Why Your Choice: Take Soc Sec. at 62, Full Retirement Age, or 70? (spouses, social security)
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Can you provide some insight as to which you did, and why?
Retirement for me is still far enough away that technically I guess I don't even need to be thinking about this now, because who knows what the rules will be 10 years from now.
But I dream of retirement and am pondering what I might do.
Insight on your choice and why would be appreciated.
-- Did you grab the lower amount as soon as you could? If you did that did you work part time?
-- Did you wait? And not choose to work part time?
-- Looking back was the increased amount worth waiting for?
-- How much of an increase is worth waiting for?
-- If you waited, did you tap your own savings in the meantime?
-- How'd you pay for healthcare, if you weren't old enough for Medicare?
Thanks.
Full retirement age for me was 65 and I choose to take it at 62. If I had it to do over again, I would not have done it that way. Here was my reasoning, my job was about to be eliminated, I was ready to take my retirement and I decided the timing was right. I thought I would just get a part time job to keep myself busy and bring a few bucks in; well I did that, but my part time job involved some commissions as well. I started making too much money, for a time the SS checks stopped and to this day I feel I would have been better off just to have waited the 3 years.
As for health insurance, luckily hubby did have coverage so that wasn't an issue, but what happened to him in regards to SS was worse that me. His job was eliminated 5 months before he turned 65. We were ready to relocate anyway so he decided, without doing the research (idiot) he would take his SS. That really cost us; it didn't affect his checks too much, but instead of my getting 1/2 of his instead of my ow, which mine was much less, I can only get 1/3 of his. We are being penalized big time for taking his 3 months early. I say 3 months because he didn't start collecting until Nov. before his 65h birthday in Feb.
We are not dumb or uneducated, I would hope others discuss their options with a SS expert. We just simply didn't think and are paying for it still. Oh well, we are not starving and life goes on.
Too many people my age are checking out early. And you have no way of knowing when you're going.
So these actuarial statistics don't mean anything on a one on one basis. Take it early, and take it as
often as you can.
Your opinion has zero logic. It's simply a made up excuse, which (sadly) is common for many people to use for reasons I won't go into because it may hurt your feelings.
I think retirement is wasted on the old and education is wasted on the young. Young people frequently do not have the wisdom to see the big picture overveiw as it applies to subjects. Old people, if the mind is not used, tend loose brain cells, become demented and lie around focusing on their aches and pains. Kids need to have fun, enjoy their youth and lie around on the beach once they have learned to read and write and basic math skills. Mature people need to work and continue their education once they have become wise from life experience. I think we have got it backwards. I myself have the best of both. I retired at 56 due to an accident, was put out to pasture and am still young enough to have a good time bucking my bridle off
When to take SS depends on so many variables. Unfortunately many are not known until shortly or long after we have decided to file. Some will not be known by us but by those we leave behind. Will you live til 85? At age 86 you will know that you did. For many death will be sudden and the what if will never be contemplated. How will investments perform? You will know after the fact but before? hmmmmm probably not. So is it all a crapshoot? No as there are considerations and assumptions you can make. For us it was looking at the various income streams possible when combining Pension decisions with SS decisions and what was the income floor for all of the possibilities. Investments were a reserve consideration. We decided for my wife to take at 62 and for me to wait until 70. We opted for survivor benefits with our pensions and those along with my benefits either as spousal or or personal created what we felt was a very comfortable floor moving forward. It was absent any government benefit changes sorta bullet proof and even allowed for reduction in benefits down the road. It is a very person/couple dependent decision and these discussions become interesting when no one is even mentioning the dollar amounts involved. How one can advise another without knowing their income possibilities is sorta interesting. We are now age 66 and trying to evaluate our decision in hindsight is sorta not needed.
while taxes would be just slightly higher pre 65 by the time you reach 65 a 65 year old couple could be pulling out tax free as much as 22k a year and as much as 42k a year with as little tax due as 1800 bucks. that is a 4.5% effecive tax rate . that is because standard deductions,exemptions and the extra deduction at 65 you get allow quite a large amount of income through.
you can muster quite a high income if you do things right and have as much as 8 years of almost tax free income.
you can pull 8 x 42,000 bucks = 336k almost tax free from ira's and reduce rmd's by that much later.
but folks listen to bad advice and spend down first the money from their taxable account where most taxes have been paid and they bypass taking the tax free money offered to them by making the first money their tax deferred stuff. many lose this tax free gift by poor planning. since if you do not use all of that deduction up you lose it each year.
This is a very insightful thing I'm learning. Let's say I don't itemize my deductions and just use the standard deduction. For a married couple, the 15% tax rate applies up to around $75,000 of income. I didn't know about the extra deduction at 65 so that is something good for me to keep in mind. You are saying a 65 year old couple can pull out 42K from an IRA with paying only $1,800 in taxes but that almost sounds too good to be true -- or are you saying that couple can have $42K in total income including IRA distributions and pay only $1,800 in taxes? It would be great if it is the first scenario. If so can you elaborate on how a couple can pull $42,000 for 8 years, and is that the 8 years from 62 to 70?
total taxable income would be the 42k but remember you can have as much roth , taxable account income with taxes already paid and tax free sources added to that so your income can be as high as you planned around.
total taxable income would be the 42k but remember you can have as much roth , taxable account income with taxes already paid and tax free sources added to that so your income can be as high as you planned around.
that is why tax planning well in advance is key.
You mean that assuming the couple has no income at retirement, they can pull 42k from IRA and pay about 1800 in taxes? How about a retired couple that has ordinary income say from small pension and dividends/interest that add up to 42k. Am I correct in assuming they would also pay about 1800 in taxes, and then any amount they take from the IRA would be taxed at the 15% rate up to about 75k in income?
Then one day a few months ago, a light bulb went off (And heck, I think it was caused by a post here on CD!) that if I waited and then died before applying, that money was lost to the government coffers. Gone. And it was mine.
I think this happens more often than people might think (people work til they die and never get to collect their Social Security).
Some people ask "what if you live" and all I can say is I've had so much death around me all my life that from watching all that I've decided the chances were more likely that I wouldn't! A guy I worked for retired, chose the benefit of a larger pension check that stops at his death, rather than a smaller one that would continue IF he died, giving his wife a pension. Guess what, that sucker dropped dead of a brain tumor 18 months after retirement!!!
Then there is my cheap, DEAD, ex-husband who made our life miserable saving every penny, running my house into the ground because he was too tight to pay for repairs, who yelled at me "every penny YOU spend is money I can't save". I divorced him and he dropped dead at age 57 leaving about a million dollars to his sister.
See what I mean.
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