I have a relative that is contemplate the timing of retirement from a state job and when to start social security. Does anybody have a good resource or rule of thumb on how best to go about deciding when it is most advantageous to start SSA? Also, will income from a state pension or side job affect the level of benefits? My understanding is that it is mostly based on how long you expect to live and whether you can make ends meet without the SSA if you wait to file. Any other thoughts or resources to help make that decision that anybody would recommend?

txags92 said:

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I have a relative that is contemplate the timing of retirement from a state job and when to start social security. Does anybody have a good resource or rule of thumb on how best to go about deciding when it is most advantageous to start SSA? Also, will income from a state pension or side job affect the level of benefits? My understanding is that it is mostly based on how long you expect to live and whether you can make ends meet without the SSA if you wait to file. Any other thoughts or resources to help make that decision that anybody would recommend?

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I think you hit on the biggest factors. If you expect to live longer than the average person your age, defer the start date, and use other interim retirement income funding sources if you have them.

Mike Piper publishes great resources around SSA
https://www.amazon.com/Social-Security-Made-Simple-Retirement/dp/0997946512

https://opensocialsecurity.com/

State Job = Do not pass go, do not collect $200, but go straight to figuring out if WEP applies to them (a personal answer based on their specific work (SS covered earnings) history.

Then, with that information, get an appointment with SS to get an honest benefit matrix. Then, do your math.

mosdefn14 said:

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State Job = Do not pass go, do not collect $200, but go straight to figuring out if WEP applies to them (a personal answer based on their specific work (SS covered earnings) history.

Then, with that information, get an appointment with SS to get an honest benefit matrix. Then, do your math.

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Yes, the state job they are in paid into social security. Does the WEP still apply in that instance?

If they have 30 years of substantial (SS) earnings, they should have earned their way out of the WEP. I would still meet with SS and confirm & get a benefit matrix as they prepare to retire/file.

https://maximizemysocialsecurity.com/how-maximize-my-social-security-works

Good thoughts. Everyone's situation is different and nothing is black and white. I think mosdefn14 is right - meet with SS to determine what the benefits actually are and then work through your personal situation.

mosdefn14 said:

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If they have 30 years of substantial (SS) earnings, they should have earned their way out of the WEP. I would still meet with SS and confirm & get a benefit matrix as they prepare to retire/file.

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If the state job was subject to SS (and if I understand his or her post, it did) the WEP should not come into play.

Stive said:

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Worlds Foremost Ag said:

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Compare total payments to be received if taking payments early, at full retirement, and late to see what the breakeven point is in years. Generally, it is best to start as early as possible because it can take approx. 15 years to come out ahead by waiting.

For example using my own projections:

I would be 77 years old before I began leaving money on the table if I took reduced early retirement vs. full retirement.

I would be 79 years old before I began leaving money on the table if I took reduced early retirement vs. delayed retirement.

I would be 82 years old before I began leaving money on the table if I took full retirement vs. delayed retirement.

---

You're leaving out two pieces of the puzzle if this is how you're calculating it.

A. What's the spouses set up with regards to SS? Is he/she younger than you? Likely to outlive you by a good bit? Is her SS higher than yours or lower?

B. The taxable aspect if you decide to take it early.

Just saying X amount of years to earn it back usually isn't giving you the big picture. In some instances it makes sense to take it at full retirement age, in most instances it makes sense to wait until 70, and it almost never makes sense to take it early. The primary exception to not taking it early is if you've got terminal health issues that make you think you'll pass before your early 70's AND your spouses benefit is already near or higher than yours.

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The take it early, at full retirement age, or wait to 70 decision is tough, and probably best to take a look at your own family's longevity. I had clients whose family history showed most made it into their mid 80s to early 90s while others few made it out of their 60s, particularly the males. In the latter instance, waiting four years to draw at 70 would likely never pay off. Four years at say $2,800 a month is quite a pile that would take many years to recoup via the increased amount by waiting until 70.

Most I have known started at FRA, a few started early, and only one that I know of waited until 70. I am pretty sure it isn't going to work out for him mathematically.

What taxable aspect are you referring to if taken early?

Stive said:

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Worlds Foremost Ag said:

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Compare total payments to be received if taking payments early, at full retirement, and late to see what the breakeven point is in years. Generally, it is best to start as early as possible because it can take approx. 15 years to come out ahead by waiting.

For example using my own projections:

I would be 77 years old before I began leaving money on the table if I took reduced early retirement vs. full retirement.

I would be 79 years old before I began leaving money on the table if I took reduced early retirement vs. delayed retirement.

I would be 82 years old before I began leaving money on the table if I took full retirement vs. delayed retirement.

---

You're leaving out two pieces of the puzzle if this is how you're calculating it.

A. What's the spouses set up with regards to SS? Is he/she younger than you? Likely to outlive you by a good bit? Is her SS higher than yours or lower?

B. The taxable aspect if you decide to take it early.

Just saying X amount of years to earn it back usually isn't giving you the big picture. In some instances it makes sense to take it at full retirement age, in most instances it makes sense to wait until 70, and it almost never makes sense to take it early. The primary exception to not taking it early is if you've got terminal health issues that make you think you'll pass before your early 70's AND your spouses benefit is already near or higher than yours.

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Good points. No spouse involved, so no worries about survivor benefits or anything like that. And yes, I will be setting up a spreadsheet at some point to look at the tax consequences.

Worlds Foremost Ag said:

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Good thoughts. Everyone's situation is different and nothing is black and white. I think mosdefn14 is right - meet with SS to determine what the benefits actually are and then work through your personal situation.

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Agreed. A meeting with SSA got added to their to-do list before making any decisions.

one safe place said:

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mosdefn14 said:

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If they have 30 years of substantial (SS) earnings, they should have earned their way out of the WEP. I would still meet with SS and confirm & get a benefit matrix as they prepare to retire/file.

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If the state job was subject to SS (and if I understand his or her post, it did) the WEP should not come into play.

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It was and with state and previous employment, they have ~40 years of substantial SS earnings. Should not be an issue.

one safe place said:

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Stive said:

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Worlds Foremost Ag said:

---

Compare total payments to be received if taking payments early, at full retirement, and late to see what the breakeven point is in years. Generally, it is best to start as early as possible because it can take approx. 15 years to come out ahead by waiting.

For example using my own projections:

I would be 77 years old before I began leaving money on the table if I took reduced early retirement vs. full retirement.

I would be 79 years old before I began leaving money on the table if I took reduced early retirement vs. delayed retirement.

I would be 82 years old before I began leaving money on the table if I took full retirement vs. delayed retirement.

---

You're leaving out two pieces of the puzzle if this is how you're calculating it.

A. What's the spouses set up with regards to SS? Is he/she younger than you? Likely to outlive you by a good bit? Is her SS higher than yours or lower?

B. The taxable aspect if you decide to take it early.

Just saying X amount of years to earn it back usually isn't giving you the big picture. In some instances it makes sense to take it at full retirement age, in most instances it makes sense to wait until 70, and it almost never makes sense to take it early. The primary exception to not taking it early is if you've got terminal health issues that make you think you'll pass before your early 70's AND your spouses benefit is already near or higher than yours.

---

The take it early, at full retirement age, or wait to 70 decision is tough, and probably best to take a look at your own family's longevity. I had clients whose family history showed most made it into their mid 80s to early 90s while others few made it out of their 60s, particularly the males. In the latter instance, waiting four years to draw at 70 would likely never pay off. Four years at say $2,800 a month is quite a pile that would take many years to recoup via the increased amount by waiting until 70.

Most I have known started at FRA, a few started early, and only one that I know of waited until 70. I am pretty sure it isn't going to work out for him mathematically.

What taxable aspect are you referring to if taken early?

---

Yeah, our family is all over the map. Grandparents that died in their 90s, some that died in their 60s, some in their late 70s. Parents were 68 and 83. I think it is going to come down to budgeting what their needs are now and if they can make ends meet comfortably, they will likely wait until either 65 or 67.

one safe place said:

---

Stive said:

---

Worlds Foremost Ag said:

---

Compare total payments to be received if taking payments early, at full retirement, and late to see what the breakeven point is in years. Generally, it is best to start as early as possible because it can take approx. 15 years to come out ahead by waiting.

For example using my own projections:

I would be 77 years old before I began leaving money on the table if I took reduced early retirement vs. full retirement.

I would be 79 years old before I began leaving money on the table if I took reduced early retirement vs. delayed retirement.

I would be 82 years old before I began leaving money on the table if I took full retirement vs. delayed retirement.

---

You're leaving out two pieces of the puzzle if this is how you're calculating it.

A. What's the spouses set up with regards to SS? Is he/she younger than you? Likely to outlive you by a good bit? Is her SS higher than yours or lower?

B. The taxable aspect if you decide to take it early.

Just saying X amount of years to earn it back usually isn't giving you the big picture. In some instances it makes sense to take it at full retirement age, in most instances it makes sense to wait until 70, and it almost never makes sense to take it early. The primary exception to not taking it early is if you've got terminal health issues that make you think you'll pass before your early 70's AND your spouses benefit is already near or higher than yours.

---

The take it early, at full retirement age, or wait to 70 decision is tough, and probably best to take a look at your own family's longevity. I had clients whose family history showed most made it into their mid 80s to early 90s while others few made it out of their 60s, particularly the males. In the latter instance, waiting four years to draw at 70 would likely never pay off. Four years at say $2,800 a month is quite a pile that would take many years to recoup via the increased amount by waiting until 70.

Most I have known started at FRA, a few started early, and only one that I know of waited until 70. I am pretty sure it isn't going to work out for him mathematically.

What taxable aspect are you referring to if taken early?

---

Apologies…that was poorly worded on my part. The lower amount when taken early, AND when combined with the fact that most people are still earning household income at 62 usually causes a pretty good chunk of your SS to be taxed. Taxing that smaller number at a household income tax threshold eats it up.

Not every time but most of the time, waiting to take it makes more sense, unless, like I said above, you don't expect to live very long or your spouse has an equal or higher SS check than you do. We've run the numbers essentially every way they can be run, and while it's a case by case basis, it's typically more favorable for the overall long-term financial projection if someone were to wait. Even drawing from other income to fill the gap can be favorable when the wife is 3+ years younger than the husband (assuming the husband was the primary breadwinner). Her being able to shift to his higher check when he dies makes that length of time someone would have to live to make it up stretch out even longer. And 8% bump per year isn't anything to sneeze at when comparing it to drawing down assets that are projected to grow at that rate (or less) but with risk.

My point in my original comment was simply to say: unless you're single and/or on a definitive life expectancy, it's not as easy as saying "if I live past age X then this is the right answer".

Good luck getting an appointment at a SSA office. Let us know how many months that takes.

Go to ssa.gov and register. It will show you all you need to know. What benefits at 62, 65, 67. You can apply there if you wish.

txags92 said:

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one safe place said:

---

Stive said:

---

Worlds Foremost Ag said:

---

Compare total payments to be received if taking payments early, at full retirement, and late to see what the breakeven point is in years. Generally, it is best to start as early as possible because it can take approx. 15 years to come out ahead by waiting.

For example using my own projections:

I would be 77 years old before I began leaving money on the table if I took reduced early retirement vs. full retirement.

I would be 79 years old before I began leaving money on the table if I took reduced early retirement vs. delayed retirement.

I would be 82 years old before I began leaving money on the table if I took full retirement vs. delayed retirement.

---

You're leaving out two pieces of the puzzle if this is how you're calculating it.

A. What's the spouses set up with regards to SS? Is he/she younger than you? Likely to outlive you by a good bit? Is her SS higher than yours or lower?

B. The taxable aspect if you decide to take it early.

Just saying X amount of years to earn it back usually isn't giving you the big picture. In some instances it makes sense to take it at full retirement age, in most instances it makes sense to wait until 70, and it almost never makes sense to take it early. The primary exception to not taking it early is if you've got terminal health issues that make you think you'll pass before your early 70's AND your spouses benefit is already near or higher than yours.

---

The take it early, at full retirement age, or wait to 70 decision is tough, and probably best to take a look at your own family's longevity. I had clients whose family history showed most made it into their mid 80s to early 90s while others few made it out of their 60s, particularly the males. In the latter instance, waiting four years to draw at 70 would likely never pay off. Four years at say $2,800 a month is quite a pile that would take many years to recoup via the increased amount by waiting until 70.

Most I have known started at FRA, a few started early, and only one that I know of waited until 70. I am pretty sure it isn't going to work out for him mathematically.

What taxable aspect are you referring to if taken early?

---

Yeah, our family is all over the map. Grandparents that died in their 90s, some that died in their 60s, some in their late 70s. Parents were 68 and 83. I think it is going to come down to budgeting what their needs are now and if they can make ends meet comfortably, they will likely wait until either 65 or 67.

---

Mine was really divided by gender. I did have a great grandfather who lived to be 97, but most of the men did not make 70 and the sample size was pretty large, many large families in our past. My paternal grandfather died at 48 and my paternal grandmother died at 28.

One thing we have done as far as budgeting is to sell assets no longer wanted or needed, and use that income to live on while waiting for the social security to start. A couple of times someone had recently inherited real estate and they sold it with no gain or loss. Even where property has been owned for a while, unless the gain is huge, they often would not owe tax on the gain.

And another thing that you don't see much anymore that used to be common is when someone retired, they would get all their retirement funds. Of course, they would roll over the taxable part. Now, most people have a 401(k) but back then a lot of companies had two or three or four "retirement" plans or "thrift savings" plans and some of those funds had already been taxed and could not be rolled over. Often, that was enough to tide them over for a bit until they started social security.

txags92 said:

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I have a relative that is contemplate the timing of retirement from a state job and when to start social security. Does anybody have a good resource or rule of thumb on how best to go about deciding when it is most advantageous to start SSA? Also, will income from a state pension or side job affect the level of benefits? My understanding is that it is mostly based on how long you expect to live and whether you can make ends meet without the SSA if you wait to file. Any other thoughts or resources to help make that decision that anybody would recommend?

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I'm assuming they live in Texas. If they do, disregard.

Otherwise, the following states tax SS on top of what the federal government takes out of SS before it gets to you. Thus, their take home is going to be less than they think:

• Colorado
• Connecticut
• Kansas
• Minnesota
• Missouri
• Montana
• Nebraska
• New Mexico
• Rhode Island
• Utah
• Vermont
• West Virgina

Stive said:

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one safe place said:

---

Stive said:

---

Worlds Foremost Ag said:

---

Compare total payments to be received if taking payments early, at full retirement, and late to see what the breakeven point is in years. Generally, it is best to start as early as possible because it can take approx. 15 years to come out ahead by waiting.

For example using my own projections:

I would be 77 years old before I began leaving money on the table if I took reduced early retirement vs. full retirement.

I would be 79 years old before I began leaving money on the table if I took reduced early retirement vs. delayed retirement.

I would be 82 years old before I began leaving money on the table if I took full retirement vs. delayed retirement.

---

You're leaving out two pieces of the puzzle if this is how you're calculating it.

A. What's the spouses set up with regards to SS? Is he/she younger than you? Likely to outlive you by a good bit? Is her SS higher than yours or lower?

B. The taxable aspect if you decide to take it early.

Just saying X amount of years to earn it back usually isn't giving you the big picture. In some instances it makes sense to take it at full retirement age, in most instances it makes sense to wait until 70, and it almost never makes sense to take it early. The primary exception to not taking it early is if you've got terminal health issues that make you think you'll pass before your early 70's AND your spouses benefit is already near or higher than yours.

---

The take it early, at full retirement age, or wait to 70 decision is tough, and probably best to take a look at your own family's longevity. I had clients whose family history showed most made it into their mid 80s to early 90s while others few made it out of their 60s, particularly the males. In the latter instance, waiting four years to draw at 70 would likely never pay off. Four years at say $2,800 a month is quite a pile that would take many years to recoup via the increased amount by waiting until 70.

Most I have known started at FRA, a few started early, and only one that I know of waited until 70. I am pretty sure it isn't going to work out for him mathematically.

What taxable aspect are you referring to if taken early?

---

Apologies…that was poorly worded on my part. The lower amount when taken early, AND when combined with the fact that most people are still earning household income at 62 usually causes a pretty good chunk of your SS to be taxed. Taxing that smaller number at a household income tax threshold eats it up.

Not every time but most of the time, waiting to take it makes more sense, unless, like I said above, you don't expect to live very long or your spouse has an equal or higher SS check than you do. We've run the numbers essentially every way they can be run, and while it's a case by case basis, it's typically more favorable for the overall long-term financial projection if someone were to wait. Even drawing from other income to fill the gap can be favorable when the wife is 3+ years younger than the husband (assuming the husband was the primary breadwinner). Her being able to shift to his higher check when he dies makes that length of time someone would have to live to make it up stretch out even longer. And 8% bump per year isn't anything to sneeze at when comparing it to drawing down assets that are projected to grow at that rate (or less) but with risk.

My point in my original comment was simply to say: unless you're single and/or on a definitive life expectancy, it's not as easy as saying "if I live past age X then this is the right answer".

---

No apology necessary, I am the world's worst at missing someone's point, lol. Then when they explain, I wonder how I missed it.

As I mentioned earlier, my life expectancy is not such that I figured it would pay to wait until 70. Plus, it is sort of a zero sum game. Wait until 70 and die at 69 and poof, you get, or your family gets the $255 thing, the rest vanishes.

I actually started taking mine at 64. I was in the process of selling one business, would have a significant decline in earned income and had a game plan on how to avoid the earnings test mess. I spoke with 6 or 7 people with social security about what I was going to do to see if they could shoot holes in it. Then, after a while, it was apparent that the sale of the business was not going to happen, meaning the game plan was no longer viable. I knew I had a year to withdraw my application and repay the monies received, then could reapply later. I am the world's worst procrastinator, and one Friday I was tossing this around in my mind, and typically would just deal with it on Monday. But I called SSA and asked when my one year period ended, she told me on the following day, a Saturday. So, I loaded my ass up and drove to their office and withdrew the application.

Social security requires a lot of decision making and if you dig into it some, it is complicated, what with bend points and other stuff. And if you are born on the 1st of the month (like me) you get to start getting paid a month earlier than those born on the 2nd of the month or later.

2 things.
1. meeting with SSA = talking to a rock. don't bother. As mentioned above, go to ssa.gov and all the info is explained and specific benefits at varying ages illustrated
2. Benefits at FRA (full retirement age) are increased by 8% per yr to age 70 (not worth waiting) Fact, as you get older you spend and do less. take the money and run
3. COLA increases are published every year about this time for the next calendar year (8.7% in 2023 and ~3.1% in 2024)

yep, I did the Biden thing .....

This thread interests me as an old. Starting to really look at retirement calculators and different scenarios. But each one has me working till 67 for max portfolio and ss benefits. I know I'll want to do something to stay active and have what my mom called walking around money.

So hard to really know how much is enough ?

AgOutsideAustin said:

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This thread interests me as an old. Starting to really look at retirement calculators and different scenarios. But each one has me working till 67 for max portfolio and ss benefits. I know I'll want to do something to stay active and have what my mom called walking around money.

So hard to really know how much is enough ?

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All my career I had people asking about this sort of thing, then it got to be my turn. There is a final page on the wall calendar and whether it is two pages down, or 60 pages down, we don't know but one thing about it, every page you tear off gets you closer to the last page.

My decision was easy, not at first but as I thought about it. Got to the point I wasn't willing to trade another year of my life at work in exchange for another year of income.

My wife was 3 years younger than me, she was determined to take hers at 62, she was talked into waiting until I was 66 but I still thought she was early. Then she died at 69 and I know she would have really been pissed if she had never taken her SS at all. Life is funny sometimes, even when it isn't.

Practically every study I have ever seen tells you to delay. I think about 60-65% take it early.

Stive is correct on data and taxes. Depending on your pension amount(s), you likely are taxed at the max on your SS no matter when you take it.

If you end up with RMDs, I would look at what that does to your tax bracket. It could be you delay SS and live/Roth convert until your 70. This may keep you from a higher bracket later. I doubt it for you, but I am just guessing.

As for the 8% growth by delaying, it is actually 8 plus inflation. Assume 3% inflation plus the 8 is 11%. The stock market averages 10 and it has inflation included plus the risk. This is why the studies say delay. You make more by waiting but need to make it around 11-12 yrs for it to work.

I am 52 and planning early retirement by age 56 so think about this constantly

my take is this:

Social security is going bankrupt in 2033.

I am taking whatever I can get the first day I am able just to get into the system

BEFORE they raise the age to 70.

likely they will cut my benefits and raise the age before I get to 62.

aren't all these discussions leaving out the other side of the equation?

if I am getting my payout benefit of $3100 (based on early retirement but 30 years at my salaries)

then isn't there an "opportunity cost" to NOT taking it?

meaning, if I can get $3100 at age 62 and then be able to INVEST $3100 into a different vehicle, wouldn't I be coming out ahead (as long as that investment outperforms Social Security?)

it's basically taking out a loan you never have to pay back

LMCane said:

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I am 52 and planning early retirement by age 56 so think about this constantly

my take is this:

Social security is going bankrupt in 2033.

I am taking whatever I can get the first day I am able just to get into the system

BEFORE they raise the age to 70.

likely they will cut my benefits and raise the age before I get to 62.

---

A. It's not going bankrupt. The government isn't going to let it disappear in the middle of the night and risk starving several million senior citizens, or at the very least Lisa them off and cost them their votes. The trust fund is scheduled to run out by that point but as long as people are still working there are still dollars coming in and able to go out. The current estimate is that the work force alone (without the trust fund) would be able to pay about 75% of the estimated demand.

B. I agree with you about them changing the rules. They're likely going to move the age up, change the contribution requirements from employers (maybe employees too), and (what I think is most likely to happen) means test it far more than they currently do.

Why do so many folks here think SS is automatically taxed. It's NOT in Texas. Now if you earn XXX over that income as income there is a limit that excludes taxing. Around 70% of annual SS income. Then it becomes taxed

SteveBott said:

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Why do so many folks here think SS is automatically taxed. It's NOT in Texas. Now if you earn XXX over that income as income there is a limit that excludes taxing. Around 70% of annual SS income. Then it becomes taxed

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On that note, I don't think many realize that some states tax it and some don't...on top of the feds taxing it.

Function of age I guess.

In mortgage we 'gross up' SS by 25% but need tax statements to confirm. So 2000 a month is 2500 for qualifying

LMCane said:

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aren't all these discussions leaving out the other side of the equation?

if I am getting my payout benefit of $3100 (based on early retirement but 30 years at my salaries)

then isn't there an "opportunity cost" to NOT taking it?

meaning, if I can get $3100 at age 62 and then be able to INVEST $3100 into a different vehicle, wouldn't I be coming out ahead (as long as that investment outperforms Social Security?)

it's basically taking out a loan you never have to pay back

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Even if you used your social security benefits to buy potato chips rather than invest it, for many I think they are better off taking it early (assuming they don't continue working to the extent the earnings test comes into play). As I recall, if you start at 62 rather than 67, I think the break-even point is at almost 79 years old, the point at which you would have been better off waiting until FRA.

In your scenario, if you invested some or all of the benefits from 62 to 67, that would make the break-even point even later.

I don't know if my sample size is adequate, but most males in my realm of things aren't making it to 79.

Sounds completely fair to just make it means tested, so that people who paid the most get none of the benefit. Probably headed that way though.