OT: When to take Social Security

[T2Kplus20]

Like I said earlier in this thread. If you don’t need the money , take it and bank it

+1
Makes perfect sense. Take it and bank/invest it! The math is clear.

 

[Plum Street]

+1
Makes perfect sense. Take it and bank/invest it! The math is clear.

Is it clear ?

I didn’t do the math, but have heard this from friends that I consider financially sound . I never tested the theory.

 

[rutgersdave]

I took social security at 66 but used my taxable money during my early retirement. I then converted some of my IRA at 59.5 years old, about $60k a year taxable rate 12% which takes into account the standard deduction 14.5k to a ROTH IRA. So when the RMD starts, my distribution would be lower or my beneficiaries upon my death will inherit money that has already been taxed. Your beneficiary will be in prime working years when you pass so they will be in the 35% or 45% including state income tax rate. I continue to convert my IRA to a ROTH IRA taking into account the tax range, social security and pension.

 

[T2Kplus20]

Is it clear ?

I didn’t do the math, but have heard this from friends that I consider financially sound . I never tested the theory.

Yes, take the money starting at 62, DCA it into the market. You get 8 years of returns and payments prior to 70. The probability is very high that the later payment (even though bigger) will never catch-up in total value due to the head start with compounding.

 

[Plum Street]

Yes, take the money starting at 62, DCA it into the market. You get 8 years of returns and payments prior to 70. The probability is very high that the later payment (even though bigger) will never catch-up in total value due to the head start with compounding.

I would assume for this to work, you invest it very conservatively ? You can’t take risks and lose

 

[jtung230]

I took social security at 66 but used my taxable money during my early retirement. I then converted some of my IRA at 59.5 years old, about $60k a year taxable rate 12% which takes into account the standard deduction 14.5k to a ROTH IRA. So when the RMD starts, my distribution would be lower or my beneficiaries upon my death will inherit money that has already been taxed. Your beneficiary will be in prime working years when you pass so they will be in the 35% or 45% including state income tax rate. I continue to convert my IRA to a ROTH IRA taking into account the tax range, social security and pension.

Any reason you didn’t do less conversion to lower or zero tax rate?

 

[rutgersdave]

Any reason you didn’t do less conversion to lower or zero tax rate?

That would convert too little money to my Roth IRA. I wish I could get it to zero rate. In between this, my parents gave me large taxable income from their E bonds from the 1980’s.

 

[jtung230]

Yes, take the money starting at 62, DCA it into the market. You get 8 years of returns and payments prior to 70. The probability is very high that the later payment (even though bigger) will never catch-up in total value due to the head start with compounding.

Show your work. I did this already and using real returns from the market. See my link above.

 

[jtung230]

That would convert too little money to my Roth IRA. I wish I could get it to zero rate.

Is that just the standard deduction?

 

[T2Kplus20]

I would assume for this to work, you invest it very conservatively ? You can’t take risks and lose

Combo of VOO, VIG, VTV, and VONG. Straight down the fairway with equities.

 

[jtung230]

Is it clear ?

I didn’t do the math, but have heard this from friends that I consider financially sound . I never tested the theory.

See my link above. I ran the numbers. Real math using real data.

 

[T2Kplus20]

Show your work. I did this already and using real returns from the market. See my link above.

Yes, you proved my point. Thanks!

 

[rutgersdave]

Is that just the standard deduction?

The standard deduction is about $14.5k and up to 44k the tax rate is 12% so up to $58k the tax rate is 12% or less. That the amount I converted to a Roth IRA every year until I collected social security.

 

[jtung230]

Yes, you proved my point. Thanks!

Not sure how. I clearly showed you can catch up if you wait until 70.

 

[T2Kplus20]

Not sure how. I clearly showed you can catch up if you wait until 70.

Can, but normally don't. Vast majority of the time you win out with taking early and investing. 5 out of 6 years the market is going up and fine. At worst, you have a 5 out of 6 chance (~85%) of being successful. Excellent odds!

And actually, the odds are likely higher than this for success since in reality you would keep DCA'ing through any bear market and end up in a better spot.

 

[jtung230]

For everyone’s benefit. I’ll copy and paste the analysis I did from the other thread. One thing I realize is that I didn’t factor in taxes. This will result in even faster catch up.

it would have worked between 1985 to 1991. It would not have worked if you retired between 1992 to 2000. Below are break even age during those years. Couldn’t run any numbers after that because there aren’t enough data for conclusion.

1992 93
1993. 87
1994. 85
1995. 83
1996 - 1998. 82
1999. 83
2000. 85

The earlier the break even the more money you leave on the table.

 

[RUBOB72]

100k Really ?

 

[RUBOB72]

Not sure how. I clearly showed you can catch up if you wait until 70.

If you make 70 ?