Social Security at age 62 perhaps?

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MP173
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Social Security at age 62 perhaps?

Post by MP173 » Tue Jan 02, 2018 3:02 pm

DW took an early retirement June, 2017 when offered. She will be 62 this March.

Our initial plans were to each take SS at age 70 in order to maximize payout. We are re-thinking that at this time.

I am 62 and plan on working for several years...enjoy my career and at this point in time there is no reason to pull the pin. Our expenses are under control - no debt (mortgage and cars paid off), low cost of living region, good health, good medical care, four year HSA contribution as part of early retirement (cannot roll over past fourth year), property taxes are reasonable, no big vices, one reasonable vacation per year, etc. Fpur adult children with the last one finishing college in May with all education expenses covered.

My variable income easily covers all expenses including 12% contribution to 401k and Roth contributions to both. She receives a small pension monthly.

Retirement assets - currently $1.5m on pace for close to $2.0 m depending on age of retirement for me. I also have the opportunity to continue working (sales) as part time should I decide to slow down. Also have considerable non-retirement assets including IBonds due in 13 - 15 years, dividend paying stocks (boring multinational such as MCD, MSFT, etc), tax free muni funds, etc. I have been planning for retirement since I was 25...amazing what a little planning and luck can provide. I am currently planning RMDs for 8 years down the road. My SS at age 70 will cover most foreseeable costs (except health care).

So, here is the question....is there any compelling reason not for my wife to take SS later this year? Yes, it will fix her payments "forever". What are the pros and cons for taking it or waiting?

Thanks,

Ed

FinanceGeek
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Re: Social Security at age 62 perhaps?

Post by FinanceGeek » Tue Jan 02, 2018 3:05 pm

My mother lived to be 69, that number always weighs on me when I think this question...

Ace1
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Re: Social Security at age 62 perhaps?

Post by Ace1 » Tue Jan 02, 2018 3:11 pm

Since you state reasonably good health, first ask is longevity in family history?
Then if so and you don’t need the cash flow, I would postpone taking SS, and
consider the pre SS years for making a few Roth conversions.

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David Jay
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Re: Social Security at age 62 perhaps?

Post by David Jay » Tue Jan 02, 2018 3:12 pm

Are you the higher wage earner (have the larger SS benefit)? If so, she can file earlier without a large long-term impact.

Remember, the surviving spouse receives 100% of the higher benefit, so the higher wage earner should postpone to 70 to maximize the survivor's benefit.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

MP173
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Re: Social Security at age 62 perhaps?

Post by MP173 » Tue Jan 02, 2018 3:59 pm

I am the higher wage earner and that was one benefits of her taking the SS early.

Ed

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celia
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Re: Social Security at age 62 perhaps?

Post by celia » Tue Jan 02, 2018 4:08 pm

MP173 wrote:
Tue Jan 02, 2018 3:02 pm
Retirement assets - currently $1.5m on pace for close to $2.0 m depending on age of retirement for me...

So, here is the question....is there any compelling reason not for my wife to take SS later this year?
Have you estimated your tax situation when you are both 71 and both on SS, possibly with pension(s), and have to take RMDs? There's a good chance your taxes will be more than you ever expected at that time. To minimize that problem, you should consider doing Roth conversions several years beforehand to lower the future RMDs. (I would now start converting more than the amount you are tax-deferring each year. Yes, you would be paying taxes on it, but why make the age-71 problem worse?)

You appear to be a good candidate for Roth conversions in your early retirement years, but if your wife starts SS now, that will use up a lot of space in your tax bracket that could be used for Roth conversions instead.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

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David Jay
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Re: Social Security at age 62 perhaps?

Post by David Jay » Tue Jan 02, 2018 4:21 pm

MP173 wrote:
Tue Jan 02, 2018 3:59 pm
I am the higher wage earner and that was one benefits of her taking the SS early.

Ed
Ed - The only other question is whether or not her PIA (primary insurance amount, i.e. What one would receive at full retirement age) is more than 50% of your PIA.

If her benefit is more than 50% of yours then her benefit continues unchanged after you file. The math is easy - she gets a smaller check for longer if she files early.

If it is less than 50% of yours, then she will get a spousal benefit when you file to bring her up to 50% of your PIA. Any spousal benefit will be permanently reduced if she starts her benefits before FRA (full retirement age: 66 years 4 months if she was born in 1956).
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

MP173
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Re: Social Security at age 62 perhaps?

Post by MP173 » Tue Jan 02, 2018 4:49 pm

Her PIA at full retirement (per last statement) was $1610.
Mine is estimated at $2650 (last statement was several years ago.

Ok...can anyone recommend a good reference book or website or other source? Probably should do some work myself on this.

ed

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Re: Social Security at age 62 perhaps?

Post by neilpilot » Tue Jan 02, 2018 4:50 pm

MP173 wrote:
Tue Jan 02, 2018 4:49 pm
Her PIA at full retirement (per last statement) was $1610.
Mine is estimated at $2650 (last statement was several years ago.

Ok...can anyone recommend a good reference book or website or other source? Probably should do some work myself on this.

ed
https://www.blackrock.com/us/financial- ... l-security

2comma
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Re: Social Security at age 62 perhaps?

Post by 2comma » Tue Jan 02, 2018 5:00 pm

This Michael Kitces article might be useful https://www.kitces.com/blog/why-it-rare ... -benefits/
If I am stupid I will pay.

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Re: Social Security at age 62 perhaps?

Post by eldinerocheapo » Tue Jan 02, 2018 5:22 pm

Both my Dad and FIL took SS @ 62 and each had about 20 more years of life after that. Both said they wanted to travel and enjoy life before nature took it's course. Despite reasonable health, they went downhill quickly and both said they were glad they retired when they did, with no regrets.

I'm 60 now, and will probably follow their lead on this, as the time we have left to spend dwindles each day. If people find their work rewarding and meaningful into their 80's, God bless 'em! I'm not one of them and neither is anyone I know.

Run all the numbers you want, but an old saying comes to mind when reflecting on our finite stay here............

"Pebbles are diamonds to a dying man"

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Re: Social Security at age 62 perhaps?

Post by neilpilot » Tue Jan 02, 2018 5:28 pm

eldinerocheapo wrote:
Tue Jan 02, 2018 5:22 pm
Both my Dad and FIL took SS @ 62 and each had about 20 more years of life after that. Both said they wanted to travel and enjoy life before nature took it's course. Despite reasonable health, they went downhill quickly and both said they were glad they retired when they did, with no regrets.

I'm 60 now, and will probably follow their lead on this, as the time we have left to spend dwindles each day. If people find their work rewarding and meaningful into their 80's, God bless 'em! I'm not one of them and neither is anyone I know.

Run all the numbers you want, but an old saying comes to mind when reflecting on our finite stay here............

"Pebbles are diamonds to a dying man"
While the general public equates retirement with the age they begin SS payments, that isn't true for many Bogelheads. I agree that retirement should be a time to "travel and enjoy life", but it isn't always necessary to begin SS early to accomplish that goal. Based on the start of this thread, it certainly is not a prerequisite for the OP.

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Re: Social Security at age 62 perhaps?

Post by beardsworth » Tue Jan 02, 2018 5:29 pm

That search box at the top of the Bogleheads page can be your friend.

A search for Social Security 62 led to all of these previous threads which you might find helpful;

https://www.google.com/search?sitesearc ... ecurity+62

reggiesimpson
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Re: Social Security at age 62 perhaps?

Post by reggiesimpson » Tue Jan 02, 2018 6:25 pm

I have never been able to figure out the date of my death. So I took SS at 62.

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Re: Social Security at age 62 perhaps?

Post by oldcomputerguy » Tue Jan 02, 2018 6:29 pm

Will you be drawing from any retirement savings to bridge the gap between now and when you start SS? That should be factored in. I did a calculation here and found that, all things considered, it would be "better" (if that word has any meaning here) for both DW and I to start drawing at FRA rather than waiting until age 70, as we end up with less out-of-pocket overall by doing so (assuming normal actuarial life expectancy, which seems to be roughly in line with family history).
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

Not Law
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Re: Social Security at age 62 perhaps?

Post by Not Law » Tue Jan 02, 2018 6:36 pm

I plan to live forever, so the choice is 75% of PIA forever, or 132% of PIA for forever minus 8 years.

delamer
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Re: Social Security at age 62 perhaps?

Post by delamer » Tue Jan 02, 2018 7:03 pm

Our situation was not dissimilar to yours in that I was retired and turned 62 while my husband continued to work.

Our marginal federal and state tax rates were such that we would have lost 40% of my benefit to taxes if I started at 62. With the tax law changes, it is now 30%.

Even taking RMDs into account and my larger SS, we will have a lower marginal rate when we are both retired. Plus my mother lived to be 94.

As it happens, I will reach my FRA the month after my husband retires. So the stars aligned for me to wait.

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David Jay
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Re: Social Security at age 62 perhaps?

Post by David Jay » Tue Jan 02, 2018 7:21 pm

I use Mike Piper's book (have it on my Kindle): https://www.amazon.com/Social-Security- ... ade+simple
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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celia
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Re: Social Security at age 62 perhaps?

Post by celia » Wed Jan 03, 2018 4:02 am

delamer wrote:
Tue Jan 02, 2018 7:03 pm
As it happens, I will reach my FRA the month after my husband retires. So the stars aligned for me to wait.
I think this is backwards. I'll bet your husband decided to retire the month before you reached FRA! :sharebeer
(Your FRA was known long before your husband starting thinking about retirement.)

Diogenes
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Re: Social Security at age 62 perhaps?

Post by Diogenes » Wed Jan 03, 2018 8:14 am

This topic has been discussed many times here, easily found in a search.
Seems to be two ways to look at it. Some consider shooting for wringing the most money out of the system and waiting until 70, hoping you make it to your mid-80's to count it as a 'win.' Many tools will tell you to do that, MaximizeMySocialSecurity being one,https://maximizemysocialsecurity.com/.
Others look at it as a cash flow issue and taking the SS payments earlier as a means to not reduce personal assets which can be passed on.
Although most folks take it at 62 in the U.S., it seems to be more evenly divided on this forum.

Chip
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Re: Social Security at age 62 perhaps?

Post by Chip » Wed Jan 03, 2018 9:09 am

Diogenes wrote:
Wed Jan 03, 2018 8:14 am
Some consider shooting for wringing the most money out of the system and waiting until 70, hoping you make it to your mid-80's to count it as a 'win.'
I think most people waiting until age 70 are NOT trying to "wring the most money out of the system". They are treating SS as longevity insurance. A plus for married couples is that the "insurance" covers both spouses.

At least that's the way I think about it.

smitcat
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Re: Social Security at age 62 perhaps?

Post by smitcat » Wed Jan 03, 2018 9:18 am

Chip wrote:
Wed Jan 03, 2018 9:09 am
Diogenes wrote:
Wed Jan 03, 2018 8:14 am
Some consider shooting for wringing the most money out of the system and waiting until 70, hoping you make it to your mid-80's to count it as a 'win.'
I think most people waiting until age 70 are NOT trying to "wring the most money out of the system". They are treating SS as longevity insurance. A plus for married couples is that the "insurance" covers both spouses.

At least that's the way I think about it.
Yes- we have the same view of delaying SS.
Additionally - the vast majority of folks that take SS early really have no choice, they need the cash flow at 62 or immediatly when they stop working to cover expenses.

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Re: Social Security at age 62 perhaps?

Post by hexagon » Wed Jan 03, 2018 10:05 am

The most important decision in terms of longevity insurance is for the high earner (you) to delay SS until age 70 since the longevity tail events are much likelier to involve just one of you. Our plan is for me to certainly wait until 70. We could both wait until 70 but it may be that the extra income will be useful for spoiling grandkids or other splurges so we will play it by ear for my wife.

hexagon
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Re: Social Security at age 62 perhaps?

Post by hexagon » Wed Jan 03, 2018 10:14 am

MP173 wrote:
Tue Jan 02, 2018 3:02 pm
DW took an early retirement June, 2017 when offered. She will be 62 this March.

Our initial plans were to each take SS at age 70 in order to maximize payout. We are re-thinking that at this time.
...

So, here is the question....is there any compelling reason not for my wife to take SS later this year? Yes, it will fix her payments "forever". What are the pros and cons for taking it or waiting?
I see I did not really address your question, but what I was trying to say is that "No, I don't think there is a compelling reason one way or the other." Here is a calculator recommended in another thread that I found useful for playing around with different scenarios:

http://www.bedrockcapital.com/ssanalyze/

MP173
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Re: Social Security at age 62 perhaps?

Post by MP173 » Wed Jan 03, 2018 10:55 am

Thanks for the replies so far.

I have discussed this with DW and we have some serious discussions and planning to do before making a decision. Several points:

1. We are not trying to maximize the overall payout. As pointed out, there is no way to plan the dates of our deaths.
2. Probably my biggest concern is how taking early SS will effect our tax situation. This is something that requires research and spreadsheet time. I must confess that I know very little about SS. My concerns so far in my adult life has been accumulating assets for retirement, college funding, and other goals. Now, it is time to begin planning for the distribution aspect.
3. The recommendations earlier about converting to ROTH is valid and should be explored.
4. The RMDs at age 70.5, while several years off, are beginning to appear on my personal finance radar. Time to plan that as well as possible.
5. My wife has an emotional "need" as much as anything for the SS. In other words, she has worked most of her adult life and received a paycheck. Obviously that paycheck is now gone. This is a transition time and she feels a void without a monthly deposit into her checking account. Yes, we understand that my work can adequately pay the bills and provide for continued retirement savings. This is somewhat complicated as it is second marriage for both of us and there are estate issues to be considered.

What I think should be done is:
1. Learn as much as possible about retirement (financial aspect including SS, taxes, RMD, etc) thru online, book, or consultant.
2. Meet with Fidelity representative (we both have accounts with them). Have them run the numbers for different aspect.
3. Trust, but verify.

Comments? You have recommended on line resources. Any recommendations for a current book?

Ed

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munemaker
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Re: Social Security at age 62 perhaps?

Post by munemaker » Wed Jan 03, 2018 11:01 am

hexagon wrote:
Wed Jan 03, 2018 10:14 am
MP173 wrote:
Tue Jan 02, 2018 3:02 pm
DW took an early retirement June, 2017 when offered. She will be 62 this March.

Our initial plans were to each take SS at age 70 in order to maximize payout. We are re-thinking that at this time.
...

So, here is the question....is there any compelling reason not for my wife to take SS later this year? Yes, it will fix her payments "forever". What are the pros and cons for taking it or waiting?
I see I did not really address your question, but what I was trying to say is that "No, I don't think there is a compelling reason one way or the other." Here is a calculator recommended in another thread that I found useful for playing around with different scenarios:

http://www.bedrockcapital.com/ssanalyze/
That is a great calculator. Another good one is, if you have an account at Vanguard, to to Financial Engines through their site. It now has a calculator that determines the best strategy for optimizing SS. In my case, it gave me the same answer as the Bedrock Capital calculator.

Ron
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Re: Social Security at age 62 perhaps?

Post by Ron » Wed Jan 03, 2018 11:30 am

Chip wrote:
Wed Jan 03, 2018 9:09 am
Diogenes wrote:
Wed Jan 03, 2018 8:14 am
Some consider shooting for wringing the most money out of the system and waiting until 70, hoping you make it to your mid-80's to count it as a 'win.'
I think most people waiting until age 70 are NOT trying to "wring the most money out of the system". They are treating SS as longevity insurance. A plus for married couples is that the "insurance" covers both spouses.

At least that's the way I think about it.
Exactly (at least for me/wife).

As it is, I turned 70 today and will be getting my first SS deposit next month.

I told my wife (at dinner, last night) that if I didn't make it to midnight, just roll me under the covers and call the FD after 12:01 :mrgreen: ...

My primary reason for delay was to maximize my SS for her, assuming I'm going first. I would hate to see her not getting the full benefit after delaying SS since age 62 :twisted:

- Ron

hulburt1
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Re: Social Security at age 62 perhaps?

Post by hulburt1 » Wed Jan 03, 2018 11:37 am

I ran this off of bedrock- very interesting-I'm 65 this year wife 62.
I'm at 2.5m and doing a lot of Roth. but now I'm not sure if that is the best way.

Recommended Solution


Based on the data above, the following plan of action is recommended:






















1.k will file for her own benefit to start on 4/1/2018, the month after she turns 62 and receive 73.33% of her full retirement age benefit.
2.m will file and "restrict his application" to his spousal benefit to start on 5/1/2019 when he is full retirement age and receive 50% of k's full retirement age benefit.
3.m will file for his own benefit to start on 5/1/2023, the month after he turns 70 and receive 132% of his full retirement age benefit.
4.After she is widowed k will receive her survivor's benefit which will be 132% of m's full retirement age benefit.

smitcat
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Re: Social Security at age 62 perhaps?

Post by smitcat » Wed Jan 03, 2018 11:50 am

MP173 wrote:
Wed Jan 03, 2018 10:55 am
Thanks for the replies so far.

I have discussed this with DW and we have some serious discussions and planning to do before making a decision. Several points:

1. We are not trying to maximize the overall payout. As pointed out, there is no way to plan the dates of our deaths.
2. Probably my biggest concern is how taking early SS will effect our tax situation. This is something that requires research and spreadsheet time. I must confess that I know very little about SS. My concerns so far in my adult life has been accumulating assets for retirement, college funding, and other goals. Now, it is time to begin planning for the distribution aspect.
3. The recommendations earlier about converting to ROTH is valid and should be explored.
4. The RMDs at age 70.5, while several years off, are beginning to appear on my personal finance radar. Time to plan that as well as possible.
5. My wife has an emotional "need" as much as anything for the SS. In other words, she has worked most of her adult life and received a paycheck. Obviously that paycheck is now gone. This is a transition time and she feels a void without a monthly deposit into her checking account. Yes, we understand that my work can adequately pay the bills and provide for continued retirement savings. This is somewhat complicated as it is second marriage for both of us and there are estate issues to be considered.

What I think should be done is:
1. Learn as much as possible about retirement (financial aspect including SS, taxes, RMD, etc) thru online, book, or consultant.
2. Meet with Fidelity representative (we both have accounts with them). Have them run the numbers for different aspect.
3. Trust, but verify.

Comments? You have recommended on line resources. Any recommendations for a current book?

Ed
"2. Probably my biggest concern is how taking early SS will effect our tax situation. This is something that requires research and spreadsheet time. I must confess that I know very little about SS. My concerns so far in my adult life has been accumulating assets for retirement, college funding, and other goals. Now, it is time to begin planning for the distribution aspect. '

Teh Bedrock calulator is a great tool for evaluating SS choices but nothing else.
For your goals stated above we run both the full IORP and the RPM model/calculator to look at choices and select the best fit for us.
Each one requires some careful set up time but once you get the feel for it analyzing options becomes quick.
You will then see how SS plays a role in other choices and can save the runs/outputs for comparison.

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Re: Social Security at age 62 perhaps?

Post by itstoomuch » Wed Jan 03, 2018 12:06 pm

Prostate cancer at 63.
High BP 180-220/80 (current and typical). Have been on medication for 5 years.
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Re: Social Security at age 62 perhaps?

Post by wrongfunds » Wed Jan 03, 2018 12:35 pm

As it is, I turned 70 today and will be getting my first SS deposit next month.

I told my wife (at dinner, last night) that if I didn't make it to midnight, just roll me under the covers and call the FD after 12:01 :mrgreen: ...

My primary reason for delay was to maximize my SS for her, assuming I'm going first. I would hate to see her not getting the full benefit after delaying SS since age 62
I do not understand this part. Can you explain it? What happens if you don't survive until 70?

Ron
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Re: Social Security at age 62 perhaps?

Post by Ron » Wed Jan 03, 2018 12:38 pm

wrongfunds wrote:
Wed Jan 03, 2018 12:35 pm
As it is, I turned 70 today and will be getting my first SS deposit next month.

I told my wife (at dinner, last night) that if I didn't make it to midnight, just roll me under the covers and call the FD after 12:01 :mrgreen: ...

My primary reason for delay was to maximize my SS for her, assuming I'm going first. I would hate to see her not getting the full benefit after delaying SS since age 62
I do not understand this part. Can you explain it? What happens if you don't survive until 70?
There would be a one month reduction in benefits for the rest of her life! :twisted:

- Ron

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celia
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Re: Social Security at age 62 perhaps?

Post by celia » Wed Jan 03, 2018 1:22 pm

MP, you snuck this in when we weren't paying attention:
MP173 wrote:
Wed Jan 03, 2018 10:55 am
This is somewhat complicated as it is second marriage for both of us...
It is more complicated for you if either of you were married at least ten years to someone else. In that case, one of you would also be eligible for collecting spousal benefits off of your ex's work history.

But I wouldn't worry about that until you file. For now, do your calculations using the variables you already know about.

As far as your spouse wanting some spending money, you could set up an automatic withdrawal from a tax-deferred account each month. This will start getting control over those future RMDs. Hopefully that will satisfy your wife's financial expectations. Then you can save the money you would have otherwise spent for the taxes that will be due (for this year and when you convert).

Traveler
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Re: Social Security at age 62 perhaps?

Post by Traveler » Wed Jan 03, 2018 1:24 pm

I'm not a SS expert but what would happen if, God forbid, you died before you filed for SS? Would she still be eligible for 1/2 of yours if that is greater than hers? Would she have sufficient cashflow to live the lifestyle she would like?

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Re: Social Security at age 62 perhaps?

Post by neilpilot » Wed Jan 03, 2018 1:33 pm

Traveler wrote:
Wed Jan 03, 2018 1:24 pm
I'm not a SS expert but what would happen if, God forbid, you died before you filed for SS? Would she still be eligible for 1/2 of yours if that is greater than hers? Would she have sufficient cashflow to live the lifestyle she would like?
Without getting into too much detail, assuming you were beyond your SS retirement age she would be eligible for a survivor benefit equal to what you would have been eligible for if you had files at the age of death.

Diogenes
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Re: Social Security at age 62 perhaps?

Post by Diogenes » Wed Jan 03, 2018 1:44 pm

Chip wrote:
Wed Jan 03, 2018 9:09 am
Diogenes wrote:
Wed Jan 03, 2018 8:14 am
Some consider shooting for wringing the most money out of the system and waiting until 70, hoping you make it to your mid-80's to count it as a 'win.'
I think most people waiting until age 70 are NOT trying to "wring the most money out of the system". They are treating SS as longevity insurance. A plus for married couples is that the "insurance" covers both spouses.

At least that's the way I think about it.
No offense Chip. The point was that many tools and articles are orientated toward simply maximizing the total lifetime payout. That isn't the only (or perhaps even the most important) consideration for many. Especially if you don't know how long you'll live. For those who don't need a higher payout later for longevity insurance, there are other factors.

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Re: Social Security at age 62 perhaps?

Post by 4nickt » Wed Jan 03, 2018 1:51 pm

neilpilot wrote:
Tue Jan 02, 2018 5:28 pm
eldinerocheapo wrote:
Tue Jan 02, 2018 5:22 pm
Both my Dad and FIL took SS @ 62 and each had about 20 more years of life after that. Both said they wanted to travel and enjoy life before nature took it's course. Despite reasonable health, they went downhill quickly and both said they were glad they retired when they did, with no regrets.

I'm 60 now, and will probably follow their lead on this, as the time we have left to spend dwindles each day. If people find their work rewarding and meaningful into their 80's, God bless 'em! I'm not one of them and neither is anyone I know.

Run all the numbers you want, but an old saying comes to mind when reflecting on our finite stay here............

"Pebbles are diamonds to a dying man"
While the general public equates retirement with the age they begin SS payments, that isn't true for many Bogelheads. I agree that retirement should be a time to "travel and enjoy life", but it isn't always necessary to begin SS early to accomplish that goal. Based on the start of this thread, it certainly is not a prerequisite for the OP.
First, congrats on your savings and investment plan for the future. You are in the minority if you don’t need to take SS as a necessity at age 62. Sadly, many folks are underfunded and made bad economic decisions over their lifetime. My view about SS is that it’s an investment account managed by Uncle Sam That you do not have access to until 62 unless you decide to wait and collect more as you age. If you follow Bogle’s And Buffet’s advice time is your friend and compounding interest makes all the difference if you take SS at 62. Recommend you reinvest all of it with a 60/40 split equities and bond index. More aggressive if you like, but 60/40 is reasonable or 50/50 with an average return of 4-6% over 20 years is likely. Keep in mind that you are collecting YOUR money you paid in. To do so you must be alive to see it work for you just as your other investments. Lastly, the new tax law reduces all SS payments using chained CPI for the future. This is a BIG deal, but most people don’t seem to know or care. On average we will lose 10-30 basis points every year under the new formula. Multiply that loss by 20-40 years and you realize it’s a big deal. Needless to say we are going to draw our SS at 62 which is very near. Keep in mind that that politicians are targeting SS and other entitlements to reduce spending. Don’t be surprised if some form of means testing is enacted in 20 years to cut spending. Folks are living a lot longer and a baby born today has an 75% chance of living to be 100 years old. New Cancer drugs are saving lives( my wife is an oncology expert) and this will continue so plan on living a good life managing your investments and passing along an inheritance to the lucky ones.

mptfan
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Re: Social Security at age 62 perhaps?

Post by mptfan » Wed Jan 03, 2018 3:08 pm

4nickt wrote:
Wed Jan 03, 2018 1:51 pm
Lastly, the new tax law reduces all SS payments using chained CPI for the future. This is a BIG deal, but most people don’t seem to know or care.
Do you have a source or a citation for this? I would like to read about it.

4nickt
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Re: Social Security at age 62 perhaps?

Post by 4nickt » Wed Jan 03, 2018 3:36 pm

mptfan wrote:
Wed Jan 03, 2018 3:08 pm
4nickt wrote:
Wed Jan 03, 2018 1:51 pm
Lastly, the new tax law reduces all SS payments using chained CPI for the future. This is a BIG deal, but most people don’t seem to know or care.
Do you have a source or a citation for this? I would like to read about it.
[OT comments removed by admin LadyGeek]

Chained CPI over a few years is nothing to worry about, but it adds up over time just as excessive fees and expenses do for mutual funds.

Link to 2018 tax law: https://www.congress.gov/bill/115th-con ... /1/text/ih

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munemaker
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Re: Social Security at age 62 perhaps?

Post by munemaker » Wed Jan 03, 2018 3:47 pm

4nickt wrote:
Wed Jan 03, 2018 3:36 pm

Unfortunately, this is just the beginning of the attack on SS.
Some may term this an attack; others a rescue.

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munemaker
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Re: Social Security at age 62 perhaps?

Post by munemaker » Wed Jan 03, 2018 3:55 pm

4nickt wrote:
Wed Jan 03, 2018 3:36 pm
mptfan wrote:
Wed Jan 03, 2018 3:08 pm
4nickt wrote:
Wed Jan 03, 2018 1:51 pm
Lastly, the new tax law reduces all SS payments using chained CPI for the future. This is a BIG deal, but most people don’t seem to know or care.
Do you have a source or a citation for this? I would like to read about it.
[OT comments removed by admin LadyGeek]

Chained CPI over a few years is nothing to worry about, but it adds up over time just as excessive fees and expenses do for mutual funds.

Link to 2018 tax law: https://www.congress.gov/bill/115th-con ... /1/text/ih
I could not find anything in either of the references (or by a Google search) that says chained CPI is being applied to Social Security at this time. Could you please point out what section this is in? Sorry if I missed it.

mptfan
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Re: Social Security at age 62 perhaps?

Post by mptfan » Wed Jan 03, 2018 4:02 pm

munemaker wrote:
Wed Jan 03, 2018 3:55 pm
I could not find anything in either of the references (or by a Google search) that says chained CPI is being applied to Social Security at this time. Could you please point out what section this is in? Sorry if I missed it.
I also cannot find anything that says chained CPI is being applied to Social Security by the new tax law. The NPR article refers to chained CPI and income tax brackets, not social security.

bberris
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Re: Social Security at age 62 perhaps?

Post by bberris » Wed Jan 03, 2018 4:20 pm

reggiesimpson wrote:
Tue Jan 02, 2018 6:25 pm
I have never been able to figure out the date of my death. So I took SS at 62.
Me neither. That's why I'm waiting til 70.

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Re: Social Security at age 62 perhaps?

Post by LadyGeek » Wed Jan 03, 2018 5:04 pm

I removed an off-topic comment, post, and reply. The discussion is getting derailed on conjecture of the future of Social Security by impacts of the chained-CPI. As a reminder, see: Politics and Religion
In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited. The only exceptions to this rule are:
  • Common religious expressions such as sending your prayers to an ailing member.
  • Usage of factual and non-derogatory political labels when necessary to the discussion at hand.
  • Discussions about enacted laws or regulations that affect the individual investor. Note that discussions of proposed legislation are prohibited.
  • Proposed regulations that are directly related to investing may be discussed if and when they are published for public comments.
Also see: Non-actionable (Trolling) Topics

(Changes to Social Security requires a change in legislation, which is a political process.)

Please stay on-topic, which is helping the OP decide on when to take Social Security.
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MP173
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Re: Social Security at age 62 perhaps?

Post by MP173 » Wed Jan 03, 2018 6:18 pm

So, to steer this back on topic and hopefully address a question of mine...

It appears that there are definite benefits, based on our situation it will be considered.

Next question...assume she take the benefit and I continue working...how will her benefits be taxed? I read enough to realize there will probably be taxation, but not sure where it kicks in.

In other words, will her SS benefit be considered "income". She will not be working and have other income, other than a small pension.

Ed

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munemaker
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Re: Social Security at age 62 perhaps?

Post by munemaker » Wed Jan 03, 2018 6:40 pm

MP173 wrote:
Wed Jan 03, 2018 6:18 pm
So, to steer this back on topic and hopefully address a question of mine...

It appears that there are definite benefits, based on our situation it will be considered.

Next question...assume she take the benefit and I continue working...how will her benefits be taxed? I read enough to realize there will probably be taxation, but not sure where it kicks in.

In other words, will her SS benefit be considered "income". She will not be working and have other income, other than a small pension.

Ed
Yes, it is taxed as income. The amount taxed depends on your income. Why not run your situation through Taxcaster to find out?

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Re: Social Security at age 62 perhaps?

Post by cherijoh » Wed Jan 03, 2018 6:57 pm

MP173 wrote:
Tue Jan 02, 2018 3:02 pm
DW took an early retirement June, 2017 when offered. She will be 62 this March.

Our initial plans were to each take SS at age 70 in order to maximize payout. We are re-thinking that at this time.

I am 62 and plan on working for several years...enjoy my career and at this point in time there is no reason to pull the pin. Our expenses are under control - no debt (mortgage and cars paid off), low cost of living region, good health, good medical care, four year HSA contribution as part of early retirement (cannot roll over past fourth year), property taxes are reasonable, no big vices, one reasonable vacation per year, etc. Fpur adult children with the last one finishing college in May with all education expenses covered.

My variable income easily covers all expenses including 12% contribution to 401k and Roth contributions to both. She receives a small pension monthly.

Retirement assets - currently $1.5m on pace for close to $2.0 m depending on age of retirement for me. I also have the opportunity to continue working (sales) as part time should I decide to slow down. Also have considerable non-retirement assets including IBonds due in 13 - 15 years, dividend paying stocks (boring multinational such as MCD, MSFT, etc), tax free muni funds, etc. I have been planning for retirement since I was 25...amazing what a little planning and luck can provide. I am currently planning RMDs for 8 years down the road. My SS at age 70 will cover most foreseeable costs (except health care).

So, here is the question....is there any compelling reason not for my wife to take SS later this year? Yes, it will fix her payments "forever". What are the pros and cons for taking it or waiting?

Thanks,

Ed
You provided lots of detail except for the size of her SS benefit relative to yours. Actuarial tables suggest that the odds are in favor of her outliving you. At which point she has the option of keeping her own benefit or taking on yours.

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Re: Social Security at age 62 perhaps?

Post by David Jay » Wed Jan 03, 2018 7:12 pm

MP173 wrote:
Wed Jan 03, 2018 6:18 pm
Next question...assume she take the benefit and I continue working...how will her benefits be taxed? I read enough to realize there will probably be taxation, but not sure where it kicks in.
If you earn over about $60,000 a year (not sure exactly, I think it is in the upper 50s) then 85% of her benefit will show up as taxable income on your joint return, with whatever consequence that has in terms of your tax bracket and amount to be paid.
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Re: Social Security at age 62 perhaps?

Post by delamer » Wed Jan 03, 2018 7:16 pm

cherijoh wrote:
Wed Jan 03, 2018 6:57 pm
MP173 wrote:
Tue Jan 02, 2018 3:02 pm
DW took an early retirement June, 2017 when offered. She will be 62 this March.

Our initial plans were to each take SS at age 70 in order to maximize payout. We are re-thinking that at this time.

I am 62 and plan on working for several years...enjoy my career and at this point in time there is no reason to pull the pin. Our expenses are under control - no debt (mortgage and cars paid off), low cost of living region, good health, good medical care, four year HSA contribution as part of early retirement (cannot roll over past fourth year), property taxes are reasonable, no big vices, one reasonable vacation per year, etc. Fpur adult children with the last one finishing college in May with all education expenses covered.

My variable income easily covers all expenses including 12% contribution to 401k and Roth contributions to both. She receives a small pension monthly.

Retirement assets - currently $1.5m on pace for close to $2.0 m depending on age of retirement for me. I also have the opportunity to continue working (sales) as part time should I decide to slow down. Also have considerable non-retirement assets including IBonds due in 13 - 15 years, dividend paying stocks (boring multinational such as MCD, MSFT, etc), tax free muni funds, etc. I have been planning for retirement since I was 25...amazing what a little planning and luck can provide. I am currently planning RMDs for 8 years down the road. My SS at age 70 will cover most foreseeable costs (except health care).

So, here is the question....is there any compelling reason not for my wife to take SS later this year? Yes, it will fix her payments "forever". What are the pros and cons for taking it or waiting?

Thanks,

Ed
You provided lots of detail except for the size of her SS benefit relative to yours. Actuarial tables suggest that the odds are in favor of her outliving you. At which point she has the option of keeping her own benefit or taking on yours.
Option really isn’t the right word.

From the publication Survivors Benefits at https://www.ssa.gov/pubs/EN-05-10084.pdf

“If you’re getting benefits based on your own work, call or visit us. We’ll check to see if you can get more money as a widow or widower. If so, you’ll get a combination of benefits that equals the higher amount. You must complete an application to switch to survivors benefits. We also need to see your spouse’s death certificate.”

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Re: Social Security at age 62 perhaps?

Post by delamer » Wed Jan 03, 2018 7:20 pm

MP173 wrote:
Wed Jan 03, 2018 6:18 pm
So, to steer this back on topic and hopefully address a question of mine...

It appears that there are definite benefits, based on our situation it will be considered.

Next question...assume she take the benefit and I continue working...how will her benefits be taxed? I read enough to realize there will probably be taxation, but not sure where it kicks in.

In other words, will her SS benefit be considered "income". She will not be working and have other income, other than a small pension.

Ed
Here’s information: https://www.kiplinger.com/article/taxes ... xable.html

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