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Social security - confusing

3K views 11 replies 6 participants last post by  MikeV 
#1 ·
When and how to take SS benefits is difficult at best. Over the years how and when you take it can either make or cost you thousands of dollars. The SS office is clueless so do not count on them for advice.


First of all the basics:


When to take it? Depends on your situation. If you take it early then you will get less but you get it for more years. Depending on your life expectancy (are you and your spouse healthy? What is your family history/) and your income needs some will want and need to take it early.


If your life expectancy is good and you do not have to have the money to live on then delaying it can pay off. The benefit increases 8% year which is a great, safe return on your money. If you need the money to live on before retirement age or maximum age of 70, then go ahead and take it.


Heads up on this - my wife qualifies for SS but did not work much over the years. She and I both turn 66 later this year (full retirement age) - on her birthday she will file for her SS - I will file to take my spousal SS (half of hers) - I will suspend taking mine. When I am age 70 (maximum retirement age) I will start taking mine. I will get my amount and she will get half of my amount as a spouse. Assuming one or both of us live to life expectancy or beyond then we will have maxed out the amount of SS retirement money available to us.
 
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#2 ·
Don't forget that when you start taking SS money...if you have any outside income they will lump part of your SS into your 'income' and you will pay income taxes on YOUR money AGAIN...

That's the part that chaps my arse….
 
#4 ·
Don't forget that when you start taking SS money...if you have any outside income they will lump part of your SS into your 'income' and you will pay income taxes on YOUR money AGAIN...

That's the part that chaps my arse….
That is part of the reason I am waiting until age 70 to start mine - I still work and earn income (age 65 now) - plan to retire before age 70 so my income will drop off
 
#6 · (Edited)
Yep - depends on ages, amount of SS each will qualify for, etc.

We are both now age 65 so our "full retirement age" as far as SS is concerned is age 66.

Since in my case my SS is way more than wifes I am going to delay taking mine until my age 70. My benefit will increase by 8% each year between my age 66 and age 70.

So this November when she turns age 66 she will file for her benefit and I will file for her spousal benefit. When I hit age 70, I will begin taking my full SS.

I will send you my calculations in the morning which may explain it better.

Here is an article

https://www.thebalance.com/clearing-spousal-benefits-confusion-2388948
 
#11 ·
Something I discovered too late was the age limit cutoff for taking the spousal benefit.

My wife took her SS benefit beginning at age 62 (we did all the calculations and made sense to start then even though we didn't need the $$). When I retired at age 68 we discovered that my wife's half of my SS benefit is capped when I turned 65. Waiting until I retired at 68 to start drawing against mine didn't add anything to her amount so we lost out on those 3 years of additional $$. Even though not a really large amount it still ticked me off I missed reading the details on spousal benefits.


Just something else to consider when planning your SS benefits.
 
#12 ·
The 32% that you would get, monthly, by waiting until age 70 rather than taking the benefits as 66 (assuming that is your FRA). The fly in the ointment is that really isn't your money (unlike what sits in a retirement plan), so any increase that you would have gotten, should you die, nobody gets. I don't remember the breakeven point, but as I recall, by delaying until 70, versus starting at 66, would mean you would need to live a bit north of 80 years old for the math to work in your favor.


A similar math issue applies to taking at 62 versus 66 (again assuming that is your FRA) when the earnings test isn't an issue (e.g., retire early). I think that you would have to live to be 78 and a few months to make that work out.


The answer is one thing for those with a healthy lifestyle and longevity in their family history, but a different answer for those with not so healthy a lifestyle, and/or a family history of kicking off at an earlier age.
 
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