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Old 06-03-2014, 07:54 PM
 
Location: Central Massachusetts
4,800 posts, read 4,850,322 times
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Originally Posted by harpoonalt View Post
How about "Take this job and shove it!" ?
Quote:
Originally Posted by luvmyhoss View Post
My favorite number.

Mine is "I Still Got A Finger That Works"
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Old 06-04-2014, 08:17 AM
 
741 posts, read 641,841 times
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Quote:
Originally Posted by biscuitmom View Post
Everyone's needs and wants are different. I've never known anyone to start taking SS early and invest the income. Not saying it's a bad idea, just saying it doesn't happen. If any posters here are doing so, more power to you.
I'm with you on this one. About the "media," a favorite whipping-boy of some: it, the "media" isn't trying to convince us to do anything. What we see published and broadcast are options and opinions. Each of us makes our own decision. For many people, drawing SS payments at 62 is a very foolish thing to do.
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Old 06-04-2014, 02:28 PM
 
Location: SoCal desert
8,093 posts, read 13,236,672 times
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Quote:
Originally Posted by biscuitmom View Post
I'm adding 8% a year to my SS 'annuity' by waiting until 70 to file. If I could find an investment that guaranteed that rate of return, I'd consider filing now.

Since I don't currently need the income and have no family history or current health problems to make me think I'll expire prematurely, I'm better off waiting. I don't worry much about the future but I have a healthy respect for the ravages of inflation and hope the 32% increase from delaying SS will offset it somewhat.

Everyone's needs and wants are different. I've never known anyone to start taking SS early and invest the income. Not saying it's a bad idea, just saying it doesn't happen. If any posters here are doing so, more power to you.
I don't need the income either, but I'm going to take it early (I'm currently retired but not 62 yet) and invest it. So now you know someone

Quote:
Originally Posted by biscuitmom View Post
Also, if one starts collecting at 62 but invests the income, as suggested by the OP, and then dies at say, 76, without cashing in the investment, does s/he "win"?
Yes - because it's in my name, not in the government coffers. That's the main reason. Otherwise, I can spend it -or- my niece will have a healthy sum (maybe) to pay down her cattle ranch mortgage.
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Old 06-04-2014, 04:05 PM
 
Location: Grove City, Ohio
10,134 posts, read 12,390,523 times
Reputation: 13984
Quote:
Originally Posted by biscuitmom View Post
I'm adding 8% a year to my SS 'annuity' by waiting until 70 to file. If I could find an investment that guaranteed that rate of return, I'd consider filing now.
Not just adding 8% but having the amount indexed to any future inflation.

Assume I will receive $2,200 at full retirement age. If I had started taking SS at 62 my amount would be reduced by 25% to $1,650 but if I leave it alone just eight years to age 70 my monthly amount $2,904 or $1,254 monthly for the rest of my life.

If I earn $75,000 my social security tax would be 6.2% or $4,650 per year totaling $37,200 over an eight year period.

What possible investment could I make that would guarantee a rate of return of $1,254 monthly indexed to inflation for the rest of my life? Money that is tax exempt from federal income taxes as well as exempt from some state income taxes as it is in Georgia?

Not just my life but my wife if she survives me as she is likely to do?

If my wife collects 50% of my benefit, as many wives do, she will receive $1,100 giving us a combined social security benefit of $3,300 tax free dollars every month but if I collected at 62 and she did as well our combined benefit would be somewhere around $2,268 which is OK for some but I would rather have the additional $1,032 every month which we would have just by putting off four years.

If I can put off retirement to age 70 and my wife collects at 66 our combined benefit would total $4,004 tax free every month. There's a lot of difference in standard of living between $2,268 and $4,004 every month.

Matter of fact if a couple can't live rather decently on $4,004 AFTER TAXES every month they have a spending problem and not an income problem.

And finally the wife. It isn't all about me but if I happen to pass this life first my wife will pick up my social security amount and I would feel a lot better knowing she would collect $2,904 as compared to $1,650 which she would receive if I started collecting at 62.

Quote:
Since I don't currently need the income and have no family history or current health problems to make me think I'll expire prematurely, I'm better off waiting. I don't worry much about the future but I have a healthy respect for the ravages of inflation and hope the 32% increase from delaying SS will offset it somewhat.

Everyone's needs and wants are different. I've never known anyone to start taking SS early and invest the income. Not saying it's a bad idea, just saying it doesn't happen. If any posters here are doing so, more power to you.
I don't worry a bit about getting my money back.

Whether I live 1 year or 20 years into retirement I will sleep much better knowing my wife and I will receive enough social security alone to live rather comfortably and leaving our IRA's and other savings to emergencies like new roof on house, air conditioner go out or maybe it gets to where we need a new car.
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Old 06-04-2014, 05:39 PM
 
71,643 posts, read 71,777,271 times
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only area i disagree is the 48k after taxes being all a couple needs or they have a spending problem

my answer is all depends on lifestyle and location. 48k wouldn't even make a decent middle class lifestyle here in ny unless you like sitting home most of the time..

in fact just housing , medical insurance costs and our long term care insurance would eat up 60% of that budget alone .
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Old 06-04-2014, 06:15 PM
 
Location: Los Angeles area
14,018 posts, read 17,744,100 times
Reputation: 32304
Default Taxation of Social Security benefits

Quote:
Originally Posted by nicet4 View Post

What possible investment could I make that would guarantee a rate of return of $1,254 monthly indexed to inflation for the rest of my life? Money that is tax exempt from federal income taxes as well as exempt from some state income taxes as it is in Georgia?

If my wife collects 50% of my benefit, as many wives do, she will receive $1,100 giving us a combined social security benefit of $3,300 tax free dollars every month but if I collected at 62 and she did as well our combined benefit would be somewhere around $2,268 which is OK for some but I would rather have the additional $1,032 every month which we would have just by putting off four years..
As a general rule, no. Social Security benefits are not exempt from federal income taxes. However, and I assume this is what you had in mind, if SS constitutes your only income, or almost your only income, then it is (as you say) exempt from federal income taxation. There is an IRS worksheet for figuring taxation (or non-taxation) of SS benefits.

Under more normal circumstances (i.e., in cases where there is more than negligible income in addition to SS), then up to 85% of the SS income is subject to federal taxation at whatever tax bracket rate applies to the individual or couple. At least only a maximum of 85% of SS income is federally taxable; that's better than 100%.

As for the states, most states, like Georgia apparently, do not tax SS at all. Even California, a high tax state, does not tax it.

Please note I am not implying that you (nicet4) did not know all that already. I am clarifying for the benefit of people who may read the first bolded part above and naively think that is the general rule.
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Old 06-04-2014, 08:04 PM
 
Location: Grove City, Ohio
10,134 posts, read 12,390,523 times
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Quote:
Originally Posted by escort rider View Post
as a general rule, no. Social security benefits are not exempt from federal income taxes. However, and i assume this is what you had in mind, if ss constitutes your only income, or almost your only income, then it is (as you say) exempt from federal income taxation. There is an irs worksheet for figuring taxation (or non-taxation) of ss benefits.

Under more normal circumstances (i.e., in cases where there is more than negligible income in addition to ss), then up to 85% of the ss income is subject to federal taxation at whatever tax bracket rate applies to the individual or couple. At least only a maximum of 85% of ss income is federally taxable; that's better than 100%.

As for the states, most states, like georgia apparently, do not tax ss at all. Even california, a high tax state, does not tax it.

Please note i am not implying that you (nicet4) did not know all that already. I am clarifying for the benefit of people who may read the first bolded part above and naively think that is the general rule.
You are correct but I wasn't thinking of high earners but even so it is pretty generous.

I found this worksheet online How much of my social security benefit may be taxed?

Married, filing joint.

15% marginal tax bracket.

Social Security: $48,048
IRA Distributions: $12,000
Earned Income: $12,000 Wal Mart Greeter or whatever)
Total Income: $72,048

Based on the above the worksheet produced the following:
Taxable Social Security benefit $9,420
Percent of Social Security benefit subject to taxation 20%
Estimated taxes due $1,413

So yes, given our total income we will be subject to a 20% tax rate on $9,420 of our social security income or $1,413. To be clear our total income tax would be higher but that $1,413 is tax on social security benefits only.

But what if all we had was social security alone?

If the only income we had was $48,048 social security our federal tax rate would be zero. To carry it even farther if our combined social security income was $60,000 the worksheet indicates we would still not pay any federal income taxes.

To the previous poster of course it is all about location and lifestyle and in my neck of the woods one can live very well on $4,004 as long as the home is paid for and the couple has no debt.

If concerned about medical you can go a long way towards fixing these costs by opting for a Plan F.

In my part of the country for a couple the medicare costs are:

Part B: $209.80
Plan F: $255.00
Plan D: $60.00 (Pharmacy)
Dental: $68.00
Total: $592.80

Plan F is the most expensive plan out there, I was surprised with how price varied with location, New Yorkers pay twice what we do, but there are not co-pays or deductibles which allows you to fix your costs almost to the penny.

$4,004.00-$592.80 leaves $3,411.20 after all medical and I would estimate in 80% of the country a couple could live very comfortably on that as long as home was paid for and no debt.

Sometimes you have to give something up. I like flying, I've been flying for near 45 years, which is a hobby that makes boats look cheap. Piper Arrow, PA28-200R. I miss her dearly, my wife always claimed she cost like the second woman in my life, but I gave it up in preparation for retirement. Sometimes you have to sacrifice (sob) but other than missing the flying we could do just fine on the $3,411.20. In New York City of San Francisco not so good, fact near poverty, but I am not there.
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Old 06-06-2014, 07:36 AM
 
29,782 posts, read 34,876,173 times
Reputation: 11705
Quote:
Originally Posted by mathjak107 View Post
only area i disagree is the 48k after taxes being all a couple needs or they have a spending problem

my answer is all depends on lifestyle and location. 48k wouldn't even make a decent middle class lifestyle here in ny unless you like sitting home most of the time..

in fact just housing , medical insurance costs and our long term care insurance would eat up 60% of that budget alone .
It is probably best to allow the individual to establish their goals and needs. Otherwise the door is open for someone else to say if you are retiring on only 48k a year you must have done something wrong. Being judgemental can go both ways.

Last edited by TuborgP; 06-06-2014 at 08:46 AM..
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Old 06-06-2014, 08:31 AM
 
Location: Central Massachusetts
4,800 posts, read 4,850,322 times
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Quote:
Originally Posted by TuborgP View Post
It is probably best to allow the individual to establish their goals and needs. Otherwise the door is open for someone else to say if you are retiring on only 48k a year you must have done something wrong. Being judge mental can go both ways.
I agree very much. One point that is not known here is housing cost. Is there a house in the mix and is it paid for. If so then in many places 48k could be a quiet and adequit for a couple.
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Old 06-06-2014, 08:46 AM
 
29,782 posts, read 34,876,173 times
Reputation: 11705
Quote:
Originally Posted by golfingduo View Post
I agree very much. One point that is not known here is housing cost. Is there a house in the mix and is it paid for. If so then in many places 48k could be a quiet and adequit for a couple.
In my mind there is a difference between stopping work and retirement. One can be a lot more expensive depending on the person/couple. It isn't just housing but the lifestyle your working effort has afforded you previously. Why retire before 70 if it means a dropoff in lifestyle some would ask. It is a personal choice and up to us to design and implement a plan that meets our needs and hopefully wants.

Last edited by TuborgP; 06-06-2014 at 08:56 AM..
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