Without knowing exactly when you will die, it is impossible to know what the best strategy is.
How are you funding the rest of your retirement? Do you anticipate that you will live to be older than 82 or 83? Are you trying to make your own assets last as long as possible? Do you believe benefits will exist in their current form when you retire? Will taxes go up or down? Will interest rates go up or down? Will inflation go up or down? Can you earn a decent return (say, inflation +3%) on your assets? How much will your retirement income change if one of you dies? Is it important to you to leave money to your kids?
Ha ha, yes @notrichenough - I get it. And several years for many changes to occur until the issue is ripe for us.
With the deemed filing rules, is seems that we are bettter delaying, in general. Always a risk in delaying, though. My parents both died tragically and simultaneously prior to receiving SS but after I was no longer a minor. As a physician, my dad had paid in the maximum amount for a loooooong time. Always kind of bugs me that money went back into the pot, but thatās how the system works.
DH and I had similar wages and will each have our own SS. But Iāve heard a few husbands (especially if older) say they will delay SS because statistically the wife will live longer and they want the 50% spouse amount to be higher.
^ Delaying taking SS benefits beyond your full retirement age (FRA) wonāt increase your spouseās 50% spousal benefit, which is based on the higher-earning spouseās benefit at FRA. But if you wait until 70 youāll maximize your own monthly SS benefit, and your surviving spouse will get that amount when you die.
Itās a calculated gamble, but thatās what Iām doing. Iām 5 years older than DW and sheās in much better health, and she also has a family history of longevityāher mother lived to 99 and her maternal grandmother to 97. Not so on my side, where everyone died in their 70s or early 80s. I plan to go on phased retirement later this year, cutting back to 70% timeāenough to pay the bills while continuing to see my retirement accounts grow. Iāll fully retire at 70, start drawing my maximum SS benefits, and at 70 1/2 Iāll need to start taking required minimum distributions from my retirement accounts. Assuming DW outlives me, that will maximize her survivor benefit. And if she unexpectedly pulls the old switcheroo and dies first, Iāll be the one getting the maximum SS benefit.
Regarding RMD ā¦ now that we are doing detailed retirement planning, weāve had to start considering that. (DH retired last month, and Iāll work a while longer. We are now working with a financial planner) . After so many years of SAVE mode, itās hard to get into the depletion mindset.
Why is everyone so anti-RMDs? What am I missing here? Letās say you receive your RMD; canāt you just pop that sucker into a CD or a brokerage account and keep earning interest that way?
I am not anti-RMD. We just will need to plan correctly to avoid any penalties and unnecessary impact to taxes etc. Itās actually something we had never considered until mentioned in a retiirement planning class.
@colorado_mom - sorry, comment wasnāt addressed to you specifically, but I have seen comments from lots of folks expressing concern about their RMDs. Iām thinking I must be overlooking some issue concerning RMDs.
Folks would rather not have to take money out and pay taxes on it if they donāt need it. This is particularly true if the RMDās move you up into IRMMA territory.
You are correct in that there is no requirement to SPEND the money. You can certainly invest it after you pay taxes. The unpleasant part of RMDs is if you donāt need the money to live on it pushes your taxable income into a higher tax bracket. Depending on what state you live in and the income tax rate (and state tax treatment of social security and other sources of income) the overall tax rate on RMDs can be pretty high. I think that is the only reason people find RMDs unpleasant or appear to be anti-RMD. Given a choice many would just leave their IRA alone, or make a smaller strategic withdrawal that only takes them up to one higher tax bracket. Itās a forced withdrawal of a forced amount so it removes discretion and makes people feel like they donāt have control over their own finances. But it is the tradeoff for saving tax free for a number of years - I think it is fair, and I donāt advocate eliminating RMDs.
Ahā¦ IRMMA was the term I could not remember (I think I learned it here). It potentially could make Medicare cost more. I found a chart and realize that for us it is unlikely to be a concern.