Hoping to get a sanity check on picking when to start SS survivor's benefit for a widow. Normally the breakeven math is pretty straightforward, but the relationship of SS to ACA premiums adds another layer to the analysis:
Current age: 62 and 4 months
FRA: 66
PIA: $2,686/month (today = 82.6% or $2,219)
Other income: ~$5k interest income. No earned income
State of residence: NY
Healthcare: Purchase plan from ACA marketplace until medicare eligibility
Turning on SS now will add $26.6k to her MAGI for 2018 ($31.4k total including interest), pushing her well above the 200% of FPL limit where NY's Essential Plan (ie, fully subsidized private insurance) goes away. At that MAGI her annual premium in 2018 for a platinum plan will be ~$7k after subsidy. And I'm sure it will only get higher in 2019/2020 (until medicare eligibility kicks in).
I was expecting the above to make it an obvious choice to delay SS until at least 65 and possibly all the way to 66. But when i ran the math, the breakeven still looks to be out at ~78 years old for claiming @ 65 vs. now, and at 80 years old for claiming @ 66 vs. now.
Here are my calcs with the breakeven graph: https://drive.google.com/open?id=1et8OM ... fgztV58FeY
(Note: I actually used a data table in excel but google docs doesn't have that feature so i hardcoded the output)
Who know if she lives another 16-18 years, but to me its not a slam dunk to wait even with the large ACA premiums. Assume she has sufficient other assets so she doesn't need SS right away and there's no concern about outliving assets (so ignore the "insurance" argument of delaying SS for the time being).
Am I missing something from a quantitative perspective?
thanks
ACA premiums and impact to SS timing
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ACA premiums and impact to SS timing
Last edited by petesamprs on Sun Nov 19, 2017 5:58 pm, edited 3 times in total.
Re: ACA premiums and impact to SSI timing
SSI = Supplemental Security Income
are you talking about that or Social Security?
are you talking about that or Social Security?
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Re: ACA premiums and impact to SS timing
If she used $2,219 per month from her investments instead, how much would she sacrifice in earnings over her lifetime?
Mary
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Re: ACA premiums and impact to SS timing
not much. Assets are invested *very* conservatively given her risk appetite, so <2% return
Re: ACA premiums and impact to SS timing
The breakeven point is only one way of looking at social security timing and it depends on your objective. It's the least important for me.
If you want to leave the most for your heirs, early claiming may be best. If you want to make sure you don't run out of income by living too long, late claiming could be best. The early claiming while under ACA is clearly out for us, and would likely cost us more than the benefits.
Also social security is taxed at a lower rate than IRA withdrawals, so on that basis maximizing social security payments (late claiming) is favored.
If you want to leave the most for your heirs, early claiming may be best. If you want to make sure you don't run out of income by living too long, late claiming could be best. The early claiming while under ACA is clearly out for us, and would likely cost us more than the benefits.
Also social security is taxed at a lower rate than IRA withdrawals, so on that basis maximizing social security payments (late claiming) is favored.