I don’t understand this at all. I’m going to have (in my hypothetical) a $1,000,000 at 60, not $150,000 nor $100,000.
Can you explain your statement?
That’s just the actuarial piece of the decision. As I mentioned several posts higher, there are other pieces, such as taxes, investment results, possible future changes to SS, and the value of spending in your 60s vs your 90s.
When I asked if you had a pension, what I meant was do you have a non-government pension instead of a retirement savings account.
In the US, typically you either have:
a) retirement account with X total number of dollars, plus social security.
or
b) pension that guaranties you Y dollars per month, plus social security.
In the case of B, you have a locked monthly number, so taking SSI early increases that number
In the case of A, you just have a large sum of money, which you expect to last decades. So taking SSI early doesn’t really give you “more money.” You just spend the SSI instead of spending some of your savings.
If you have $1M, you can’t take 100,000 per year and it’s probably not a good idea to do it for even one year. You’ll end up broke sooner than you think. You can probably take 50 and you’ll have to take your SS at 62 just to keep up some kind of standard of living.
Actuarilly you are going to end up with the same amount no matter when you claim your SS. Of course, some people live longer and some live less, but it’s a suckers bet say that you are going to be one of the lucky ones.
So if you take SS at 62, you don’t have more overall, but you do have more in your spending years. You’re not going to be making a lot of big purchases when you’re drooling into your soup in the nursing home.
My opinion is that if you’re going to keep working then delay SS, if you’re going to stop getting paid then you should take SS as soon as you can.
A senior living facility can cost $100k+/year, and many have huge up-front fees, too.
- That is the earliest and the best option.
The op stated he has excess assets. If you are going to die with money, it’s simply a math problem.
Accounting for the unknown, besides being impossible, doesn’t change that.
If you have a million dollar nest egg, then it is not hard to get 5+% on that money, so you can draw 50 to 60k a year without touching the principal. That along with SSI should enable a nice standard of living if you just planned ok. Most are without a mortgage anymore, or near the end. medicare kicks in and that saves a ton too for most. You own your cars and monthly expenses just drop off. Dont need much more unless you collect old Porsches…
The way I’ve seen it around here in NY with people who were pretty broke, but their grown kids were paying the bills was that Medicade paid for home health aids, then nursing home, then after they died, Medicaid clawed the money back from the sale of their house.
Yes that is another calculation, if you run out of money and assets in this position, Medicaid will kick in. But you have to be run out of all your assets first. I know of many who spent the last 5+ years of their lives with no memories of their families, and just drained the last of their nest eggs and left their families nothing. So certainly some planning to not be in that position when and if the time comes, which if you live long enough, puts you in a very high risk group to happen…
Well that is the question of the century. If you knew the time of your death it would be 100% easier. Some of my best friend money managers told me to take it at 65 or earlier and laid out tables how the crossover of waiting later and going early were in favor of taking early.
I think the need for $ is prolly the best indicator. When we retired at my house we had enough money coming in from pensions to not need the ss benifets. I started at 68 and my wife at 69 which seemed comfortable for us. Don’t think there is a right or wrong answer here. You just have to make your best decision and live with it.
I hit the magic 73 this year and have to start taking money out of my 401k. Can’t wait to see how much the gov’t gets out of my 401.
But you won’t have more in your spending years.
Again, if I have a million dollars, I have a million dollars. I don’t have $50,000 a year. I have the full 1 million dollars. The only reason not to spend all of it at once is so that I’ll have more money later.
But that also applies to SSI. The reason not to take it early is so that you’ll have more later.
So, using your example, I can:
a) Spend $50K a year at 62 and take out $25K a year in SSI.
or
b) Spend $75K a at 62, and wait until 70 to take SSI. At 70, I’ll have less money, but my SSI will be ~double than if I took it at 62.
If you want more money in the “spending years,” then you just spend more money.
Yeah, that is a whole other complex topic. There are various strategies people use to make themselves eligible for Medicaid. I don’t know about NY, but you need to be careful about paying someone’s bills, as it can affect their Medicaid eligibility. That is, in some states they may treat your assets as — in effect — the assets of the elderly parent such that your assets make the parent too wealthy for Medicaid.
This topic is confusing and concerning. Reading all the posts here, i am wholly underprepared for my retirement this year. In 3 weeks, i will reduce my hours to about 15 a week then full retirement in july when i hit 66.8 months. I do not have the million$ you guys mention. My hubby is retired due to health issues but makes the minimum with no retirement or 401.
I have 42 years in healthcare and i just cant do more than i have. I have less than half of that million and a modest pension will be monthly. We own our home. In july, hubby will get a raise with spousal benefits.
My hubby is chronically ill and i want quality time with him. I hope we can get by. He needs my help at home now.
All hard decisions and very individual!
The vast majority of Americans don’t have the million dollars either and people get along with what they have. You have to remember who’s posting here.
Think you know the answers already. Budget, get rid of subscription services not needed, get rid of second car, shop wisely (but healthy), buy used clothes/shoes etc on eBay, pick up part time (perhaps one day week) waitressing or whatever for fun money…
Good luck
about 4%.
I hope you are right. I was expecting for it to be quite a bit more than that. We will see. Then do you take it out late and not get the use of the money for 2025, or take it out early and lose the interest the invested money makes in 2025? Another by gosh and by golly hard question.
RMD isn’t magic. There is a table published (easy Google search) that says how much you’ll have to take out every year for the rest of your life. Spoiler alert, it gets worse as you get older. Worse meaning a higher percentage of whatever you have left. The table is presented in a wired way, they give you a number based on age, you divide that number into the balance of any accounts subject to an RMD, and that’s your answer.
If your spouse is 10 years younger or more it’s a little more complicated, a different table, but better in your favor, better meaning you have to withdraw less money.
Well, no. Government takes whatever the appropriate taxes are. If that -4% RMD for year 1 is all in the 12% bracket, they will take about an eight of your RMD for the year. If fully in the 22% bracket, it will be almost a quarter of your RMD.
It is not that tough to figure out how much tax your RMD will produce. But the danger of a high 401k balance and taking SS early is higher taxes later.
I go back to my earlier reply - choice of when to start SS is not so simple, and one really should consider it as an exercise to reduce overall tax burden. On a practical note, if the Trump tax cuts get extended it is even more reason, in my opinion, to delay SS and use the lower rates to withdraw or convert/rollover to Roth.
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