thanks. i just tried it out. looks very useful. took me a while to find out how to factor in the expected 24% cut starting in 2034 (again under current law)JoeRetire wrote: ↑Mon Feb 22, 2021 12:37 pmAll good tools include that factor in the analysis.grok87 wrote: ↑Mon Feb 22, 2021 12:27 pm under current law, it is estimated by the trustees that social securities benefits will be reduced by 24% starting in 2034. IMHO that needs to be factored into any serious analysis of this issue. Not trying to start a political discussion here. just saying analyzing things consistent with current law seems like a reasonable approach.
https://opensocialsecurity.com/ does.
It's just some assumptions and some math. You can choose to vary the assumptions if you like.
Delaying Social Security
Re: Delaying Social Security
RIP Mr. Bogle.
Re: Delaying Social Security
It's a terrific tool - by far the best, most comprehensive free social security tool out there.grok87 wrote: ↑Mon Feb 22, 2021 1:36 pmthanks. i just tried it out. looks very useful. took me a while to find out how to factor in the expected 24% cut starting in 2034 (again under current law)JoeRetire wrote: ↑Mon Feb 22, 2021 12:37 pmAll good tools include that factor in the analysis.grok87 wrote: ↑Mon Feb 22, 2021 12:27 pm under current law, it is estimated by the trustees that social securities benefits will be reduced by 24% starting in 2034. IMHO that needs to be factored into any serious analysis of this issue. Not trying to start a political discussion here. just saying analyzing things consistent with current law seems like a reasonable approach.
https://opensocialsecurity.com/ does.
It's just some assumptions and some math. You can choose to vary the assumptions if you like.
IMHO, it's important to explore the "advanced" options. The "Possible Future Cut" option for sure. Also explore the "Mortality Table" options, and in particular the "Assumed age at death" choice to see what might work out best in the event of a long lifetime.
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Re: Delaying Social Security
The delayed retirement credits do not compound. Delaying for four years increases the benefit amount by 32%. It is useful to know how Social Security benefits are actually calculated before speculating about means testing and other changes that no one knows.bikechuck wrote: ↑Mon Feb 22, 2021 10:07 am They are delaying four years so they can capture a 36% increase in their benefits (1.08)x(1.08)×(1.08)×(1.08) for the rest of their life. However, depending on how we manage our way through the rapidly depleting SS Trust fund they might not see the increased benefits they are hoping for. If benefits are cut or if we see means testing will they still be financially better off for waiting? Perhaps but perhaps not ... no one knows or can know for sure.
Re: Delaying Social Security
As Carl53 implies, if the Primary Insurance Amount (PIA) at Full Retirement Age (FRA) of 66+2mo is $2,300, then the increase from delaying to age 70 should be 705 constant dollars, not 1,000. (See Effect of Early or Delayed Retirement on Retirement Benefits.)
If we compare starting SS at a later age (ageL) versus an early age (ageE), starting at ageE will be relatively better if any future reduction occurs after ageE. Only if the reduction occurred before ageE would it have no effect on the comparison between starting at the two ages. To illustrate, if there is no future reduction, by delaying from 66+2mo to 70, the original poster would earn a +2.0% real return if he collects SS until age 85.
Code: Select all
Row Col A Col B Col C Col D Col E Col F
3 Born 1955
4 NRA 66.17
5 Year change 2034
6 Pct change 0%
7 Start age 66.17 70.00
8 Pct of PIA 100.00 130.67
9 Year Age Early Late Diff IRR
Code: Select all
10 2018 63
11 2019 64
12 2020 65
13 2021 66
14 2022 67 83.33 (83.33)
15 2023 68 100.00 (100.00)
16 2024 69 100.00 (100.00)
17 2025 70 100.00 (100.00)
18 2026 71 100.00 130.67 30.67
19 2027 72 100.00 130.67 30.67
20 2028 73 100.00 130.67 30.67
21 2029 74 100.00 130.67 30.67 (25.1%)
22 2030 75 100.00 130.67 30.67 (18.4%)
23 2031 76 100.00 130.67 30.67 (13.5%)
24 2032 77 100.00 130.67 30.67 (9.9%)
25 2033 78 100.00 130.67 30.67 (7.1%)
26 2034 79 100.00 130.67 30.67 (4.9%)
27 2035 80 100.00 130.67 30.67 (3.1%)
28 2036 81 100.00 130.67 30.67 (1.7%)
29 2037 82 100.00 130.67 30.67 (0.5%)
30 2038 83 100.00 130.67 30.67 0.5%
31 2039 84 100.00 130.67 30.67 1.3%
32 2040 85 100.00 130.67 30.67 2.0%
Code: Select all
Row Col A Col B Col C Col D Col E Col F
5 Year change 2034
6 Pct change -24%
9 Year Age Early Late Diff IRR
...
25 2033 78 100.00 130.67 30.67 (7.1%)
26 2034 79 100.00 130.67 30.67 (4.9%)
27 2035 80 76.00 99.31 23.31 (3.5%) <=== 24% less
28 2036 81 76.00 99.31 23.31 (2.3%)
29 2037 82 76.00 99.31 23.31 (1.3%)
30 2038 83 76.00 99.31 23.31 (0.5%)
31 2039 84 76.00 99.31 23.31 0.3%
32 2040 85 76.00 99.31 23.31 0.9%
- Select All, Copy, and Paste [ * ] the following at cell A3 of a blank Excel sheet:
Code: Select all
Born 1955 NRA =MIN(67,66+MAX(0,B3-1954)/6) Year change 2034 Pct change -0.24 Start age =B4 70 Pct of PIA =100*IF(C7<$B4,1-(5/900)*MIN(36,($B4-C7)*12)-(5/1200)*MAX(0,($B4-C7)*12-36),1+(8/1200)*(C7-$B4)*12) Year Age Early Late Diff IRR =B3+63 63 =IF($B10<=C$7,0,IF($B10>INT(C$7)+1,C$8,C$8*(1-MOD(C$7,1))))*IF($A10<=$B$5,1,1+$B$6) =IF($B10<=D$7,0,IF($B10>INT(D$7)+1,D$8,D$8*(1-MOD(D$7,1))))*IF($A10<=$B$5,1,1+$B$6) =D10-C10 =IRR(E$10:E10) =A10+1 =B10+1 =IF($B11<=C$7,0,IF($B11>INT(C$7)+1,C$8,C$8*(1-MOD(C$7,1))))*IF($A11<=$B$5,1,1+$B$6) =IF($B11<=D$7,0,IF($B11>INT(D$7)+1,D$8,D$8*(1-MOD(D$7,1))))*IF($A11<=$B$5,1,1+$B$6) =D11-C11 =IRR(E$10:E11)
- Copy cell C8 right to column D.
- Copy cells A11:F11 down to row 32.
- Format for readability.
- Modify assumptions as needed in cells B3, B5:B6, and C7:D7.
jeffyscott is correct. The only way delaying one year beyond FRA can generate an 8% return is if the extra benefit continued forever. Anything less and the return is less than 8%. For example, if the increased benefit continued 20 years, the return would be 5%.JoeRetire wrote: ↑Mon Feb 22, 2021 12:31 pmYou are confused. Nobody is saying anything that would require "never die" to accomplish.jeffyscott wrote: ↑Mon Feb 22, 2021 11:33 amI feel like a lot of people act as if they will never die. Look at all the posters here calling delaying SS a risk-free, guaranteed, 8% return. The only way it is that is if you will never die.
5.0% = RATE(20, 8, -100, 0, 0)
* If you have trouble pasting, try "Paste Special" and "Text".
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Re: Delaying Social Security
In fact, it is a smaller percentage increase each year in that one year's delay means you get 108% of the PIA, a second year's delay means you get 116% of PIA, so the year over year increase is about 7.4%, the third year increase would be about 6.9%. The OP was born in 1955 so FRA is 66 and 2 months, so can not quite get a full 4th year of delay, but for those who can the increase for that year would be about 6.5%.FactualFran wrote: ↑Mon Feb 22, 2021 4:19 pmThe delayed retirement credits do not compound. Delaying for four years increases the benefit amount by 32%. It is useful to know how Social Security benefits are actually calculated before speculating about means testing and other changes that no one knows.bikechuck wrote: ↑Mon Feb 22, 2021 10:07 am They are delaying four years so they can capture a 36% increase in their benefits (1.08)x(1.08)×(1.08)×(1.08) for the rest of their life. However, depending on how we manage our way through the rapidly depleting SS Trust fund they might not see the increased benefits they are hoping for. If benefits are cut or if we see means testing will they still be financially better off for waiting? Perhaps but perhaps not ... no one knows or can know for sure.
Depending on year of birth the age 70 benefit can be anywhere from 124% of the PIA to 132% of the PIA, while for every one (not already passed 70) the age 62 benefit is 75% to 80%. So the average annualized benefit increase over the full 8 years is actually about 7.3% or 7.4%.
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Re: Delaying Social Security
You are right, of course.
I was thinking in terms of the commutative property of multiplication. But, that only holds, as you explain, if the cuts occur before AgeE.
Thanks for the detailed analysis.
I was thinking in terms of the commutative property of multiplication. But, that only holds, as you explain, if the cuts occur before AgeE.
Thanks for the detailed analysis.
#Cruncher wrote: ↑Mon Feb 22, 2021 5:14 pmAs Carl53 implies, if the Primary Insurance Amount (PIA) at Full Retirement Age (FRA) of 66+2mo is $2,300, then the increase from delaying to age 70 should be 705 constant dollars, not 1,000. (See Effect of Early or Delayed Retirement on Retirement Benefits.)
If we compare starting SS at a later age (ageL) versus an early age (ageE), starting at ageE will be relatively better if any future reduction occurs after ageE. Only if the reduction occurred before ageE would it have no effect on the comparison between starting at the two ages. To illustrate, if there is no future reduction, by delaying from 66+2mo to 70, the original poster would earn a +2.0% real return if he collects SS until age 85.Code: Select all
Row Col A Col B Col C Col D Col E Col F 3 Born 1955 4 NRA 66.17 5 Year change 2034 6 Pct change 0% 7 Start age 66.17 70.00 8 Pct of PIA 100.00 130.67 9 Year Age Early Late Diff IRR
However, if SS benefits were cut 24% beginning in 2034, his return would be only +0.9%. This is because, by delaying he forsakes the same 383.33% of his PIA. But instead of being compensated with 30.67% of his PIA every subsequent year, he only gets that 30.67% for 9 years. After that he only gets 23.31% more.Code: Select all
10 2018 63 11 2019 64 12 2020 65 13 2021 66 14 2022 67 83.33 (83.33) 15 2023 68 100.00 (100.00) 16 2024 69 100.00 (100.00) 17 2025 70 100.00 (100.00) 18 2026 71 100.00 130.67 30.67 19 2027 72 100.00 130.67 30.67 20 2028 73 100.00 130.67 30.67 21 2029 74 100.00 130.67 30.67 (25.1%) 22 2030 75 100.00 130.67 30.67 (18.4%) 23 2031 76 100.00 130.67 30.67 (13.5%) 24 2032 77 100.00 130.67 30.67 (9.9%) 25 2033 78 100.00 130.67 30.67 (7.1%) 26 2034 79 100.00 130.67 30.67 (4.9%) 27 2035 80 100.00 130.67 30.67 (3.1%) 28 2036 81 100.00 130.67 30.67 (1.7%) 29 2037 82 100.00 130.67 30.67 (0.5%) 30 2038 83 100.00 130.67 30.67 0.5% 31 2039 84 100.00 130.67 30.67 1.3% 32 2040 85 100.00 130.67 30.67 2.0%
To repeat this calculation with other assumptions, follow these steps:Code: Select all
Row Col A Col B Col C Col D Col E Col F 5 Year change 2034 6 Pct change -24% 9 Year Age Early Late Diff IRR ... 25 2033 78 100.00 130.67 30.67 (7.1%) 26 2034 79 100.00 130.67 30.67 (4.9%) 27 2035 80 76.00 99.31 23.31 (3.5%) <=== 24% less 28 2036 81 76.00 99.31 23.31 (2.3%) 29 2037 82 76.00 99.31 23.31 (1.3%) 30 2038 83 76.00 99.31 23.31 (0.5%) 31 2039 84 76.00 99.31 23.31 0.3% 32 2040 85 76.00 99.31 23.31 0.9%
- Select All, Copy, and Paste [ * ] the following at cell A3 of a blank Excel sheet:
Code: Select all
Born 1955 NRA =MIN(67,66+MAX(0,B3-1954)/6) Year change 2034 Pct change -0.24 Start age =B4 70 Pct of PIA =100*IF(C7<$B4,1-(5/900)*MIN(36,($B4-C7)*12)-(5/1200)*MAX(0,($B4-C7)*12-36),1+(8/1200)*(C7-$B4)*12) Year Age Early Late Diff IRR =B3+63 63 =IF($B10<=C$7,0,IF($B10>INT(C$7)+1,C$8,C$8*(1-MOD(C$7,1))))*IF($A10<=$B$5,1,1+$B$6) =IF($B10<=D$7,0,IF($B10>INT(D$7)+1,D$8,D$8*(1-MOD(D$7,1))))*IF($A10<=$B$5,1,1+$B$6) =D10-C10 =IRR(E$10:E10) =A10+1 =B10+1 =IF($B11<=C$7,0,IF($B11>INT(C$7)+1,C$8,C$8*(1-MOD(C$7,1))))*IF($A11<=$B$5,1,1+$B$6) =IF($B11<=D$7,0,IF($B11>INT(D$7)+1,D$8,D$8*(1-MOD(D$7,1))))*IF($A11<=$B$5,1,1+$B$6) =D11-C11 =IRR(E$10:E11)
- Copy cell C8 right to column D.
- Copy cells A11:F11 down to row 32.
- Format for readability.
- Modify assumptions as needed in cells B3, B5:B6, and C7:D7.
jeffyscott is correct. The only way delaying one year beyond FRA can generate an 8% return is if the extra benefit continued forever. Anything less and the return is less than 8%. For example, if the increased benefit continued 20 years, the return would be 5%.JoeRetire wrote: ↑Mon Feb 22, 2021 12:31 pmYou are confused. Nobody is saying anything that would require "never die" to accomplish.jeffyscott wrote: ↑Mon Feb 22, 2021 11:33 amI feel like a lot of people act as if they will never die. Look at all the posters here calling delaying SS a risk-free, guaranteed, 8% return. The only way it is that is if you will never die.
5.0% = RATE(20, 8, -100, 0, 0)
* If you have trouble pasting, try "Paste Special" and "Text".
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Re: Delaying Social Security

Re: Delaying Social Security
Lots of single people have different opinions and situations.ColoRetiredGirl wrote: ↑Mon Feb 22, 2021 6:03 pmWhy should a single person take SS at FRA? Single people can live a long life as well so there remains a benefit to waiting until 70 yo.
- I know a good bunch of single people in the "I want my money as soon as I can get my hands on it" camp.
- I know a few single people in the "I want my money when I can enjoy it before I get too old" camp.
- And I know a few single people who wanted to retire near 62 and couldn't afford to do so without claiming their benefit.
As far as "should", (shrug).
I'm married. But I would delay until 70 even if I weren't. For me, the "longevity insurance" aspect is compelling.
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It's the end of the world as we know it. |
And I feel fine.
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Re: Delaying Social Security
I am not sure what I would do were I single, but the expected benefit of delaying is smaller if one is single, so that could tilt things toward less delay. I'm probably not delaying all the way to 70 anyway, tentative plan is to take it before it's enough to push us into the next tax bracket.JoeRetire wrote: ↑Mon Feb 22, 2021 7:38 pmLots of single people have different opinions and situations.ColoRetiredGirl wrote: ↑Mon Feb 22, 2021 6:03 pmWhy should a single person take SS at FRA? Single people can live a long life as well so there remains a benefit to waiting until 70 yo.
- I know a good bunch of single people in the "I want my money as soon as I can get my hands on it" camp.
- I know a few single people in the "I want my money when I can enjoy it before I get too old" camp.
- And I know a few single people who wanted to retire near 62 and couldn't afford to do so without claiming their benefit.
As far as "should", (shrug).
I'm married. But I would delay until 70 even if I weren't. For me, the "longevity insurance" aspect is compelling.
I don't think there's anything special about taking it at FRA vs. any other age, though.
The two greatest enemies of the equity fund investor are expenses and emotions. ― John C. Bogle
Re: Delaying Social Security
I have not run the numbers for being single prior to 70 ...but if one of us were single it would be even more important to delay and accomplish Roth conversions prior to collecting SS.ColoRetiredGirl wrote: ↑Mon Feb 22, 2021 6:03 pmWhy should a single person take SS at FRA? Single people can live a long life as well so there remains a benefit to waiting until 70 yo.
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Re: Delaying Social Security
Well I have heard the same reasons from married people. Expect on this forum, I have heard few people mention to delay for the spouse. I am waiting for the longevity insurance. However, I do not understand the “less benefit” for singles to delay statements made on this tread. Perhaps someone can run the numbers.JoeRetire wrote: ↑Mon Feb 22, 2021 7:38 pmLots of single people have different opinions and situations.ColoRetiredGirl wrote: ↑Mon Feb 22, 2021 6:03 pmWhy should a single person take SS at FRA? Single people can live a long life as well so there remains a benefit to waiting until 70 yo.
- I know a good bunch of single people in the "I want my money as soon as I can get my hands on it" camp.
- I know a few single people in the "I want my money when I can enjoy it before I get too old" camp.
- And I know a few single people who wanted to retire near 62 and couldn't afford to do so without claiming their benefit.
As far as "should", (shrug).
I'm married. But I would delay until 70 even if I weren't. For me, the "longevity insurance" aspect is compelling.

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Re: Delaying Social Security
I'm single, and I look at the whole picture in terms of SS payout, SWR, taxes, IRMAA, and RMD's.
For me it makes more sense to to spend down savings prior to age 70-72.
1) Once I hit 70 and collect SS My savings withdrawal rate will drop to less than 2%.
2) Spending down savings in my 60's allows me to lower my RMD's once I hit 72.
3) Once I reach 70 my income will stay the same but a large portion will be SS causing Taxes to decrease (more money in my pocket).
Being single I have to try to pull as much as I can from tax deferred as often as I can without paying too much in taxes now as well as later on when RMD's kick in.
For me it makes more sense to to spend down savings prior to age 70-72.
1) Once I hit 70 and collect SS My savings withdrawal rate will drop to less than 2%.
2) Spending down savings in my 60's allows me to lower my RMD's once I hit 72.
3) Once I reach 70 my income will stay the same but a large portion will be SS causing Taxes to decrease (more money in my pocket).
Being single I have to try to pull as much as I can from tax deferred as often as I can without paying too much in taxes now as well as later on when RMD's kick in.
Retired as of July 2020
Re: Delaying Social Security
Great reply. I feel #8 is the most important reason by far. And that reason seems to make all the complicated calculations unnecessary.averagedude wrote: ↑Sun Feb 21, 2021 2:36 pm Their are many things to consider when it comes to delaying social security. Me personally, these are the things that I have to think about and i'm sure I am missing several things. Also all of these things that I am considering, I also have to consider my spouse also. Your things to consider will be different from mine. It really can be a complex math problem with many variables.
1. Life expectancy.
2. MAGI for subsidized premiums for health insurance until I am 65.
3. What percentage of my social security will be taxed.
4. RMD's on traditional tax deferred plans.
5. Impact of higher or lower investment returns, and how this affects taxes and the possibility of running out of money.
6. Maximizing the survivor benefit when one spouse dies.
7. Probability of working part time in retirement.
8. Piece of mind such as inflation protection and longevity risk.
9. The piece of mind of a larger social security check when it comes to medicaid planning /spousal impoverishment rules.
[Note, there is a typo in #8 (should be "peace"; but it's the thought that counts). Thanks again for the excellent, thoughtful list.]
Re: Delaying Social Security
And basically, no matter how long I live, I don't want to be unable to sleep at night because I am worried that my income is becoming insufficient. That is something I think everyone should fear.
Social Security not delayed is sleep denied.
(I just made that up, but I think it's true.)
Social Security not delayed is sleep denied.
(I just made that up, but I think it's true.)
Re: Delaying Social Security
Spousal and survivor's benefits can be huge. Singles don't get those benefits.ColoRetiredGirl wrote: ↑Mon Feb 22, 2021 10:07 pmHowever, I do not understand the “less benefit” for singles to delay statements made on this tread. Perhaps someone can run the numbers.
It's the end of the world as we know it. |
It's the end of the world as we know it. |
It's the end of the world as we know it. |
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Re: Delaying Social Security
you may be interested in this threadrgs92 wrote: ↑Mon Feb 22, 2021 11:10 pm And basically, no matter how long I live, I don't want to be unable to sleep at night because I am worried that my income is becoming insufficient. That is something I think everyone should fear.
Social Security not delayed is sleep denied.
(I just made that up, but I think it's true.)
viewtopic.php?f=10&t=245377
cheers,
grok
RIP Mr. Bogle.
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Re: Delaying Social Security
And to clarify further, it's delay for the higher earning spouse that has the greater benefit. The higher earning spouse's SS ends only when both spouses die and the second to die life expectancy is longer than that for a single person.JoeRetire wrote: ↑Tue Feb 23, 2021 6:24 amSpousal and survivor's benefits can be huge. Singles don't get those benefits.ColoRetiredGirl wrote: ↑Mon Feb 22, 2021 10:07 pmHowever, I do not understand the “less benefit” for singles to delay statements made on this tread. Perhaps someone can run the numbers.
For the lower earning spouse, since the benefit effectively ends upon the death of either, there's actually value to delaying than there is for a single person.
Because of this, many have the lower earning spouse take SS at 62 and the higher earning at 70. That's my plan, except I probably won't go all the way to 70, due to taxes and IRMAA.
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Re: Delaying Social Security
retireIn2020 wrote: ↑Mon Feb 22, 2021 10:28 pm I'm single, and I look at the whole picture in terms of SS payout, SWR, taxes, IRMAA, and RMD's.
For me it makes more sense to to spend down savings prior to age 70-72.
1) Once I hit 70 and collect SS My savings withdrawal rate will drop to less than 2%.
2) Spending down savings in my 60's allows me to lower my RMD's once I hit 72.
3) Once I reach 70 my income will stay the same but a large portion will be SS causing Taxes to decrease (more money in my pocket).
Being single I have to try to pull as much as I can from tax deferred as often as I can without paying too much in taxes now as well as later on when RMD's kick in.
I am single as well. My concern is SS will be significantly reduced sooner than 2034. Therefore, instead of spending down my tax deferred account, I plan to do Roth conversions before age 72 to reduce my RMDs. I rather pay more taxes and have funds available rather than hoping SS would be a substitute for the same income stream. I am not sure this is a reasonable strategy.
Re: Delaying Social Security
If you are going to make assumptions about various potential future events then your strategy will be customized to those events - whether or not that is reasonable will lie in the future that unfolds.ColoRetiredGirl wrote: ↑Tue Feb 23, 2021 9:33 amretireIn2020 wrote: ↑Mon Feb 22, 2021 10:28 pm I'm single, and I look at the whole picture in terms of SS payout, SWR, taxes, IRMAA, and RMD's.
For me it makes more sense to to spend down savings prior to age 70-72.
1) Once I hit 70 and collect SS My savings withdrawal rate will drop to less than 2%.
2) Spending down savings in my 60's allows me to lower my RMD's once I hit 72.
3) Once I reach 70 my income will stay the same but a large portion will be SS causing Taxes to decrease (more money in my pocket).
Being single I have to try to pull as much as I can from tax deferred as often as I can without paying too much in taxes now as well as later on when RMD's kick in.
I am single as well. My concern is SS will be significantly reduced sooner than 2034. Therefore, instead of spending down my tax deferred account, I plan to do Roth conversions before age 72 to reduce my RMDs. I rather pay more taxes and have funds available rather than hoping SS would be a substitute for the same income stream. I am not sure this is a reasonable strategy.
Re: Delaying Social Security
Before starting earlier than 70, I suggest looking carefully at the marginal tax on the increase in SS resulting from delaying. It may be smaller than you think. To illustrate I concocted the following example where SS passes beyond the point where the maximum 85% is taxable and at the same time ordinary income plus taxable SS less the standard deduction exactly equals the start of the 22% tax bracket. [*]jeffyscott wrote: ↑Mon Feb 22, 2021 8:14 pmI'm probably not delaying all the way to 70 anyway, tentative plan is to take [Social Security] before it's enough to push us into the next tax bracket.
Increasing SS before that point has a 10.2% marginal tax rate (12% X 85%). But after that point the marginal tax rate is only 9.35% (22% X 42.5%) even though the additional income falls into the 22% bracket. This happens because, once the point is reached where the maximum 85% of SS is no longer taxed, for each additional $100 of SS only $42.50 is taxable.
The following table is for a 2021 Joint return with the standard deduction for an age 65+ couple. The middle column represents the case where SS has reached the point where additional SS is no longer 85% taxable and taxable income has reached the start of the 22% bracket. The left column shows the result with $10,000 less SS, and the right column shows the results with $10,000 more SS. The bottom of the table shows that the first $10,000 increase in SS causes tax to rise $1,020; but the second $10,000 increase in SS causes tax to rise only $935 -- even though the additional income in now in the 22% bracket.
Code: Select all
Social Security 50% threshhold 32,000 -------------->
Social Security 85% threshhold 44,000 -------------->
Floor: ord income 12% bracket 19,900 -------------->
Floor: ord income 22% bracket 81,050 -------------->
Non-SS Ordinary Income 63,574 63,574 63,574
Social Security Benefit 43,266 53,266 63,266
Non-SS plus 1/2 SS 85,207 90,207 95,207
50% SS taxable 6,000 6,000 6,000
85% SS taxable 30,776 39,276 43,526
Total SS taxable 36,776 45,276 49,526
Adjusted gross income 100,350 108,850 113,100
Standard deduction 65+ 27,800 27,800 27,800
Taxable Income 72,550 81,050 85,300
Code: Select all
Taxable: ord income 22% bracket - - 4,250
Taxable: ord income 12% bracket 52,650 61,150 61,150
Taxable: ord income 10% bracket 19,900 19,900 19,900
Tax: ord income 22% bracket - - 935
Tax: ord income 12% bracket 6,318 7,338 7,338
Tax: ord income 10% bracket 1,990 1,990 1,990
Total tax 8,308 9,328 10,263
Increased SS benefit 10,000 10,000
Increased taxable SS 8,500 4,250
Increased tax 1,020 935
Marginal SS taxable 85.00% 42.50%
Marginal tax rate 10.20% 9.35%
Edited 4:25 PM to illustrate using the "Main" sheet: Here are the inputs corresponding to my example above.
Code: Select all
Tax year 2021
Single or Joint Return Joint
Number filers age 65 or older 2
Tax exempt interest 0
Non-SS Ordinary Income 63,574
LTCG & QDI 0
Social Security Benefit <blank>
Deductions <blank>
Exemption <blank>
Code: Select all
AGI = Adjusted Gross Income = $81,050 start of 22% bracket plus $27,800 standard deduction
T1 = $32,000 = 50% SS threshold for joint return
T2 = $44,000 = 85% SS threshold for joint return
SS = Social Security benefit
OI = Other income
SS = (0.85 * AGI - 0.5 * T1 - 0.35 * T2) / 1.1475
53,265.80 = (0.85 * 108850 - 0.5 * 32000 - 0.35 * 44000) / 1.1475
OI = AGI - 0.85 * SS
63,574.07 = 108850 - 0.85 * 53265.80
Last edited by #Cruncher on Tue Feb 23, 2021 4:25 pm, edited 1 time in total.
- CyclingDuo
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Re: Delaying Social Security
It was interesting to read what age people took SS pertaining to the type of spender(s) they were in the EBRI document regarding "one size does not fit all"...jeffyscott wrote: ↑Tue Feb 23, 2021 8:02 amAnd to clarify further, it's delay for the higher earning spouse that has the greater benefit. The higher earning spouse's SS ends only when both spouses die and the second to die life expectancy is longer than that for a single person.JoeRetire wrote: ↑Tue Feb 23, 2021 6:24 amSpousal and survivor's benefits can be huge. Singles don't get those benefits.ColoRetiredGirl wrote: ↑Mon Feb 22, 2021 10:07 pmHowever, I do not understand the “less benefit” for singles to delay statements made on this tread. Perhaps someone can run the numbers.
For the lower earning spouse, since the benefit effectively ends upon the death of either, there's actually value to delaying than there is for a single person.
Because of this, many have the lower earning spouse take SS at 62 and the higher earning at 70. That's my plan, except I probably won't go all the way to 70, due to taxes and IRMAA.
https://www.ebri.org/docs/default-sourc ... f503c2f_10
https://www.ebri.org/docs/default-sourc ... 5e443a2f_2
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- jeffyscott
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Re: Delaying Social Security
Thanks, I am a long way from having to make a decision and will be looking in more detail when it's closer. I did do some initial estimates and didn't see a point where additional SS would be taxed at a lower rate like that. It also happened that about the point where more SS hit a higher tax bracket was also about the point where a sole survivor would likely stay just below where IRMAA applies. So I thought maybe that would be as good a place as any to stop delaying. As of now that might be 65-68, that keeps us in the 12% bracket and sole survivor out of IRMAA, but could look different by the time I get there.#Cruncher wrote: ↑Tue Feb 23, 2021 1:49 pmBefore starting earlier than 70, I suggest looking carefully at the marginal tax on the increase in SS resulting from delaying. It may be smaller than you think.jeffyscott wrote: ↑Mon Feb 22, 2021 8:14 pmI'm probably not delaying all the way to 70 anyway, tentative plan is to take [Social Security] before it's enough to push us into the next tax bracket.
I believe our pensions result in 85% of every dollar of SS being taxed, no matter when we take it. That and other aspects could change, of course.
I don't understand what would make the tax rate on additional SS fall, but it doesn't seem to occur for us. In our range of expected income and SS, I see marginal rates on additional SS of 10.2% and then 18.7%.
The two greatest enemies of the equity fund investor are expenses and emotions. ― John C. Bogle
Re: Delaying Social Security
I look at my numbers a few years out on my spreadsheet and find them tantalizingly close to those in Cruncher's example. Yes I am delaying my SS until 70 but when I adjust my brackets, standard deduction and SS income for inflation (yeah I realize they are not all on the same indices but I'm using the same for all three) and realize that my RMD at 72 will likely increase for a number of years I find that 85% of my SS will become taxable just about the point at which I leave the 12% (22.2% of last non-SS $) bracket and possibly a few at the 22% (40.7% of last non-SS $) bracket. I forsee doing some QCDs but they always appear to be coming off at 22% as the SS being included in income is already maxed. I almost could see bunching QCDs in alternative years but there will not be much savings for me (some years it looks like I will have the few dollars at the 40.7% taxation level). The biggest fly in the ointment are the fixed numbers in the determination of how much SS is taxed that are not indexed for inflation. As inflation occurs most of the tax parameters are adjusted and if your non-SS income stays the same you might have a decreased fraction of your SS being taxed. In my case it appears that annual RMD increases will overwhelm the other non-SS fixed income and result in 85% of the annually increasing SS continuing to be taxed even before the 22% bracket will be incurred.#Cruncher wrote: ↑Tue Feb 23, 2021 1:49 pmBefore starting earlier than 70, I suggest looking carefully at the marginal tax on the increase in SS resulting from delaying. It may be smaller than you think. To illustrate I concocted the following example where SS passes beyond the point where the maximum 85% is taxable and at the same time ordinary income plus taxable SS less the standard deduction exactly equals the start of the 22% tax bracket. [*]jeffyscott wrote: ↑Mon Feb 22, 2021 8:14 pmI'm probably not delaying all the way to 70 anyway, tentative plan is to take [Social Security] before it's enough to push us into the next tax bracket.
Increasing SS before that point has a 10.2% marginal tax rate (12% X 85%). But after that point the marginal tax rate is only 9.35% (22% X 42.5%) even though the additional income falls into the 22% bracket. This happens because, once the point is reached where the maximum 85% of SS is no longer taxed, for each additional $100 of SS only $42.50 is taxable.
The following table is for a 2021 Joint return with the standard deduction for an age 65+ couple. The middle column represents the case where SS has reached the point where additional SS is no longer 85% taxable and taxable income has reached the start of the 22% bracket. The left column shows the result with $10,000 less SS, and the right column shows the results with $10,000 more SS. The bottom of the table shows that the first $10,000 increase in SS causes tax to rise $1,020; but the second $10,000 increase in SS causes tax to rise only $935 -- even though the additional income in now in the 22% bracket.Code: Select all
Social Security 50% threshhold 32,000 --------------> Social Security 85% threshhold 44,000 --------------> Floor: ord income 12% bracket 19,900 --------------> Floor: ord income 22% bracket 81,050 --------------> Non-SS Ordinary Income 63,574 63,574 63,574 Social Security Benefit 43,266 53,266 63,266 Non-SS plus 1/2 SS 85,207 90,207 95,207 50% SS taxable 6,000 6,000 6,000 85% SS taxable 30,776 39,276 43,526 Total SS taxable 36,776 45,276 49,526 Adjusted gross income 100,350 108,850 113,100 Standard deduction 65+ 27,800 27,800 27,800 Taxable Income 72,550 81,050 85,300
The figures above were prepared with the "Compare" sheet of my Marginal Tax Rates Excel workbook. I suggest, jeffyscott, plugging your estimates of tax exempt, non-SS ordinary income, and long term gains plus qualified dividends into the "Main" sheet to graphically see the marginal tax rates for increasing SS benefits.Code: Select all
Taxable: ord income 22% bracket - - 4,250 Taxable: ord income 12% bracket 52,650 61,150 61,150 Taxable: ord income 10% bracket 19,900 19,900 19,900 Tax: ord income 22% bracket - - 935 Tax: ord income 12% bracket 6,318 7,338 7,338 Tax: ord income 10% bracket 1,990 1,990 1,990 Total tax 8,308 9,328 10,263 Increased SS benefit 10,000 10,000 Increased taxable SS 8,500 4,250 Increased tax 1,020 935 Marginal SS taxable 85.00% 42.50% Marginal tax rate 10.20% 9.35%
Edited 4:25 PM to illustrate using the "Main" sheet: Here are the inputs corresponding to my example above.* Here are the formulas for determining SS and ordinary income that meet this double requirement.Code: Select all
Tax year 2021 Single or Joint Return Joint Number filers age 65 or older 2 Tax exempt interest 0 Non-SS Ordinary Income 63,574 LTCG & QDI 0 Social Security Benefit <blank> Deductions <blank> Exemption <blank>
Code: Select all
AGI = Adjusted Gross Income = $81,050 start of 22% bracket plus $27,800 standard deduction T1 = $32,000 = 50% SS threshold for joint return T2 = $44,000 = 85% SS threshold for joint return SS = Social Security benefit OI = Other income SS = (0.85 * AGI - 0.5 * T1 - 0.35 * T2) / 1.1475 53,265.80 = (0.85 * 108850 - 0.5 * 32000 - 0.35 * 44000) / 1.1475 OI = AGI - 0.85 * SS 63,574.07 = 108850 - 0.85 * 53265.80
Re: Delaying Social Security
It's because, for certain amounts of other income, the maximum 85% of a given Social Security benefit may be taxable. But if that SS benefit increases, it may reach a level where 85% of it is no longer taxable. At this point, only 42.5% of any additional benefit will be taxed. This is due to the way the taxable portion of SS is calculated, as explained in the Wiki's Taxation of Social Security benefits. Here is a graph that may help explain this.jeffyscott wrote: ↑Tue Feb 23, 2021 4:44 pmI don't understand what would make the tax rate on additional SS fall ...

The blue line is the taxable portion of SS calculated by the formula explained in the Wiki, if there were no maximum. The orange line is 85% of the SS benefit. When the SS benefit is less than $53,266, the formula value exceeds the 85% maximum, so the taxable portion equals 85% of SS. But when the benefit exceeds $53,266 the formula value is less than the 85% maximum and that becomes the amount taxed. The green line represents the amount of SS that is taxed, which is the minimum of the blue and orange lines.
Here is a table of the values that the graph is based on. Note how in the upper part of the table each additional $100 of SS benefit causes $85 more to be taxed. But after the SS benefit reaches $53,300, each $100 of benefit only makes $42.50 more taxable.
Code: Select all
50% threshold 32,000
85% threshold 44,000
Other income 63,574
SS benefit Formula 85% SS Diff Min Incr
Code: Select all
51,000 44,313 43,350 963 43,350
51,100 44,355 43,435 920 43,435 85.00
51,200 44,398 43,520 878 43,520 85.00
51,300 44,440 43,605 835 43,605 85.00
51,400 44,483 43,690 793 43,690 85.00
51,500 44,525 43,775 750 43,775 85.00
51,600 44,568 43,860 708 43,860 85.00
51,700 44,610 43,945 665 43,945 85.00
51,800 44,653 44,030 623 44,030 85.00
51,900 44,695 44,115 580 44,115 85.00
52,000 44,738 44,200 538 44,200 85.00
52,100 44,780 44,285 495 44,285 85.00
52,200 44,823 44,370 453 44,370 85.00
52,300 44,865 44,455 410 44,455 85.00
52,400 44,908 44,540 368 44,540 85.00
52,500 44,950 44,625 325 44,625 85.00
52,600 44,993 44,710 283 44,710 85.00
52,700 45,035 44,795 240 44,795 85.00
52,800 45,078 44,880 198 44,880 85.00
52,900 45,120 44,965 155 44,965 85.00
53,000 45,163 45,050 113 45,050 85.00
53,100 45,205 45,135 70 45,135 85.00
53,200 45,248 45,220 28 45,220 85.00 <===
53,300 45,290 45,305 (15) 45,290 70.40 <===
53,400 45,333 45,390 (57) 45,333 42.50 <===
53,500 45,375 45,475 (100) 45,375 42.50
53,600 45,418 45,560 (142) 45,418 42.50
53,700 45,460 45,645 (185) 45,460 42.50
53,800 45,503 45,730 (227) 45,503 42.50
53,900 45,545 45,815 (270) 45,545 42.50
54,000 45,588 45,900 (312) 45,588 42.50
54,100 45,630 45,985 (355) 45,630 42.50
54,200 45,673 46,070 (397) 45,673 42.50
54,300 45,715 46,155 (440) 45,715 42.50
54,400 45,758 46,240 (482) 45,758 42.50
54,500 45,800 46,325 (525) 45,800 42.50
54,600 45,843 46,410 (567) 45,843 42.50
54,700 45,885 46,495 (610) 45,885 42.50
54,800 45,928 46,580 (652) 45,928 42.50
54,900 45,970 46,665 (695) 45,970 42.50
55,000 46,013 46,750 (737) 46,013 42.50
Code: Select all
If Other
Income
At Least
Single: SS = 2 * other income - 57412 34,000
Joint: SS = 2 * other income - 73882 44,000
Example: 53,266 = 2 * 63574 - 73882
- jeffyscott
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Re: Delaying Social Security
Thanks as it is explained there, for every $1 of "relevant income" above the upper bases ($34K single, $44K joint), 85 cents of your Social Security benefits become taxable. Where "relevant income" is your adjusted gross income, plus tax-exempt interest income, plus 50% of your Social Security benefits.#Cruncher wrote: ↑Wed Feb 24, 2021 8:33 amIt's because, for certain amounts of other income, the maximum 85% of a given Social Security benefit may be taxable. But if that SS benefit increases, it may reach a level where 85% of it is no longer taxable. At this point, only 42.5% of any additional benefit will be taxed. This is due to the way the taxable portion of SS is calculated, as explained in the Wiki's Taxation of Social Security benefits.jeffyscott wrote: ↑Tue Feb 23, 2021 4:44 pmI don't understand what would make the tax rate on additional SS fall ...
So it seems to be that a $2 increase in SS benefit may, at some point, increase your "relevant income" by only $1 and then 85% of that $1 is taxable income, thus only 42.5% of the additional benefit is taxable and so the effective tax rate may be 9.35% for additional SS benefits while other additional income would be taxed at 22%.
Based on your formula, whether or not I would get to that point is going to depend on RMDs (and Roth conversions). I'm going to check on that with your spreadsheet. I also won't be surprised if that part of tax law is changed and even if it is not, the non-indexing of the thresholds may change how things work out by the time I am deciding how long to delay.
The two greatest enemies of the equity fund investor are expenses and emotions. ― John C. Bogle
Re: Delaying Social Security
I don't understand the resistance Bogleheads have to operating under the assumption of current law. Obviously that's unlikely to be the precise outcome but speculation on any other legislation is always shot down per forum policies.grok87 wrote: ↑Mon Feb 22, 2021 12:27 pmagree.bikechuck wrote: ↑Mon Feb 22, 2021 10:07 amThey are delaying four years so they can capture a 36% increase in their benefits (1.08)x(1.08)×(1.08)×(1.08) for the rest of their life. However, depending on how we manage our way through the rapidly depleting SS Trust fund they might not see the increased benefits they are hoping for. If benefits are cut or if we see means testing will they still be financially better off for waiting? Perhaps but perhaps not ... no one knows or can know for sure.marcopolo wrote: ↑Sun Feb 21, 2021 10:46 pmThe OP is 66. There is essentially 0% chance that anything will change for them prior to age 70. Any changes after that would be there whether they delay or not. What do you think their risk is?bikechuck wrote: ↑Sun Feb 21, 2021 9:41 pmI am waiting until 70 but with the state of the SS Trust Fund I disagree that the 8% return you reference is risk free and guaranteed.averagedude wrote: ↑Sun Feb 21, 2021 12:08 am
You could possibly get better than an 8% return, but a 65 year old should pounce on a risk free guaranteed 8 percent, especially when it comes with inflation protection forever.
I too am waiting until 70 and hoping for the best but I do not consider my decision to be risk free and guaranteed.
under current law, it is estimated by the trustees that social securities benefits will be reduced by 24% starting in 2034. IMHO that needs to be factored into any serious analysis of this issue. Not trying to start a political discussion here. just saying analyzing things consistent with current law seems like a reasonable approach.
cheers
grok
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Re: Delaying Social Security
Instead of treating SS income as being 85% taxed, can we instead agree to treat it as if getting a 15% tax break on SS income instead? Would that make some of the future tax calculation more palatable? I would be thrilled if I could get the 15% tax break on my W2 income 

- jeffyscott
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Re: Delaying Social Security
Playing with his spreadsheet, things change rapidly as other income exceeds $63,574. Initially there is a narrow blip with 18.7% effective tax on a small portion of additional SS benefits, but that quickly widens. Here's marginal rate graph for SS income from #cruncher's spreadsheet with $64,000 in other income, where the 18.7% rate just a blip:Carl53 wrote: ↑Wed Feb 24, 2021 3:32 amI look at my numbers a few years out on my spreadsheet and find them tantalizingly close to those in Cruncher's example. Yes I am delaying my SS until 70 but when I adjust my brackets, standard deduction and SS income for inflation (yeah I realize they are not all on the same indices but I'm using the same for all three) and realize that my RMD at 72 will likely increase for a number of years I find that 85% of my SS will become taxable just about the point at which I leave the 12% (22.2% of last non-SS $) bracket and possibly a few at the 22% (40.7% of last non-SS $) bracket.

With another $5000 in other income, so $69,000, the 18.7% rate now applies to as much as about $20K of SS, from about $46K to $66K.

I have only used current brackets via putting some our likely range of figures in #crunchers spreadsheet and what I find is that taxation of additional SS benefits becomes (and stays) 18.7%, if we leave the 12% bracket. Our combined SS benefit is not going to be large enough to get to the other side of that 18.7% rate. OTOH, with enough Roth conversions, low enough growth in TIRA, and low enough pension increases, it's possible that our other income will be below $63,574 and avoid the 18.7% rate entirely.
The two greatest enemies of the equity fund investor are expenses and emotions. ― John C. Bogle
Re: Delaying Social Security
You don't have to publicly speculate about any specific future legislation in order to predict that something will change between now and 2034, and to plan accordingly.
I'll be fully prepared in the unlikely event that 2034 arrives and nothing has changed. I'll also be prepared if what I suspect will happen actually occurs. It's not all that hard to prepare but be flexible.
It's the end of the world as we know it. |
It's the end of the world as we know it. |
It's the end of the world as we know it. |
And I feel fine.
Re: Delaying Social Security
I don't think "the glass is half full" viewpoints are permitted here!wrongfunds wrote: ↑Wed Feb 24, 2021 9:54 am Instead of treating SS income as being 85% taxed, can we instead agree to treat it as if getting a 15% tax break on SS income instead? Would that make some of the future tax calculation more palatable? I would be thrilled if I could get the 15% tax break on my W2 income![]()

It's the end of the world as we know it. |
It's the end of the world as we know it. |
It's the end of the world as we know it. |
And I feel fine.
Re: Delaying Social Security
Exactly - and when you delay you get that 15% discount on a larger number.wrongfunds wrote: ↑Wed Feb 24, 2021 9:54 am Instead of treating SS income as being 85% taxed, can we instead agree to treat it as if getting a 15% tax break on SS income instead? Would that make some of the future tax calculation more palatable? I would be thrilled if I could get the 15% tax break on my W2 income![]()
- jeffyscott
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Re: Delaying Social Security
It's actually a 100% discount, then a 50% discount, then a 15% discount, then back to a 50% discount (I think). The issues and discussions revolve around that complexity. If it were simply that you add 85% of SS to your taxable income and that's all there was to it, there would be a lot less to discuss and analyze.smitcat wrote: ↑Wed Feb 24, 2021 12:45 pmExactly - and when you delay you get that 15% discount on a larger number.wrongfunds wrote: ↑Wed Feb 24, 2021 9:54 am Instead of treating SS income as being 85% taxed, can we instead agree to treat it as if getting a 15% tax break on SS income instead? Would that make some of the future tax calculation more palatable? I would be thrilled if I could get the 15% tax break on my W2 income![]()
The two greatest enemies of the equity fund investor are expenses and emotions. ― John C. Bogle
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Re: Delaying Social Security
But it is *not* a cliff i.e. earning extra dollar does not effectively costs extra thousands of dollars in either increased taxes or reduced credits as far as your social security income is concerned. The variable discount only applies to the marginal social security dollar (I hope that is correct).jeffyscott wrote: ↑Wed Feb 24, 2021 5:13 pmIt's actually a 100% discount, then a 50% discount, then a 15% discount, then back to a 50% discount (I think). The issues and discussions revolve around that complexity. If it were simply that you add 85% of SS to your taxable income and that's all there was to it, there would be a lot less to discuss and analyze.smitcat wrote: ↑Wed Feb 24, 2021 12:45 pmExactly - and when you delay you get that 15% discount on a larger number.wrongfunds wrote: ↑Wed Feb 24, 2021 9:54 am Instead of treating SS income as being 85% taxed, can we instead agree to treat it as if getting a 15% tax break on SS income instead? Would that make some of the future tax calculation more palatable? I would be thrilled if I could get the 15% tax break on my W2 income![]()
The tax structures have enough cliffs to worry about but to the best of my knowledge social security income tax discount is not one of them. This is what I have understood so far.
Re: Delaying Social Security
Thank you! Quite a lot of food for thought. I see why it's in the wiki. Cheers also.grok87 wrote: ↑Tue Feb 23, 2021 7:54 amyou may be interested in this threadrgs92 wrote: ↑Mon Feb 22, 2021 11:10 pm And basically, no matter how long I live, I don't want to be unable to sleep at night because I am worried that my income is becoming insufficient. That is something I think everyone should fear.
Social Security not delayed is sleep denied.
(I just made that up, but I think it's true.)
viewtopic.php?f=10&t=245377
cheers,
grok
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Re: Delaying Social Security
smitcat wrote: ↑Tue Feb 23, 2021 10:19 amWhen I say spend down, I'm mean use the portfolio, not deplete it! As I mentioned it's hard to draw it down without paying too much in taxes in the 1st place. I looked at Roth conversions and the determination was that I'll end up paying more taxes and actually drew my portfolio lower than spending it.ColoRetiredGirl wrote: ↑Tue Feb 23, 2021 9:33 amI am single as well. My concern is SS will be significantly reduced sooner than 2034. Therefore, instead of spending down my tax deferred account, I plan to do Roth conversions before age 72 to reduce my RMDs. I rather pay more taxes and have funds available rather than hoping SS would be a substitute for the same income stream. I am not sure this is a reasonable strategy.retireIn2020 wrote: ↑Mon Feb 22, 2021 10:28 pm I'm single, and I look at the whole picture in terms of SS payout, SWR, taxes, IRMAA, and RMD's.
For me it makes more sense to to spend down savings prior to age 70-72.
1) Once I hit 70 and collect SS My savings withdrawal rate will drop to less than 2%.
2) Spending down savings in my 60's allows me to lower my RMD's once I hit 72.
3) Once I reach 70 my income will stay the same but a large portion will be SS causing Taxes to decrease (more money in my pocket).
Being single I have to try to pull as much as I can from tax deferred as often as I can without paying too much in taxes now as well as later on when RMD's kick in.Well said, I believe you have to make your plan based on what is fact and law at present, speculating on what may or may not happen is illogical and you'll likely make the wrong choice (flipping a coin or even worse odds). In my mind, having been on this rock for a while, it seems big changes are always speculated but in reality they end up being much smaller changes.If you are going to make assumptions about various potential future events then your strategy will be customized to those events - whether or not that is reasonable will lie in the future that unfolds.
Retired as of July 2020
Re: Delaying Social Security
O.P. here.
I am warming up to the idea of purchasing shares in a high-yield ETF and using the dividends from it to cover my monthly cash shortfall, sort of a roll-your-own annuity as described above, but with the ability to withdraw funds at will, and waiting 4 years until age 70 to collect SS.
I am warming up to the idea of purchasing shares in a high-yield ETF and using the dividends from it to cover my monthly cash shortfall, sort of a roll-your-own annuity as described above, but with the ability to withdraw funds at will, and waiting 4 years until age 70 to collect SS.
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Re: Delaying Social Security
Curious is to why "high yield" ETF is better suited for you than just total market or SP500 ETF. Do you believe that way you will not have to touch your principal and leave only on interest?
Re: Delaying Social Security
Its a 15% difference for us.jeffyscott wrote: ↑Wed Feb 24, 2021 5:13 pmIt's actually a 100% discount, then a 50% discount, then a 15% discount, then back to a 50% discount (I think). The issues and discussions revolve around that complexity. If it were simply that you add 85% of SS to your taxable income and that's all there was to it, there would be a lot less to discuss and analyze.smitcat wrote: ↑Wed Feb 24, 2021 12:45 pmExactly - and when you delay you get that 15% discount on a larger number.wrongfunds wrote: ↑Wed Feb 24, 2021 9:54 am Instead of treating SS income as being 85% taxed, can we instead agree to treat it as if getting a 15% tax break on SS income instead? Would that make some of the future tax calculation more palatable? I would be thrilled if I could get the 15% tax break on my W2 income![]()
Re: Delaying Social Security
That's the general idea, but the dividend income would only supplement my pension income.wrongfunds wrote: ↑Thu Feb 25, 2021 8:38 am Curious is to why "high yield" ETF is better suited for you than just total market or SP500 ETF. Do you believe that way you will not have to touch your principal and leave only on interest?