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I cant believe I'm disagreeing with you, Mathjak, but I'll still say that if you're drawing more than your RMD, you're better off taking SS earlier and decreasing the amount you're withdrawing from an IRA.
you need to work the numbers .
a couple today can draw 24k a year out of an ira while delaying ss and get 192k in tax free dollars over 8 years with the standard deduction .
they can pull up to 40k out at less than 5% tax .that is 320k out at a minimal tax . that is a great gift from the tax gods one will likely never see again .
they can get an aca subsidy from 62-65 .....
so that can be a huge reduction in rmds later . especially for a spouse who loses a spouse and files single .
plus the ss is growing .
so one needs to really look at their own personal situation
a couple today can draw 24k a year out of an ira while delaying ss and get 192k in tax free dollars over 8 years with the standard deduction .
they can pull up to 40k out at less than 5% tax .that is 320k out at a minimal tax . that is a great gift from the tax gods one will likely never see again .
they can get an aca subsidy from 62-65 .....
so that can be a huge reduction in rmds later . especially for a spouse who loses a spouse and files single .
plus the ss is growing .
so one needs to really look at their own personal situation
Ill go along with that for retired folks in a lower income bracket who aren't paying any (or very little) income tax. Otherwise. I'm not sure I'd agree - especially if the RMD is large enough that it throws you into a higher tax bracket. And those people aren't going to qualify for any kind of ACA subsidy.
Yes - each individual has personal situations and needs. There's no one size fits all on when to draw SS (or the majority of financial decisions).
Fair enough for retired folks in a lower income bracket. Otherwise. I'm not sure I'd agree (especially if the RMD is large enough that it throws you into a higher tax bracket. And those people aren't going to qualify for any kind of ACA subsidy.
Yes - each individual has personal situations and needs. There's no one size fits all on when to draw SS (or the majority of financial decisions).
yep , that is the point .. it is a complex decision with lots of moving parts .
I cant believe I'm disagreeing with you, Mathjak, but I'll still say that if you're drawing more than your RMD, you're better off taking SS earlier and decreasing the amount you're withdrawing from an IRA.
You need to look at the whole picture, multiple years planning, we have somebody here who brags about not using a dime of their $10 million in retirement account, assume the $10 million is not of pesos, when you get to RMD age, you have to take out at least $400k a year, do the math on the tax, it’s a lot more than what they save on going on Medicaid insurance now. The key thing is to smooth out your tax rate.
About 18 years ago, everyone said to take out SS at 62, and I did that. Now 85% of the SS is taxed, with adjusted income tax around 12%. I’m not complaining but possibly could have been more aware of tax implications.
I'm taking at 62--the minute I'm eligible. I can take less out of my interest bearing mutual funds.
I'm surprised. Usually anytime anyone asks this every single person replies that you should wait.
I agree with Adam. The minute I am able. I have seen far far far far far too many friends and friends of friends die way before they ever got to get to the max retirement. Health rarely improves after 62.
Unless you absolutely cannot afford to, retire early.
RIP Rudy and Dee, 2 close friends that worked until the max age... and both died within a week of retirement.
But remember ,there is far more to the story if you are spending down invested assets or assets that could be invested to delay ...that makes it a whole other equation.
Fidelity pulled their in house software for optimizing social security from use ....it did not look at how it factored in with spending down assets delaying , spousal ,taxes and rmds later .....just looking at the benefit as it compounds delaying is not likely the whole story for those retiring at 63 since they have to live on something and spend it down
If you have a large IRA or 401K you might want to start spending them down to avoid higher taxes in the future when you have to start taking them at 70 rather than take social security early. Also a point in delaying if you have a spouse who perhaps didn't work much or at all they get half of your full retirement age benefit if you wait. If you can wait by using 401k's and IRA's judiciously you not only get a higher social security benefit but you also lower future tax burden.
If you have a large IRA or 401K you might want to start spending them down to avoid higher taxes in the future when you have to start taking them at 70 rather than take social security early. Also a point in delaying if you have a spouse who perhaps didn't work much or at all they get half of your full retirement age benefit if you wait. If you can wait by using 401k's and IRA's judiciously you not only get a higher social security benefit but you also lower future tax burden.
a spousal benefit only matters that you filed . the age is irrelevant .
what matters is her age when she files .
as long as she has any work record at all she gets her own benefit based on her own record and age when she files .
as long as you filed regardless of age she gets an adder to her benefit if half your full is more than her full would have been .
so if she filed at 62 and her benefit is 800 .. but her fra amount would have been 1200 , and your fra amount is 2800 regardless of when you filed ; they take half yours which is 1400 , subtract her full which is 1200 andd the difference of 400 is added to her early benefit amount .
none of that is based on when you file , only that you did file
I'm surprised. Usually anytime anyone asks this every single person replies that you should wait.
I agree with Adam. The minute I am able. I have seen far far far far far too many friends and friends of friends die way before they ever got to get to the max retirement. Health rarely improves after 62.
Unless you absolutely cannot afford to, retire early.
RIP Rudy and Dee, 2 close friends that worked until the max age... and both died within a week of retirement.
I'll be 62 shortly. In my life I have known people that have died of:
heart attack
ALS
Liver failure
Car wreck
Suicide
Drugs
I also know people that are on their last legs with stroke and eyesight issues. They can't do much. All these folks were or are 62 or less. So trying to get every dime out of social security seems kind of pointless. Everybody knows SS does the actuarial table so you get the same whenever you file - as long as you drop dead on schedule. Nobody knows what the future holds, but waiting until you are sending social security to the nursing home seems like a bad idea. Get it, spend it, enjoy. While you still can.
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Our SS office explained that if a low earing spouse filed at age 62, future benefits (including future spousal 1/2) would be reduced by the early filing penalty %.
Maybe their explanation was miss understood, and should have been that HER (low earnings benefit would be the only benefit to absorb the reduction of early filing, and that the spousal benefit would always be exactly 50% of FRA benefit of spouse (once spouse files). No increased benefit amount to low earning spouse, if high earning spouse waits until age 70 to draw. Just a reduction on potential 1/2 spousal payments while awaiting high earner spouse to claim benefits.
I would not be surprised to see the maximum age to draw pushed out to 72, as was done with RMD.
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So true
