I am pondering this all - have a defined benefit pension that is not indexed for inflation. It makes sense to live on that and invest SS or delay SS to age 70. There are so many unknowns though - not just longevity of spouse and I, but whether pension will still be around (most defined benefit pensions are not fully funded - cities go bankrupt, pensions are slashed). Inflation (that’s a big issue - if inflation jumps to 20%, a non-indexed pension isn’t going to provide much, health insurance (currently available at discounted rate for retirees through the city, but could be cut or rates increase greatly at discretion of city management)…
I am guessing if you can delay, you have other means to live. Continue to live on that and invest SS taken early and see how it compares if you delayed. At age 70, you have a decent lump sum from 8 years of collecting and investing and lower monthly payment or no lump sum of any kind and higher monthly payment. That should tell which scenario gives you greater net sum in the end assuming you knew “the end”. To me, it’s not worth the bother, certainly not something to pay for. The difference is not that great.
^^I agree that its not worth the bother but for a different reason. No way anyone should assume that they can beat 8% return, inflation protected, with zero risk (“invest SS taken early…”). Thus, it just comes down to longevity. Do you think the probability is good that you will make it to ~82, which is the rough breakeven for taking at 70. If not, take prior to 70. That of course, ignores the spousal benefit.
In October I’ll be 66, my full SS retirement age, but I’m still working full-time and planning to begin a phased retirement in a year. That will have me working part-time until I’m 70, health permitting. I’m going to delay taking SS until I’m 70 because we have sufficient income from other sources now. My health isn’t great and neither of my parents had exceptional longevity (they died at 79 and 83 respectively). But DW is four years younger than me and very healthy. Her mother lived to 99 and her maternal grandmother to 98. No telling what the future will bring, but we need to plan for the possibility that DW is in for the long haul. If she outlives me, she takes over my SS benefit, which is considerably larger than her own. If we both live to a ripe old age, so much the better that we’ll have a larger stream of SS income.
To me, the risk that we both die early and leave some SS money on the table by not taking benefits earlier is outweighed by the risk that one or both of us lives long enough that the bigger SS benefit might make a difference in our quality of life. That also feeds into other aspects of my plan to delay full retirement until age 70. I’m still able to work and for the most part enjoy it. Each year I continue to work is one less year of tapping into retirement assets, which will actually continue to grow until I fully retire because my employer will continue to make its full contribution to my retirement accounts even while I’m on phased retirement. And at 70 1/2 I’ll need to begin taking required minimum distributions from my retirement accounts, so between that and my SS benefit maxing out at age 70 it seems like the right time to get on with the life of a retiree.
According to maximize… I tried a couple of years ago, the break even age becomes 90 if you assume 4% return. I think 82 comes from assuming 0% return. I don’t think SSA counts any return on capital. IMO, calling it 8% return is misleading. They are mostly giving out your own money you didn’t claim between 66-70. I do agree SS is inflation protected and zero risk.
My H who just officially retired (he’s been working 3 days a week for a long time)just 2 months shy of his 70th birthday plans to continue to do per diem work one day a week whenever he is in town because he loves his work. He’s been told he can delay his RMD this way until he no longer works. This is a good way to make sure your retirement funds can last much longer and to delay paying taxes on RMD.
You can delay RMDs from your current employer’s plan as long as you are still working, but you have to take the RMD from all other IRAs and previous employers’ 401ks, regardless of whether you are still working.
The still working exemption has some rules. There is no exception for IRAs. Once you reach the year you turn 70 ½, you must take an RMD. You also have to take RMDs from any employer plan if you are no longer working for that employer. The “still working” exception only applies to your current employer.
Yes, it’s true the RMD delay only applies to the contributed portion of the employer which you retired from and will work for after retirement. My H worked for the same organization for 42 years so his total 401k can be delayed.
H is highly valued at work right now, but it involves travel until projects come to the plant in the city where we live. I returned to work in professional career in 2017 - essentially two PT jobs, one is a adjunct faculty position which just started. We both will retire in 3 years after both of us are 65 (we are born in the same year). H is very much looking forward to doing projects and having time at home - also very involved in a hobby and a club. He won’t miss work. The people from his work place that have retired meet quarterly at a restaurant (I had worked there too - we talk about the old days and what is going on now with our lives).
My ‘job’ in the first part of retirement will be directing and sweat equity on getting our home ready for our next transition - and moving potentially where the kids are. We have been in this home 25 years (which we built); have to figure out what to keep and what to get rid of. Just finished launching 2nd (2 of 2) out of college into her career, and have a 3 month old grandchild who is delightful and right now doesn’t live far from us. H will make one big trip to relatives with me; otherwise he won’t mind me traveling with friends.
For us, we will take SS once we stop working. That is what works in our situation. My current earnings will boost my SS check; I was SAHM for 18 years (which included 5 years of maximized health care costs and medical visits/treatments for stage III aggressive cancer - which I have been cancer free since 2010 and stop seeing Medical Oncologist next July; already was able to stop seeing Radiation Oncologist - that was a 5 year window). This Medical Oncologist is seeing a friend of mine who is stage IV and has been stage IV for a number of years - still holding off dying of the cancer but toughing out continued treatment to stay alive with QOL.
We have ‘the gold standard’ with LTC insurance policies (well in place before my cancer at age 52/53). Since we depended on H’s income for many years, he is heavily insured, with a lot on term insurance. But we have cash value policies too.
Will pay off house before we retire. No rush now as we pay 2.5% interest (we took out mortgage for 10 years and hit a super interest rate with one of the credit unions we belong to).
Life is good when you have survived major medical issues and have successfully launched offspring. Key of course is not worrying about money, and living within means.
Quick question re: non-qualified variable annuities -
If beneficiary named at death is spouse, is the difference between the original investment and death benefit taxable as ordinary income to the surviving spouse? I’m not sure I’m reading all the information about these correctly. Looks like spouse can continue the plan, take death benefit over five years, or take it all as a lump sum with the latter two options resulting in taxation as ordinary income. Distributions to deceased spouse had not started/happened. Surviving spouse is > 59 1/2 years old.
I know this isn’t a retirement question, but I have read much discussion re: annuities on this thread and figured someone could provide some guidance. Or, if someone could point me in the right direction, that would be great.
"My current earnings will boost my SS check; I was SAHM for 18 years " - You may want to check the calculators. Many wives I know that had long SAHM period end up being better off taking 1/2 of husband’s SS. It would depend on your specific situation / earnings.
What do you think of the two new Fidelity No-Fee Mutual Funds, Fidelity Zero Total Market Index Fund and Fidelity Zero International Market Zero Fund?
Other no load mutual funds offered by Vanguard and Fidelity have very low costs, going no-fee won’t save a lot unless you have a huge holding. With no performance history yet, is it worthwhile to invest in them?
I think those funds are fine, in and of themselves. Fidelity is using them to get new customers, to whom they’ll pitch their other offerings; there is nothing wrong with that. Vanguard’s Total Stock Fund expense ratio is 0.04%, so even for a $1M account, that’s $400 per year; I’m cheap, but that’s not much. The International Fund is more expensive, at 0.11%, so that’s a little more tempting.
For what it’s worth, we have substantial holdings in the Vanguard equivalent funds, and I’m not moving to Fidelity. If I were starting out, I might go to Fidelity, but would not listen to their pitches. In fairness to Fidelity, my wife’s employer uses them for her 401k; they pitched us at first, but backed off when I told them we were not interested in expanding our relationship with them.
We use Fidelity not Vanguard. Both are fine. Fidelity has branches which can come in handy.
“With no performance history yet, is it worthwhile to invest in them?”
Since they are index funds, there should be no surprises. 
My H is preparing to retire & we need to figure out what to do with his 401(k). The plan currently is managed by Mutual of America, which offers IRAs & annuities.
We’re considering Schwab, Fidelity, & Vanguard as possible places to transfer his 401(k). I’d appreciate hearing about experience with any of their services.
My H & I prefer to meet in person with an advisor who would assess all assets, not only 401(k), in order to make recommendations about drawing down on savings (cash, mutual funds, stock holdings) and both types of IRAs, as well as clarifying reassurance about timing of Social Security benefits.
Ideas for resources other than the “Big 3” would be great too!
(I have used MaxiPlanner, which indicated that we have enough assets. It’s what to do with the assets. Drawing down is a very alien thing to do after many decades of being natural automatic savers)
@Hopeful820 , thanks for bringing up those Fidelity funds. I mentioned them to dh and learned he’d already seen them but didn’t expect me to be interested. (?!) We ended up moving some money into the International fund. Then we had a chat about how we’ll handle our decision making process. He’d taken it all on himself while I was recuperating and hadn’t yet thought about returning to the norm.
I have the majority of my funds in Fidelity because I like to meet with a rep face to face and we get together once every other year perhaps and several phone calls a year. I do all my own investments and I enjoy it. I also have funds in Vanguard.
We are getting ready with updating our estate planning and I am thinking of joining either Fidelity or Vanguard’s wealth management service. I know what Fidelity’s services are and their costs and I have an appt in a few weeks speaking with a rep from Vanguard’s team. We shall see. From preliminary talks with Vanguard, they are not as service oriented as Fidelity.
I have a few mutual funds that I started invested in mid 90’s into late 2000’s, then stopped when tuition payments began, have one more year to go. Fidelity is the smallest among my holdings which I regret, stupid move on my part, hindsight…
I am thinking of starting to put money into mutual funds again, this time may concentrate on Fidelity funds.
I won’t qualify for the wealth management service, so I am not sure if I should still go into their office and have some of my questions answered instead of over the phone. Do they overwhelm you with sale pitch?
Yes, they will answer your answers on the phone and you can go in to see someone to ask questions. FWIW, they don’t have a fiduciary duty to you unless you are in wealth management so do your due diligence. We’ve always have had a nice rep who didn’t try any sales pitch because I told him I manage on my own and my returns are shown on my statements.