When to take SS

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Topic Author
JimMolony
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When to take SS

Post by JimMolony »

Only 52 and wife is 53 but doing retirement planning.

We are looking to retire around age 60-61. Wife is a teacher with pension (California). As a teacher she is not eligible for Social Security (only fair since she doesn't pay in), nor will she get 1/2 of mine. What I've recently learned is she will NOT get my SS check if I expire before her. Given these facts, would this influence at what age you begin collecting SS? If so why or why not?

My original goal was to do a tax deferred IRA to Roth ladder starting at retirement as much as I can while staying in the 10-12% federal tax bracket. Then collect SS starting at age 70. This is before I learned that should would not be eligible for my SS payments if I go first.

Advice/opinions appreciated.
JohnFiscal
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Re: When to take SS

Post by JohnFiscal »

I'm not an expert here. But are you certain that your wife/widow will not be eligible for spousal/survivor benefits off of your SS? Again, I'm not an expert but I have been reading about SS rules for a number of years and I haven't heard of this sort of thing, although your situation is different from mine.

What rules would prevent your wife from these benefits? Curious

This is a great resource for SS issues: https://maximizemysocialsecurity.com/ask-larry
Larry is Professor Laurence Kotlikoff
Beehave
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Re: When to take SS

Post by Beehave »

While the lack of spousal benefit diminishes the value of the overall Social Security benefit, I'd still recommend maxing it out to age 70 if you can do so without undue financial stress. The COLA and increase-for-delay features are huge benefits that make the wait worthwhile. And you can always change your mind and start collecting if earlier things change.

If you choose to collect before age 70, then age 68 would be my next suggestion as an optimization point.

OF course, your particular situation regarding assets and health might dictate otherwise, but since you have not mentioned them and were comfortable waiting until age 70 before learning of the spousal restriction, I'm assuming that your health and financial condition are perfectly compatible with delaying until age 70.

Best wishes.
Yooper16
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Re: When to take SS

Post by Yooper16 »

I've been having the same conversation for the last 3 years. It does add a wrinkle to the "delay as long as possible" for argument.

Going to collect SS no later than age 66 FRA. May starts a 1 year countdown, and drawing anytime from then until next May is on the table.

The old Government Pension Offset provision. It is what it is. Would be nice to have the survival benefits for the spouse tho.
carol-brennan
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Re: When to take SS

Post by carol-brennan »

One's death date seems the obvious wildcard in all of these discussions.

Does a spouse get any SS benefit at all if you die before you start taking SS?
goGators
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Re: When to take SS

Post by goGators »

I don't know if Mike Piper's calculator could help
https://opensocialsecurity.com/

In his calculator's advanced options, there is an item
Do you receive (or will you receive) a pension from employment that was not covered by Social Security taxes? Yes/No
Topic Author
JimMolony
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Re: When to take SS

Post by JimMolony »

carol-brennan wrote: Mon Feb 18, 2019 12:44 pm One's death date seems the obvious wildcard in all of these discussions.

Does a spouse get any SS benefit at all if you die before you start taking SS?
No death benefits AT ALL if I file at or before FRA. Unfortunately the Government Pension Offset from her pension is greater than my Social Security check at ages 62, 67 (FRA). If I wait until 70 to collect, she would get $500-ish a month after the offset.
Topic Author
JimMolony
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Re: When to take SS

Post by JimMolony »

JohnFiscal wrote: Mon Feb 18, 2019 12:15 pm I'm not an expert here. But are you certain that your wife/widow will not be eligible for spousal/survivor benefits off of your SS? Again, I'm not an expert but I have been reading about SS rules for a number of years and I haven't heard of this sort of thing, although your situation is different from mine.

What rules would prevent your wife from these benefits? Curious

This is a great resource for SS issues: https://maximizemysocialsecurity.com/ask-larry
Larry is Professor Laurence Kotlikoff
It's a Government Pension Offset issue. Her pension will be enough that she would get 0 survivor benefits if I claim SS at age 62 or 67 (FRA). Theoretically if I claim at 70 she could get about $500 a month if I die first, but I'd have to do the math as her pension has a guaranteed 2% COLA, therefore it could be well below $500 a month.

I don't won't need the SS money from 60-70, but trying to look for rational if I should take it while I can get it in the event of my demise. If she had full survivor benefits I would definitely wait until age 70.
TBillT
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Re: When to take SS

Post by TBillT »

Hard to comment as it has to do with Calfornia teacher's situation.
Just make sure you undertsand it correctly, some of us in DC region recently saw a presentation by the chief actuary of SS and he was saying many non-SS paying people are nonetheless covered due to spouse, but presumably not all cases.
Topic Author
JimMolony
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Re: When to take SS

Post by JimMolony »

TBillT wrote: Mon Feb 18, 2019 2:48 pm Hard to comment as it has to do with Calfornia teacher's situation.
Just make sure you undertsand it correctly, some of us in DC region recently saw a presentation by the chief actuary of SS and he was saying many non-SS paying people are nonetheless covered due to spouse, but presumably not all cases.
Yep. The exception is there are I believe 15 states (California is one of them) that has an exclusion in this situation.
sawdust60
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Re: When to take SS

Post by sawdust60 »

You might do some modeling to see the results with taxes considered. (notes below)

Try this alternative:
Each year, do Roth conversions to top of 12% bracket, unless you need lower income for ACA subsidy.
Start SS at 18 months before FRA. (at 10% reduction)

Then try it again for SS at age 70.

---------------------------------------------------------------------
The following is included to emphasize that 12% tax rates can be very scarce in retirement. Little downside risk in doing Roth conversions at 12%.

Understand how marginal tax rates are different with varying levels of SS. link to wiki: Taxation of SS

These graphs are similar to the wiki, but note the larger amount of non-SS income taxed at 12% rates when SS is less. Pension + SS + RMD or other income can result in unexpected 22% marginal rates.

Image


Roth conversions can also help avoid Medicare IRMAA, a hidden tax age 63+; the first bracket starts at 170k, based on Medicare MAGI (AGI plus tax exempt interest). Roth conversions can cause you to incur the IRMAA penalty, if you are not aware of the bracket and that it starts about 20k below the top of the 22% tax bracket.

With large RMD and other income, some Roth conversion at 22% might be considered. prior post: viewtopic.php?f=2&t=271875#p4365173
Golf maniac
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Re: When to take SS

Post by Golf maniac »

If you truly do not need it and in good health I would delay until 70 to give her some benefit if you die first.
potto0213
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Re: When to take SS

Post by potto0213 »

I am in a very similar situation as the OP. My wife is also a retired teacher (Ohio). She is not eligible for any spousal benefit from my SS but if I delay until 70 she will receive about $600 a month in survivor benefits if I predecease her. My wife's pension had a 2% COLA until about 4 years ago until they did away with that benefit. So at least that $600 survivor benefit would get a COLA.

Knowing she could not get any spousal benefits from my SS we elected to take no survivor benefit from her pension for me so that her pension was maximized. Also, because I would no longer receive any of her benefits I am going to delay my SS until 70 to maximize what I will receive if she predeceases me. I am currently 68 and my wife is 65. Hopefully this is the correct course but only time will tell.
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willthrill81
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Re: When to take SS

Post by willthrill81 »

I'm no SS expert, but after reading a lot on this topic and hearing a lot of viewpoints, it seems to me that a very good time (not the best, but that's probably impossible to objectively determine) to take SS is when you truly need to (or reach age 70).

If you can afford to do Roth conversions until age 70, then you probably don't yet need SS benefits.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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tennisplyr
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Re: When to take SS

Post by tennisplyr »

Take it early and invest it....a bird in the hand.
Those who move forward with a happy spirit will find that things always work out.
JW-Retired
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Re: When to take SS

Post by JW-Retired »

JimMolony wrote: Mon Feb 18, 2019 12:11 pm We are looking to retire around age 60-61. Wife is a teacher with pension (California). As a teacher she is not eligible for Social Security (only fair since she doesn't pay in), nor will she get 1/2 of mine. What I've recently learned is she will NOT get my SS check if I expire before her. Given these facts, would this influence at what age you begin collecting SS? If so why or why not?
Don't know about the teacher not eligible aspect but........ if you are going to be in a significant tax bracket in retirement then maxing your SS at the expense of your other income is very probably the way to go. California taxes about every sort of income except SS at a high rate. SS is not taxed by CA at all.

Overall, my tax deferred income or pension is Fed + CA taxed just about 50% more per income dollar than my SS.
JW
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HueyLD
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Re: When to take SS

Post by HueyLD »

JimMolony wrote: Mon Feb 18, 2019 12:11 pm Only 52 and wife is 53 but doing retirement planning.

We are looking to retire around age 60-61. Wife is a teacher with pension (California). As a teacher she is not eligible for Social Security (only fair since she doesn't pay in), nor will she get 1/2 of mine. What I've recently learned is she will NOT get my SS check if I expire before her. Given these facts, would this influence at what age you begin collecting SS? If so why or why not?

My original goal was to do a tax deferred IRA to Roth ladder starting at retirement as much as I can while staying in the 10-12% federal tax bracket. Then collect SS starting at age 70. This is before I learned that should would not be eligible for my SS payments if I go first.
Your wife can receive spousal SS benefit as early as 62 yo provided that you have filed for your own SS benefit and she has not started collecting on her own CalSTRS pension. As far as the GPO is concerned, simply because she is in a retirement system doesn’t mean she is receiving pension payments.

She can continue to work part time even after starting to collect spousal benefit but she needs to be aware of the earnings test for social security benefits if she is below her FRA. And there are two levels of earnings test, one for the years before her FRA year and the other for her FRA year.

There is nothing simple about when to claim SS.
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