Delaying SS? How Long It Will Take for It to Pay Off?

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Lancelot
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Re: Delaying SS? How Long It Will Take for It to Pay Off?

Post by Lancelot » Sun Sep 23, 2018 6:11 pm

remomnyc wrote:
Sun Sep 16, 2018 8:09 pm
Breakevens depends on what rates you use. Personally, I see delaying SS simply as longevity insurance. The only reasons I would it take earlier than 70 is if I thought I would die earlier than average or if I needed the money before 70.
I'm with you, SS is my "pension" complete with COLA. I view SS more as income insurance. But I'm probably leaving thousands of dollars on the table by not collecting SS at 62 and investing the proceeds in a S&P 500 index fund :mrgreen: :oops:
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hulburt1
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Re: Delaying SS? How Long It Will Take for It to Pay Off?

Post by hulburt1 » Sun Sep 23, 2018 7:52 pm

If I take at 70 I will get 6000 a year more then if I take at 66, next year. But it's all in a IRA so I pay tax on what I take out now. I also do a Roth of about 35000. I'm just asking a dumb question. Does it make sense to take SS now about 18000 and just send in as taxes and move my IRA to Roth of 2.5m. over the next 5 years. Would I come out ahead at 70 with SS and most of my money in a Roth tax free. My wife at 63 could get 18000 right now. So at her 70 we would get about 36000 ss and would have a large Roth tax free. if we stay to old plan when wife turns 70 we will get about 47000 from SS but pay 85% tax on it.

Right now we take out about 60000 from Ira to live on. No SS out now will weight until 70. If you say don't even think about my idle
Is this just stupid thinking.

The Wizard
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Re: Delaying SS? How Long It Will Take for It to Pay Off?

Post by The Wizard » Mon Sep 24, 2018 3:33 am

hulburt1 wrote:
Sun Sep 23, 2018 7:52 pm
If I take at 70 I will get 6000 a year more then if I take at 66, next year. But it's all in a IRA so I pay tax on what I take out now. I also do a Roth of about 35000. I'm just asking a dumb question. Does it make sense to take SS now about 18000 and just send in as taxes and move my IRA to Roth of 2.5m. over the next 5 years. Would I come out ahead at 70 with SS and most of my money in a Roth tax free. My wife at 63 could get 18000 right now. So at her 70 we would get about 36000 ss and would have a large Roth tax free. if we stay to old plan when wife turns 70 we will get about 47000 from SS but pay 85% tax on it.

Right now we take out about 60000 from Ira to live on. No SS out now will weight until 70. If you say don't even think about my idle
Is this just stupid thinking.
I feel it's generally better not to do "excessive" Roth conversions prior to age 70
Put a spreadsheet together to model your AGI each year until early 70's. My SS will be 85% taxable so easy for me to do. Trickier to do if you're in the hump zone.

Anyway, it makes little sense to have an AGI of $250k per year prior to age 70 due to big Roth conversions so that you can have a way lower AGI of $100k after age 70.
Better, IMO, to have slightly increasing AGI each year through early 70s...
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arcticpineapplecorp.
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Re: Delaying SS? How Long It Will Take for It to Pay Off?

Post by arcticpineapplecorp. » Mon Sep 24, 2018 3:21 pm

As Lawrence Kotlikoff put it to James Lange on his (now defunct) radio show:

"Stop thinking about it like an actuary and start thinking about it like an economist."

If you delayed til 70 and die before the breakeven point, so what? You're dead. You won't care that you should have taken earlier because you're dead.

If you take SS early and live a long time, you'll be sorry you are living on a greatly reduced SS amount.

It's a longevity benefit as has been said. It's protection from living long (and running out of money), not dying early. That being said, if you believe you won't live long (due to some known health condition with shortened mortality), take it earlier.

Also, if you have a spouse and the spouse's SS is lower than yours, it pays to delay as long as possible if you expect the spouse to outlive you. Otherwise, to take it early would be to permanently reduce your spouse's benefit they'd get (off your claim). Why would you want to leave your spouse with lower income than s/he would otherwise have if you instead delayed?
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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