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I'm starting SS at age 66. Don't believe I'll need the $. Thinking of investing into VTCLX ea. month. Tax efficient, good performer over the long run. Any other ideas? Trying not to get into higher tax bracket.
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I'm starting SS at age 66. Don't believe I'll need the $. Thinking of investing into VTCLX ea. month. Tax efficient, good performer over the long run. Any other ideas?

If you really don't need the money, I would suggest delaying taking the SS benefits. Each year you delay taking your benefits until age 70, you would get a guaranteed 8%/year increase in your monthly benefit amount.

Here's a webpage from the SS website that explains 'delayed retirement credits' for those who defer taking SS after they reach the full retirement age: http://www.socialsecurity.gov/pressoffice/DlyRetCrdtFactShee...

AJ
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AJ,

You perked my interest in your scenario, so I did some fuzzy math and this is what I came up with. If my math fails, I apologize in advance to the board and hopefully someone can give the correct numbers. I for one, would like to know if my numbers are in fact correct.

With that, this is what I came up with...

(X) retires at 66 vs 70 and dies at 80.

At 66 (X) decides to collect SS and begins receiving (lets say) $1000. per month.
At 80 (X) will have received $181,440. without any COLA increases considered into my calculations.

At 70 (X) decides to collect SS and with the added bonus of 8% per year allocated from 66 begins receiving $1360. per month.
At 80 (X) will have only received $176,319 in SS with a net loss of $5,120.

If my math happens to be correct, I would start taking SS at 66 and invest it given that (X) does not need the money to live on.

Troy
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lol, Well, I already found one flaw in my math. I accidently included 8% on the the starting $1000.

So, with that, I get...

66 to 80 = $168,000.
Vs.
70 to 80 = $176,319 with a net profit of $8,319.

Even with my revised numbers, I would still take SS at 66.


Troy
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Trying not to get into higher tax bracket.

I'm doing everything I can to get into a higher tax bracket. A higher tax bracket means more income and more money in my pocket after paying those higher tax rates.

--Peter
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TroySR71 wrote:
Even with my revised numbers, I would still take SS at 66.

No, you don't end up with more money taking SS later, at least not if you can invest reasonably. Taking SS later is insurance for if you outlive your money, and also sets a higher income floor if all your investments go into the toilet (or you are scammed out of them).

So if you don't need the money from SS at 62 or 66, then waiting until 70 gets you those benefits. This is not for everybody, but it's a tangible win for some. I haven't decided for sure what I'll do, but my guess is that I'll probably wait.

-IGU-
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Taking SS later is insurance for if you outlive your money, and also sets a higher income floor if all your investments go into the toilet (or you are scammed out of them).
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Very good point.

Troy
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So if you don't need the money from SS at 62 or 66, then waiting until 70 gets you those benefits. This is not for everybody, but it's a tangible win for some. I haven't decided for sure what I'll do, but my guess is that I'll probably wait.

-IGU-


Very true words. I really hate it when advisors specifically blanket state to wait until I'm 70 1/2 to take it. Personally plan to reassess when I'm 65 and make a decision based upon the overall picture. If doing okay at that moment but future cash flow is more uncertain, will probably delay taking it until later so that stream will be a bit bigger. If fat-and-happy at 65, will probably take it then and invest. If the need for it to be a mainstream of income at 80 is minimal, would rather "gamble" that I can build it and enjoy it or pass it on in my estate. I find it funny that while a couple strategies have been suggested to minimize my RMD's, SS is always maximized in recommendations.

LakeD
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Trying not to get into higher tax bracket.

I'm doing everything I can to get into a higher tax bracket. A higher tax bracket means more income and more money in my pocket after paying those higher tax rates.

I'm doing everything I can to increase my income in ways that are tax deferred or not subject to taxes. :-)

Considering only cash return, and all other factors being ignored. If you're expecting to live past your early 80's it's best to defer taking SS. If you're expecting to die before your early 80's, it's best to take the money earlier.

Jack
Interested in decreasing your taxes?
Let me sell you a deduction.
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Waiting until 70 also provides a higher widow/widower benefit if you are the higher earner, married and die before your spouse.
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I'm doing everything I can to get into a higher tax bracket. A higher tax bracket means more income and more money in my pocket after paying those higher tax rates.

But once you start Medicare, extra income can raise your annual premium feom $42 + $12.30/mo (prescriptions coverage) to $230.80 + $70.80/mo.

There can be good reason to stay on the low side of the steps. I just got my annual notice from Medicare. The steps for next year are--

$42 and 12.30 for singles $85K to $107K marrieds $170K to $214K
104.90 and 31.80 ,,,,,,, $107K to $160K ,,,,,,,, $214K to $320K
167.80 and 51.30 ,,,,,,,, 160k to 214k ,,,,,,,,,, 320k to 428k
230.80 and 70.80 ,,,,,,,, 214K+ ,,,,,,,,,,,,,,,,, 428k+
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Taking SS later is insurance for if you outlive your money, and also sets a higher income floor if all your investments go into the toilet (or you are scammed out of them).

But you also get zip if you don't live long enough to collect once you defer.

Cash in the hand is a better deal. Its yours. You earned it. You paid premiums into Social Security/FICA for years. Why gamble?

Personally I took the money at 62 and I am not sorry.
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There can be good reason to stay on the low side of the steps. I just got my annual notice from Medicare. The steps for next year are--

$42 and 12.30 for singles $85K to $107K marrieds $170K to $214K
104.90 and 31.80 ,,,,,,, $107K to $160K ,,,,,,,, $214K to $320K
167.80 and 51.30 ,,,,,,,, 160k to 214k ,,,,,,,,,, 320k to 428k
230.80 and 70.80 ,,,,,,,, 214K+ ,,,,,,,,,,,,,,,,, 428k+


So let me get this straight. If your married income is $213K, your annual premium would be $189.60. If your married income is $429K, your annual premium is $1080.40. For an extra $216K in income, it'll cost an extra $890.80 in annual premiums. I think I'd settle for the extra income.

PSU
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Waiting until 70 also provides a higher widow/widower benefit if you are the higher earner, married and die before your spouse.

This is confusing. If you are the high earner, die before your spouse and have not started taking SS, there's no reason for the one left to wait past normal retirement age. Are you referring to waiting from full retirement age to 70 and hoping to stay alive ?
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This looks like a screaming bargain to me - at any income.
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Personally I took the money at 62 and I am not sorry.

I did the same thing. No regrets here. Been drawing for 8 years now. RMDs kicked in this year. Life is Good.

Regards,

ImAGolfer (retired '03)
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SS benefits vs investment income.

One thing to consider is state taxes. In Illinois, where I live, retirement benefits are not (yet) taxed, but investment income is.

Just one more thing to add to your calculations.

Bob
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SS is actuarially standardized so no matter when you take it, the AVERAGE total income until death is the same, obviously for large groups of people. This does not apply to an individual.

So if you are really healthy(ie everyone in your family lived past 85) and don't need the money you can take your bet that you will live longer than the actuarial table says you will.

If you have significant medical issues, then taking at 62 may make sense for you.
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So let me get this straight. If your married income is $213K, your annual premium would be $189.60. If your married income is $429K, your annual premium is $1080.40. For an extra $216K in income, it'll cost an extra $890.80 in annual premiums. I think I'd settle for the extra income.

The point is that if you are close to one of these step points, it can be worth your while to reduce your income to keep below the step point.

Otherwise, if you cross the step line, your Medicare cost can rise by ($652 to $1628) almost $1000/yr.
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If you have significant medical issues, then taking at 62 may make sense for you.

My mother lived to 91. My father is 93 and still going. My grandmother died at 94.

I had no significant issues at age 62, but decided to start collecting then anyway. That was five years ago, and suddenly I have issues, and they are compounding. Does that mean I will live until next Spring or the next decade? I have no earthly idea, but I'm glad I started taking when I did, even though I didn't need it.

I have noticed that once (most) people are 85, they have little use for "extra" money. They're not taking the yacht to Bimini, they're not buying a new car every two years, they're not putting an addition on the house. The only use for it seems to be to collect it and then hand it over to the nice people running the retirement or assisted living home. So if "breakeven" is 82, you don't really have a lot of years to spend that "extra" income.

Personally, I'd rather have it now. First, I'm sure I'm alive and can get it; second, I'm sure I have better use for it now than I will if/when I make it to 87. Those few extra dollars won't buy much once you're in the nursing home; the bingo games are the same for everyone, and you can't buy an extra chocolate drink at dinner, so what are you going to use it for, flowers at the gift shop that's open on Tuesdays from 2-5?
 
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Goofyhoofy asks,

Those few extra dollars won't buy much once you're in the nursing home; the bingo games are the same for everyone, and you can't buy an extra chocolate drink at dinner, so what are you going to use it for, flowers at the gift shop that's open on Tuesdays from 2-5?

</snip>


Maybe that extra income from delaying SS to age 70 would allow you to afford a nursing home with an open bar?

intercst
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I have noticed that once (most) people are 85, they have little use for "extra" money. They're not taking the yacht to Bimini, they're not buying a new car every two years, they're not putting an addition on the house. The only use for it seems to be to collect it and then hand it over to the nice people running the retirement or assisted living home. So if "breakeven" is 82, you don't really have a lot of years to spend that "extra" income.

My grandmother (Adriana, but known as `Paperino`, the Italian name of Donald Duck, for her diminutive size and -- even though as a grandson I never observed it -- apparently for her reputed readiness to actively display anger if sorely provoked!-) lived to 96 -- physically not in the greatest shape (admittedly not the worst one either), but mentally lucid to the very end.

It was great for her to have substantial extra income from her savings -- for example it meant she could take a taxi to go from one son's home where she had had a Sunday lunch, to the other son's for Sunday dinner, without that expense being at all meaningful. Yes all of us descendants would have happily driven her to wherever she wanted to go -- but being self-sufficient, never dependent on anybody, was crucial to her self image and self-respect.

And when she showed up at any such family event, always most welcome!, she'd never be empty-handed -- always toys or comic books for all of us kids, more often than not a tasteful "hostess gift". Again, of course she didn't need to bring anything but her wonderful company -- but, again, it was important to her to feel she was contributing, not "being a weight" on anybody at all.

Once (past my childhood) I recall her showing up with a bottle of wonderful (and no doubt costly) aged French cognac -- cognac was always her favorite drink, and she wouldn't deprive herself of a glass after dinner, any more than of a cigarette on the same occasion, all the way to 96. She had a fun quip about how Italians have many wonderful products but will never learn to make really good cognac (she was Italian herself, like all of us, but also had French relatives -- which is how French became my second language before I started learning some English, but, I digress:-)...

She was 89 when she traveled on a plane for the first (and only) time in her life -- visiting London (where I went for a month every summer in my teens, to learn some English) with me, my mother, and my sister. Had the time of her life and of course was proud to pay for her own ticket, room, restaurants, shopping... she spoke no English but with a little Italian and French managed to make her way around.

She never wanted luxury, even such small luxuries as these, throughout her exceedingly long and productive working life. For years, she'd rather walk downtown than take a bus -- why waste the money of a bus ticket, cheap as it may seem, when you can save it instead. It was exactly when she just had to retire (in her late '70s), because her health was not just up any more to the task of managing her downtown hotel (as she had for 60 years, starting by dropping out of school in her teens because all her male relatives were busy with WW1 and the adult female relatives were `ladies` who had never done one day of work in their lives and didn't know where to start even had they wanted to -- yes, life was different if you were born in the 19th century...), that all the small luxuries above, and many more (all small, but, also, all meaningful) became relevant. Fortunately she had lived well below her means and saved throughout her long life, so that despite terrible inflationary hits that seriously struck what should otherwise have been a lot of retirement savings, she could still well afford them.

Yes, it doesn't work out that way for everybody, far from it; indeed, my grandma `Paperino` was my only close relative, born in the 19th century, living into the second half of her '90s in good mental health. But, somebody born late in the 20th century has a much longer life expectancy than somebody from a couple of generations earlier, of course. Perhaps it's different for somebody from a different culture with less intense family connections (which may be true of many Italians, too, from many generations afterwards -- though, it is not true of me, personally; I believe I'll retire in the US, where I live and work now and my wife is from, but, half of my family is in Italy, and my "small luxuries" in old age, health permitting, will likely be to fly over there to visit, and host visiting relatives when they come here...).
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I don't know if I'm the only one this happens to but many people tell me it is. To wit:

Whenever I run my numbers through FireCalc I always get a better future when I start Soc Sec at age 62. When I wait till 66 or 70 I end up with less money and a lower spending rate to boot. It seems anything that lets you conserve your own money sooner is better. Maybe if my SS were truly huge at age 70 it would make up for it?


Goofyhoofy asks,

Those few extra dollars won't buy much once you're in the nursing home; the bingo games are the same for everyone, and you can't buy an extra chocolate drink at dinner, so what are you going to use it for, flowers at the gift shop that's open on Tuesdays from 2-5?

</snip>

Maybe that extra income from delaying SS to age 70 would allow you to afford a nursing home with an open bar?

intercst
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Whenever I run my numbers through FireCalc I always get a better future when I start Soc Sec at age 62. When I wait till 66 or 70 I end up with less money and a lower spending rate to boot.

Did it matter whether or not you were still working (and receiving wages) when you calculated the numbers?

I'd be interested to hear what difference that made with folks who took SS benefits at 62 or 66 (or 70).

Pete
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Whenever I run my numbers through FireCalc I always get a better future when I start Soc Sec at age 62. When I wait till 66 or 70 I end up with less money and a lower spending rate to boot.

------------------------------

Did it matter whether or not you were still working (and receiving wages) when you calculated the numbers?


There were no additional work years after retirement. I was not a high wage earner and not paying max SS tax rates . That could be the reason why some people (all of 'em really, that I talk to) say waiting till 70 is best for them. I have not experimented with "What If" scenarios using bogus end-stage SS numbers. Just my own relevant numbers.
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The point is that if you are close to one of these step points, it can be worth your while to reduce your income to keep below the step point.

Otherwise, if you cross the step line, your Medicare cost can rise by ($652 to $1628) almost $1000/yr.


I'm not sure where your numbers are coming from. This is the table of values you posted earlier.

$42 and 12.30 for singles $85K to $107K marrieds $170K to $214K
104.90 and 31.80 ,,,,,,, $107K to $160K ,,,,,,,, $214K to $320K
167.80 and 51.30 ,,,,,,,, 160k to 214k ,,,,,,,,,, 320k to 428k
230.80 and 70.80 ,,,,,,,, 214K+ ,,,,,,,,,,,,,,,,, 428k+

Doing the math, I get the premium cost to be:
$189.60
$486.50
$783.40
$1080.40

I don't see a different of $1000 between any of the steps.

So let's consider the married couple that is crossing the first and second step lines. From your table, that occurs at $214K. Some retirees concerned about an extra $1 costing them an extra $296.90 could also be familiar with the 4% SWR. {I'm not near Medicare age so I don't pay much attention if the premiums listed about are on a per person basis for marrieds.}

A married retired couple with $214K income would have $5,350,000 in retirement investments. Would a retired couple with over $5 million care that much about step points? How much effort would they put in to be sure their income is just below a step point? Would they save more by putting that effort into finding the best early bird specials?

PSU
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Mark, I don't see where you get your numbers but lets take the first two lines--

$42 and 12.30 for singles $85K to $107K marrieds $170K to $214K
104.90 and 31.80 ,,,,,,, $107K to $160K ,,,,,,,, $214K to $320K

$42+12.30 = 54.30 monthly premium x 12 = $651 annual premium

$104.90 + 31.80 = 136.70 monthly = $1640 annual premium.

So at $213,999, one dollar of additional income costs you $989 in additional Medicare premiums.
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Mark, I don't see where you get your numbers but lets take the first two lines--

$42 and 12.30 for singles $85K to $107K marrieds $170K to $214K
104.90 and 31.80 ,,,,,,, $107K to $160K ,,,,,,,, $214K to $320K

$42+12.30 = 54.30 monthly premium x 12 = $651 annual premium

$104.90 + 31.80 = 136.70 monthly = $1640 annual premium.

So at $213,999, one dollar of additional income costs you $989 in additional Medicare premiums.


First, my name isn't Mark.

Second, it was confusing how you posted the premiums. Since I'm not Medicare age, I don't have much interest in how premiums are calculated. I thought you were listing a base amount plus monthly amount. For example, in the first line, $42+(12*12.30). I guess I was wrong.

Still, $214K in income puts you in the top 4% or 5% depending on data source. Also, as mentioned, it means you have over $5 million in retirement investments. How many people have a heart burn over $989 in additional premiums if they're pulling $214K out of the retirement accounts? Obviously, at least one person is having one.

Personally, I can say that if I'm having concerns with pulling $213,999 or $214,000 out of my investments, I would conclude that I worked too long and should have quit years earlier.

PSU
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What PSU said.

Seriously, the issue is that, at $213,999, you're paying $651 in ANNUAL premium, but at 214,000 exactly, your ANNUAL premium is $1,640, or $989 higher? For the YEAR?!?!?

This is as silly as the discussions c-man and I used to have about earning an extra buck on the tax tables and paying an extra $12 or $14 in income taxes, although those discussions were, at least in part, tongue-in-cheek. If I'm taking income of 200K to 220K in retirement (and Real Life being what it is, distributions will vary by a bit) there is NO WAY I'm doing scads of planning around the possibility that I'll lose $989 in a year. I mean, fine, I'll generally know that's there in case I'm really close to 214K so as not to pull out 214.2K and be "worse off" at year end, but otherwise?

If I'm 65+, retired and can safely live on over 200K, I'm filling my days with every fun experience I can think of. $989 a year is pretty close to Rounding Error at that point. It's the sort of thing you spend two minutes on and every minute after that is a minute too much.

-synchronicity
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If I'm 65+, retired and can safely live on over 200K, I'm filling my days with every fun experience I can think of. $989 a year is pretty close to Rounding Error at that point. It's the sort of thing you spend two minutes on and every minute after that is a minute too much.
-synchronicity
=== ===
Yep, I agree: just "Rounding Error."
--BigBunk
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First, my name isn't Mark.

That's very interesting, Mark. Because your profile clearly shows your Real Name as Mark A. Read

Maybe its time to update your profile.

$42+(12*12.30). I guess I was wrong.

I should have been more clear. The first number is the monthly premium charged automatically to your Social Security account for basic Medicare beginning at age 65. The second number is the amount charged for Medicare Pt D, the prescription coverage. Pt D is optional, but there is a penalty if you don't carry it.

My point is still that retirees should be aware of these step points as small changes in gross income can cost you an extra $1000/yr.

Yes, for married couples filing jointly, the numbers are quite generous. For singles, the numbers are not so lax.
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That's very interesting, Mark. Because your profile clearly shows your Real Name as Mark A. Read

Maybe its time to update your profile.


Maybe it's time you got a sense of humor.

Do the following steps. When you are done, you'll figure out what the A. stands for in my profile name.

Click on "Favorites & Replies". You get your list of favorite boards.

Look to the right.

Look below "Marked for Later Reply".

Look above "Total".

Look to the right of "Edit".

If you figure it out, smack your forehead with the palm of your hand. If you don't figure it out, I don't know what to say.

PSU
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