Author Topic: Not-So-Early early retirees seek social security advice  (Read 3350 times)

cmk

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Not-So-Early early retirees seek social security advice
« on: August 29, 2018, 08:27:11 AM »
   First, I'd like to say that I enjoy this forum very much despite the fact that I didn't find it until I was nearly 60!  So we're not really talking about early retirement, just a little bit earlier than we planned for!

   My husband and I are a total team, have put all of our resources together since we were married 30 years ago.  He just learned that he is laid-off, effective in a few weeks, at the age of 61 and 9 months.  I am already 62.

   I haven't worked for 20 years, but was very productive up until that time.  We didn't live an MMM lifestyle, but were more frugal than most.  We have a very nice paid-off home and no debt.  Two sons in early 20's, the oldest is doing well.  The youngest is a recent graduate, still trying to get a good hold on his first career choice.  He might continue to live with  us, which gives us a little income, but don't want to charge him too much, since he's chosen a lower-income profession.  He's very frugal also.

   I calculate that we need about $40,000 for a comfortable lifestyle.  If we both take our pensions, it will provide $10,000/yr.  If we both took Social Security early, it would provide about $36,000/yr. (13200 for me and 22800 for hubby)  If we wait until 70, it would be $64,000/year.

   We have $600,000 in 401K/IRA's, so a 3% withdrawal (to be ultra-safe) would give us $18,000/year.

   We are both fit and healthy, and retirement would provide even more time to work on fitness and nutrition.  We come from generally long-lived families, his mother died at 91, my father at 85, and my mother is doing well at 85.  His father died young, not an inheritable problem. 

   We intend to keep our future income low enough that we will qualify for subsidies in the ACA until we are old enough for Medicare.  Since we're healthy, we're willing to go with a high deductible plan and take our chances.

   The fact that my father died recently and my mother is doing well means that I have time to work, and I would like to work although the job search is not easy at 62.  I think most of the online applications to straight to the bit-bucket.

   I know we can put together an income, I'm just so confused as to what is the smartest way to proceed.

   I'm sure we'll be just fine with our pensions and social security right now, but I've always heard that it's so much better to wait to take the  SS.  Also, I wouldn't mind working.
One thing I have in the back of my mind:  If we did die early, our sons would get the remainder of our retirement savings, maybe a reason to take SS now and let the 401K/IRA funds grow?

   Our 401K/IRA money is invested mostly in Vanguard Target Retirement funds, as if we were already retired.  Hoping that's the safe thing to do.   

   So, finally, after so much rambling, what would you do if you were in our shoes?

oldmannickels

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Re: Not-So-Early early retirees seek social security advice
« Reply #1 on: August 29, 2018, 08:52:17 AM »
Just a couple thoughts.

First, if you are in Vanguard Retirement Funds you are probably a little conservative for a 3% withdrawal rate. You only have something like a 33% equity allocation. You need this money 30 years from now, you want more of it growing especially if you are going to take early SS.

With that said I ran your numbers through Firecalc and based on what you provided it looks pretty good. I would make sure you price some LTC insurance and that your expense numbers are reasonable.

https://www.firecalc.com/

Taking early SS would be what I would do. You keep your taxable income low while still building your 401k value.

If you do decide to get a part time job, fund you life from your SS and sock away the job income in HSA/Roth.

RWD

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Re: Not-So-Early early retirees seek social security advice
« Reply #2 on: August 29, 2018, 09:10:47 AM »
When to take social security is a trade off based on how much longer you expect to live. The longer you will live the better it will be to delay it.

Based on your current situation you do not need to continue to work. Your pensions plus retirement savings are way way more than enough to get you to age 70. Or you take social security now and you're still fine.

Running the numbers through cFIREsim it looks like regardless of when you take SS you'll be safe for $60k+/year, inflation adjusted.

Rubic

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Re: Not-So-Early early retirees seek social security advice
« Reply #3 on: August 29, 2018, 12:46:29 PM »
Agree with everything RWD said.

If it were me(*), I'd delay SS and start withdrawing from my IRA at $30K per
year.  Even factoring in 3% increases for inflation, you'd still have over 50%
of your original portfolio by ages 70 (exclusive of presumed gains, though
with a slight possibility of losses over that 8 year time span).

One advantage is every month over the next 8 years, you have an option
to start taking SS benefits, so you have a fallback in the event of an unlikely
2008-like drop in your portfolio value.

Even though delaying social security benefits is often in our best interest,
here's a useful interview with Nobel economist Richard Thaler which explains
why we often opt for early benefits.

Also, two of my favorite articles from Michael Kitces:

How delaying social security can be the best long-term investment or annuity money can buy

The asymmetric value of delaying social security benefits as the ultimate hedge



* Excellent health and both parents are living well into their 80's.

 

MDM

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Re: Not-So-Early early retirees seek social security advice
« Reply #4 on: August 29, 2018, 01:32:03 PM »
By delaying SS, you may incur less in tax when converting traditional to Roth.

See https://opensocialsecurity.com/ for a good "when to take SS?" calculator.  It is good, but ignores the lower tax benefit from t->R conversions.

Similarly, you noted "If we both take our pensions...."  If you get no pension increase by deferring the start date, there is no reason to wait.  If you do get a pension increase by deferring the start date, you might want to do that - depends on how much of an increase for how much delay.

See also https://www.i-orp.com/aftxcost/extended.html for another tool.

cmk

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Re: Not-So-Early early retirees seek social security advice
« Reply #5 on: August 30, 2018, 03:29:51 AM »
Thanks for the links and the comments, I am studying all of them. 

We hadn't thought about transferring funds to a Roth.  Is there any benefit to doing that if we expect our retirement income to be less than 60K?  All we have now are traditional retirement funds.

This sudden retirement wouldn't be so scary if we thought we would have a typical 15-20 year span to cover, but it is entirely possible that one or both of us will be around for another 40 years. 

Ladychips

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Re: Not-So-Early early retirees seek social security advice
« Reply #6 on: August 30, 2018, 04:51:09 AM »
I'm not trying to be negative or scary, but you might also want to think about what happens to your income (pensions somewhat put particularly social security) if one of you dies.  That might have a significant impact on what you decide to do now.

cmk

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Re: Not-So-Early early retirees seek social security advice
« Reply #7 on: August 30, 2018, 06:22:41 AM »
Excellent point.  I allow my mind to go there occasionally.  I haven't thought about it in detail, but the pensions are small anyway, and we're choosing the 50% to the survivor option, so it isn't a total loss.  Social Security is a much larger piece of the pie.  Maybe that's another reason to wait as long as possible before taking it.

pecunia

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Re: Not-So-Early early retirees seek social security advice
« Reply #8 on: August 30, 2018, 07:12:33 AM »
Not sure what was said about health care.  You have less than three years to medicare.  That swamp has not been drained and could be a rising cost.  You are certainly better off than many people who save little to nothing.

MrThatsDifferent

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Re: Not-So-Early early retirees seek social security advice
« Reply #9 on: August 30, 2018, 07:36:01 AM »
It would seem that no matter what path you choose, you should be fine. You just have to work out what you want? If your expenses are $40k and youll get $46k with SS and pension, youre fine. You then let the Vanguard money grow as much as possible and dont touch, until you have to. Id do that if I never wanted to work again.

If you both want to keep working, Id take the pension and DWs SS and then each find work that brings in $8k each at least a year.

No matter which way you slice it, youll be fine. Enjoy life!

cmk

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Re: Not-So-Early early retirees seek social security advice
« Reply #10 on: August 30, 2018, 07:36:33 AM »
Absolutely.  We always assumed we would have employer-sponsored health care until  Medicare.  I knew that if we retired, we could get by with a small income.  It was a huge relief when we looked into the ACA and found that we could get it very reasonably.  If they alter or eliminate it, we would have to pay out-of-pocket or find a job with benefits.

MDM

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Re: Not-So-Early early retirees seek social security advice
« Reply #11 on: August 30, 2018, 09:56:49 AM »
Thanks for the links and the comments, I am studying all of them. 

We hadn't thought about transferring funds to a Roth.  Is there any benefit to doing that if we expect our retirement income to be less than 60K?  All we have now are traditional retirement funds.
See Taxation of Social Security benefits - Bogleheads for background, then compare your marginal rates for tIRA withdrawals for neither, one, and both of you taking SS at various ages.

Quote
This sudden retirement wouldn't be so scary if we thought we would have a typical 15-20 year span to cover, but it is entirely possible that one or both of us will be around for another 40 years.
All the more reason for the higher earner to delay SS until age 70.

Chrissy

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Re: Not-So-Early early retirees seek social security advice
« Reply #12 on: September 07, 2018, 10:11:16 AM »
Congratulations, you're about to successfully retire!  No need to work.

I think I'd split the difference on all the choices.  Like this...

Now
Take the pensions:  $10k
Take your SS:  $13k
Take the remainder from your retirement funds: as much as you need to make up the shortfall.
=$40-$53k (depends on Health Insurance, LTC insurance, enjoying your first/best years of retirement, etc.)

Your retirement funds will likely continue to grow even though you're withdrawing from them.

Five years from now, at age 67:
Still getting pensions:  $10k
Take his SS:  ~$33k
Take your SS + spousal benefit:  ~$17k
Stop taking from your retirement funds.
=$60k/yr

At this point, either there's a surplus, or you spend every penny due to desire or circumstances.  Meanwhile, the retirement funds grow.

Eight years from now, at age 70:
Still getting pensions:  $10k
His SS:  $33k
Your SS + sp benefit:  $17k
Required minimum distribution from retirement funds:  ~$35k?  Really depends on the market.
=$95k/yr

You might need all of it if health has declined, or you might have quite the surplus.  And, the retirement funds will likely STILL grow.  Plenty left for the kids.



Goldielocks

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Re: Not-So-Early early retirees seek social security advice
« Reply #13 on: September 07, 2018, 11:32:57 AM »
A lot of people enjoy working a bit in retirement, it sounds like you may, too.   A bit of part time, low stress work (customer service, retail, counter, back up reception), for a few hours a week and a few dollars may be enjoyable... as would be a little more fun money.   It is surprising how quickly the $$'s add up for fun money when you work 8 hours a week.

Also -- I think everyone's resumes go into the bit bucket no matter what age.   At age 40, DH put out 200 of them, and only received 4 call backs (and only one was a valid employment).

mxt0133

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Re: Not-So-Early early retirees seek social security advice
« Reply #14 on: September 07, 2018, 03:52:32 PM »
I worked with my parents on selecting the appropriate SS collection strategy that best suited their situation and the I highly recommend the book 'Get What's Yours' that goes through the various collection strategies based on your goals.

https://www.amazon.com/Get-Whats-Yours-Revised-Security/dp/1501144766/ref=sr_1_1?ie=UTF8&qid=1536354230&sr=8-1&keywords=social+security+get+whats+yours&dpID=51IdUvnD5dL&preST=_SY344_BO1,204,203,200_QL70_&dpSrc=srch

I also recommend thinking about the various possibilities of either you out live your spouse or if your spouse out lives you.  Because your SS benefits are half his the cash flows in each situation will be significantly different.  In the case of my parents, my dad had lower benefits and because my mom or dad would have been OK financially if either out lived the other, it was no a matter of maximizing benefits.  They chose to have my dad collect at full retirement age (FRA) while my mom deferred until 70, so that if my dad out lived her, my dad would collect my mom's higher benefit.  In the meantime once my mother reached FRA she filled and restricted to let her benefit grow while collecting half of my dad's.

On a side note that is not related to finance, my dad was forced into retirement at 65 due to health reasons but he was not prepared for it and did not do well not having a job that provided him structure and purpose.  He had a hard time not receiving a paycheck and worried about money even though my mom kept working and had enough savings for a comfortable retirement.  How is your husband dealing with the layoff?  Be sure to watch out for signs of depression as that could cause his health might decline rapidly.

beer-man

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Re: Not-So-Early early retirees seek social security advice
« Reply #15 on: September 07, 2018, 05:56:51 PM »
I’m tax averse so if I were you I would burn through that 401k/IRA with the pension as a supplement and let that SS benefit grow.
 I’d set a floor amount of the IRA where you wouldn’t feel comfortable letting it dip below. 
You could draw 30k a year from IRA for 10yrs and by then your SS benefit would grow to cover part of your costs and be partially tax free.
 Also you could partially convert some of your IRA to a Roth to shelter it from taxes when you do have a higher SS


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AccidentalMiser

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Re: Not-So-Early early retirees seek social security advice
« Reply #16 on: September 07, 2018, 09:52:07 PM »
I worked with my parents on selecting the appropriate SS collection strategy that best suited their situation and the I highly recommend the book 'Get What's Yours' that goes through the various collection strategies based on your goals.

https://www.amazon.com/Get-Whats-Yours-Revised-Security/dp/1501144766/ref=sr_1_1?ie=UTF8&qid=1536354230&sr=8-1&keywords=social+security+get+whats+yours&dpID=51IdUvnD5dL&preST=_SY344_BO1,204,203,200_QL70_&dpSrc=srch

I also recommend thinking about the various possibilities of either you out live your spouse or if your spouse out lives you.  Because your SS benefits are half his the cash flows in each situation will be significantly different.  In the case of my parents, my dad had lower benefits and because my mom or dad would have been OK financially if either out lived the other, it was no a matter of maximizing benefits.  They chose to have my dad collect at full retirement age (FRA) while my mom deferred until 70, so that if my dad out lived her, my dad would collect my mom's higher benefit.  In the meantime once my mother reached FRA she filled and restricted to let her benefit grow while collecting half of my dad's.


As I read through the posts on this thread, everyone else beat me to everything I was going to say so I won't belabor except to highly recommend Kotlikoff's book.

I would leave the SS alone for as long as possible, particularly if you have family history of living long and are in good health.  Please read the Kitces articles also.

Spending down and/or rolling your tax deferred accounts into Roth accounts helps you avoid punitive RMDs when you hit 70.5.  My father is dealing with this first world problem right now.  He wasn't diligent about moving/spending out of his tax-d accounts and now gets to give Uncle Sam a handsome chunk of his retirement money every year in taxes. 

Good luck to you both!  Enjoy your well-earned retirement!

By the River

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Re: Not-So-Early early retirees seek social security advice
« Reply #17 on: September 10, 2018, 04:21:38 PM »
Excellent point.  I allow my mind to go there occasionally.  I haven't thought about it in detail, but the pensions are small anyway, and we're choosing the 50% to the survivor option, so it isn't a total loss.  Social Security is a much larger piece of the pie.  Maybe that's another reason to wait as long as possible before taking it.

Are the two pensions relatively the same amount? if so, just take the 100% which would be more money overall.   My wife and I are planning this.  Hers will be about 20% larger but we feel each taking 100% is the better approach. 

Finances_With_Purpose

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Re: Not-So-Early early retirees seek social security advice
« Reply #18 on: September 11, 2018, 09:23:21 PM »
I have helped folks in or near your situation.

Your situation is a bit too fact-specific for this forum - even though you'll get some great input here - and it may be worth the time sitting down with an accountant in particular, especially one familiar with SS. 

Where you're at, your main focus should be on planning in ways that save you on taxes.  Taxes are the biggest thing you can save on.  Taxes will drive a lot of your decisions, such as when to jump on SS, possibly.

For instance, you might be better off in ten years if you used *more* retirement money directly now, while taking no other income (or just a pension) and then getting more SS later - or some road in between.

As one poster pointed out, you would save a lot on future taxes now if you moved the IRA/401k over to Roth or used it as income.  Why?  At 70 1/2, you're going to have to start taking Required Minimum Distributions from your IRA or face even *higher* tax penalties.  The more you draw now, the lower the penalties later...but, the better the chance you'll pay more in SS taxes along the way, too. 

Those mandatory withdrawals - on 600k - will rocket your income to where 85% of your SS is taxed and you won't qualify for ACA subsidies (though you'll be on Medicare at that point anyway). 

With as much as you have invested, you may want to consider some healthcare alternatives as well, since you're likely to have a hard time juggling (1) keeping your taxes down with (2) keeping your income lower, especially in the early years. 

It's frustrating how complex the various government rules and programs make planning at your life stage, especially when you have some savings, but not enough to spend thousands on accountants and so on.  With that said, you'd still likely benefit from having a CPA or someone explain some scenarios to you (especially if they can give you examples of what various options might look like).  It will depend on your state, too, possibly (state taxes, etc.). 

On that note, I would also sit down with an estate planner/lawyer to prepare you for those things, too - that person will likely prep you in ways that can be helpful for you as *you* age, not just after you're gone.  For instance, they can set you up power of attorneys and other things that can be useful and save money if/when one of you passes or has a serious medical issue. 

Now, the big disclaimer: I'm just a random guy, not an accountant or etc., so these are simply suggestions from someone who has seen a little of it, and my main suggestion is to get some professional advice specific to your exact situation. 

Plus, this is all trial-and-error with big rooms for margin.  The government can change the rules and the tax rates at any time: capital gains could go way up, social security could, they could eliminate required distributions (I heard someone just floated a plan to do that), or they could do something else entirely....so I would hold any plan loosely, revisit it fairly often, and realize it's all more of a "best guess." 

The huge upside for you is that, as others noted, you're well-positioned now regardless of whether you take a number of different paths.  Just make a good plan and go with it. 

cmk

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Re: Not-So-Early early retirees seek social security advice
« Reply #19 on: September 13, 2018, 06:05:00 PM »
Thank you all for your thoughtful replies.  We are midway through a vacation and I haven't visited MMM forums for a week.  I've got a lot to discuss with hubby.
   What is the required minimum distribution at 70.5?  We haven't thought about tax implications yet.
    Someone asked about hubby's state of mind - it's good!  He is overworked and underappreciated , he's worried about those left behind,  but can see that this is a blessing in disguise for us.
   Thanks for the reading sugestions. We have a nice bit of severance and retention pay to live on while we consider our options.

Another Reader

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Re: Not-So-Early early retirees seek social security advice
« Reply #20 on: September 13, 2018, 06:16:44 PM »
For some opinions from people in your age category, check out early-retirement.org.  You will get a lot of relevant analysis and recommendations from people that have worked through similar scenarios.  There are many nuances in your situation and the advice will be more specific to you.

Rubic

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Re: Not-So-Early early retirees seek social security advice
« Reply #21 on: September 13, 2018, 06:57:10 PM »
Thank you all for your thoughtful replies.  We are midway through a vacation and I haven't visited MMM forums for a week.  I've got a lot to discuss with hubby.
   What is the required minimum distribution at 70.5?  We haven't thought about tax implications yet.

Interestingly, many articles about RMD seem to discuss click-bait subtopics
and not get into the actual percentages that are important.  Here's one that
does:

http://www.themoneyalert.com/rmd-tables/

At age 70 (70 ) your RMD is 3.65% of your deferred IRA and it starts
increasing from there.  You can use the above link to determine if your
RMD numbers put you into nosebleed territory(*).  If so, you can then
decide what to do about it, e.g. Roth conversions.



* Possibly susceptible to this dilemma myself, but it's definitely a
first-world problem.


former player

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Re: Not-So-Early early retirees seek social security advice
« Reply #22 on: September 14, 2018, 04:07:14 AM »
I'm going to add one more reason for drawing down the investments now and leaving the Social Security for later (although not necessarily all the way until 72 - that depends on your personal calculations).

I think the big reason for relying on social security rather than investments later in life is that it requires no effort or thought on your part: the money is deposited in your bank account without you having to do anything.  You don't have to think about investments.  You don't have to move money around between accounts.  You don't have to worry about scammers getting to your stash, or market crashes.   The older you get the less you will want to have to think about those things.  Even without concerns about mental deterioration or physical disability, as you get into your nineties and inevitably get frailer you will have less energy and bandwith for these issues.  The security of a good regular income that you don't have to worry about is pure gold for a safe and secure old age.  I've seen this in my own family: numerous relatives who lived comfortably into their late eighties and nineties, and while none of them were rich all of them had pensions and social security which meant that money was not a worry.


Finances_With_Purpose

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Re: Not-So-Early early retirees seek social security advice
« Reply #23 on: September 16, 2018, 11:04:14 PM »
Thank you all for your thoughtful replies.  We are midway through a vacation and I haven't visited MMM forums for a week.  I've got a lot to discuss with hubby.
   What is the required minimum distribution at 70.5?  We haven't thought about tax implications yet.

Interestingly, many articles about RMD seem to discuss click-bait subtopics
and not get into the actual percentages that are important.  Here's one that
does:

http://www.themoneyalert.com/rmd-tables/

At age 70 (70 ) your RMD is 3.65% of your deferred IRA and it starts
increasing from there.  You can use the above link to determine if your
RMD numbers put you into nosebleed territory(*).  If so, you can then
decide what to do about it, e.g. Roth conversions.



* Possibly susceptible to this dilemma myself, but it's definitely a
first-world problem.

I have used this RMD calculator before and it seems decent, though I'm not an accountant, and merely use it for planning purposes. 

At any rate, it lets you input your own account balance, age, and rate of return, then it spits out your estimated required distributions.

Op, given your update: this is something you really need to get with a professional about.  Especially the tax piece.  Planning for RMDs alone might save you thousands and thousands in taxes at the amounts you're talking about.

Your own tax situation may be complicated (and none of us advise on taxes), which is why none of us here can give you the type of very specific input you're needing.

cmk

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Re: Not-So-Early early retirees seek social security advice
« Reply #24 on: September 17, 2018, 12:19:06 AM »
What is the best way to find an advisor regarding required minimum distribution and taxes?  We have 401k and IRa accounts with Merrill lynch,vanguard,and fidelity.  Would it be sufficient to accept the advice they offer?

MDM

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Re: Not-So-Early early retirees seek social security advice
« Reply #25 on: September 17, 2018, 12:39:19 AM »
What type of advice do you seek?

https://www.irs.gov/pub/irs-tege/uniform_rmd_wksht.pdf shows the official RMD table.

Finances_With_Purpose

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Re: Not-So-Early early retirees seek social security advice
« Reply #26 on: September 17, 2018, 11:33:35 PM »
Personally, I would consult a good CPA/accountant.  Others may be able to give the advice, too (tax lawyers, for instance). 

In general, I avoid getting advice from anyone who's selling other services/things, such as investments, rather than giving me advice where I know what I'm paying them for (specific tax or legal advice) and how much they're making (just what I pay them, not commissions from other services).

cmk

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Re: Not-So-Early early retirees seek social security advice
« Reply #27 on: September 28, 2018, 05:39:09 AM »
Hello, this is the OP again.
 
We're back from a very relaxing 2 weeks in Europe.  DH is working one last week before retirement begins.  His layoff occurred just after we had pre-paid a major portion of the trip, so we decided to go with it.   We could have easily cancelled it after the shock of the layoff, so glad we didn't!

The readings and videos you all have suggested have been a real education for me.  We do seem to be in good shape to retire.  It's funny that we probably wouldn't have even thought about it for another 3 years! 

Hubby is doing well, but it's a real kick in the gut to be let go without any recognition or thanks after 25 years.  He deserves the old retirement ceremony where the bigwigs tell him how much they appreciate his dedication and sacrifice.  That's not gonna happen now.  He's not alone, dozens of people were kicked out, several retiring, their positions being outsourced to a major US corporation hiring cheap help overseas.

We wouldn't have been in a position to retire a year or two ago, youngest was still in college and we were paying for it.  So the timing is perfect.

I've read most of Kotlikoff's book.  My amount is less than my husband's, but more than half.  So we do think we'll wait until each of us is 70.  There's nothing to complicate it, like other spouses or young children.

My pension is also about half of his.  His is $600, mine is $250 if I take it now or $320 if I wait until 65.  Not much, but together they will pay our property taxes (our biggest bill) and buy a couple weeks' worth of  groceries.

Now that I understand how 401K distributions work, I can see that we will be forced to pay taxes on some big numbers in our later years.  If I take money out to do a back-door Roth, do I have to claim that money as income in the year I take it out?   Doing that for any significant amount would eliminate the possibility of getting ACA subsidies, right?   

I think the big reason for relying on social security rather than investments later in life is that it requires no effort or thought on your part: the money is deposited in your bank account without you having to do anything.  You don't have to think about investments.  You don't have to move money around between accounts.  You don't have to worry about scammers getting to your stash, or market crashes.   The older you get the less you will want to have to think about those things.  Even without concerns about mental deterioration or physical disability, as you get into your nineties and inevitably get frailer you will have less energy and bandwith for these issues.  The security of a good regular income that you don't have to worry about is pure gold for a safe and secure old age.  I've seen this in my own family: numerous relatives who lived comfortably into their late eighties and nineties, and while none of them were rich all of them had pensions and social security which meant that money was not a worry.



Another excellent point!  I can't believe I didn't think of that myself, since we are going through the same thing with my mother.  She has no interest in knowing anything about her own finances.  I'll probably be just like her some day.  More reason to make things as simple as possible for us and for the next generation.

Thanks again to all who responded! 

MDM

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Re: Not-So-Early early retirees seek social security advice
« Reply #28 on: September 28, 2018, 08:21:09 AM »
Now that I understand how 401K distributions work, I can see that we will be forced to pay taxes on some big numbers in our later years.  If I take money out to do a back-door Roth, do I have to claim that money as income in the year I take it out?
It won't be a backdoor Roth - it would be a conversion of pre-tax money to Roth, and yes it counts as income.   Do you see why it would not be a backdoor Roth (or can you help me see why it would be)?

Quote
Doing that for any significant amount would eliminate the possibility of getting ACA subsidies, right?
Depends on what you mean by "significant".  See the case study spreadsheet (and know your SLCSP amount) to look at a tax estimate that includes ACA effects.

Chrissy

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Re: Not-So-Early early retirees seek social security advice
« Reply #29 on: September 28, 2018, 09:11:26 AM »
Your income could be up to ~$62k before you're totally phased out of ACA subsidies.
« Last Edit: September 28, 2018, 09:15:24 AM by Chrissy »

jim555

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Re: Not-So-Early early retirees seek social security advice
« Reply #30 on: September 28, 2018, 04:57:10 PM »
Your house equity might be useful, if you could find a way to take advantage of it.