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Social Security Draw

Old 02-28-2019, 07:57 PM
  #41  
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'Lots of good posts! With all the other retirement thread topics, I was more looking to stir discussion as opposed to looking for advice.

I have researched this , and thought about it, and there are many variables, and the fact that my choice is at least 5 years off...(early draw at 62, FRA @ 67, and late at 70) means I can wait before needing to make a decision.

Yes, my break even point for early draw is age 77. If I live longer than 77, I will lose money if I draw early. Who knows? It's a gamble, but if I am still working at 62, my salary will eliminate any SS $ losing $1 for every $2. And the way i look at it is, If I am going to work any job, I might as well keep the one I have. It pays well, and I'm relatively secure. There are other things I like to do, but the economic benefit is not there. Lots can change in 5 years, for the good and the bad. I'll just ride it out.

Thanks for the comments
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Old 02-28-2019, 08:10 PM
  #42  
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Originally Posted by lobsterboatman View Post
I started social security at 62. The reason for this was because I thought the pay back period was too long. When the catch up period arrives, I figure the only good thing you can do with that extra money, is have your depends changed twice a day in the nursing home.
Take that money that you worked for all your life, and enjoy it the best you can. You can enjoy the money today, but tomorrow is promised to no one !
My other thought on this, is Do you think they have not figured this equation out ? Lot's of people will Never reach the equal payback date. Only my opinion !
I retired 2 years ago at 60 and received my first SS deposit 2 weeks ago. Original plan was to retire at 62 and begin collecting but my company threw a curve at me with a generous handshake. I have a similar rationale, Iím gonna enjoy the extra cash in my best youngest years. So far the last 2yrs have met and surpassed expectations for fishing, travel, volunteering, goofing off and quality of life in general.
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Old 02-28-2019, 08:36 PM
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Originally Posted by Buoy Scout View Post
I retired in March at 63. I had earned enough in those 2-1/2 months prior to quitting work that I'd not have been able to keep any of my SS benefits that entire year if I had started taking them at that point. (You lose 1 dollar for every 2 you earn if not at FRA). So I waited until the following calendar year to begin.
I believe the rule is in the first year of retirement, earned income prior to filing and collecting is exempt from the 1 for 2 rule. So if you retired in March, began SS April 1 only earned income after that date is included in the penalty calculation. Maybe a CPA here can verify this. Or tell me Iím full of shit...
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Old 02-28-2019, 08:45 PM
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My thought is take the money as early as you can even if you don't need it and invest it. I might not make 8 percent but if I can get 4 or 5 percent it pushes the break even point into the 80s and your family has the investment.
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Old 02-28-2019, 08:55 PM
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I was probably going to wait as I was doing well in my little engineering business. Then I had a heart attack at 57 and another at 63. I decided to quit at 66, the normal year of eligibility for me. Best decision ever.
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Old 03-01-2019, 01:53 AM
  #46  
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55 now hope to stop all together by 60 will take withdrawals and projected ss from iras/401k each month until 62 then take ss and reduce withdrawals. with have defined pension and medical coverage from employer at rate im paying when i retire
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Old 03-01-2019, 06:10 AM
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It would be foolish to start drawing SS before FRA if your income results in a penalty.
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Old 03-01-2019, 06:15 AM
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Originally Posted by Buoy Scout View Post
I retired in March at 63. I had earned enough in those 2-1/2 months prior to quitting work that I'd not have been able to keep any of my SS benefits that entire year if I had started taking them at that point. (You lose 1 dollar for every 2 you earn if not at FRA). So I waited until the following calendar year to begin.
That's not correct.

You lose $1 for every $2 you earn OVER THE LIMIT. For the year 2019, this limit on earned income is $17,640 ($1,470 per month).
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Old 03-01-2019, 06:18 AM
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Originally Posted by rickboat View Post
That's not correct.

You lose $1 for every $2 you earn OVER THE LIMIT. For the year 2019, this limit on earned income is $17,640 ($1,470 per month).
Yep, that's true. I still would have lost all of my SS benefits for the year.
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Old 03-01-2019, 06:20 AM
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Originally Posted by ttwo View Post

I believe the rule is in the first year of retirement, earned income prior to filing and collecting is exempt from the 1 for 2 rule. So if you retired in March, began SS April 1 only earned income after that date is included in the penalty calculation. Maybe a CPA here can verify this. Or tell me Iím full of shit...
Interesting if that is true. Water under the bridge at this point, but I never saw this in the rules.
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Old 03-01-2019, 06:46 AM
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Originally Posted by ttwo View Post

I believe the rule is in the first year of retirement, earned income prior to filing and collecting is exempt from the 1 for 2 rule. So if you retired in March, began SS April 1 only earned income after that date is included in the penalty calculation. Maybe a CPA here can verify this. Or tell me Iím full of shit...
Originally Posted by Buoy Scout View Post
Interesting if that is true. Water under the bridge at this point, but I never saw this in the rules.
I was just researching an issue related to survivor's benefits and found this on the SSA.gov website:

In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different limit. In 2019, the limit on your earnings is $46,920 but we only count earnings before the month you reach your full retirement age.
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Old 03-01-2019, 06:46 AM
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There have been some misstatements made about Social Security.

First, if you wait from your FRA (Full Retirement Age) until you have to collect at 70, your benefit increases 8% a year. That is correct.

And, if you collect social security early, your benefit is cut. However, it was stated that if you wait (i.e. don't collect early), your benefit goes up 8% a year. That is not correct. The amount it goes up from 62 until your FRA is dependent upon when you were born and when you collect.

When is your FRA? Depends when you were born. https://www.ssa.gov/planners/retire/agereduction.html

If you collect before your FRA, your benefit will be reduced by 5/9 of 1% for each month you claim before your FRA, up to 36 months (5/9 x 1% x 12 = 6.67% per year). If it's even earlier than 36 months before your FRA, it's reduced by 5/12 of 1% per month (5/12 x 1% x 12 = 5% per year).

Example:

Bob's FRA is 66. He starts collecting at 62, 4 years early. He will get 75% of his monthly benefit for his life. 20% (6.67*3) + 5% = 25% lost.

So by waiting 4 years, how much does the benefit increase?

Assuming a monthly benefit of $100, and Bob gets only $75, if he wait then it would go up by 7.46% per year. Close to 8, but not 8.

If Bob's FRA was 67, and he collected at 62, he would get 70% of his monthly benefit. That's more like a 7.4% increase per year.

And, if Bob collected 1 year before his FRA, he would only lose 6.67%, so his benefit would be $93.33. So his benefit would grow 7.15% in a year if he waited.

In short, the earlier you collect, the more you lose in monthly benefit. And the increase in monthly benefit by waiting far outpaces the return you should expect in the market over time.

The determination of when to collect is not a simple one, and is impacted by whether you have a spouse, and whether that spouse is going to collect spousal benefits or their own benefits, or both, which is dependent on their earnings. If you collect early, you can also impact your spouse's benefits. It's also impacted by your life expectancy AND your spouse's life expectancy. Not something you can simply read on a forum as the answer differs for everyone.


I posted in a prior thread both a calculator as well as a very short book that even THT's could read. You can get the book at your library, or buy it. Links below again.

Social Security calculator -https://opensocialsecurity.com

Social Security Made Simple: Social Security Retirement Benefits and Related Planning Topics Explained in 100 Pages or Less

On a related note, for those that actually established retirement accounts, if your retirement accounts are pre-tax, then from the point that you stop working until the point that you collect Social Security, it may be wise to convert funds from pre-tax to ROTH, up to your tax bracket limit. Why? Because once you collect Social Security, and add in dividends and interest, you may not have room in your tax bracket to convert, and your RMDs (Required Minimum Distributions) that begin at 70 1/2 may be taxed at a higher rate. ROTH accounts have no RMDs.

Last edited by rickboat; 03-01-2019 at 06:54 AM.
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Old 03-01-2019, 06:53 AM
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Originally Posted by rickboat View Post
That's not correct.

You lose $1 for every $2 you earn OVER THE LIMIT. For the year 2019, this limit on earned income is $17,640 ($1,470 per month).

Thats right. And remember, pensions that were accumulated post SS payment do not count as income in that calculation. However they do count when it comes to wether or not your SS income is taxable or not. I've been drawing my two pensions for about 9 years now and my wife and I combine make over the limit. So every bit of the 80% of my SS is taxable. So I have the maximum withheld. 25% iirc? Anyway.. the max.

Thats kind of what I am doing. I throttled back on my 1099 work hours to make sure I come under that and still make about the same total income from that combined with SS. If I go over, I could suspend my SS check for the period needed to accommodate the penalty but Im keeping close track on my hours and delegating a lot more work to various supervisors. It is also the case that this penalty ends once you reach full retirement age. So many of you would be subject to this for like maybe 3 years. Once you reach full retirement age there is no limit.

It is also important to know that when it come to 1099 income the amount SS looks at is total profit. Not total paid on the 1099. So you can make $17040 in profit. So for me that comes in at about $21-24000 gross on a 1099 in a typical year after allowable deductions. It's very hard to predict so I am playing it real safe this first year and staying to no more than $18K

Last edited by cphilip; 03-01-2019 at 06:59 AM.
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Old 03-01-2019, 07:16 AM
  #54  
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I took mine at 63. The guy at the SS office said only fools wait so they think they get more. He told me I would be 84 before it all equaled out.
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Old 03-01-2019, 07:23 AM
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Originally Posted by Istockpoga View Post
I took mine at 63. The guy at the SS office said only fools wait so they think they get more. He told me I would be 84 before it all equaled out.
Clearly, without knowing your benefit and your age when you took it, no one can dispute that 84 was your break even age. However, the statement made by the guy at the Social Security office is not worth anything.

If you have a spouse, you taking it early impacted her.

A friend of ours that started taking his at 67 (his FRA) does in fact have a breakeven of 84 years old, but with his wife's spousal benefit (which he didn't take into account), that might have changed.

Like anything else, learning as much as you can about this is valuable before you make the decision, because once made it doesn't get changed. Nobody should base their decision on a post on a boat forum, or any other forum, or a Social Security Administration employee. Make sure you agree with the numbers, because no one cares if you short change yourself but you.

In 2012, we were given two options on a retirement account via my wife's employer. One gave us cash we could invest, the other gave a reduction in her medical benefit cost after she retired. We laughed and said that she'd never be working for them for ten years to earn that benefit, so we took the cash. Fast forward and we're 2 years from her hitting 10 years, planning on sticking it out for the small pension but mostly the medical benefits. My quick analysis shows that if she collects that medical benefit for about 10 years, we should have picked the other choice. Nothing we can do about it now, and it's not earth shattering either way, but depending upon one's lifetime expectancy, taking Social Security early can amount to a significantly different lifetime payout, and for your spouse also.
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Old 03-01-2019, 07:38 AM
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Originally Posted by rickboat View Post
The determination of when to collect is not a simple one, and is impacted by whether you have a spouse, and whether that spouse is going to collect spousal benefits or their own benefits, or both, which is dependent on their earnings. If you collect early, you can also impact your spouse's benefits. It's also impacted by your life expectancy AND your spouse's life expectancy. Not something you can simply read on a forum as the answer differs for everyone.
This is an important part that I don't think people consider enough. The "survivors benefit" for a spouse is based on when you start drawing. For example, if the husband and wife both started drawing at 62, they get the minimum. Which also means if he kicks the bucket at 90 she's still stuck at the minimums until she meets her demise which might be 10 or 20 years later. If he waited till his FRA, she'd get full FRA 'survivors benefits' for those last 10 or 20 years.
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Old 03-01-2019, 07:46 AM
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Originally Posted by Istockpoga View Post
I took mine at 63. The guy at the SS office said only fools wait so they think they get more. He told me I would be 84 before it all equaled out.
No no offense but to me it would be foolish to take financial advice from a clerk at a SS office.
As as a few of the posters have highlighted, the answer to this question is not simple. The more types of accounts you have for example traditional IRA Roth IRA 401K etc and whether or not you're married makes everything more complicated. There is no one answer for everyone. however one thing you can say about delaying social security is that it is longevity insurance.
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Old 03-01-2019, 08:56 AM
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Originally Posted by cphilip View Post
Unless you simply live with the amount they allow before you start losing. Limit before paying back is $17,040 at this time. But that drops off as soon as you reach full retirement age. Then it's unlimited just like if you waited.. So you're limited for like 3 years. Right now I just started doing that. Of course, in the first year you can suspend if you want. Or you can simple work only what allowed or stop your check for a while if you go over.
you could but if i am making good money lets say 6 figures a year, i sure as hell am not going to drop to the 17,040 allowed? if i were only pulling in say 50 or less then might consider it. otherwise id wait till i could make as much as i want and not be penalized for it.
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Old 03-01-2019, 09:00 AM
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Originally Posted by Rolandt03 View Post
you could but if i am making good money lets say 6 figures a year, i sure as hell am not going to drop to the 17,040 allowed? if i were only pulling in say 50 or less then might consider it. otherwise id wait till i could make as much as i want and not be penalized for it.
Most definitely. Its case by case. In my case I am already drawing my pension and was just doing some 1099 work to have some extra cash to blow. So I can actually make the same of that extra by drawing SS AND cutting my hours to make the limit. Its going to all depend. Which is what I said... "IF" you can or your situation allows you to do so. Im working about 200 hours total now to stay under that limit. About 3 weeks a year if you look at it as a regular job. I can double that but why? 1099 work is heavily taxed and a bother to keep up with. Its still worth doing a little of it but I am retired and can do it or not.
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Old 03-01-2019, 09:02 AM
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Originally Posted by rickboat View Post
There have been some misstatements made about Social Security.

First, if you wait from your FRA (Full Retirement Age) until you have to collect at 70, your benefit increases 8% a year. That is correct.

And, if you collect social security early, your benefit is cut. However, it was stated that if you wait (i.e. don't collect early), your benefit goes up 8% a year. That is not correct. The amount it goes up from 62 until your FRA is dependent upon when you were born and when you collect.

When is your FRA? Depends when you were born. https://www.ssa.gov/planners/retire/agereduction.html

If you collect before your FRA, your benefit will be reduced by 5/9 of 1% for each month you claim before your FRA, up to 36 months (5/9 x 1% x 12 = 6.67% per year). If it's even earlier than 36 months before your FRA, it's reduced by 5/12 of 1% per month (5/12 x 1% x 12 = 5% per year).

Example:

Bob's FRA is 66. He starts collecting at 62, 4 years early. He will get 75% of his monthly benefit for his life. 20% (6.67*3) + 5% = 25% lost.

So by waiting 4 years, how much does the benefit increase?

Assuming a monthly benefit of $100, and Bob gets only $75, if he wait then it would go up by 7.46% per year. Close to 8, but not 8.

If Bob's FRA was 67, and he collected at 62, he would get 70% of his monthly benefit. That's more like a 7.4% increase per year.

And, if Bob collected 1 year before his FRA, he would only lose 6.67%, so his benefit would be $93.33. So his benefit would grow 7.15% in a year if he waited.

In short, the earlier you collect, the more you lose in monthly benefit. And the increase in monthly benefit by waiting far outpaces the return you should expect in the market over time.

The determination of when to collect is not a simple one, and is impacted by whether you have a spouse, and whether that spouse is going to collect spousal benefits or their own benefits, or both, which is dependent on their earnings. If you collect early, you can also impact your spouse's benefits. It's also impacted by your life expectancy AND your spouse's life expectancy. Not something you can simply read on a forum as the answer differs for everyone.


I posted in a prior thread both a calculator as well as a very short book that even THT's could read. You can get the book at your library, or buy it. Links below again.

Social Security calculator -https://opensocialsecurity.com

Social Security Made Simple: Social Security Retirement Benefits and Related Planning Topics Explained in 100 Pages or Less

On a related note, for those that actually established retirement accounts, if your retirement accounts are pre-tax, then from the point that you stop working until the point that you collect Social Security, it may be wise to convert funds from pre-tax to ROTH, up to your tax bracket limit. Why? Because once you collect Social Security, and add in dividends and interest, you may not have room in your tax bracket to convert, and your RMDs (Required Minimum Distributions) that begin at 70 1/2 may be taxed at a higher rate. ROTH accounts have no RMDs.
Thanks for those links! JUST FYI: the calculations match - to the penny - the reports/recommendations from a FA I'd retained a few years ago.
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