Re: Pension and Social Security

Post by Hillview » Fri Apr 27, 2018 5:43 am

I read Mike Piper's book and I believe there is an impact if it is a government pension

https://www.amazon.com/Social-Security- ... 0997946512
"How your benefits are affected if you have a government pension or if you continue working while claiming Social Security" is a mini chapter in his excellent book

Silk McCue
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Re: Pension and Social Security

Post by Silk McCue » Fri Apr 27, 2018 7:06 am

Quite a few people post their pension options and seek feedback on the pros and cons of the choices. You will get some good analysis if you do so.

Cheers

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BolderBoy
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Re: Pension and Social Security

Post by BolderBoy » Fri Apr 27, 2018 9:20 am

D Newton wrote:
Thu Apr 26, 2018 8:24 pm
Thanks RK. That's what i thought too. Now the big question is whether to take a Lump Sum payment or monthly payment for life.
This website can help you decide: https://www.immediateannuities.com/
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

delamer
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Re: Pension and Social Security

Post by delamer » Fri Apr 27, 2018 10:05 am

If your wife has less than 35 years of Wages covered by Social Security, that will adversely affect her SS benefit.

Something to consider when making the decision about going back to work.

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bobcat2
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Re: Pension and Social Security

Post by bobcat2 » Fri Apr 27, 2018 10:55 am

How much does your wife's pension benefit increase for each year she delays taking it? The answer to that question should be a key determinant of when she should take her pension.

BobK
In finance risk is defined as uncertainty that is consequential (nontrivial). | The two main methods of dealing with financial risk are the matching of assets to goals & diversifying.

GAAP
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Re: Pension and Social Security

Post by GAAP » Fri Apr 27, 2018 12:14 pm

bobcat2 wrote:
Fri Apr 27, 2018 10:55 am
How much does your wife's pension benefit increase for each year she delays taking it? The answer to that question should be a key determinant of when she should take her pension.

BobK
Exactly.

For example: My wife retired in December and was eligible for two pensions. With one of them, there was no benefit in waiting, so she took it immediately. The other tops out in four years, so she's waiting for that one. Both are real pensions, indexed to or above inflation (at least at today's levels). Delaying the second pension also allows more room for Roth Conversions while I'm still working.

JoeRetire
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Re: Pension and Social Security

Post by JoeRetire » Fri Apr 27, 2018 12:19 pm

D Newton wrote:
Thu Apr 26, 2018 7:53 pm
Quick question: My wife is considering taking her pension now and if so, we were wondering if that impacts her social security benefit in the future.
Assuming this isn't a government pension, then it won't have any impact on social security benefits.
Any thoughts on the pros and cons of taking the pension now would be appreciated.
As always, it depends.

What is the pension benefit impact of taking it now versus later? How much larger will the pension be if she waits?
Does the pension have a COLA?
Is this a single-life pension? Or is there a joint life option?

If you post the lump sum and lifetime benefit numbers for now and later, then it's mostly just math.

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