I think State workers usually do not. My mom worked for state and this impacts her ability to get spousal SS if her H predeceases.
Oh yes, weāve been doing this for years. The issue is really checking what the breakeven amount is and when it would be worth it for me to take mine or not if he waits until heās 70.
Since my husband turned 62 in January and can claim social security now, I have checked each month to see how much his goes up by waiting. Itās not significant, but considering it is essentially compounding the delayed increase, itās huge. So if he takes it now itās maybe $15/month more than if he took it last month. Over 4 years thatās a lot of money. But if he waits until next month, then itās $30 more per month than last month which is even more money, etc. So for each delayed month the value is significant.
My social security on the other hand is way less than his, so the value of my waiting 8 more years to claim full social security may not really be worth it. He would be 79-1/2 when I turn 70. How much longer would we both be living where we would receive the two amounts? And is the difference of having waited really worth it. Right now the difference for me at 62 vs 70 would be around $800/mo. His difference is more substantial because heās at the max social security amount, while Iām not. A lot of it may depend on our health also.
At the same time, they do say not to take social security until you have used all your other savings because social security is supposed to be into perpetuity where your savings would not be, so if ss doesnāt dry up, then the longer one can hold off taking it, the better.
Either way, weāre both still working so who knows what will be. Just keep chugging along, lol.
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Correct. My mom worked for a state and has a state retirement, she did not pay into SS and the majority of her working life was for a state agency.
It kinda stinks as my dad did work and pay into SS. Did not collect for very long. But that is the rule.
Mom has had great public employee health insurance so that has actually saved her.
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Popping in and out of the thread. @SOSConcern glad to hear your use of annuities in a structured portfolio designed to create income. Annuities generally get a bad rap. There is so much misinformation about them. There are many types of annuities and a lot of moving parts. The rub has generally regarding the cost. But like everything else, the cost is for benefits that may or may not be important in a specific situation. If they are, theyāre great. If theyāre not, they look expensive. Iāve been using them with clients and my own portfolio for yrs. Very useful tools to build long term guaranteed income without worrying about bond yield and pricing volatility. Generally better returns than long term bonds.
I like the approach, and have implemented it into my own retirement plan, of cobbling together a chunk of guaranteed income via SS, pension (for those that have), and annuities. Whatever the percentage is, say 50% for example. So I have built a model where 50% of my preretirement income is guaranteed and the remaining nest egg can be managed appropriately to fill in the needed gap and continue to grow. Very simple and easy to maintain. When a chunk is guaranteed, youād be amazed at how much more comfortable you are with the other 50% having risk exposure.
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My ex husband works for the state and initially if I recall there were no social security taxes and when I was a full time teacher none paid. But some of that changed some time ago and he now pays both social security and a mandatory pension. Now at my school, not a full-time teacher but still pay into the pension, I pay only into the teacher pension but nothing into social security. I didnāt pay back my pension either when I left teaching in 2000 to be a SAHM because I didnāt think I would ever go back and now itās not worth paying it back for the credits because of what they charge in interest. I at least rolled it to my IRA which did phenomenal. As for the credits I earn now, until this year, I was at a snails pace, but this year Iām working 4 days a week so I will catch up a lot and maybe will qualify for a pension which is 5 years of credit and age 60 I think but my pension will maybe be $100/mo if that, but of course Iāll also have the WEP to worry about which will impact my social security which is another reason I should probably just take it early but who knows? The pension at least wonāt impact getting my husbandās social security and i can always get my pension. I am also divorced from my first husband, so if this husband dies before me, I can also go claim social security of my ex husband instead of this one if the first one is higher, but Iām pretty sure theyāre the same so probably no point.
However, the guarantees involved are only as good as the financial strength of Social Security, the pension fund, and the insurance company.
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True, but you have to assess the risk of that vs. the market. If predictable income is what you seek, for example, I would bet more on SS benefits (as an example) being there as stated for someone who is currently 60. Could there be a change? Sure. Will there be for that age group? very unlikely. Certainly less likely than other market concerns. With annuities, important to pick strong carriers with massive balance sheets / reserves. A+ Superior only for me. The states and the industry work together via a risk pool should there be a default. Essentially assets and liabilities are taken over by another carrier with benefits remaining unchanged. Same with M&A. Have had numerous carriers acquired over the years with their existing book remaining 100% in tact and serviced by the new or 3rd party carrier without any suspension of benefits. Pensions can also go away but are somewhat protected. However, if a company goes bankrupt, the pension may (or may not) get hit. However, if thatās the case the equity would have got crushed anyway, so Iād rather be a pension recipient of large CO X than an shareholder if I was concerned about guaranteed income.
Yes it could happen.
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Just be aware that all FAās have a financial incentive to recommend taking SS earlier (as that leaves them more assets under management). And if they do your analysis correctly, it would be mortality and risk-adjusted (which I bet few can do).
Donāt forget to ask about Spousal benefits ā again mortality and risk-adjusted ā as well as tIRA conversions to Roth instead by delaying SS. (Not only your marginal tax return but also that of your beneficiaries.)
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I wish I understood annuities. I gave hell to a woman who sold my then-85yo mother an annuity when I didnāt think there was a need. Now my mom wants out of it, and Iām kind of inclined to keep her in it at this point. She likes the annual check she gets from it each December to more than pay for Christmas, and if she cashed it out all she would do it let the money sit in her savings account.
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Same thinking here. We did not figure SS into our retirement planning, so itās gravy. We donāt care what the breakeven is and plan to start taking it next year when weāre both 64 and we start spending down our investments. SS is substantial enough that it will cover all of our above-the-line annual living expenses and minimize our investment withdrawals. If it is ever reduced or goes away, it wonāt matter for us.
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So many different types of annuities designed to do different things. Some focus on immediate income, some pure growth, some deferred income, some market based, some guaranteed. There are even a relatively new category called longevity annuities where you pay a lump sum today and get a guaranteed income starting 10 or 20 yrs later, eliminating the need to worry about your portfolio spitting out income when youāre 85-100 (assuming the numbers work). Lots of creative uses.
The key is understanding how annuity X works including the fee structure. If it does what you want it to do, than the fee is worth it. If it doesnāt, itās not. I donāt get consumed by fees. Theyāre there to provide certain benefits. What I mind is a certain type of insurance agent who is more about shoehorning you into annuity X to serve his/her needs. My shop sells a lot of them without any allegiance to carrier or type. All about understanding client goals and matching the appropriate solution which sometimes includes an annuity (and sometimes it doesnāt).
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@MarylandJOE THANK YOU for the early/late SSA link for early/late SS payments! It was common knowledge about earning 8% more a year on SS after your specific full retirement age. The early calculation info is exactly what I was needing! MY FA may know about this link, but his assistant didnāt. Now I can put the numbers together. I believe we still will take SS before 66 and 4 months, but I can make more informed decision on exactly when.
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@rickle1 that is very helpful overview information. We didnāt purchase annuities until we had an established relationship with our FA - who is also designated as fiduciary meaning they are obligated to make recommendations based on the clientās best interest. He saw certain opportunities with specific very solid Insurance company annuities which served our needs to lower our portfolio risk and still have decent return.
I would not sign a deal in one sitting, nor take pressure talk ā that is someone looking at the seller making his/her commission and getting you a product that may not be the best fit for you but it is what they can make commission on.
@ChoatieMom congrats about being able to retire at 64 - meaning you have health insurance coverage until you qualify for Medicare at 65.
Most people will have their financial picture hurt w/o SS. All those years paying in FICA - individual and company match.
Younger people are definitely knowing they need to plan for very little of SS being in their retirement picture. Our retirement will be better with SS payments. I imagine if the current corporate tax increase goes through personal income tax will be next. We shall see.
My dad drew SS at 62 due to poor health, but he had built up investment properties that did well; mom died at 77 and the SS was good for helping with her expenses over those years without dad from her age 62 to 77, 15 years; fortunately with momās dementia which only became intense a few months before she died did not spend down the nest egg due to being able to be at home with live in help and a son whose home was close with one house between the two ā and he was the local person to manage the investment properties.
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@bluebayou we have converted all IRAs to Roth IRAs already and absorbed the taxes in that tax year (we didnāt bump up in tax category, and paid the taxes). We also have a large 401k that is not under FA. Preserving the money in the annuities (we can take some money out w/o penalty - which we have done) is important for our risk balance right now, so we have taken some money out of 401k (as H retired in Dec). Since I continue to work, and we have not had any major expenses, we have not needed to withdraw any more out of retirement funds at this point.
Now I will see where we are with SS early withdrawal now that I have the SSA formula on early w/d with SS before full retirement age. With the 401k doing well, we can see on month to month how SS monthly/yearly will be affected. We can go into meeting with FA with more up front info, and can review with him.
I know this is not a simple math problem but pls help me with reasons to delay SS.
77 yrs is the breakeven point for somebody that chose to take SS at 67 vs 62.
80 yrs is the breakeven point for somebody that chose to take SS at 70 vs 62.
This is assuming the SS money earns 0%.
Does it make sense to delay SS?
I am also a fiduciary and agree you shouldnāt make decisions until you are completely comfortable with and understand what you are doing. Itās the FAs job to educate you on your options and compare scenarios. "Doing dealsā on the first meeting would be a sign of a predetermined outcome. Doesnāt work for me as that first meeting is always about learning as much as I can about the client - goals, concerns, resources, knowledge, etc. Then itās a pretty simple solution matching session for the next meeting and then a third for implementation. Very transparent process.
For others on the thread, I would do some research and then ask your FA about annuities and their role in predictable income. Warning (and I tell this to my clients up front), when you google annuities, youāre going to see a lot of things saying āannuities bad!ā written by people who donāt know the first thing about them. Very powerful planning tools if used properly.
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@rickle1 I could tell by your information that you are knowledgeable and figured you were in the industry by your comments. Good to share!
SS, Medicare, and health insurance coverage up to Medicare/supplement/advantage/drug plan are a thing to figure out prior to retirement.
Retirement planning is a process one should start very young with learning to live within oneās income, pay off any debt (outside of a home) ASAP and also be wise on home interest/payoff, and start saving and investing early - 401k, Roth IRA, other things to build up oneās āestateā. The time value of money. Trying to stay in the work place at highest earning level (harder and harder to do in some industries and with some jobs). Taking care of and keeping oneās health (despite possibly poor genetics) so can live to enjoy retirement. āHealth is Wealthā - true to an extent.
All great points. Starting early is key as it takes so much pressure off market returns. Just had a conversation with my son about that as heāll graduate in May with a good job so heāll start at 22. Canāt over emphasize living within (or beneath) your means and eliminating debt quickly.
For those that are close to retirement, I have found that your resources will take you far IF you donāt have debt. You wonāt need to equal your preretirement income to live comfortably if you donāt owe anyone anything. You just need to cover your expenses (and hopefully have a little extra) and have the resources to cover emergencies.
Also important to have realistic expectations. Have met many that aspire to do things they just can simply not afford. They couldnāt afford them while working. What makes them think that would change. We help our clients a lot by understanding their goals and positioning their assets for the best chance of achieving that outcomeā¦but we canāt create miracles. If the resources arenāt there, theyāre not there. Most we deal with are much better off than they think.
if you enter your info on the link below, it will turn the complex math problem into a mortality-adjusted Present Value solution. But yes, the rule of thumb is that if you delay until 70, you need to be alive 80+ to ābreakevenā. But that excludes any Survivor Benefits for a spouse. (Click on teh Additional tab up top.)