It Might Be Better to Take Social Security at 66 Instead of 70. Here's Why

[VacationForever]

I have to keep playing the lottery. I am not greedy. I just want $1000 per week for life. LOL!

$52K per year is not much. Are you sure you did not mean $1K per day?

 

[WinniWoman]

$52K per year is not much. Are you sure you did not mean $1K per day?

LOL! I said I wasn't greedy! I do those $2.00 scratch offs one per month and i believe they are $1000 per week for life.

 

[geekette]

The reason is because of the tax torpedo that will hit at 70 1/2 when we have to start taking mandatory RMD's.

Tax torpedo? If you have enough stashed away for RMDs to be scary, how much easier is converting to Roth going to be, when you have to pay that tax?

No torpedo coming for me. RMDs are unlikely to be more than I was planning to take out anyway.

 

[Talent312]

Tax torpedo? If you have enough stashed away for RMDs to be scary, how much easier is converting to Roth going to be...?

DW currently does RMD's, but most of her stuff is in a Roth, so it's just annoying.
Converting just wasn't going to get us enuff additional $$ for us to pull the trigger.
We withhold enuff from the RMD's to cover the additional tax, so not scary at all.

 

[WinniWoman]

Tax torpedo? If you have enough stashed away for RMDs to be scary, how much easier is converting to Roth going to be, when you have to pay that tax?

No torpedo coming for me. RMDs are unlikely to be more than I was planning to take out anyway.

It's because 2 SS checks, 2 Mandatory RMDs, plus I have an inherited IRA that requires RMDs- not a lot but still...

"How much easier is converting to Roth going to be when we have to pay that tax?" I mean, it is not easy- just have to do it. I wasn't planning on doing this initially, but the FA says to do it. Not ALL of our IRA money, just enough to stay under a certain income between the conversions and the IRA/brokerage withdrawals we will live on for each of the 4 years leading up to age 70 1/2. (husband will have 4 years until he is 70 when he retires the end of this year). Bring the IRA balances down as much as we can- won't eliminate the taxes later on, of course, but will help

I am not an accountant and I do not understand a lot of this. This is why I hired him. He is a CFP. At some point- like with a doctor- you have to have some element in trust in someone who is the professional and you are not.

This all said, I do a lot of mental gymnastics trying to understand it all and I do ask him a lot of questions. I have access to him all year and going past that I can always pay him by the hour for more advice or put him on a retainer. He said he would help me with the withdrawals when the time comes if I am uncertain what and how to do.

He does not have our assets. He would just look at what we have and help me out so I can do the withdrawals myself.

 

[DavidnRobin]

Like TimeSharing - one size does not fit all. Deciding when to take Social Security is dependent on too many individual factors.

Under certain situations, an argument could be made that taking Social Security at 62 is a good decision when you don’t need it to grow to achieve the necessary Spend for you and spouse.

Delaying SS to convert more IRA to Roth to take advantage of tax rates can be a good decision. We are doing this.

Sent from my iPhone using Tapatalk

 

[WinniWoman]

Speaking of which- our FA did not know the answer to this question- but does anyone know if the RMD's from an Inherited IRA are counted towards your total required RMD's from your own IRA after age 70 1/2? Or must those still be taken separately as I do now?

The FA said he suspected they must still be taken separately and I am assuming so as well. My brother had asked me about it- I never thought about this, but it is something else I need to know. Actually, I am thinking our investment company must know the answer to this.

 

[VacationForever]

Speaking of which- our FA did not know the answer to this question- but does anyone know if the RMD's from an Inherited IRA are counted towards your total required RMD's from your own IRA after age 70 1/2? Or must those still be taken separately as I do now?

The FA said he suspected they must still be taken separately and I am assuming so as well. My brother had asked me about it- I never thought about this, but it is something else I need to know. Actually, I am thinking our investment company must know the answer to this.

From my understanding, inherited IRA RMDs are separate from your own IRA RMDs. You have to meet both requirements.

 

[pedro47]

If I was in my twenties again. I would saved all my money in a Good ROTH Account.

I would not purchase U S Saving Bonds. Remember you must calmed the interest, when you cash them in and that is taxable income.

 

[WinniWoman]

If I was in my twenties again. I would saved all my money in a Good ROTH Account.

I would not purchase U S Saving Bonds. Remember you must calmed the interest, when you cash them in and that is taxable income.

They did not have Roth IRA's years ago. But for our son, I had him start one. In fact, we funded it a bit for him when he was 16 and on up and working. Now-as an adult he puts 5% of his pay into the company 401k and a little money into the Roth every month. I keep trying to get him to put more into the Roth- max it out if possible. But he has not done so as he has no interest in handling his finances. SMH....

When the Roth's came out we immediately switched to funding them. My husband is funding his this year instead of his HSA since he is on Medicare and his company was a pain about funding it- too complicated-long story- he could have but we chose to avoid doing it this last work year, but at least he could do the Roth and 5% into his 401k, though I am not sure he will get the match since he plans to leave the end of the year and the match is usually done in February.

Our savings bonds have been coming due and we have been reinvesting the proceeds in I Bonds now. They are all in electronic format. I converted the savings bonds- EE- all years ago. What a job that was!

 

[WinniWoman]

Good article FA has on his website regarding the tax torpedo.

https://www.cnbc.com/2017/10/29/will-the-tax-torpedo-blow-up-your-retirement.html

 

[am1]

I do not know much about social security. Should the government do away with spousal benefits? The world is a lot different now then before. Or allow it but split the working spouses amount in half to pay the non working/lower earning spouse. Or some formula where they get added together and split. Seems like a money drain for both spouses to collect off of ones contribution.

 

[WinniWoman]

I do not know much about social security. Should the government do away with spousal benefits? The world is a lot different now then before. Or allow it but split the working spouses amount in half to pay the non working/lower earning spouse. Or some formula where they get added together and split. Seems like a money drain for both spouses to collect off of ones contribution.

My opinion has always been that only people who work and pay into the system should get SS. Not a non working spouse EXCEPT when the spouse with the SS dies, the other spouse should be able to collect it.

It always irks me that a non working spouse can collect half of their spouses' SS- an amount that is sometimes higher than another persons' who worked all their life!

Ex: A woman married to a high earning man. The woman never had to work. Yet she can collect 1/2 of his SS and he collects his.

Meanwhile, lots of women have worked all their lives, as well as their husbands.

That woman who never worked can be collecting more $ than the working woman!

 

[Patri]

Ex: A woman married to a high earning man. The woman never had to work. Yet she can collect 1/2 of his SS and he collects his. That woman who never worked can be collecting more $ than the working woman!

But perhaps the woman who did not work, and took care of the kids, made it better financially for the family. No childcare or work wardrobe, and less eating out. If she would have had a low income job, it is a no-brainer to stay home.

 

[Luanne]

My opinion has always been that only people who work and pay into the system should get SS. Not a non working spouse EXCEPT when the spouse with the SS dies, the other spouse should be able to collect it.

It always irks me that a non working spouse can collect half of their spouses' SS- an amount that is sometimes higher than another persons' who worked all their life!

Ex: A woman married to a high earning man. The woman never had to work. Yet she can collect 1/2 of his SS and he collects his.

Meanwhile, lots of women have worked all their lives, as well as their husbands.

That woman who never worked can be collecting more $ than the working woman!

But then you also need to think about the woman who didn't work, not because she didn't "need" to but because she stayed home to raise the family. Or, she was in a job where she didn't pay into Social Security. She probably doesn't have a pension. So her spouse dies and now she has nothing?

 

[clifffaith]

Cliff took SS when he retired from aerospace at age 68; he is now 81. Both of his parents lived into their early 90s, so I expect the same for him. I turned 63 in December and took my first SS check in January. We closed our window coverings business at the end of October, so this is my first year of retirement. Because of our 18 year age difference we just decided that for me to wait could end up leaving money on the table if Cliff dies “early”.

 

[VacationForever]

My opinion has always been that only people who work and pay into the system should get SS. Not a non working spouse EXCEPT when the spouse with the SS dies, the other spouse should be able to collect it.

So her spouse dies and now she has nothing?

No one is saying the surviving spouse gets nothing. See the first statement by MaryAnn.

 

[geekette]

Women get screwed if spousal benefits go away. Pregnancy alone is a dent in an otherwise upwardly career, and caretaking in general falls to the female spouse, whether it be the kids or parents. Unless unpaid work gets SS credit, I am a no on doing away with spousal benefits.

I have no dog in this fight, my SS will be much higher than my ex-husb, but I never interrupted my career to have kids and didn't have as many ladder-climbing barriers that others face and left workplaces that were not good for me.

 

[bluehende]

If I was in my twenties again. I would saved all my money in a Good ROTH Account.

I would not purchase U S Saving Bonds. Remember you must calmed the interest, when you cash them in and that is taxable income.

We just went through this. When I started in a savings plan this was an option that you could get delivered to you. This was before the tax benefit of a 401k. It was a matching program and most investments could only be withdrawn under special circumstances. I was 22 and figured it was better to have it delivered to me. 40 yrs later they had amassed to a pretty sum. We cashed them in over 4 yrs when we wanted to consolidate finances in case something bad happened and since they were getting to the point of not earning interest. Of course these are very much first world problems to have. Just a few more moles in the wac a mole game of taxes.

 

[artringwald]

I do not know much about social security. Should the government do away with spousal benefits? The world is a lot different now then before. Or allow it but split the working spouses amount in half to pay the non working/lower earning spouse. Or some formula where they get added together and split. Seems like a money drain for both spouses to collect off of ones contribution.

I would not have been able to put in the long hours I did, and make the advancements I did if DW didn't stay home, raise the kids, and run the household. She wasn't employed, but she certainly did work hard. I think she fully deserves the SS benefit she gets, even though it's only 50% of my benefit. On the taxes returns each year I put her occupation as domestic engineer.

On the other hand, it doesn't seem fair that Johnny Carson was married to 3 different women for at least 10 years. Each of those women were eligible to claim 50% of his SS benefit.

 

[VacationForever]

No offence to all homemakers. I worked hard, climbed the career ladder and I was also a divorced mother for many years of that. I did not interrupt my career to raise my son but instead utilized the financial resources that I obtained from working hard and hired help along the way to help raise my son. It can be done.

 

[am1]

I would not have been able to put in the long hours I did, and make the advancements I did if DW didn't stay home, raise the kids, and run the household. She wasn't employed, but she certainly did work hard. I think she fully deserves the SS benefit she gets, even though it's only 50% of my benefit. On the taxes returns each year I put her occupation as domestic engineer.

On the other hand, it doesn't seem fair that Johnny Carson was married to 3 different women for at least 10 years. Each of those women were eligible to claim 50% of his SS benefit.

That is great and your social security would be split with your wife. It should be based on the contributions and when. Your wife should get some. Half of yours if you have been married your working career and you should get half. That way there would be no need for survival benefits. Set a fixed age of when payments start and millions would be saved on paying accountants fir that advice.

 

[tompalm]

Regarding survivor benefit - When the spouse has social security income and that money is saved, she is better off with a large lump sum than to take a higher survivor benefit. The what if’s get difficult to figure, but having two people collect SS for a long period of time would produce more cash than a spouse collecting higher survivor benefit at age 70.

 

[WinniWoman]

But perhaps the woman who did not work, and took care of the kids, made it better financially for the family. No childcare or work wardrobe, and less eating out. If she would have had a low income job, it is a no-brainer to stay home.

I have nothing against someone staying home. Hell- I wish I could have. But that has nothing to do with whether or not you should be entitled to Social Security.

 

[WinniWoman]

But then you also need to think about the woman who didn't work, not because she didn't "need" to but because she stayed home to raise the family. Or, she was in a job where she didn't pay into Social Security. She probably doesn't have a pension. So her spouse dies and now she has nothing?

I am not saying the woman would not be entitled to her husband's social security IF he dies. She certainly should be. I am saying while he is collecting his, she should not be entitled to also collect an amount that is 1/2 of his as well.

Think of it this way, with that line of thinking, the women who worked and ALSO had to still do the homemaking and child rearing and so forth- then THEY too should be able to collect their own and half of their husbands'. They had two jobs! In fact- the men that worked- they still had to be the handyman around the house and help with the kids, maybe handle the finances at home, whatever and so forth. So maybe they, too should get half their wive's SS as well as their own!

Just because you choose to stay home and have responsibilities has nothing to do with getting Social Security. This said, I do think in the situation where a spouse that worked dies, the other spouse who also worked should continue to get both checks as a beneficiary until he/she too passes on. The deceased spouse worked long and hard to earn it.