Delaying Social Security Until 70

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steve roy
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Re: Delaying Social Security Until 70

Post by steve roy » Sun Sep 16, 2018 1:12 pm

Waiting to 70. Easy decision to make since I worked until 68 and had bonuses and sale of house to bridge to the seventh decade.

Every person’s situation is different. Nothing wrong taking it sooner if you have to.

Dandy
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Re: Delaying Social Security Until 70

Post by Dandy » Sun Sep 16, 2018 1:20 pm

GeoffD wrote:
Sun Sep 16, 2018 1:02 pm
Dandy wrote:
Sun Sep 16, 2018 12:41 pm
GeoffD wrote:
Sun Sep 16, 2018 10:03 am
Dandy wrote:
Sun Sep 16, 2018 8:06 am
Many people take it earlier because they need it.
In my spreadsheet, I calculate my age 62 to age 70 Social Security benefit payout as $198,144. I'm career high income. 29 years with my Social Security contribution maxed and another 6 years that are strong. I'm maybe $1K per year short of the maximum possible defer-to-age-70 benefit. In 2018 dollars, my age 70 benefit would $43,524/year.

My father made it to ~85. My mother is 86. With medical advances, I have pretty high odds of making it to at least age 85. I'm 60 now. I view Social Security as very good COLA-protected insurance against outliving my retirement portfolio. If I totally run out of money other than the equity in my house, I'm still fine. I have the extra $198,144 I can spend during those 8 years between 62 and 70. Why wouldn't I do the financially conservative thing and defer to 70? If the markets defy gravity and continue to boom for another 8 years, I leave some money on the table. That's way better than being 90+, out of money, and trying to get by on an age 62 Social Security benefit of $24,768 in 2018 dollars.

[OT comments removed by admin LadyGeek]
I agree that waiting for age 70 is a good idea for many including me. But, many people retire without a pension and without enough savings. It isn't that they didn't try to save or squandered their income, many had low wages or health issues etc and they need to take that SS income early. No shame in that.

My dad was forced to retire at age 59 and got a terrible pension. He had to move to a mobile home community in Florida far from his family in the Northeast. I'm pretty sure he had to take Social Security as soon as he could. He ended up working in a kitchen post retirement washing dishes etc. to help make ends meet. He was lucky, he had a small pension and his house was paid for. But, I can't imagine at retirement age what it must have been like working in a hot kitchen in Fla.
Right. So your dad took it at 62 because he needed it. No agonizing decision to be made. My net worth is right on that cusp where the decision matters. I'm at risk of out-living my savings. If I had double my net worth, it would be an academic exercise where any decision wouldn't change the outcome much. I figure I get one shot at it so I'd prefer to take the conservative path.
The good thing about Social Security is if you are on the cusp you can try waiting and if it doesn't work out take it at 63? or any age. But you are correct that you are in the gray area which of often unsettling. I was trying to make the point that people who take it early often have to it isn't that they aren't financially savvy.

Morgan Dollar 1921
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Re: Delaying Social Security Until 70

Post by Morgan Dollar 1921 » Sun Sep 16, 2018 1:43 pm

I am the classic case of looking at SS the wrong way, but I took mine early, as soon as I could and filed the 89th day before my 62nd B-day. Why? My employers and I paid in a lot of money over 41+ years. I understand the present value of a future stream of payments. My income has been typical middle class high school wage and middle management compensation, the bend factor helped boost my benefit. The Lehman BK, shut down the phones in our parts department, in Oct 2008 I was in trouble, when the boss called me into his office on the 30th of Oct, 2008, I chuckled, I knew it was coming. I worked hard trying to find a job, but some of the questions in interviews bordered on discrimination, I needed health benefits, so I answered honestly. The interviewers wanted to hear that I had a wife who carried the healthcare, but I did not. Laid off for nine months then six years of below middle class earnings created a unique situation at age 62 for me. I was not adding any bigger numbers to the PIA calculation, I could draw more at 62 than my take home pay minus taxes and expenses of going to work. Remember, that not only do you stop paying Fed, State, & City income tax at retirement, you also leave behind SS & medicare deductions, 401k funding to capture the match % and expenses of commuting etc. Healthcare, the ACA silver plan with APC came to the rescue, it was a little high the first 6 months then, my lower SSA income vs Gross earnings dropped me below the 200 % of FPL. There are a lot of retiree's that are working strategy to say below 400% FPL.

My Dad lived to late 90's, and started drawing at 70, my mother passed at 71, Alzheimer's, I have watched dozens of classmate's, co-workers and friends die in their 50's & 60's. Ten men out of a high school class of 120 guys and gals. None of my maternal uncles made it to 80. A common statement is look how long your Dad lived, then I mention yes, but whose genes do I have, toss a coin. Some of us have no interest in providing spousal or survivor benefits. If we pass the funds paid in are gone.

There is a lot of real life out there, am I looking for sympathy ? No! My intent is only to illustrate there is more to the decision of when to start drawing than math and statistics. One of my friends was successful with a good manufacturing job, he has one health concern, and his tax situation with pension and 401k funds made early SSA withdrawals good sense due to income tax status of SSA payments combined 401k withdrawals. I'll be OK, may find some part-time in my skill work after I turn 68, if my health is good when I get there. Why 68 well that is a special number too, I will have had six good years of enjoying retirement, no stress, no snowy slide in the ditch morning commutes, yeah life is good.

Just this week, I read of SSA fraud cases, where a thief files for your SSA income earlier than you do, turns out some real horror stories to iron out, talk about being a victim. I sure did dodge that one.

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SeeMoe
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Re: Delaying Social Security Until 70

Post by SeeMoe » Sun Sep 16, 2018 3:27 pm

We both took SS soon as possible although we both have good pensions and investments. So we invest the proceeds and watch them grow for one. A bird-in-hand now rather than later if the SS well starts running dry , or the government has an emergency and changes the rules! Life expectancy is another. Plus we don’t mind paying our fair share of taxes either.

SeeMoe: :mrgreen:
"By gnawing through a dike, even a Rat can destroy a nation ." {Edmund Burke}

JoeRetire
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Re: Delaying Social Security Until 70

Post by JoeRetire » Mon Sep 17, 2018 7:50 am

AlphaLess wrote:
Sat Sep 15, 2018 9:39 pm
inbox788 wrote:
Sat Sep 15, 2018 7:24 pm
sometimesinvestor wrote:
Sat Sep 15, 2018 4:07 pm
If you are single the calculations are simple :all that matters is how long you willlive My father died at 55 my mom at 75.I understood I would have to live till 78 to come out ahead if I waited till 70 so I didn't take it at 62 but took it when I retired. ifI am wrong won't go broke and taking it when I retired enabled me to invest in the last 10 years
Delaying SS until 70 is another way of investing it conservatively with a high confidence and relative high return. It's fortunate the last 10 years have been good to market investors, but for less fortunate, it might be like a lost decade.
Almost.

If you are 66, with a cancer diagnosis, that math does not work out.
Way too much of a generalization.

I'm almost 64. I have cancer. My cancer is completely under control. I expect to live a full life.
I'm still planning to delay to 70 so that my wife receives the maximum survivor benefits.

Your mileage may vary.

JoeRetire
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Re: Delaying Social Security Until 70

Post by JoeRetire » Mon Sep 17, 2018 7:56 am

hulburt1 wrote:
Sun Sep 16, 2018 8:35 am
So as I understand that I could take my SS at 66. My wife is younger by 3 years and has a bigger ss coming. If she plan on taking at 70 but dies on the way. At my 70 I can switch to her SS that she would get at 70.
No.

If she dies before 70, you cannot receive what she would have gotten at 70.

JoeRetire
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Re: Delaying Social Security Until 70

Post by JoeRetire » Mon Sep 17, 2018 8:08 am

heyyou wrote:
Sun Sep 16, 2018 11:20 am
About those 2% who do wait until 70 to start SS:
Morgan Housel wrote that most people are not good at saving, therefore you have to act differently than most, to be a saver.
By definition, those 2% who wait until 70 "act differently than most".
And I suspect part of that acting differently has to do with saving and investing.

JoeRetire
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Re: Delaying Social Security Until 70

Post by JoeRetire » Mon Sep 17, 2018 8:09 am

GeoffD wrote:
Sun Sep 16, 2018 11:52 am
Taxes are going up. It's a matter of when.
There's no doubt about that.

JoeRetire
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Re: Delaying Social Security Until 70

Post by JoeRetire » Mon Sep 17, 2018 8:11 am

JW-Retired wrote:
Sun Sep 16, 2018 11:55 am
I think most states are pretty similar in giving SS a pass.
true.

13 states tax Social Security benefits.
37 states do not.

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ObliviousInvestor
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Re: Delaying Social Security Until 70

Post by ObliviousInvestor » Mon Sep 17, 2018 8:57 am

drawpoker wrote:
Sun Sep 16, 2018 12:13 pm
pennywise wrote:
Sun Sep 16, 2018 7:03 am
drawpoker wrote:
Sat Sep 15, 2018 4:39 pm

(I had been drawing a spousal benefit since age 60, 71.5% of my husband's benefit)
I didn't think one could claim a spousal benefit before age 62, other than as a widow/widower--can you explain how you started receiving spousal benefits at 60?
Yes, as a widow.
I used to call it a "survivors benefit" but was corrected by ObliviousInvestor here. Evidently, to be technical, the SSA terminology does not make a distinction if the spouse is deceased or living. If the benefit is based on the husband's PIA for old age benefits it is still called a spousal benefit, not a survivor's. Survivors is correct name if the worker died before filing for old age benefit, and left a spouse and minor children eligible to collect.
I'm failing to recall this discussion, but I apologize for apparently having communicated poorly.

A survivor benefit is the same as a widow/widower benefit.

A spousal benefit is the same as a husband/wife benefit.

A retirement benefit is the same as an old-age benefit.

The difference in terminology just depends on which source you're looking at. The CFR talks about old-age benefits, husband/wife benefits, and widow/widower benefits. The POMS talks about retirement benefits, spouse's benefits, and widow/widower benefits (though sometimes it talks about survivor's benefits). On the more publicly-promoted FAQ-style pages, SSA.gov uses all of the above terms.
Mike Piper, author/blogger

Gretchen
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Re: Delaying Social Security Until 70

Post by Gretchen » Mon Sep 17, 2018 9:15 am

We took Social Security last year when DH was a few months past 69 and I turned 66. He took his own, and I took spousal. I was the higher lifetime earner, so I'm waiting till 70. We both have parents and grandparents who lived past 90, so we need the higher benefit as longevity insurance. Strictly speaking, he is in the vast majority who don't wait all the way to age 70.

Our tax strategy was somewhat different before and after SS. We live in CA, which does not tax SS, but does tax interest and capital gains as ordinary income. It made sense to harvest capital gains before SS, and then leave the already-taxed account alone once SS kicked in.

Along with this strategy, since he has now passed 70 1/2, we are using Qualified Charitable Distributions from his IRA for our charitable donations.

alter
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Re: Delaying Social Security Until 70

Post by alter » Mon Sep 17, 2018 10:00 am

I've got a long way to go but I've already decided im taking it at 62, and I have a pension and max the 401k and roth...it's not enough to factor whether or not you'll live to 70. You could live til 70 and die after a year or two, it still would not have been worth it to wait. Factor the odds of living until the break even point and compare that with what someone could have grown their SS payments in an S&P500 fund using the average return of it, compounded until the "breakeven point". If statistics show, for example you have a 85% chance of living til 70 if you are 62, then that means you have a 15% chance of getting zero from SS. The prospect of higher returns in exchange for a 15% chance of getting zero, sounds a lot like gambling to me, and I would not call it conservative. Conservative would be start getting the money and invest it. Likewise, if it shows you only have a 75% chance of making it to the "breakeven point",say 75, then right off the bat you have a 25% chance of it not being worth it to take it later. Yes if you are 100% certain you will live past the breakeven point, then it could be worth it to some.

smitcat
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Re: Delaying Social Security Until 70

Post by smitcat » Mon Sep 17, 2018 10:05 am

alter wrote:
Mon Sep 17, 2018 10:00 am
I've got a long way to go but I've already decided im taking it at 62, and I have a pension and max the 401k and roth...it's not enough to factor whether or not you'll live to 70. You could live til 70 and die after a year or two, it still would not have been worth it to wait. Factor the odds of living until the break even point and compare that with what someone could have grown their SS payments in an S&P500 fund using the average return of it, compounded until the "breakeven point". If statistics show, for example you have a 85% chance of living til 70 if you are 62, then that means you have a 15% chance of getting zero from SS. The prospect of higher returns in exchange for a 15% chance of getting zero, sounds a lot like gambling to me, and I would not call it conservative. Conservative would be start getting the money and invest it. Likewise, if it shows you only have a 75% chance of making it to the "breakeven point",say 75, then right off the bat you have a 25% chance of it not being worth it to take it later. Yes if you are 100% certain you will live past the breakeven point, then it could be worth it to some.
Have your plans factored in a spouse, taxes, Roth converts and heirs?
Did you confirm your thoughts by utilizing the IORP and RPM calculators?

GeoffD
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Re: Delaying Social Security Until 70

Post by GeoffD » Mon Sep 17, 2018 10:12 am

smitcat wrote:
Mon Sep 17, 2018 9:22 am
"It's not politically possible to cut benefits. Sometime in the next decade, taxes are going up."
This is not the first time it has happened - perhaps research how it was 'corrected' the past time.
They boosted the FRA for people too young to be much of a voting block. In 1983 the last time the law changed, it impacted people born after 1954. People under the age of 30 mostly don't vote. No politician would dare touch benefits for anyone over age 45. No Congressman would survive their next election cycle.

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dm200
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Re: Delaying Social Security Until 70

Post by dm200 » Mon Sep 17, 2018 10:16 am

GeoffD wrote:
Mon Sep 17, 2018 10:12 am
smitcat wrote:
Mon Sep 17, 2018 9:22 am
"It's not politically possible to cut benefits. Sometime in the next decade, taxes are going up."
This is not the first time it has happened - perhaps research how it was 'corrected' the past time.
They boosted the FRA for people too young to be much of a voting block. In 1983 the last time the law changed, it impacted people born after 1954. People under the age of 30 mostly don't vote. No politician would dare touch benefits for anyone over age 45. No Congressman would survive their next election cycle.
I agree. Except for some very minor adjusting (maybe for just a few folks), I believe the changes will affect those scheduled to receive benefits in the future.

smitcat
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Re: Delaying Social Security Until 70

Post by smitcat » Mon Sep 17, 2018 10:37 am

GeoffD wrote:
Mon Sep 17, 2018 10:12 am
smitcat wrote:
Mon Sep 17, 2018 9:22 am
"It's not politically possible to cut benefits. Sometime in the next decade, taxes are going up."
This is not the first time it has happened - perhaps research how it was 'corrected' the past time.
They boosted the FRA for people too young to be much of a voting block. In 1983 the last time the law changed, it impacted people born after 1954. People under the age of 30 mostly don't vote. No politician would dare touch benefits for anyone over age 45. No Congressman would survive their next election cycle.
Yes - It was solved by slightly lengthening the benefits per FRA. Similar solutions have occurred in other countries as well.
Your thoughts are projecting politics and I am merely suggesting history is a good indicator.

smitcat
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Re: Delaying Social Security Until 70

Post by smitcat » Mon Sep 17, 2018 10:45 am

GeoffD wrote:
Mon Sep 17, 2018 9:19 am
JoeRetire wrote:
Mon Sep 17, 2018 8:06 am
GeoffD wrote:
Sun Sep 16, 2018 10:03 am
I'm career high income.

I view Social Security as very good COLA-protected insurance against outliving my retirement portfolio.
If you have been "career high income" what's the real chances of outliving your retirement portfolio?
Income and wealth are two different things. I've been divorced twice. Life happens. My age 70 Social Security check is going to be a large fraction of my cash flow if I stop working now at age 60. A COLA-protected and largely tax-free $43,524 per year at least means I won't be poor if I live into my 90s and zero out everything but home equity.
JoeRetire wrote:
Mon Sep 17, 2018 8:06 am
GeoffD wrote:
Sun Sep 16, 2018 10:03 am
So is the whole "Trust Fund" charade. As the program goes severely cash flow negative over the next decade, the program will eventually be changed to make it cash flow neutral.
Yup. Once the trust fund is depleted, social security must pay out whatever it takes in - no more and no less. Unless the laws are changed.
[OT comments removed by admin LadyGeek]
"A COLA-protected and largely tax-free $43,524 per year at least means I won't be poor if I live into my 90s and zero out everything but home equity"

I am not sure how you arrived at a SS benifit of $43,524/yr @ 70 but perhaps check the source to make sure your calcs are correct.

bradpevans
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Re: Delaying Social Security Until 70

Post by bradpevans » Mon Sep 17, 2018 10:56 am

oldcomputerguy wrote:
Sun Sep 16, 2018 12:28 pm
dm200 wrote:
Sat Sep 15, 2018 2:18 pm
2. Some do the math and (with justification) conclude earlier is better
I believe that we are going to be in this category. We'll be bridging the gap between punching out and filing for SS by drawing on our 401k / tIRA accounts, and my math seems to indicate that there is a "sweet spot" between spending those accounts down and filing for SS that favors filing at FRA rather than at age 70. My plan is that we will wait until FRA, re-evaluate our situation, and if things seem to support the proposition, we'll revisit the idea of delaying further. If they don't, we'll file then.
this surprises me a little. I say that because the +/- yearly % from 62 to 66 are smaller than 66 to 70.
So 70 catches 69 faster than 66 catches 65 in terms of cash flow. But of course starting later has more risk of never catching up so that may what is going on....

My view (at 52) is to have the larger amount wait till 70, (and do Roth conversions). This *may* put you above a 4% withdraw rate at the start of retirement -- but only till 70, and then you should be a decent bit under the 4% due to the larger SS benefit. 15% of SS is never taxed, so that those dollars are worth more than 401K/tIRA dollars

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Re: Delaying Social Security Until 70

Post by #Cruncher » Mon Sep 17, 2018 11:00 am

IowaFarmBoy wrote:
Sun Sep 16, 2018 5:41 am
I used to be firmly in the wait till 70 camp but I learned that I was making an incorrect assumption that is making me look seriously at drawing at FRA of 66-8. I am married and my spouse will be drawing based on half my benefit rather than hers. I had incorrectly assumed that she would get half of my age 70 benefit (including the increase) but I learned that she would only get half of my PIA at FRA, even if she waits till 70. So there is no advantage for waiting on her spousal benefit, which is a third of our total payment. (underline added)
Good point, IowaFarmBoy. The time to claim with the maximum present value of benefits is shortened when the spousal benefit exceeds what the spouse could receive on her own work record. I discuss this in several posts in the thread, Argument for taking social security before 70. Comments?. (Here is the first one.)

The following table illustrates this for the following assumptions:
  • Worker and spouse are exactly the same age with a Normal Retirement Age (NRA) of 66+8 mo (per this SSA web page).
  • Spouse will claim at the same time as the worker and will only receive spousal benefit.
  • Benefits are discounted at 0.93%, the current default discount rate in member ObliviousInvestor's nice Open Social Security Calculator.
  • An estimate that both spouses will live 16.00 years and at least one will live 26.82 years past worker's age 62. These are taken from my longevity estimator using the 2015 SSA Period Life Table, the default table used in the Open SS Calculator. But these can be set to any desired values to see the effect on present values. (Just make sure to use your estimates for both (i.e., first to die) and either (i.e., last to die), not for the worker and the spouse individually.)
The table shows that the maximum expected present value occurs when the couple retires at age 67+4 mo, eight months after reaching NRA of 66+8 mo, when the spouse becomes entitled to a spousal benefit of 50% of the worker's Primary Insurance Amount (PIA). The Open Social Security Calculator says the optimum time to claim is when both are 68+8 mo. But note that there isn't much difference in present value from 66+8 mo ($290,667 per $1,000 of PIA) to 67+4 mo ($291,077) to 68+8 mo ($289,697). However, waiting to claim until age 70 would reduce the expected present value about $4,000 (to $285,430).

Code: Select all

Row  Col A                 Col B     Col C
  1                       Worker    Spouse
  2  Year born              1958      1958
  3  Month born                9         9
  4  NRA                  66.667    66.667
  5  Worker's PIA          1,000
  6  Discount rate        0.930%
  7  Life exp - base       62.00
  8  Life exp - both       16.00
  9  Life exp - either     26.82
      -- Claim Age --    % of Worker's PIA    PV at    Incr
      Worker   Spouse     Worker    Spouse   LE Base  (Decr)
Row    Col A    Col B      Col C     Col D     Col E   Col F

Code: Select all

 11   62.000   62.000    71.667%   33.333%   262,516
 12   62.333   62.333    73.333%   34.167%   264,451   1,935 
 13   62.667   62.667    75.000%   35.000%   266,201   1,749 
 14   63.000   63.000    76.667%   35.833%   267,766   1,565 
 15   63.333   63.333    78.333%   36.667%   269,147   1,382 
 16   63.667   63.667    80.000%   37.500%   270,346   1,199 
 17   64.000   64.000    82.222%   38.889%   273,663   3,317 
 18   64.333   64.333    84.444%   40.278%   276,712   3,049 
 19   64.667   64.667    86.667%   41.667%   279,495   2,783 
 20   65.000   65.000    88.889%   43.056%   282,012   2,518 
 21   65.333   65.333    91.111%   44.444%   284,266   2,254 
 22   65.667   65.667    93.333%   45.833%   286,257   1,991 
 23   66.000   66.000    95.556%   47.222%   287,987   1,730 
 24   66.333   66.333    97.778%   48.611%   289,456   1,469 
 25   66.667   66.667   100.000%   50.000%  [290,667]  1,210   <== IowaFarmBoy
 26   67.000   67.000   102.667%   50.000%   290,964     298 
 27   67.333   67.333   105.333%   50.000%  [291,077]    113   <== table max
 28   67.667   67.667   108.000%   50.000%   291,006     (71)
 29   68.000   68.000   110.667%   50.000%   290,752    (254)
 30   68.333   68.333   113.333%   50.000%   290,315    (436)
 31   68.667   68.667   116.000%   50.000%  [289,697]   (618)  <== Open SS Calc
 32   69.000   69.000   118.667%   50.000%   288,899    (798)
 33   69.333   69.333   121.333%   50.000%   287,921    (978)
 34   69.667   69.667   124.000%   50.000%   286,765  (1,157)
 35   70.000   70.000   126.667%   50.000%   285,430  (1,335)
To modify the calculation for other assumptions, follow these steps. (Note: only works for case where the spouse doesn't collect on her own work record and where both spouses claim at the same time.)
  • Select All, Copy, and Paste [ * ] the following at cell A1 of a blank Excel sheet:

    Code: Select all

    	Worker	Spouse
    Year born	1958	1958
    Month born	9	9
    NRA	=MIN(67,66+MAX(0,B2-1954)/6)	=MIN(67,66+MAX(0,C2-1954)/6)
    Worker's PIA	1000
    Discount rate	0.0093
    Life exp - base	62
    Life exp - both	16
    Life exp - either	26.82
    W Age	S Age	W % PIA	S % PIA	PV at Base	Incr
    =62	=IF(ISNUMBER(C$2),A11-(C$2-B$2)-(C$3-B$3)/12,0)	=IF(A11<B$4,1-(5/900)*MIN(36,(B$4-A11)*12)-(5/1200)*MAX(0,(B$4-A11)*12-36),1+(8/1200)*(A11-B$4)*12)	=IF(B11<62,0,0.5*MIN(1,1-(25/3600)*MIN(36,(C$4-B11)*12)-(5/1200)*MAX(0,(C$4-B11)*12-36)))	=-12*B$5*PV(B$6,B$7+B$8-A11,C11+D11,-PV(B$6,B$9-B$8,C11,0,0),0)/(1+B$6)^(A11-B$7)	
    =62+4/12	=IF(ISNUMBER(C$2),A12-(C$2-B$2)-(C$3-B$3)/12,0)	=IF(A12<B$4,1-(5/900)*MIN(36,(B$4-A12)*12)-(5/1200)*MAX(0,(B$4-A12)*12-36),1+(8/1200)*(A12-B$4)*12)	=IF(B12<62,0,0.5*MIN(1,1-(25/3600)*MIN(36,(C$4-B12)*12)-(5/1200)*MAX(0,(C$4-B12)*12-36)))	=-12*B$5*PV(B$6,B$7+B$8-A12,C12+D12,-PV(B$6,B$9-B$8,C12,0,0),0)/(1+B$6)^(A12-B$7)	=E12-E11
    =2*A12-A11	=IF(ISNUMBER(C$2),A13-(C$2-B$2)-(C$3-B$3)/12,0)	=IF(A13<B$4,1-(5/900)*MIN(36,(B$4-A13)*12)-(5/1200)*MAX(0,(B$4-A13)*12-36),1+(8/1200)*(A13-B$4)*12)	=IF(B13<62,0,0.5*MIN(1,1-(25/3600)*MIN(36,(C$4-B13)*12)-(5/1200)*MAX(0,(C$4-B13)*12-36)))	=-12*B$5*PV(B$6,B$7+B$8-A13,C13+D13,-PV(B$6,B$9-B$8,C13,0,0),0)/(1+B$6)^(A13-B$7)	=E13-E12
  • Format for readability.
  • Copy row 13 down to row 35.
  • Modify year and month born in cells B2:C3 and the discount rate, if desired, in B6.
  • If there is a big difference in ages between the worker and the spouse, run the Open Social Security Calculator to see if it says the best time to claim is the same for both spouses. When I did so, this was the case for the spouse being up to four years younger or four years older than the worker.
  • If desired, modify the both/either life expectancies in B8:B9. For example, changing the "either" value in cell B9 from 26.82 to 33 -- to protect against one of the spouses living to age 95 -- causes the maximum present value to occur when claiming is delayed to age 70.
* If you have trouble pasting, try "Paste Special" and "Text".

GeoffD
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Re: Delaying Social Security Until 70

Post by GeoffD » Mon Sep 17, 2018 11:18 am

smitcat wrote:
Mon Sep 17, 2018 10:45 am

"A COLA-protected and largely tax-free $43,524 per year at least means I won't be poor if I live into my 90s and zero out everything but home equity"

I am not sure how you arrived at a SS benifit of $43,524/yr @ 70 but perhaps check the source to make sure your calcs are correct.
SSA publication no. 05-10070 and an Excel Spreadsheet. I update it every year. It agrees with what the Social Security web portal says within a couple bucks so that's the number off the Social Security Administration web portal. It's all part of my "Geoff never works again" contingency planning.

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Re: Delaying Social Security Until 70

Post by smitcat » Mon Sep 17, 2018 11:22 am

GeoffD wrote:
Mon Sep 17, 2018 11:18 am
smitcat wrote:
Mon Sep 17, 2018 10:45 am

"A COLA-protected and largely tax-free $43,524 per year at least means I won't be poor if I live into my 90s and zero out everything but home equity"

I am not sure how you arrived at a SS benifit of $43,524/yr @ 70 but perhaps check the source to make sure your calcs are correct.
SSA publication no. 05-10070 and an Excel Spreadsheet. I update it every year. It agrees with what the Social Security web portal says within a couple bucks so that's the number off the Social Security Administration web portal. It's all part of my "Geoff never works again" contingency planning.
Good that you have checked and opened an SS account for verification.
This means that Geoff has already reached the max SS deductions for almost 35 years.

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One Ping
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Re: Delaying Social Security Until 70

Post by One Ping » Mon Sep 17, 2018 11:35 am

smitcat wrote:
Mon Sep 17, 2018 10:45 am
I am not sure how you arrived at a SS benifit of $43,524/yr @ 70 but perhaps check the source to make sure your calcs are correct.
Seems doable for a relatively high lifetime earner.

$43,524/yr @ 70 requires an age 66 FRA PIA of about $2,748 (2747.73 * 1.32 * 12 = 43524.04). Current maximum PIA per SS is $2,788.

One Ping
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Re: Delaying Social Security Until 70

Post by GeoffD » Mon Sep 17, 2018 12:11 pm

One Ping wrote:
Mon Sep 17, 2018 11:35 am
smitcat wrote:
Mon Sep 17, 2018 10:45 am
I am not sure how you arrived at a SS benifit of $43,524/yr @ 70 but perhaps check the source to make sure your calcs are correct.
Seems doable for a relatively high lifetime earner.

$43,524/yr @ 70 requires an age 66 FRA PIA of about $2,748 (2747.73 * 1.32 * 12 = 43524.04). Current maximum PIA per SS is $2,788.

One Ping
My birth year is 1958. My 35 years adjusted for inflation total $3,998,926.68. My 90% + 32% + 15% number is $2,864.74. My spreadsheet says $43,629.46 deferring to age 70 using the SSA publication. Their web portal says $43,524. I got within $100. Not sure what the discrepancy is. I must have a transcription error somewhere or I'm not rounding/truncating the way they do it. Close enough.

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Re: Delaying Social Security Until 70

Post by Ron » Mon Sep 17, 2018 12:59 pm

One Ping wrote:
Mon Sep 17, 2018 11:35 am
smitcat wrote:
Mon Sep 17, 2018 10:45 am
I am not sure how you arrived at a SS benifit of $43,524/yr @ 70 but perhaps check the source to make sure your calcs are correct.
Seems doable for a relatively high lifetime earner.

$43,524/yr @ 70 requires an age 66 FRA PIA of about $2,748 (2747.73 * 1.32 * 12 = 43524.04). Current maximum PIA per SS is $2,788.

One Ping
It's certainly doable. While I'm a bit below the max at my current age of 70, my current gross monthly SS is still $3,424/mo. ($41,100 year).

Of my 35 earnings years for SS consideration, I was fortunate to max out 20; the remaining 15 were close to the then maximum yearly contribution.

- Ron

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Re: Delaying Social Security Until 70

Post by smitcat » Mon Sep 17, 2018 2:02 pm

One Ping wrote:
Mon Sep 17, 2018 11:35 am
smitcat wrote:
Mon Sep 17, 2018 10:45 am
I am not sure how you arrived at a SS benifit of $43,524/yr @ 70 but perhaps check the source to make sure your calcs are correct.
Seems doable for a relatively high lifetime earner.

$43,524/yr @ 70 requires an age 66 FRA PIA of about $2,748 (2747.73 * 1.32 * 12 = 43524.04). Current maximum PIA per SS is $2,788.

One Ping
Thanks , yes - understood , it is definitely doable I was just confused by some of Geoffs other posts.

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Re: Delaying Social Security Until 70

Post by Leroy Jones » Mon Sep 17, 2018 2:10 pm

Our plan is this. We both turn 66 next year. The wife in January and myself in March. The wife will take her Social Security as of March 1, meaning she will get a little extra on her PIA. I will file restricted spousal beginning in March and claim 1/2 of her PIA. This will reduce the break even point due to collection some SS while waiting for age 70. At 70 I will claim on my own record, and that will be about $1,000 more per month than at 66 FRA. If I pass first she will receive the increased amount of my SS for life. I she passes first I will receive a larger SS for life. If we don't make it to break even we won't care because we are dead. If we surpass break even age we'll be in the chips and probably dealing with IRMAA on Medicare. Life's choices are never easy but this is what we plan to do. Right wrong or indifferent
Leroy Jones :sharebeer

mptfan
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Re: Delaying Social Security Until 70

Post by mptfan » Mon Sep 17, 2018 2:17 pm

GeoffD wrote:
Mon Sep 17, 2018 12:11 pm
My birth year is 1958. My 35 years adjusted for inflation total $3,998,926.68. My 90% + 32% + 15% number is $2,864.74. My spreadsheet says $43,629.46 deferring to age 70 using the SSA publication. Their web portal says $43,524. I got within $100. Not sure what the discrepancy is. I must have a transcription error somewhere or I'm not rounding/truncating the way they do it. Close enough.
The discrepancy may be in the wage indexing factors.

https://www.ssa.gov/oact/cola/Benefits.html#aime

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Re: Delaying Social Security Until 70

Post by Darth Xanadu » Mon Sep 17, 2018 2:26 pm

dknightd wrote:
Sun Sep 16, 2018 9:10 am
Our plan is wife claims her smaller benefit at FRA. That way her eventual spousal benefit will not be reduced. I'll claim at 70. Unfortunately we missed the restricted filing options, otherwise our strategy might have been different (and better).
Is it permissible for a spouse to claim their own benefits, and then later get a larger spousal benefit?

I have a ways to go before having to consider any of this but I'm already confused.
"A courageous teacher, failure is."

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One Ping
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Re: Delaying Social Security Until 70

Post by One Ping » Mon Sep 17, 2018 2:45 pm

Darth Xanadu wrote:
Mon Sep 17, 2018 2:26 pm
dknightd wrote:
Sun Sep 16, 2018 9:10 am
Our plan is wife claims her smaller benefit at FRA. That way her eventual spousal benefit will not be reduced. I'll claim at 70. Unfortunately we missed the restricted filing options, otherwise our strategy might have been different (and better).
Is it permissible for a spouse to claim their own benefits, and then later get a larger spousal benefit?

I have a ways to go before having to consider any of this but I'm already confused.
Yes, this is exactly what DW is doing.
"Re-verify our range to target ... one ping only."

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dm200
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Re: Delaying Social Security Until 70

Post by dm200 » Mon Sep 17, 2018 3:56 pm

drawpoker wrote:
Mon Sep 17, 2018 3:50 pm
JoeRetire wrote:
Mon Sep 17, 2018 11:00 am
And you are completely wrong that it's "not politically possible" to cut benefits. It's happened before via adjustments to the FRA and other means. It can happen again.
Yes. To my memory, in the Reagan years a child's survivor benefit was changed from age 21 (if attending college) to age 18 (or time of h.s. graduation) for everyone. This clear "cut in benefits" certainly impacted me, along with many others.
In more recent times, every married couple here should recall the end of the "file and suspend" strategy, which also represented a significant cut to those who would have been eligible.
Bumping up FRA from 65, to 66, then 67, just tip of iceberg, it will likely creep up to 70 in my lifetime.
The other factor (factual, not "political") that does and will affect the state of the SS retirement fund and projections is immigration. Because of declining birth rates in the US in recent decades, as well as other factors, there are fewer paying in compared to those receiving. If more, younger workers immigrate to the US, then that helps the ratio.

It is also possible that some folks now exempt from "participating" may be mandated to "participate" - as was the case a few decades ago for federal employees.

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Re: Delaying Social Security Until 70

Post by LadyGeek » Mon Sep 17, 2018 4:05 pm

I removed a number off-topic comments and replies. This is a "no politics" forum. Conjecture on the future of Social Security (Trust fund) requires a change in legislation (proposed legislation) and is therefore off-topic. 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.
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Re: Delaying Social Security Until 70

Post by AlphaLess » Mon Sep 17, 2018 9:50 pm

JoeRetire wrote:
Mon Sep 17, 2018 7:50 am
AlphaLess wrote:
Sat Sep 15, 2018 9:39 pm
inbox788 wrote:
Sat Sep 15, 2018 7:24 pm
sometimesinvestor wrote:
Sat Sep 15, 2018 4:07 pm
If you are single the calculations are simple :all that matters is how long you willlive My father died at 55 my mom at 75.I understood I would have to live till 78 to come out ahead if I waited till 70 so I didn't take it at 62 but took it when I retired. ifI am wrong won't go broke and taking it when I retired enabled me to invest in the last 10 years
Delaying SS until 70 is another way of investing it conservatively with a high confidence and relative high return. It's fortunate the last 10 years have been good to market investors, but for less fortunate, it might be like a lost decade.
Almost.

If you are 66, with a cancer diagnosis, that math does not work out.
Way too much of a generalization.

I'm almost 64. I have cancer. My cancer is completely under control. I expect to live a full life.
I'm still planning to delay to 70 so that my wife receives the maximum survivor benefits.

Your mileage may vary.
OK. Add the magic word, 'termina' between with and cancer.
"You can get more with a kind word and a gun than with just a kind word." George Washington

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Re: Delaying Social Security Until 70

Post by MrTimewise » Tue Sep 18, 2018 5:05 pm

Leroy Jones wrote:
Mon Sep 17, 2018 2:10 pm
Our plan is this. We both turn 66 next year. The wife in January and myself in March. The wife will take her Social Security as of March 1, meaning she will get a little extra on her PIA. I will file restricted spousal beginning in March and claim 1/2 of her PIA. This will reduce the break even point due to collection some SS while waiting for age 70. At 70 I will claim on my own record, and that will be about $1,000 more per month than at 66 FRA. If I pass first she will receive the increased amount of my SS for life. I she passes first I will receive a larger SS for life....
Leroy Jones :sharebeer
This is what we did/are doing. Just change some dates:

My spouse turned 66 (her FRA) in Dec 2014, whereupon she became entilted to retirement benefits with neither a reduction due to early claiming, nor an increase due to DRCs. I began spousal benefits at the same time (my FRA was in November 2014).

In November 2018, six weeks from today, I will claim my age 70 retirement benefits with 48 DRCs, and my spouse will begin receiving her un-reduced retirement benefits plus her excess spousal benefits (these two benefits total exaclty half my PIA).

My retirement benefits at age 70 will include 48 DRCs, which will increase my benefits approximately $825 above my PIA at entitlement.

In retrospect, my spouse probably should have claimed in November 2014, allowing me to begin spousal benefits one month earlier. Yes, her monthly benefit would have been decreased a small amount.

I am still working a full time job, and plan to do so for several years more.

:sharebeer :sharebeer

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Re: Delaying Social Security Until 70

Post by drawpoker » Tue Sep 18, 2018 11:18 pm

MrTimewise wrote:
Tue Sep 18, 2018 5:05 pm
.....six weeks from today, I will claim my age 70 retirement benefits with 48 DRCs......I am still working a full time job, and plan to do so for several years more.
Congrats to you! You got it right, and will reap the benefits.

However, you do realize, don't you, that your case is not typical. It represents a very small minority of senior citizens.

Being in good health at reaching age 70, looking forward to continue full-time work for several years more, is far removed from the norm.

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Re: Delaying Social Security Until 70

Post by SGM » Wed Sep 19, 2018 7:35 am

I just received my first SS deposit at age 70. I filed and suspended so that DW could take a spousal benefit at her FRA. Her own benefit will grow until she takes it at 70.


We had several reasons to delay:


1. Family history of extreme longevity. Good health.

2. We could afford to delay.

3. We did conversions prior to taking SS.

4. We value having monthly guaranteed income. I am more inclined to spend SS income than portfolio income.

5. An annuity is different than most of our income.

6. Only 85% of SS is taxed by the federal government and the state taxes it favorably.

7. It is more difficult for fraudsters to get at income vs. portfolio assets in my experience.

8. Given expected longevity less will be taken out of assets and more left as an inheritance.

9. I plan on adding a ladder of SPIA income.

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Re: Delaying Social Security Until 70

Post by jimishooch » Wed Sep 19, 2018 1:06 pm

just filed at FRA that starts this coming january,

made no sense for me to wait until 70. my wife is 8 years younger and the higher earner and we want to maximize our lifetime benefits. i'll be eligible for a spousal benefit when she eventually files. used a couple of calculators to confirm my decision.

we'll revisit all of this in 10 years when my DW reaches FRA...

jim

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galeno
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Re: Delaying Social Security Until 70

Post by galeno » Wed Sep 19, 2018 1:28 pm

I played around with this: https://opensocialsecurity.com/

1. Wife is 61. I will be 61 in several months. I assumed $2000 PIA for me and $1000 PIA for spouse. PIA for both is 66 years 6 months.

Advice: I take SS at 70 years 0 months. Wife takes SS at 62 years 1 month.

NPV of SS for both is $609,934.


2. Wife and I are 61. Assumed $2000 PIA for me and $0 PIA for spouse. PIA for me is 66 years 6 months.

Advice: Both take SS at 68 years 1 months.

NPV of SS for both is $570,272.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 4.0%. TER = 0.4%. Port Yield = 2.82%. Term = 33 yr. FI Duration = 6.0 yr. Portfolio survival probability = 95%.

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Re: Delaying Social Security Until 70

Post by smitcat » Wed Sep 19, 2018 4:30 pm

SGM wrote:
Wed Sep 19, 2018 7:35 am
I just received my first SS deposit at age 70. I filed and suspended so that DW could take a spousal benefit at her FRA. Her own benefit will grow until she takes it at 70.


We had several reasons to delay:


1. Family history of extreme longevity. Good health.

2. We could afford to delay.

3. We did conversions prior to taking SS.

4. We value having monthly guaranteed income. I am more inclined to spend SS income than portfolio income.

5. An annuity is different than most of our income.

6. Only 85% of SS is taxed by the federal government and the state taxes it favorably.

7. It is more difficult for fraudsters to get at income vs. portfolio assets in my experience.

8. Given expected longevity less will be taken out of assets and more left as an inheritance.

9. I plan on adding a ladder of SPIA income.
Excellent - congratulations

2015
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Re: Delaying Social Security Until 70

Post by 2015 » Thu Sep 20, 2018 12:50 am

SGM wrote:
Wed Sep 19, 2018 7:35 am
I just received my first SS deposit at age 70. I filed and suspended so that DW could take a spousal benefit at her FRA. Her own benefit will grow until she takes it at 70.


We had several reasons to delay:


1. Family history of extreme longevity. Good health.

2. We could afford to delay.

3. We did conversions prior to taking SS.

4. We value having monthly guaranteed income. I am more inclined to spend SS income than portfolio income.

5. An annuity is different than most of our income.

6. Only 85% of SS is taxed by the federal government and the state taxes it favorably.

7. It is more difficult for fraudsters to get at income vs. portfolio assets in my experience.

8. Given expected longevity less will be taken out of assets and more left as an inheritance.

9. I plan on adding a ladder of SPIA income.
My reasoning as well, as delaying is part of my liability matching. SPIA is plan C or D (some form of asteroid strike), I forget which.

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Re: Delaying Social Security Until 70

Post by tennisplyr » Thu Sep 20, 2018 7:36 am

We took it a 62 and now in late sixties. I know we've used a couple of hundred thousand of SS money while ours continued to grow. A bird in the hand kind of thing. I have zero regrets!!
Those who move forward with a happy spirit will find that things always work out.

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Re: Delaying Social Security Until 70

Post by smitcat » Thu Sep 20, 2018 8:48 am

tennisplyr wrote:
Thu Sep 20, 2018 7:36 am
We took it a 62 and now in late sixties. I know we've used a couple of hundred thousand of SS money while ours continued to grow. A bird in the hand kind of thing. I have zero regrets!!

That maybe the best solution in your case. Have you figured out a few of these ahead of time?
- what Roth conversions would have meant between 62 and 70
- what your income and tax rates wil be afetr RMD's
- what all of this will mean for a surviving spouse
- what each of these varaibles represnts to spenadble dollars after tax

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Re: Delaying Social Security Until 70

Post by susa » Thu Sep 20, 2018 9:31 am

smitcat wrote: - what all of this will mean for a surviving spouse
All good points to ponder and I would add

- what having done tIRA to Roth conversions would have meant for beneficiaries vs. tax consequences of passing IRA's to children

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Re: Delaying Social Security Until 70

Post by smitcat » Thu Sep 20, 2018 10:02 am

susa wrote:
Thu Sep 20, 2018 9:31 am
smitcat wrote: - what all of this will mean for a surviving spouse
All good points to ponder and I would add

- what having done tIRA to Roth conversions would have meant for beneficiaries vs. tax consequences of passing IRA's to children
Yes - of course I missed that. Its believe its always going to be 'better' until you get to the RMD"s , single spouse and heirs.
At least if I take it now it will feel like its better unless/until I do some work with the IORP and RPM calculators and see what the ramifications are for later on.
But … all of these answers depend upon your specific information and goals , the OP's answer may be different from ours and yours.

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Re: Delaying Social Security Until 70

Post by SGM » Thu Sep 20, 2018 1:59 pm

Smitcat and 2015 thanks for your positive response to my reasons for delaying SS. It is comforting to read that other BHs are thinking along the same lines. I don't think others who are taking SS early are wrong. I just wanted to list my personal priorities.

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Re: Delaying Social Security Until 70

Post by tennisplyr » Fri Sep 21, 2018 7:46 am

smitcat wrote:
Thu Sep 20, 2018 8:48 am
tennisplyr wrote:
Thu Sep 20, 2018 7:36 am
We took it a 62 and now in late sixties. I know we've used a couple of hundred thousand of SS money while ours continued to grow. A bird in the hand kind of thing. I have zero regrets!!

That maybe the best solution in your case. Have you figured out a few of these ahead of time?
- what Roth conversions would have meant between 62 and 70
- what your income and tax rates wil be afetr RMD's
- what all of this will mean for a surviving spouse
- what each of these varaibles represnts to spenadble dollars after tax
I'm happy 😀
Those who move forward with a happy spirit will find that things always work out.

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Re: Delaying Social Security Until 70

Post by smitcat » Fri Sep 21, 2018 8:00 am

SGM wrote:
Thu Sep 20, 2018 1:59 pm
Smitcat and 2015 thanks for your positive response to my reasons for delaying SS. It is comforting to read that other BHs are thinking along the same lines. I don't think others who are taking SS early are wrong. I just wanted to list my personal priorities.
SGM - We used the IORP long form as well as the RPM and checked our preferred outputs with tax software. We ran a host of options and had put them all down on a chart of sorts so that we could refer to the most likely variables and their interactions. Some of the variables were:
- SS timing
- Future SS reductions
- Portfolio returns both high and low
- Roth conversions
- One spouse survving at various ages
- The impact (after tax) to heirs
Our goals were to maximize after tax 'spendable' dollars for both ourselves and our heirs in various potential outcomes.
When we ran these we found that there were a few outlying cases where we could gain more spendable dollars with early SS but the gain was nearly negligable and did not affect us greatly. There were much higher results by delaying SS and Roth converting for both ourselves and our heirs within all of the most likely scenarios.
We are just playing into the best choices each year we run the options.

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Re: Delaying Social Security Until 70

Post by smitcat » Fri Sep 21, 2018 8:02 am

tennisplyr wrote:
Fri Sep 21, 2018 7:46 am
smitcat wrote:
Thu Sep 20, 2018 8:48 am
tennisplyr wrote:
Thu Sep 20, 2018 7:36 am
We took it a 62 and now in late sixties. I know we've used a couple of hundred thousand of SS money while ours continued to grow. A bird in the hand kind of thing. I have zero regrets!!

That maybe the best solution in your case. Have you figured out a few of these ahead of time?
- what Roth conversions would have meant between 62 and 70
- what your income and tax rates wil be afetr RMD's
- what all of this will mean for a surviving spouse
- what each of these varaibles represnts to spenadble dollars after tax
I'm happy 😀
I think that is great for you folks - but it is important for each person and couple to run their own numbers as we will all have differing inputs, goals, and results.

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Re: Delaying Social Security Until 70

Post by David Jay » Fri Sep 21, 2018 8:14 am

One Ping wrote:
Mon Sep 17, 2018 11:35 am
Current maximum PIA per SS is $2,788.
Maximum PIA, if stated by the SSA, must be based on a certain age (your number sounds about right for someone who was born in about 1953 or 1954). Maximum PIA changes for every birth year.

As I noted at the link below, for someone born in 1956, maximum PIA is over $3000. The maximum PIA calculation depends on the amount of maximum contribution in each of the top 35 earning years and the AWI escalator in the year that an individual turns 60. Link: viewtopic.php?f=10&t=230506

AWI for those born in 1957 will be released in about a month. Then I will know my PIA.
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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Re: Delaying Social Security Until 70

Post by David Jay » Fri Sep 21, 2018 9:15 am

smitcat wrote:
Mon Sep 17, 2018 10:45 am
"A COLA-protected and largely tax-free $43,524 per year at least means I won't be poor if I live into my 90s and zero out everything but home equity"
Using the above information, for someone born in 1956, claiming at age 70, the maximum benefit would be about $46,600.
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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Re: Delaying Social Security Until 70

Post by Small Law Survivor » Fri Sep 21, 2018 9:53 am

retired early&luv it wrote:
Sun Sep 16, 2018 5:40 am
Apparently the social security staff often give a recipient a lump sum representing half of a year of benefits and then calculate your retirement based on an age of 69.5 instead of 70. Make sure you tell them you do not want any retroactive lump sum.

The source of my information is three years old, at this link:
https://www.cnbc.com/2015/06/22/the-lat ... ntary.html
Hmmm ... exactly how would one avoid this?

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