New spin on traditional SS Advice!

[ducky19]

https://www.kiplinger.com/article/retirement/T051-C032-S014-retirees-often-make-this-social-security-mistake.html

I clicked on this link expecting the same bland advice about waiting to take Social Security until 70, but I was pleasantly surprised to be given some food for thought!

Essentially, the author advocates for depleting retirement accounts earlier in retirement and deferring SS filing until 70 - not (just) because of the higher payments, but also because of the tax advantages. I haven't fully researched it yet (I plan to, believe me!), but if his math holds up, using your retirement accounts will both allow you a higher SS payment and reduce your AGI due to your SS being a larger part of your income later in life. By using your retirement accounts earlier, your RMDs will be lower when you hit them.

The author's math is based on a hypothetical couple, so I do plan to try the math with my own numbers, but does this make sense to anyone else? Or does it seem like it doesn't pan out?

[MDM]

Similar to this post: Social Security at 62? Let’s Run the Numbers - Bogleheads.org.

[TheWifeHalf]

Kind of the same, but different:

TheHusbandHalf will stop working Jan, 2019. (I do not work)

We have enough money to live on until 67-70? The age we do not have enough, is the age he will apply for Railroad Retirement (instead of SS) Right now we're figuring in late 2022. (his full ret. age) It may be later, depending on how our finances look.
I will apply for spousal benefits in early 2024, my full ret age.

The years from when he stops working, until his first RMD, 2026, we will convert tIRA to Roth, up to the upper limit of the 22% bracket. (It will be $165,000 for 8 years, unless changed again of course. Then it will go back to 25%)

Why that bracket? We figure taxes are only going to go up, and having the money in the Roth, where the earnings aren't taxed, will pay off because from my family tree, I have a good chance of living to 95. Plus, one of us will be filing taxes as a single, who knows when. It seems Roth money is better to leave the kids than  tIRA.

We will get 54,000 RR (he paid tier one and two), and if things go as planned, my share we will continue to pay income tax on tIRA conversions, not in the same bracket though. We realize RR will be taxed and the way we look at it, that's a sign we did ok.

Like the OP said, the RMDs should be lower.

But of course, if they change the rules, we'll change the plan.

[TornWonder]

I think this is a decision that would make sense for people that retire close to 62 with substantial savings in pre-tax accounts.  For me, I plan to never have an RMD from a pre-tax account because I will retire early enough to roll all of it over into a Roth by the time I hit 70.  I will probably take SS as early as possible because it will allow me to keep more money in my Roth, which works out to be a better deal than waiting to take SS.