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I delayed until 65 because working my one day a week would have had me give back money ..since in the year I would be fra I could earn 45k, 65 worked well .. once I was in what I will call battlefield conditions and actually seeing all that extra money coming out of our accounts my taste for delaying soured and if i could have filed earlier then 65 I likely would have but the day of work prevented me
Sure, that's a separate issue and honestly it has been discussed here and elsewhere ad nauseam. If it's not possible to delay 8 years, then one can do what is feasable... 5 years, 3 years, etc.
My point is that saving on taxes as you posted is just one aspect and for many it wouldn’t matter since they couldn’t draw for that long.
I just need room to convert my Roth. Simple reason. I get into a higher bracket once I take SS or once one of us goes first. I could be looking at 32% bracket if I’m not careful.
Exactly, same thing I'm doing, using the 62-through-70 window to convert tax-deferred 401k holdings into Roth (with a goal toward minimizing the RMD), and spending non tax-advantaged dollars for that period. Now, will I make it all the way to 70, or like Mathjack, modify the Plan based on changing conditions? Time will tell, but one needs a roadmap prior to starting the trip. If the market grows more than expected during this period and I can't get the RMD down due to growth, there are far worse problems to have than having to pay taxes.
Bottom line, absolutely include tax considerations into your calculations. My own plan is that after age 70, my tax liability (both federal and state) drops to near zero, from limiting taxable income to no more than ten or twelve grand a year (adjusted for inflation), keeping SS payments tax-free. The balance of my income, if I choose (or need) to spend it instead of leaving it to charity or other beneficiaries, will come from Roth accounts. The Tyson quote is noted and appreciated, LOL.
Sure, everyone needs to look at their own personal situation. I'm not saying the decision is easy, nor am I saying there is some magic answer that's universally applicable to everyone.
However I've looked at this enough that I feel I can make the following generalization. Any calculation that's done using pre-tax dollars will make the "taking SS early" scenario look better than it really is. After all, we can only spend after-tax dollars so that is what really counts.
To do the calculations right and to include all scenarios and parameters takes very complex software ... I mentioned that fidelity beta tested their optimizing social security software on us . It did a great job of finding the most dollars ..
but it dropped the ball by not incorporating all these other issues like invested assets , taxes ,etc ..so the software was pulled back and is no longer being used
Exactly, same thing I'm doing, using the 62-through-70 window to convert tax-deferred 401k holdings into Roth (with a goal toward minimizing the RMD), and spending non tax-advantaged dollars for that period. Now, will I make it all the way to 70, or like Mathjack, modify the Plan based on changing conditions? Time will tell, but one needs a roadmap prior to starting the trip. If the market grows more than expected during this period and I can't get the RMD down due to growth, there are far worse problems to have than having to pay taxes.
This is precisely where I am, as well.... after having my eyes opened this week to the previously-unappreciated (by me) spend down strategy, during the "golden window!" Conveniently, the amount of taxable holdings convereted should come out close to the amount I want for living expenses. And then yes, there are worse problems than having to pay some taxes, on the remainder.
Last edited by HeelaMonster; 06-14-2019 at 04:22 PM..
My point is that saving on taxes as you posted is just one aspect and for many it wouldn’t matter since they couldn’t draw for that long.
Of course it will be of no interest to someone who has few assets. They have no choice but to start taking SS as soon as they're no longer working. I'm not sure what that person would be reading this discussion. Maybe they are getting tired of the Politics forum, haha.
Sure, everyone needs to look at their own personal situation. I'm not saying the decision is easy, nor am I saying there is some magic answer that's universally applicable to everyone.
However I've looked at this enough that I feel I can make the following generalization. Any calculation that's done using pre-tax dollars will make the "taking SS early" scenario look better than it really is. After all, we can only spend after-tax dollars so that is what really counts.
Oh absolutely and for those that are able to use the extra SS money to then having to withdraw less from taxable accounts the savings on taxes would be a bigger impact.
I am fortunate to have a pension that will get tax no matter when I take SS. What I would be taken from my 401k at early SS draw is minimal so in reality my taxes don’t really change Much if I wait it out because the tax I’m not able to substitute the extra SS dollars for not drawn 401k money.
I appreciate your post because I went back and used those options to see if it made as big a different for me. In my case the savings on taxes were not major.
Of course it will be of no interest to someone who has few assets. They have no choice but to start taking SS as soon as they're no longer working. I'm not sure what that person would be reading this discussion. Maybe they are getting tired of the Politics forum, haha.
I think ALL kinds of people read this thread. We will ALL retire hopefully one day and we all are at different stages of assets accumulation. So reading threads like this one are educational for all of us. I’m always willing to learn new things.
As for the political forum, well we all have more than one interest in life so I’m sure you also wander into other forums yourself.
To do the calculations right and to include all scenarios and parameters takes very complex software ... I mentioned that fidelity beta tested their optimizing social security software on us . It did a great job of finding the most dollars ..
but it dropped the ball by not incorporating all these other issues like invested assets , taxes ,etc ..so the software was pulled back and is no longer being used
That's unfortunate, but not surprising. Even if one gets all of the software working and tested, they still have to explain to customers what it's doing and get them to trust the answers. That's not such an easy thing.
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