Just filed for Social Security and feeling good

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Mayacallie
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Just filed for Social Security and feeling good

Post by Mayacallie »

I’m 68 and 6 months and just filed for benefits to commence next month. Until recently, I was going to wait until 70. I’m retired,and very financially comfortable. My benefit will be $3964 vs $4340 had I waited, thus only an 8.6% reduction. It would take almost 16 years to make up the difference in absolute dollars, but I would be over 95 before it would make up the difference at a modest 5% reinvestment rate. I’ve visited all of the social security sites, and reviewed the discussions here. Most urge waiting until 70. Survivor benefits are often pushed.
I’ve done the calculations many times before. With health unknowns and political uncertainty the gurus stopped making sense
MorgansRun
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Re: Just filed for Social Security and feeling good

Post by MorgansRun »

Congrats! Enjoy your retirement…sounds like you’ve earned it.
livesoft
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Re: Just filed for Social Security and feeling good

Post by livesoft »

The OP did not state if they were married or single. And if married what their spouse has been or is doing.
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Escapevelocity
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Re: Just filed for Social Security and feeling good

Post by Escapevelocity »

The difference in the two scenarios at this point is not worth fretting over in my view. It comes down to a personal choice.
bradinsky
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Re: Just filed for Social Security and feeling good

Post by bradinsky »

Good for you OP! Enjoy!! Everyone has a different perspective on this matter & you did what you believe is best for you. Only you are able to determine that & the rest of us just have opinions. FWIW, I filed at full retirement age & DW filed at 62. No regrets here.
Last edited by bradinsky on Fri May 10, 2024 8:59 pm, edited 1 time in total.
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Watty
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Re: Just filed for Social Security and feeling good

Post by Watty »

A nice thing about the Open Social Security website is that once it gives you its recommendations you can scroll down to the bottom of the web page and see the impact of starting at other dates. In my case starting at my full retirement age was only about 2% less than at the recommended age of close to 70.

In my case there were other things like taxes which were not in the model which were more important than getting that last 2%.
heyyou
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Re: Just filed for Social Security and feeling good

Post by heyyou »

The boost in retirement income without needing to sell more assets, just feels good to me.
chassis
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Re: Just filed for Social Security and feeling good

Post by chassis »

Mayacallie wrote: Fri May 10, 2024 6:35 pm I’m 68 and 6 months and just filed for benefits to commence next month. Until recently, I was going to wait until 70. I’m retired,and very financially comfortable. My benefit will be $3964 vs $4340 had I waited, thus only an 8.6% reduction. It would take almost 16 years to make up the difference in absolute dollars, but I would be over 95 before it would make up the difference at a modest 5% reinvestment rate. I’ve visited all of the social security sites, and reviewed the discussions here. Most urge waiting until 70. Survivor benefits are often pushed.
I’ve done the calculations many times before. With health unknowns and political uncertainty the gurus stopped making sense
Congratulations! You have done exactly the right calculation. Waiting to start claiming is of no practical financial advantage as your analysis properly demonstrates.
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kramer
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Re: Just filed for Social Security and feeling good

Post by kramer »

Isn't the difference 2/3% per month benefits increase for waiting? For 18 months, wouldn't that be approximately 12% difference in final check amount? (Instead of 8.6%)

Hopefully, someone can explain.
Topic Author
Mayacallie
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Re: Just filed for Social Security and feeling good

Post by Mayacallie »

kramer wrote: Fri May 10, 2024 9:14 pm Isn't the difference 2/3% per month benefits increase for waiting? For 18 months, wouldn't that be approximately 12% difference in final check amount? (Instead of 8.6%)

Hopefully, someone can explain.
8% per deferred year is what I was always taught. In my case, the 8.6% difference for 17 months is what also made up my mind to claim now. Can’t explain it, but I’ll take it.
Tracker968
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Re: Just filed for Social Security and feeling good

Post by Tracker968 »

I recently did the same thing, started SS at age 69. Planning to invest it all so will have 12 months of payments piled up before I reach age 70. Spouse already claimed so now she can get half my PIA. My calculations didn't show any significant downside.
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Re: Just filed for Social Security and feeling good

Post by RyeBourbon »

kramer wrote: Fri May 10, 2024 9:14 pm Isn't the difference 2/3% per month benefits increase for waiting? For 18 months, wouldn't that be approximately 12% difference in final check amount? (Instead of 8.6%)

Hopefully, someone can explain.
OP was born in 1955 so FRA is 66 and 2 months, so filing with 29 months of DRC (19 1/3% increase from PIA). This implies a PIA of $3322. At age 70, they get 46 months of DRC (30 2/3%). That should equal a payment of $4340.
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Marq1
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Re: Just filed for Social Security and feeling good

Post by Marq1 »

You only had 18 months to get an additional $376 per month and being "financially comfortable" sounds like you should have hung in there!
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celia
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Re: Just filed for Social Security and feeling good

Post by celia »

Watty wrote: Fri May 10, 2024 8:15 pm In my case there were other things like taxes which were not in the model which were more important than getting that last 2%.
+1

OP, I hope your future RMDs (after your tax-deferred accounts have continued to grow) don't push you into higher tax brackets. Many people here use the years between retirement and the starting RMD year to do Roth conversions to shift assets from tax-deferred to Roth. It can also be used to level out your MAGI (and taxes) each year instead of having low MAGI for a few years followed by many more years of higher MAGI (and taxes).
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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Mayacallie
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Re: Just filed for Social Security and feeling good

Post by Mayacallie »

Marq1 wrote: Fri May 10, 2024 11:43 pm You only had 18 months to get an additional $376 per month and being "financially comfortable" sounds like you should have hung in there!
The numbers just didn’t add up. It didn’t make financial sense on the spreadsheet
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Mayacallie
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Re: Just filed for Social Security and feeling good

Post by Mayacallie »

celia wrote: Sat May 11, 2024 12:22 am
Watty wrote: Fri May 10, 2024 8:15 pm In my case there were other things like taxes which were not in the model which were more important than getting that last 2%.
+1

OP, I hope your future RMDs (after your tax-deferred accounts have continued to grow) don't push you into higher tax brackets. Many people here use the years between retirement and the starting RMD year to do Roth conversions to shift assets from tax-deferred to Roth. It can also be used to level out your MAGI (and taxes) each year instead of having low MAGI for a few years followed by many more years of higher MAGI (and taxes).
I’m of the camp that believes fear of RMDs is greatly exaggerated. If they really become onerous I’ll just join the QCD camp. I refuse to pay certain taxes now based on future unknowns
Chuckles960
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Re: Just filed for Social Security and feeling good

Post by Chuckles960 »

Mayacallie wrote: Sat May 11, 2024 5:24 am
Marq1 wrote: Fri May 10, 2024 11:43 pm You only had 18 months to get an additional $376 per month and being "financially comfortable" sounds like you should have hung in there!
The numbers just didn’t add up. It didn’t make financial sense on the spreadsheet
As has often been said on BH, the decision to wait until 70 is not based on the average or likely scenario. It is based on insuring against the unlikely scenario that one lives to, say, 110.
Tom_T
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Re: Just filed for Social Security and feeling good

Post by Tom_T »

Chuckles960 wrote: Sat May 11, 2024 5:48 am
Mayacallie wrote: Sat May 11, 2024 5:24 am
Marq1 wrote: Fri May 10, 2024 11:43 pm You only had 18 months to get an additional $376 per month and being "financially comfortable" sounds like you should have hung in there!
The numbers just didn’t add up. It didn’t make financial sense on the spreadsheet
As has often been said on BH, the decision to wait until 70 is not based on the average or likely scenario. It is based on insuring against the unlikely scenario that one lives to, say, 110.
How do you figure that? The breakeven age is in the 80s, not 110.
Vinny_in_NJ
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Re: Just filed for Social Security and feeling good

Post by Vinny_in_NJ »

Congrats! When to collect is a personal decision on your mindset of SS and how comfortable you are to wait until "the right time". We have friends that retired and both collected at 62 but the husband has a NYC pension (don't know how much). They were given the "advice" to take it at 62 and question my wife as to why she hasn't started collecting yet, my wife turns 66 this year. The good thing about SS is you can turn it on when need be up until age 70.
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Re: Just filed for Social Security and feeling good

Post by SevenBridgesRoad »

I must say this thread makes me smile. It's refreshing to see OP and a number of others admitting they have started Social Security payments sooner than BH dogma. My wife and I both started our SS before age 70. We're happy about it too. Next I might also confess we have an annuity or two (single premium income), own international in a single fund (VTINX) portfolio including taxable account (gasp), didn't work one more year, paying our mortgage early and have Medicare Advantage.
IowaFarmBoy
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Re: Just filed for Social Security and feeling good

Post by IowaFarmBoy »

We likely will do something similar (maybe start at 68.5). In our case, DW will be drawing half of my amount as a spousal benefit which will not get the delayed retirement credits so our increase due to delayed retirement credits is about 6%/year while both of us are drawing. The survivor benefit will be increased but I think our life expectancy is close to the same so she's not likely to gain a lot from that. When I calculate our crossover points for total dollars received, I get similar ages to the OP.

I think we will probably delay till we have used up our taxable account (pretty small) and would have to start drawing from our Roth accounts (relatively quite large due to conversions). Our intent is to leave those to the kids as they are a much higher tax bracket than us.

Right decision? I'll get back to you in thirty years if I'm still around.....
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tennisplyr
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Re: Just filed for Social Security and feeling good

Post by tennisplyr »

Being taking SS since 62 and have no regrets...didn't feel like waiting to mid 80s to breakeven.
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Tom_T
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Re: Just filed for Social Security and feeling good

Post by Tom_T »

There are a hundred threads on this topic. There is no one correct answer because it depends on one's personal circumstances as well as what factors are most important to you. Every SS claiming age has a potential tradeoff which may not be realized for years. If you claim at 'x' age and you're happy with it, then that was the right decision.
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Re: Just filed for Social Security and feeling good

Post by Harmanic »

tennisplyr wrote: Sat May 11, 2024 7:43 am Being taking SS since 62 and have no regrets...didn't feel like waiting to mid 80s to breakeven.
Some people want to maximize assets, others income. There is no right answer for everyone. The biggest mistake is when people claim early and then take an annuity later. In almost every case, social security will be a better annuity than the commercial annuity, so they would be better off taking the commercial one earlier and deferring social security (due to favorable actuarials and inflation adjustments).
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Re: Just filed for Social Security and feeling good

Post by ondarvr »

I'm probably going to do the exact same thing, I'm 68 and will retire later this year, and collect when I turn 69.

The extra $300 or so per month by waiting to 70 would be great, but the numbers easily work without it. Our total income in retirement will exceed our expenses by enough that we won't need to touch our investments and savings for normal life stuff. So it's time to get on with the next phase of life.
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Re: Just filed for Social Security and feeling good

Post by Wannaretireearly »

I like this thread. Thanks and well done OP!
Someone respected here did a great write up in a different thread I can’t find. One of the key factors is the higher interest rate now vs. the past. I think it was Nisi who did the write up that the math works good (or actuarily neutral?) to claim earlier than 70.

Following closely :)
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dodecahedron
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Re: Just filed for Social Security and feeling good

Post by dodecahedron »

Mayacallie wrote: Fri May 10, 2024 9:46 pm
kramer wrote: Fri May 10, 2024 9:14 pm Isn't the difference 2/3% per month benefits increase for waiting? For 18 months, wouldn't that be approximately 12% difference in final check amount? (Instead of 8.6%)

Hopefully, someone can explain.
8% per deferred year is what I was always taught. In my case, the 8.6% difference for 17 months is what also made up my mind to claim now. Can’t explain it, but I’ll take it.
8% of your PIA per year, which is not the same as 8% of your current benefit amount. In other words, delay credits don’t compound. If you were born in 1955, your FRA was 66 and 2 months, and your PIA (the base for computing the 8% delayed credit is the benefit you would have received if you’d filed at that age, adjusted for inflation.)
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kramer
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Re: Just filed for Social Security and feeling good

Post by kramer »

Thanks for explaining the delayed credits (2/3% per month increase of PIA, not the cumulative amount). This is pretty significant as it means the marginal percentage increase in total benefit for waiting after PIA keeps decreasing until age 70.

If I understand this correctly, for someone whose retirement age is age 67 and whose PIA is 1000:

Age 67: 1000
Age 68: 1080 (8.0% increase over previous year)
Age 69: 1160 (7.4% increase over previous year)
Age 70: 1240 (6.9% increase over previous year)

In the OP's case, with a retirement age of 66 years and 2 months, this diminishing effect is even slightly stronger.
chassis
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Re: Just filed for Social Security and feeling good

Post by chassis »

tennisplyr wrote: Sat May 11, 2024 7:43 am Being taking SS since 62 and have no regrets...didn't feel like waiting to mid 80s to breakeven.
Spot on!
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Re: Just filed for Social Security and feeling good

Post by chassis »

Mayacallie wrote: Sat May 11, 2024 5:31 am
celia wrote: Sat May 11, 2024 12:22 am
Watty wrote: Fri May 10, 2024 8:15 pm In my case there were other things like taxes which were not in the model which were more important than getting that last 2%.
+1

OP, I hope your future RMDs (after your tax-deferred accounts have continued to grow) don't push you into higher tax brackets. Many people here use the years between retirement and the starting RMD year to do Roth conversions to shift assets from tax-deferred to Roth. It can also be used to level out your MAGI (and taxes) each year instead of having low MAGI for a few years followed by many more years of higher MAGI (and taxes).
I’m of the camp that believes fear of RMDs is greatly exaggerated. If they really become onerous I’ll just join the QCD camp. I refuse to pay certain taxes now based on future unknowns
Another excellent myth, busted. The much feared tax bomb related to RMDs is a nothing burger in the grand scheme of things, over the long term.
AlwaysLearningMore
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Re: Just filed for Social Security and feeling good

Post by AlwaysLearningMore »

livesoft wrote: Fri May 10, 2024 6:44 pm The OP did not state if they were married or single. And if married what their spouse has been or is doing.
OP might consider such questions intrusive. Not everyone wants to share that level of detail.
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stan1
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Re: Just filed for Social Security and feeling good

Post by stan1 »

Predicting the year of one's death 15-20 years in advance is fraught with uncertainty. I guess there are some optimistic optimizers who assume they will live past their mid-80s.
MoreTaxes
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Re: Just filed for Social Security and feeling good

Post by MoreTaxes »

kramer wrote: Fri May 10, 2024 9:14 pm Isn't the difference 2/3% per month benefits increase for waiting? For 18 months, wouldn't that be approximately 12% difference in final check amount? (Instead of 8.6%)

Hopefully, someone can explain.
You are correct about the 2/3% but that doesn't work out to 12% in the end. His full retirement age is 66 years 2 months.

Monthly benefit amount at 68 years 6 months: that's 28 months of delay, or 118.7% of primary insurance amount
Monthly benefit amount at 70 years 0 months: that's 46 months of delay, or 130.7% of primary insurance amount.

There is about a 10% difference between these two options.

Also, since he is filing before age 70, the delayed retirement credits within the current calendar year do not count this year. This is a quirk many people miss. It means he would miss out on 5 months of delayed credit in 2024, meaning his 2024 payments would reflect only 23 months of delay, or 115.3% of PIA. In 2025 and later, he'd get all 28 months of delay credited.
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Re: Just filed for Social Security and feeling good

Post by Vinny_in_NJ »

chassis wrote: Sat May 11, 2024 11:55 am
Mayacallie wrote: Sat May 11, 2024 5:31 am
celia wrote: Sat May 11, 2024 12:22 am
Watty wrote: Fri May 10, 2024 8:15 pm In my case there were other things like taxes which were not in the model which were more important than getting that last 2%.
+1

OP, I hope your future RMDs (after your tax-deferred accounts have continued to grow) don't push you into higher tax brackets. Many people here use the years between retirement and the starting RMD year to do Roth conversions to shift assets from tax-deferred to Roth. It can also be used to level out your MAGI (and taxes) each year instead of having low MAGI for a few years followed by many more years of higher MAGI (and taxes).
I’m of the camp that believes fear of RMDs is greatly exaggerated. If they really become onerous I’ll just join the QCD camp. I refuse to pay certain taxes now based on future unknowns
Another excellent myth, busted. The much feared tax bomb related to RMDs is a nothing burger in the grand scheme of things, over the long term.
There is a CFP on YouTube that recently did 3 videos on RMDs with a $3M portfolio and the the outcome was shockingly low taxes in comparison to the amount of forced withdrawal and amount compared to the overall value of the portfolio. One of the videos was showing a widowed, 90 YO with $3M in a tIRA. He did the math and I tried to double check based on how I think taxes are done and my figures were about $400 higher ... I think he had capital gains which I didn't account for just did straight taxes - 0%, 10% 12% and 22% for all the money. Taxes weren't too scary with such a large RMD withdrawal!
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kramer
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Re: Just filed for Social Security and feeling good

Post by kramer »

MoreTaxes wrote: Sat May 11, 2024 12:39 pm
kramer wrote: Fri May 10, 2024 9:14 pm Isn't the difference 2/3% per month benefits increase for waiting? For 18 months, wouldn't that be approximately 12% difference in final check amount? (Instead of 8.6%)

Hopefully, someone can explain.
Also, since he is filing before age 70, the delayed retirement credits within the current calendar year do not count this year. This is a quirk many people miss. It means he would miss out on 5 months of delayed credit in 2024, meaning his 2024 payments would reflect only 23 months of delay, or 115.3% of PIA. In 2025 and later, he'd get all 28 months of delay credited.
This explains so much. When I was using some tool a few years ago to calculate my SS (my full retirement age is 67), I couldn't understand why the progression was not linear for taking SS at age 67, 68, 69, 70 (only the age 67 and age 70 numbers made sense, the other numbers were too low). It turns out that the tool was showing what my first SS check would be at age 68, for instance, and not how much it would be in January of the following calendar year and thereafter. I just went back to the numbers and understanding this fixes everything. It's just a small effect in the long run, at least. Thanks.

I was going to wait until age 70 mostly for tax reasons and insuring against longevity, assuming that I maintain good health (and projected longevity) until then. But with a September birthday, I may now start at 69 years and 3 or 4 months.
JonFund
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Re: Just filed for Social Security and feeling good

Post by JonFund »

Congratulations, and thank you for sharing your social security story. Very timely, as I've been going through the same analysis as to when is the optimal time to start receiving SS benefits. I'm 67 and 6 months old, recently retired with two (2) pensions and an investment portfolio that generates more in dividends and interest than my pensions and (expected) social security combined. You're correct that you need to apply a present value discount factor to the analysis in order to get a true "break even" age. That breakeven age for me is around 87 years old, but even if I go out to 90-95 years, the difference in accumulated SS benefits is still a small portion of my overall retirement portfolio. My analysis has also included the impact on my total portfolio, including forecasted RMD taxes. Because the difference between taking it now versus at age 70 is so relatively small, I'm planning on starting to take it very soon.
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Re: Just filed for Social Security and feeling good

Post by Tom_T »

Vinny_in_NJ wrote: Sat May 11, 2024 12:44 pm
chassis wrote: Sat May 11, 2024 11:55 am
Mayacallie wrote: Sat May 11, 2024 5:31 am
celia wrote: Sat May 11, 2024 12:22 am
Watty wrote: Fri May 10, 2024 8:15 pm In my case there were other things like taxes which were not in the model which were more important than getting that last 2%.
+1

OP, I hope your future RMDs (after your tax-deferred accounts have continued to grow) don't push you into higher tax brackets. Many people here use the years between retirement and the starting RMD year to do Roth conversions to shift assets from tax-deferred to Roth. It can also be used to level out your MAGI (and taxes) each year instead of having low MAGI for a few years followed by many more years of higher MAGI (and taxes).
I’m of the camp that believes fear of RMDs is greatly exaggerated. If they really become onerous I’ll just join the QCD camp. I refuse to pay certain taxes now based on future unknowns
Another excellent myth, busted. The much feared tax bomb related to RMDs is a nothing burger in the grand scheme of things, over the long term.
There is a CFP on YouTube that recently did 3 videos on RMDs with a $3M portfolio and the the outcome was shockingly low taxes in comparison to the amount of forced withdrawal and amount compared to the overall value of the portfolio. One of the videos was showing a widowed, 90 YO with $3M in a tIRA. He did the math and I tried to double check based on how I think taxes are done and my figures were about $400 higher ... I think he had capital gains which I didn't account for just did straight taxes - 0%, 10% 12% and 22% for all the money. Taxes weren't too scary with such a large RMD withdrawal!
Keep in mind that if you die, your spouse will be paying a much higher tax rate as a single person. Being in the 12% bracket now or later doesn't sound like a big deal for a couple, but what if "later" is 22% instead of 12%?
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zzcooper123
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Re: Just filed for Social Security and feeling good

Post by zzcooper123 »

I am following a similar path on Soc Security. Glad the delayed payments on the delayed credits was explained. I like the guaranteed aspect of Soc Security payments. I like the lower tax rate on benefits on the Federal level. I like the lack of State taxation. I like that I can, for the time being, invest these payments into a MMF paying 5.3%.

All this juices my returns and makes filing earlier more lucrative.
Vinny_in_NJ
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Re: Just filed for Social Security and feeling good

Post by Vinny_in_NJ »

Tom_T wrote: Sat May 11, 2024 1:21 pm
Vinny_in_NJ wrote: Sat May 11, 2024 12:44 pm
chassis wrote: Sat May 11, 2024 11:55 am
Mayacallie wrote: Sat May 11, 2024 5:31 am
celia wrote: Sat May 11, 2024 12:22 am
+1

OP, I hope your future RMDs (after your tax-deferred accounts have continued to grow) don't push you into higher tax brackets. Many people here use the years between retirement and the starting RMD year to do Roth conversions to shift assets from tax-deferred to Roth. It can also be used to level out your MAGI (and taxes) each year instead of having low MAGI for a few years followed by many more years of higher MAGI (and taxes).
I’m of the camp that believes fear of RMDs is greatly exaggerated. If they really become onerous I’ll just join the QCD camp. I refuse to pay certain taxes now based on future unknowns
Another excellent myth, busted. The much feared tax bomb related to RMDs is a nothing burger in the grand scheme of things, over the long term.
There is a CFP on YouTube that recently did 3 videos on RMDs with a $3M portfolio and the the outcome was shockingly low taxes in comparison to the amount of forced withdrawal and amount compared to the overall value of the portfolio. One of the videos was showing a widowed, 90 YO with $3M in a tIRA. He did the math and I tried to double check based on how I think taxes are done and my figures were about $400 higher ... I think he had capital gains which I didn't account for just did straight taxes - 0%, 10% 12% and 22% for all the money. Taxes weren't too scary with such a large RMD withdrawal!
Keep in mind that if you die, your spouse will be paying a much higher tax rate as a single person. Being in the 12% bracket now or later doesn't sound like a big deal for a couple, but what if "later" is 22% instead of 12%?
Although I agree with what you said that CFP put it into perspective - a 90 YO widow collecting SS and forced to take a hefty RMD - a $3M porfolio/RMD factor. Taxes obviously were high but not out of this world high. Like I said I did the math, I am not a tax savvy person and it pretty much fell along the lines of what I think I know. Here''s the video: https://www.youtube.com/watch?v=4Wdjv8afxgs
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Re: Just filed for Social Security and feeling good

Post by chassis »

Vinny_in_NJ wrote: Sat May 11, 2024 12:44 pm
chassis wrote: Sat May 11, 2024 11:55 am
Mayacallie wrote: Sat May 11, 2024 5:31 am
celia wrote: Sat May 11, 2024 12:22 am
Watty wrote: Fri May 10, 2024 8:15 pm In my case there were other things like taxes which were not in the model which were more important than getting that last 2%.
+1

OP, I hope your future RMDs (after your tax-deferred accounts have continued to grow) don't push you into higher tax brackets. Many people here use the years between retirement and the starting RMD year to do Roth conversions to shift assets from tax-deferred to Roth. It can also be used to level out your MAGI (and taxes) each year instead of having low MAGI for a few years followed by many more years of higher MAGI (and taxes).
I’m of the camp that believes fear of RMDs is greatly exaggerated. If they really become onerous I’ll just join the QCD camp. I refuse to pay certain taxes now based on future unknowns
Another excellent myth, busted. The much feared tax bomb related to RMDs is a nothing burger in the grand scheme of things, over the long term.
There is a CFP on YouTube that recently did 3 videos on RMDs with a $3M portfolio and the the outcome was shockingly low taxes in comparison to the amount of forced withdrawal and amount compared to the overall value of the portfolio. One of the videos was showing a widowed, 90 YO with $3M in a tIRA. He did the math and I tried to double check based on how I think taxes are done and my figures were about $400 higher ... I think he had capital gains which I didn't account for just did straight taxes - 0%, 10% 12% and 22% for all the money. Taxes weren't too scary with such a large RMD withdrawal!
Agreed. There are a few perpetuated myths on this site and the video you mentioned dispels one of them regarding taxes on RMDs. It just doesn’t matter.

Roth conversions are a nothing burger because the main argument to do them, RMD tax avoidance, is a nothing burger.

Age of SS claiming is a nothing burger, meaning it makes no material difference which age is chosen to start claiming.
MoreTaxes
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Re: Just filed for Social Security and feeling good

Post by MoreTaxes »

kramer wrote: Sat May 11, 2024 12:55 pm
MoreTaxes wrote: Sat May 11, 2024 12:39 pm Also, since he is filing before age 70, the delayed retirement credits within the current calendar year do not count this year. This is a quirk many people miss. It means he would miss out on 5 months of delayed credit in 2024, meaning his 2024 payments would reflect only 23 months of delay, or 115.3% of PIA. In 2025 and later, he'd get all 28 months of delay credited.
This explains so much. When I was using some tool a few years ago to calculate my SS (my full retirement age is 67), I couldn't understand why the progression was not linear for taking SS at age 67, 68, 69, 70 (only the age 67 and age 70 numbers made sense, the other numbers were too low). It turns out that the tool was showing what my first SS check would be at age 68, for instance, and not how much it would be in January of the following calendar year and thereafter. I just went back to the numbers and understanding this fixes everything. It's just a small effect in the long run, at least. Thanks.

I was going to wait until age 70 mostly for tax reasons and insuring against longevity, assuming that I maintain good health (and projected longevity) until then. But with a September birthday, I may now start at 69 years and 3 or 4 months.
I'm glad this helped.

This nuance is rarely well explained, and in my mind the SS statements do a grave disservice the way they list the monthly benefit amounts. For ages 68 and 69 they list only the first year amount. If someone is retired for 30 years, the first year will only account for about 3% of their retirement, so in my mind it would certainly be better to list the subsequent-years amount if they are only going to list one number. To compound the problem, the bar graph has bar lengths in a linear progression from 67 to 70, and that doesn't even correspond properly to the numbers they list.

Another other SS quirk is that you can't actually file for SS at 62 years 0 months unless you are born on the first of the month. Otherwise, the earliest you can file for benefits is 62 years 1 month. This is also not explained at all on the SS statements, which just silently report a 62 years 1 month number under the heading for 62 years.
Claudia Whitten
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Re: Just filed for Social Security and feeling good

Post by Claudia Whitten »

Mayacallie wrote: Fri May 10, 2024 6:35 pm I’m 68 and 6 months and just filed for benefits to commence next month. Until recently, I was going to wait until 70. I’m retired,and very financially comfortable. My benefit will be $3964 vs $4340 had I waited, thus only an 8.6% reduction. It would take almost 16 years to make up the difference in absolute dollars, but I would be over 95 before it would make up the difference at a modest 5% reinvestment rate. I’ve visited all of the social security sites, and reviewed the discussions here. Most urge waiting until 70. Survivor benefits are often pushed.
I’ve done the calculations many times before. With health unknowns and political uncertainty the gurus stopped making sense
Full retirement age is a good time to take it. Watch this video, if you haven't already:

https://youtu.be/jtBv1HZK0k4?si=CkonoJCrNNJuSbrr

Enjoy.
Barkingsparrow
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Re: Just filed for Social Security and feeling good

Post by Barkingsparrow »

Not the OP, but I've been debating when to take SS and very interested in this topic. The question I have: does taking SS earlier and thus minimizing portfolio withdrawals between retirement and the SS claiming date help with the sequences of returns risk?
Last edited by Barkingsparrow on Sat May 11, 2024 7:29 pm, edited 1 time in total.
TravelforFun
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Re: Just filed for Social Security and feeling good

Post by TravelforFun »

Mayacallie wrote: Fri May 10, 2024 6:35 pm I’m 68 and 6 months and just filed for benefits to commence next month. Until recently, I was going to wait until 70. I’m retired,and very financially comfortable. My benefit will be $3964 vs $4340 had I waited, thus only an 8.6% reduction. It would take almost 16 years to make up the difference in absolute dollars, but I would be over 95 before it would make up the difference at a modest 5% reinvestment rate. I’ve visited all of the social security sites, and reviewed the discussions here. Most urge waiting until 70. Survivor benefits are often pushed.
I’ve done the calculations many times before. With health unknowns and political uncertainty the gurus stopped making sense
Survivor benefits are huge if your spouse is a lot younger than you, has better longevity than you, and make a lot less than you. I took it at 70 and my wife sure appreciates it.

TravelforFun
billaster
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Re: Just filed for Social Security and feeling good

Post by billaster »

Just filed for Social Security and feeling good
And think back on all those people in your 20s and 30s who told you Social Security would never be there for you.
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cosmos
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Re: Just filed for Social Security and feeling good

Post by cosmos »

billaster wrote: Sat May 11, 2024 7:19 pm
Just filed for Social Security and feeling good
And think back on all those people in your 20s and 30s who told you Social Security would never be there for you.
Thankfully we all have faith and certainty that the esteemed and benevolent members of congress will not fail us in 2035... I, for one, sleep very well at night relying on the best and brightest America can offer.
It's 106 miles to Chicago, we've got a full tank of gas, half a pack of cigarettes, it's dark... and we're wearing sunglasses. Hit it.
goblue100
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Re: Just filed for Social Security and feeling good

Post by goblue100 »

cosmos wrote: Sat May 11, 2024 7:35 pm
billaster wrote: Sat May 11, 2024 7:19 pm
Just filed for Social Security and feeling good
And think back on all those people in your 20s and 30s who told you Social Security would never be there for you.
Thankfully we all have faith and certainty that the esteemed and benevolent members of congress will not fail us in 2035... I, for one, sleep very well at night relying on the best and brightest America can offer.
I really don't want to get this thread locked, but I for one appreciate the sarcasm in this comment.
"Confusion has its cost" - Crosby, Stills and Nash
retired early&luv it
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Re: Just filed for Social Security and feeling good

Post by retired early&luv it »

If you have a large new income source such as Soc Sec, if you also have other income sources, such as investments, the new Soc Sec income source can put you into a higher cost bracket for Medicare. I call it the Medicare high income penalty, but Medicare calls it an adjustment.

Do an internet search for Medicare IRMAA to learn more.

The higher cost would likely kick in during 2026, so if you are in that boat, you have plenty of time to budget for it.

I think almost everyone that has the higher Medicare cost from that is single, where married couples seem to have a lower average income between the two.

Have a great retirement.
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winterfan
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Re: Just filed for Social Security and feeling good

Post by winterfan »

Barkingsparrow wrote: Sat May 11, 2024 7:04 pm Not the OP, but I've been debating when to take SS and very interested in this topic. The question I have: does taking SS earlier and thus minimizing portfolio withdrawals between retirement and the SS claiming date help with the sequences of returns risk?
Seems like it to me. We'd like to leave money to heirs too. In our case, we are debating between 67-70. 70 is the most logical because I'm the lower earning, younger spouse, but it's also hard to spend that nest egg.
Claudia Whitten
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Re: Just filed for Social Security and feeling good

Post by Claudia Whitten »

billaster wrote: Sat May 11, 2024 7:19 pm
Just filed for Social Security and feeling good
And think back on all those people in your 20s and 30s who told you Social Security would never be there for you.
I must have been hanging in the wrong crowd. No one ever talked to me about Social Security in my 20s and 30s or had an opinion to express about its longevity.

I think the bigger challenges at the OP's age (and presumably the age of most of those contributing to this discussion) are finding a community, remaining intellectually challenged and relevant, and keeping active through activities that don't really make you think about being active--they're just part of who you are. Frankly concerns other than when to take Social Security should so overwhelm your mind that the debate over whether to take at 67, 68, 69, or 70 (even 62) comes in at around 20 percent important. That's not completely unimportant, I admit, but in the grand scheme of things, it's quite unimportant. More important is whether you can live the kind of life that makes it more likely you will even live to "break-even" age. And that's actually no easy feat in older age.
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