When to start drawing Social Security

[Crowbob]

Uncle Sam can change any rules anytime they want to so its a crap chute no matter what.

It’s not a flat 85%. It’s up to 85% over a certain amount of unearned income.

Plus, at age 70.5 you gotta start a scheduled withdrawal of your 401k so’s that same uncle can hit it hard if he so chooses-which can also change at any moment.

I say minimize the 401k withdrawals and maximize the SSA payout OVER YOUR LIFETIME so the heirs get what’s left over that the hot bimbo you met at Costco didn’t find.

[Baz]

Earlier this month, I received my 77th SS benefit payment since starting back in August of 2018, the year I turned 64.

This is my "retirement" benefit.

The next COL increase is coming up in December, just like clockwork.

The SSA says the 2.8% cost-of-living adjustment (COLA) will take effect with benefits payable to Social Security beneficiaries in January 2026. Increased payments to people receiving SSI benefits will begin in December 2025.

In closing, I would like to thank all of those who continue to pay into the system.

Happy Friday!

[Zeke]

Drawing early I beat the bet. At 80 I have received more than if I had waited to age 70 which was the max back then. Actually, I didn't spread sheet it, but that's what they say.

[The Synergizer]

Now we'll see how the Medicare premiums adjust...

[KFC911]

Originally Posted by The Synergizer

Now we'll see how the Medicare premiums adjust...

I started drawing SS at 62 and hit Medicare a few months back.

Were I still in the marketplace like many ... it would/will have been bigly next year.

I could still afford it ... but ...

The Medicare deduction is meh ...

I'm lucky ... many aren't.

[jyl]

This is a very useful discussion.

It looks like my break-even is 80 y/o - if I die before 80, I'm better off taking benefits early; if I die after, I'm better of waiting to take benefits.

I have a question about how recent earnings factor into the benefit. I had max SS earnings every year for decades until 2021 when I opened my own office, elected S-Corp, and started paying myself the smallest credible W2 salary ($50K). So my last four years' SS earnings have been at $50K. Does that hurt my benefit? Should I up my W2 salary to max SS earnings for a couple of years, before starting to take SS benefits?

Edit: answered own question. Benefits based on top 35 years of inflation-indexed earnings.

Another question: how do we factor spousal benefits into this? Women often outlive men, and often have a lower SS benefits. Shouldn’t we think about a scenario where we (I) die first and spouse lives on?

Edit: see below.

[jyl]

I built a quickie spreadsheet to play with this. Inflation matters a little bit - the lower the average inflation you assume, the lower the break-even death age is. If I assume 3% inflation then my break-even is a year lower.

Answering my question, looks like you just run the model to continue 50% of your benefit from your death until your spouse's death.

Gee I just love thinking about this stuff.

Anyone wants my (rough, crude) spreadsheet, PM me.

[Crowbob]

In general, if you are not on either extreme of the grim reaper’s reach, it doesn’t make much difference when you start drawing.

However, if you are gonna die young, take the money whilst you can. If you’re gonna live longer than 80% of everybody else, wait.

By far the best strategery is to be debt-free before you retire. If you do that, the point at which you begin to draw SS becomes almost irrelevant.

[JavaBrewer]

I will be turning 63 this November. Frankly, my heath is terrible and highly doubt I will see 70. Going to start pulling now.

[jyl]

Just putting these links here for reference:

Summary of how SSA reduces your benefit if you claim while continuing to work, and credits those benefits back after you still working or reach full retirement age:
https://www.aarp.org/social-security/faq/withholding-while-working/

Example of how SSA calculates your benefit, using top 35 years of indexed earnings.
https://www.ssa.gov/OACT/ProgData/retirebenefit1.html

I’m trying to figure out the optimal strategy in my case. 62, plan to work another 10 years (I love what I do and, what’s worse, I think I’m addicted to it), S-Corp so I set my own W2 salary, spouse who I expect to outlive me. Basically trying to figure out if I should give myself a big raise.

[jyl]

Originally Posted by KFC911

I started drawing SS at 62 and hit Medicare a few months back.

Were I still in the marketplace like many ... it would/will have been bigly next year.

I could still afford it ... but ...

The Medicare deduction is meh ...

I'm lucky ... many aren't.

My wife started Medicare recently. The cost isn’t nothing but isn’t much. I have two and a half more years. My ACA coverage cost is going to go up for sure. I can afford it. Many can’t.

[Cajundaddy]

For maybe 10% of the population there are significant considerations to decide when to take SS. For most of us, once you stop working after 62 the exact time doesn't matter much. I sold my business at age 64 and started taking SS at full retirement which was 65. I could have waited and lived off investments but... SS increases at 8% per year and my investments were doing far better than that. I chose to stay invested. Others will choose differently.

[Chocaholic]

It seems that starting in 2026, there will be no federal income tax on SS (if I understand correctly). Because the whims of DC change almost every 4 years, that seems like a good reason to take it while the tax burden is low.

[Crowbob]

Originally Posted by jyl

Just putting these links here for reference:

Summary of how SSA reduces your benefit if you claim while continuing to work, and credits those benefits back after you still working or reach full retirement age:
https://www.aarp.org/social-security/faq/withholding-while-working/

Example of how SSA calculates your benefit, using top 35 years of indexed earnings.
https://www.ssa.gov/OACT/ProgData/retirebenefit1.html

I’m trying to figure out the optimal strategy in my case. 62, plan to work another 10 years (I love what I do and, what’s worse, I think I’m addicted to it), S-Corp so I set my own W2 salary, spouse who I expect to outlive me. Basically trying to figure out if I should give myself a big raise.

You’ve expressed your optimum strategy: Work ‘till age 73, retire and sign up for SS. Yes, give yourself a big raise. The mass of money you’ve accumulated so far will provide plenty of momentum for you to coast in comfort.

I look at what will make my life as pleasant as possible, not at how much my SS check will be.

[Baz]

Well over $100,000 deposited into my bank account since I signed up.

Think how far that goes for someone with a VFR obsession?

[Crowbob]

Get help, Baz. Before it’s too late.

[Baz]

Originally Posted by Crowbob

Get help, Baz. Before it’s too late.

It's a passion for me Bob. That's all.

BTW.....I have 3 First Generation Interceptors as well.

These are '83's. The top one is a US spec and the 2nd pic is a Euro spec (rare here in the states):






And this one is an '84. The seller started to do a repaint so striped and primered the panels before realizing he didn't have the right tank for it. But I did. So it's mine now....

The cool thing about this bike is the twin Kerker full exhaust system!



Some of my bikes came to me in running condition and not needed anything but most needed things whether running or not and I have learned how to overhaul and rebuild most of the bike's systems. I enjoy it.....

[A930Rocket]

Looks like a fun hobby, Baz!

[Baz]

Originally Posted by A930Rocket

Looks like a fun hobby, Baz!

Thanks, A930Rocket!

Doing the calculations of when to start drawing your benefit is fine. But at some point it's also nice to be able to enjoy some extra things while you still can!

[The Synergizer]

One motorcycle thread was not enough...
He must overload into others...
Next, tulip bulbs...

Originally Posted by Crowbob

Get help, Baz. Before it’s too late.