# Social Security Facts and Fiction



## SeaBreeze (Jun 29, 2018)

Seven myths about Social Security, full article here.   



> Social Security benefits are likely to be a big part of your retirement  plan. Around 63 million Americans will receive approximately $1 trillion  in benefits during 2018, according to the Social Security  Administration. Yet understanding exactly how this program works, as  well as the best time to start taking benefits,  isn’t always easy. Here are some of the most common misconceptions  surrounding Social Security, as well as the truth behind them.


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## Don M. (Jun 29, 2018)

SeaBreeze said:


> Seven myths about Social Security, full article here.



Social Security seems to be the Most Important, and Most Neglected social program our government has ever devised.  Millions of Seniors are dependent upon this program for their sole source of income...yet, this program has not been substantially changed/improved in many years.  Instead, Washington just releases "gloom and doom" reports about how this vital program is headed for serious troubles in coming years....instead of taking actions now to keep the program viable for future retirees.  I guess our politicians are too busy engaging in Partisan Politics to do anything that might better prepare our people for the future.  There are numerous actions that could prevent these future troubles...removing the caps, increasing the withholding, even "means testing" for those with substantial other sources of income, etc.  But, so long as people keep sending the same old hacks to Washington, things will never change, until a crisis occurs. 

The "Big Thing" now seems to be to encourage people to delay applying for benefits as long as possible.  That sounds good if a person knew for sure how long they will live.  Personally, we signed up as soon as we became eligible, and have already received several times more than I paid in over my working career...my wife never worked outside the home....and we are probably a classic example of why this program is headed for trouble. 

The Best and perhaps Only approach our people can take to insure this program for the future is to find out Where their politicians stand on Social Security, and then get out and Vote in upcoming elections, and start ridding Washington of the politicians who do little other than pandering to their biggest campaign donors.  

I hope Matrix allows this discussion to continue...even though it is bound to "reek" of politics...this is ONE political discussion that NEEDS to be taking place.


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## StarSong (Jun 29, 2018)

Don M. said:


> I hope Matrix allows this discussion to continue...even though it is bound to "reek" of politics...this is ONE political discussion that NEEDS to be taking place.



So true, Don.  

Although it swings into politics, discussing the future of SS and suggesting various personal financial strategies with each other surely can't hurt.  Rare indeed is the American of SS age who would argue that the potential SS shortfall was caused by one party, that the problem has been kicked down the road by only one party, or that it can be solved without compromises across the aisle.


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## mathjak107 (Jun 29, 2018)

Don M. said:


> Social Security seems to be the Most Important, and Most Neglected social program our government has ever devised.  Millions of Seniors are dependent upon this program for their sole source of income...yet, this program has not been substantially changed/improved in many years.  Instead, Washington just releases "gloom and doom" reports about how this vital program is headed for serious troubles in coming years....instead of taking actions now to keep the program viable for future retirees.  I guess our politicians are too busy engaging in Partisan Politics to do anything that might better prepare our people for the future.  There are numerous actions that could prevent these future troubles...removing the caps, increasing the withholding, even "means testing" for those with substantial other sources of income, etc.  But, so long as people keep sending the same old hacks to Washington, things will never change, until a crisis occurs.
> 
> The "Big Thing" now seems to be to encourage people to delay applying for benefits as long as possible.  That sounds good if a person knew for sure how long they will live.  Personally, we signed up as soon as we became eligible, and have already received several times more than I paid in over my working career...my wife never worked outside the home....and we are probably a classic example of why this program is headed for trouble.
> 
> ...


social security is already means tested . it is means tested tax wise and it is means tested because those who pay in more get smaller benefits proportionately  then lower incomes .so i am not in favor of any more means testing . i paid in to fica which is insurance and no one should be told after paying in to an insurance plan that you can't get what you paid in to get because you have to much ..

of course those who talk  about means testing "substantial assets "  will always consider substantial as not including them .

is someone generating 40k a year pretax income from a million dollars to live  different than someone who has a 40k pension  and no assets ?  not really when it comes to what you have to live on , as that 40k generated by the portfolio assumes the spending of principal too when needed to sustain that income flow .

social security should have ssdi split off an made part of welfare . it has drained social security retirement and because of  all the fraud and abuse money is transferred constantly to sure it up.


What most people don’t know is that our employment tax dollars don’t all buy the same amount of future benefit. Some of our employment tax dollars buy six times as much in benefits as others.

According to the most recent Trustees Report, for instance, the first $767 of “average indexed monthly earnings” (a complex formula that adjusts earnings over time) is credited at a 90 percent rate, assuring the lowest wage workers of a retirement benefit nearly equal to their earned wage.

Wages of more than $767 a month but less than $4,624 a month are credited at a 32 percent rate. This means retirement benefits increase at a much lower rate. The benefit pinching, however, does not end there.

More means less

For wages of more than $4,624 a month up to the wage base maximum ($113,700 for 2013), the crediting rate is only 15 percent. Thus, all the wages earned — and employment taxes paid — over that $55,488-a-year “bend point” gain benefits at only one-sixth the rate of the lowest wage earners.

In effect, the Social Security benefits formula functions as a sharply graduated benefits “tax,” reducing the benefits that accrue to higher wages by 85 percent. The higher your means, the lower your benefit.


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## Aunt Bea (Jun 29, 2018)

I agree with removing the wage cap and capping benefits but I'm against additional forms of means testing.

I also think that current income taxes on some SS benefits should be returned to the SS trust and not become part of the general fund. Taxing SS benefits seems like sleight of hand to move the pea under the walnut shell.

I also believe it is time to think about phasing out SS and putting the responsibility for funding retirement squarely on the shoulders of the American people. The government could and should still provide some education programs, tax incentives, guidelines, and insurance programs similar to the FDIC.  I believe that over time a self-funded retirement program would actually put more dollars in the average American's pocket and help strengthen the economy.  I realize that we would still need some form of government benefits for the destitute similar to welfare or Medicaid but I still think the country and the average taxpayer would be better off in the long run.


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## KingsX (Jun 30, 2018)

.

They need to eliminate the tax on Social Security... 
or at least increase the income thresholds for that tax
which were never to be indexed for inflation and have
never been increased since the tax became law in 1983.


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## KingsX (Jun 30, 2018)

Don M. said:


> The "Big Thing" now seems to be to encourage people to delay applying for benefits as long as possible. That sounds good if a person knew for sure how long they will live. Personally, we signed up as soon as we became eligible...
> 
> .




Me too.   

That "big thing" is aimed at baby boomers so they will put off claiming SS to benefit SS.

.


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## mathjak107 (Jun 30, 2018)

actually social security is not actuarially  neutral and has not been for years . more of us are living longer , the odds of one in a couple reaching 90 today is almost 50% . if everyone delayed it would hurt social security way more  so that is not true at all .

social security is making up a larger percentage of a seniors income than it was ever designed to. delaying where one has choice can at least increase that  income .


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## Butterfly (Jun 30, 2018)

I very strongly agree with removing or substantially increasing the wage cap on SS contributions.

I also like Aunt Bea's idea of returning income taxes on SS benefits to the SS trust.

I think the idea of phasing out SS would only lead to a greater pool of elderly poor.  Making everyone responsible for their own retirement is a great idea in a vacuum, but as a practical matter, at least now,  there is a huge  number of people who can barely keep food on their tables, much less saving large amounts for their retirement.  I live in a pretty poor state, and this is very widespread here.  I am not talking about those living extravagant lifestyles beyond their means, but rather about families who are working, many adults working more than one job, who can barely make ends meet in humble circumstances, especially with the  high cost of healthcare and the rising costs of just about everything, including food.


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## KingsX (Jun 30, 2018)

Butterfly said:


> I think the idea of phasing out SS would only lead to a greater pool of elderly poor. Making everyone responsible for their own retirement is a great idea in a vacuum, but as a practical matter, at least now, there is a huge number of people who can barely keep food on their tables, much less saving large amounts for their retirement. I live in a pretty poor state, and this is very widespread here. I am not talking about those living extravagant lifestyles beyond their means, but rather about families who are working, many adults working more than one job, who can barely make ends meet in humble circumstances, especially with the high cost of healthcare and the rising costs of just about everything, including food.




A return to the "grapes of wrath."

.


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## KingsX (Jun 30, 2018)

Butterfly said:


> I also like Aunt Bea's idea of returning income taxes on SS benefits to the SS trust.




There should not be an income tax on SS.  Or at least the income levels should be greatly increased. 

The tax on SS began in 1983 and at the time the income levels [$25,000 single/$32,000 married couple] at which the tax kicked in were high [ie, back then, the tax only affected the well-to-do.]  But those income levels were never indexed for inflation. So now, after 35 years of inflation,  people with low incomes are subject to the tax on their SS income. 

.


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## mathjak107 (Jun 30, 2018)

we are double taxed in fact . we all are taxed when we earn it and then we are taxed when it is means tested again based on income so the same money is taxed 2x


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## KingsX (Jun 30, 2018)

mathjak107 said:


> we are double taxed in fact . we all are taxed when we earn it and then we are taxed when it is means tested again based on income so the same money is taxed 2x





And when IRA RMD kick-in,  many more people [like me] will be subject to that double SS tax.

.


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## mathjak107 (Jun 30, 2018)

i  have  always had my ss taxed  and i have no rmd's yet . 

the worst is when you lose a spouse , have rmd's and have to file single . this is where planning around permanent life insurance which is tax free can be a big help and surpasses the results you get trying to invest instead


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## KingsX (Jun 30, 2018)

mathjak107 said:


> i  have  always had my ss taxed  and i have no rmd's yet .
> 
> the worst is when you lose a spouse , have rmd's and have to file single . this is where planning around permanent life insurance which is tax free can be a big help and surpasses the results you get trying to invest instead




Because I have zero debt, I can live comfortably on a relatively small income. 

Since age 62,  I have been able to live on SS plus a small distribution from my IRA
while still staying below the IRS tax threshold.  Not only have I paid zero income tax
the past several years,  I didn't need to file tax returns.  That all comes to an end
in a few years when I turn 70 and forced to take out much larger IRA distributions
which will cause my Social Security to also be taxed. Soon there will be a whole lot 
of government hoops I will have to jump through. It's really unfair to suddenly burden 
old people with those draconian tax laws. For the first time ever,  I will  probably have 
my taxes done professionally...  bummer.

It's not paying taxes that bothers me so much... it's paying taxes to the "enemy"... 
to a government whose policies contradict my values.

.


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## mathjak107 (Jun 30, 2018)

well you know the answer to the problem -move to another country .. i am not sure any gov't holds my values in mind .


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## KingsX (Jun 30, 2018)

mathjak107 said:


> well you know the answer to the problem -move to another country .. *i am not sure any gov't holds my values in mind .*




There you go.  That's why moving to another country is not only futile... one might be moving from the frying pan to the fire.

At least here in Texas,  I only have to worry about federal income taxes [no state income tax.]

.


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## StarSong (Jun 30, 2018)

KingsX said:


> Because I have zero debt, I can live comfortably on a relatively small income.
> 
> Since age 62,  I have been able to live on SS plus a small distribution from my IRA
> while still staying below the IRS tax threshold.  Not only have I paid zero income tax
> ...



To be fair, paying taxes on withdrawals from IRAs is exactly the deal we struck when placing money into those accounts.  Deposits were made with deferred income so it was tax-free at that time, upon withdrawal we must pay the piper.  Those funds are now added to current income and taxed at today's rate.  The gamble and presumption was that one's income level and tax rates would be lower in retirement than during earning years.  

Everyone pays taxes for some things we heartily support and some we vehemently disagree with.  It's part of the social contract we all have to live with.  Don't like policies?  Move or vote to change them.


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## KingsX (Jun 30, 2018)

StarSong said:


> To be fair, paying taxes on withdrawals from IRAs is exactly the deal we struck when placing money into those accounts.




That is not my complaint.

My complaint is having to pay extra taxes on my SS because at age 70 
government RMD laws force me to withdraw huge amounts from my IRA.





StarSong said:


> Don't like policies? Move or vote to change them.





Unfortunately,  we can't vote on government policies... only for some officials who might change those policies.

And speaking of that,  I recently read that a second tax reform package is now in the works. So I have spent time today,  contacting my congressman and Congressman Brady about this specific important senior issue.

Here is what I emailed:

Please help seniors who are forced to pay draconian income taxes on their IRA RMD and Social Security income.

The tax on SS began in 1983 and at the time the income levels [$25,000 single/$32,000 married couple] at which the tax kicked in were high [ie, back then, the tax only affected the well-to-do.] But those income levels were never indexed for inflation. So now, after 35 years of inflation, people with low incomes are subject to this draconian tax on their SS income.

In a few years when I turn 70, the federal government will force me  to take out much larger RMD IRA distributions than I need  which will cause my Social Security income to also be taxed. Soon there will be a whole lot of related government hoops I will have to jump through. It’s really unfair to suddenly burden old people with these draconian tax laws.

.


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## OneEyedDiva (Jun 30, 2018)

Good post for people who had erroneous information about SS.  One thing...most analysts tout waiting to take SS but most people take it early for a variety of reasons. If someone lives to the break even age, they wind up with the same amount of money. If they die before that age...well good thing they took it early. If they live several years beyond that age, according to what they did with their SS payments, it may be unfortunate that they didn't wait or fortunate (if they invested that money and did well).


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## KingsX (Jun 30, 2018)

.

Baby Boomer RMD will cause this number to continue to increase.


*20 million people pay taxes on their Social Security benefits*

See more info at link

https://www.fool.com/taxes/2018/06/09/did-tax-reform-solve-my-social-security-tax-proble.aspx


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## Don M. (Jun 30, 2018)

The Only recourse Seniors have on maintaining their finances is to begin to put pressure on the politicians...and then, VOTE.  Any relief we might see in this latest round of tax reductions will most likely be eaten up by increases in the Medicare withholding.  Then, the paltry rates at which Social Security payments are increased rarely keep up with inflation.  About the ONLY thing the government has done in decades that can help retirees is the adoption of the IRA/401K plans, which allow those who could afford it to put aside some of their own funds for retirement.  Company "defined pension" plans are becoming increasingly rare, so even that once faithful source of income is beginning to disappear.  Even government workers may find themselves facing problems as increasing State and National debt forces governments to cut back on the generous pensions offered by those entities.  I sometimes wonder just how future retirees are going to be able to live decently if present trends continue.


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## mathjak107 (Jul 1, 2018)

OneEyedDiva said:


> Good post for people who had erroneous information about SS.  One thing...most analysts tout waiting to take SS but most people take it early for a variety of reasons. If someone lives to the break even age, they wind up with the same amount of money. If they die before that age...well good thing they took it early. If they live several years beyond that age, according to what they did with their SS payments, it may be unfortunate that they didn't wait or fortunate (if they invested that money and did well).


most of us will go on past break even and of course break even can vary  for all of us.spousal benefits and whether the bigger gains are in the early part of our retirement or later on effect your outcome too .

the biggest reason to delay is not what if i die but what if i live ?   it really boils down to whether you want to be more stock market and interest rate dependent or longevity risk dependent .

your 70% bigger check at 70 has you far less dependent on what markets or rates do  once ss kicks in .survivor benefits are bigger too if that matters


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## Aunt Bea (Jul 1, 2018)

Don M. said:


> I sometimes wonder just how future retirees are going to be able to live decently if present trends continue.



I think that the biggest thing that we can do is to _right size_ our own expectations and our own individual standard of living.

For far too long Americans have tended to use 110% of their income on immediate needs/wants and not take the long view when it comes to their finances.

Over the years I've noticed that people always seem to find the time and the money to do the things that are important to them.  We can choose a secure retirement, healthcare, education for our kids or we can choose consumer spending and consumer debt.


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## mathjak107 (Jul 1, 2018)

once we get beyond living in a tent in a camp ground in a warm climate , everything we do from that point on is a lifestyle choice . there is always somewhere cheaper  we can live or make cheaper lifestyle arrangements . our needs really are very little which is why we have those living on just social security .

i know people like to compare what they do to others and then talk about how others are spending to much on other things but they don't realize they too can do things far cheaper .

so where and how we all live are wants and not needs in most cases  . the more money we have the more the choices in life we can have as far as lifestyles but at the end of the day just about every thing we do is a lifestyle choice and not a need  regardless of income ..

many who live on lower incomes could live golden girl style and save money, they choose not to so there living expenses are not needs as they like to think , those choices they make are still wants .


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## StarSong (Jul 1, 2018)

KingsX said:


> That is not my complaint.
> 
> My complaint is having to pay extra taxes on my SS because at age 70
> government RMD laws force me to withdraw huge amounts from my IRA.
> ...



KingsX, I"m trying to understand why your taxes will be so high at age 70.  I'm not a tax accountant, but by my research and reckoning it shouldn't be anywhere near draconian levels, at least partly because only 50% of SS is added to a 66 year old (and over) filer's taxable income.  

Hypothetical case:  If Mary Doe get $30K a year in SS she only considers $15K as income.  
At age 70-1/2 the minimum distribution of an IRA would be 3.65% of her total IRA holdings.  (So even Mary had $200K in IRAs, her minimum distribution would only be $7300 that year.)  
Add that to her $15K and she'd be looking at a total reportable income of $22,300. 
Standard deduction is $12K for single filers, bringing down that income to $10,300.  

Presuming no other deductions or taxable income, the way I can figure it, Ms. Doe's federal tax bill would be $1045.  A bit of a sting perhaps, but on a total income of $37,300, it works out to 2.8% of that her income for that year.    

If I'm incorrect on this, I hope someone will let me know.


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## mathjak107 (Jul 1, 2018)

the taxing of ss as you go over certain milestones is very very complex . without software it makes my hair hurt . 

_If your combined income exceeds the threshold amounts, an IRS formula is applied to determine how much of your benefits are taxable. The result of these calculations will be that you pay taxes on the lower of:_

_85% of your Social Security benefits_
_50% of the benefits plus 85% of the amount of combined income over the second threshold amount_
_50% of the amount of combined income over the first threshold amount, plus 35% of the amount of combined income over the second threshold_ amount


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## StarSong (Jul 1, 2018)

Mathjak - my understanding was that only 50% of SS is reported as income after FRA (now age 66).  That's incorrect?


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## mathjak107 (Jul 1, 2018)

star song that is incorrect .

50% of the social security amount is added to your other income to see if ss is taxed  in the magi testing .. so that is only used to calculate your magi  to see if you are taxed . once it is determined you are taxed  how much of the ss is taxed   is determined below .

_If your combined income exceeds the threshold amounts, an IRS formula is applied to determine how much of your benefits are taxable. The result of these calculations will be that you pay taxes on the lower of:_


_85% of your Social Security benefits_
_50% of the benefits plus 85% of the amount of combined income over the second threshold amount_
_50% of the amount of combined income over the first threshold amount, plus 35% of the amount of combined income over the second threshold_ amount


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## StarSong (Jul 1, 2018)

Thank you for the clarification.  I knew I'd seen the 50% number somewhere.


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## mathjak107 (Jul 1, 2018)

the taxation of ss and the fact you have 2 moving targets can make for some crazy taxation . a single can take an extra 1k out of an ira and that 1k can see the  effect of a marginal tax rate of over 46%....

lets call our straw man harry . i am using the old tax amounts , i don't feel like recalculating .


Harry is an individual with $36,000 of income but a hefty $22,000/year of Social Security benefits. His Social Security provisional income is $36,000 + $11,000 = $47,000, which is $13,000 over the upper threshold for individuals. As a result, $15,550 of his Social Security benefits are subject to taxation (which is 50% of the amount from $25,000 to $34,000, plus 85% of the excess of provisional income above the $34,000 threshold), which puts his AGI at $51,550. Even after a standard deduction and one personal exemption, Harry's taxable income would be $51,550 - $6,100 - $3,900 = $41,550, which places him in the 25% tax bracket.

If Harry now takes an additional $1,000 from his IRA, his provisional income increases to $48,000, his taxable Social Security benefits increase to $16,400, and his AGI rises to $53,400. The net result: Harry's AGI increased by $1,850 for "just" a $1,000 IRA withdrawal, and with a 25% tax bracket his liability will be $1,850 x 25% = $462.50, which equates to a whopping $462.50 / $1,000 = 46.25% marginal tax rate!


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## StarSong (Jul 1, 2018)

Mathjak, you've convinced me to reach out to my accountant this week to learn when we should start drawing down on our IRAs.

Thank you for taking the time to illustrate just how complex these calculations are - and how easy it is to make an expensive misstep.


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## mathjak107 (Jul 1, 2018)

my pleasure  

keep in my mind sometimes the  fact that the tax gods give us a gift each year coupled with delaying ss can be a powerful combo .

each year we can take up to 24k  out tax free from our ira's using the standard deduction .over 8 years of delaying ss that is 192k in tax free money we wrote off at higher tax rates . we can take up to 42k out and pay as little as 4% tax on it . so spending potential rmd money down while increasing your ss payment can be quite a combo .

the one thing i will caution is accountants do not usually know the ins and outs of retirement planning in its entirety.

think about why  ,  they would have to know all about financial planning too .  combining roths ,  delaying ss , spending down rmd's , getting the right comfortable allocations and getting a comprehensive plan together usually requires a team of pro's .

perhaps both immediate annuities or maybe longevity annuities can improve your plan . perhaps leaving a spouse tax free life insurance and  no rmd's may be better than  those tax infested ira's ?   there can be a lot involved .


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## KingsX (Jul 1, 2018)

StarSong said:


> KingsX, I"m trying to understand why your taxes will be so high at age 70.  I'm not a tax accountant, but by my research and reckoning it shouldn't be anywhere near draconian levels, at least partly because only 50% of SS is added to a 66 year old (and over) filer's taxable income.
> 
> 
> .




It's the burdensome tax laws that begin to affect the elderly at age 70 that are draconian...  not only paying extra taxes on Social Security income [many will have to do that for the first time because of the government mandate to withdraw specific amounts from IRAs = RMD]... but also the IRS' draconian penalty if an elderly person forgets the yearly RMD or does not withdraw at least the specific government mandated amount correctly and send required tax payments to the IRS every year.  Remember,  all that is required not just at age 70... but for all the years of the elderly person's life [if he outlives his IRA.]  I think that is draconian, especially because it burdens the elderly.   

.


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## mathjak107 (Jul 1, 2018)

then they should have done roth conversions or stuck to brokerage accounts . they can't complain about how taxes are handled later on if they choose to defer the taxes in the first place. getting the deferred tax money due  is not an easy taskafter the fact.


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## KingsX (Jul 1, 2018)

mathjak107 said:


> the taxation of ss and the fact you have 2 moving targets can make for some crazy taxation . a single can take an extra 1k out of an ira and that 1k can see the  effect of a marginal tax rate of over 46%....
> 
> lets call our straw man harry . i am using the old tax amounts , i don't feel like recalculating .
> 
> ...




And there is a draconian tax penalty if one doesn't calculate his specific yearly RMD corrently [IRS tax penalty of 50% of an amount not withdrawn per the government mandate.]  And tax payments to the IRS must be sent in the same RMD year, sometimes quarterly. 

Can you imagine the elderly [especially the very elderly ] doing those kind of calculations every year, especially the tech-challenged [which many elderly are] who would have the burden of the additional cost of hiring a professional tax consultant.

.


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## mathjak107 (Jul 1, 2018)

sorry but  if someone does not understand something like their rmd's which by the way the brokerages calculate and do automatically for you if you tell them then they need a planner or accountant  who does .

i just can't agree with you here as not understanding something  someone does  , and the requirements that go with that tax deduction they wanted to take are what they are . it is up to each of us to have people who understand what has to be done if we don't .


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## KingsX (Jul 1, 2018)

mathjak107 said:


> then they should have done roth conversions or stuck to brokerage accounts . they can't complain about how taxes are handled later on if they choose to defer the taxes in the first place. getting the deferred tax money due  is not an easy taskafter the fact.




Don't expect everyone to be smart,  educated and tech-savvy like you.   Don't be the one to tell the "unwashed masses" to "eat cake."

 Many of these elderly might have been a guy who worked in a factory or a girl who worked in an office.  They may have put their money into a 401K because they were told it was the smart thing to do, that it would grow tax-free and they would pay the tax when it was withdrawn.  I doubt they were initially told about all the other future draconian tax consequences. They might also have taken a pension lump-sum and rolled it into an IRA and are now suddenly and unexpectedly facing these draconian tax hoops.

.


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## mathjak107 (Jul 1, 2018)

this has zero to do with telling anyone to eat cake .

i highly doubt there are many people with tax deferred accounts that don't know they have to take rmd's at some point .  brokerages will notify you as well when you hit 70-1/2 . every custodian  not only notifies you  and gives you the amount but tells you they can auto pilot it for you. there really is nothing to do on your end as it is all automated once you pay attention to the notice . i believe your custodian is required to notify you about the rmd's as well .

all the penalty's are not for not knowing , they are for not taking the steps and paying attention to the notifications to allow the custodian to do this automatically for you .

if anyone is so financially ignorant that they don't know they owe taxes on retirement money they deducted then they should have taken the time to learn at least the basics . most people know more about sports and their refrigerator than they do even the most basic  important  financial aspects of their lives and there could be a price to pay for not  taking an interest . sorry no sympathy from me here


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## KingsX (Jul 1, 2018)

mathjak107 said:


> this has zero to do with telling anyone to eat cake .
> 
> ... sorry no sympathy from me here




You made my point.

_Those who do not learn from history are doomed to repeat it._


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## mathjak107 (Jul 1, 2018)

those who take no interest in their financial lives are doomed to pay the price !   if they think the cost of learning a bit is costly in time or  paying the right people wait until they see what ignorance cost . you can put that with your mantra's .


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## OneEyedDiva (Jul 1, 2018)

mathjak107 said:


> most of us will go on past break even and of course break even can vary  for all of us.spousal benefits and whether the bigger gains are in the early part of our retirement or later on effect your outcome too .
> 
> the biggest reason to delay is not what if i die but what if i live ?   it really boils down to whether you want to be more stock market and interest rate dependent or longevity risk dependent .
> 
> your 70% bigger check at 70 has you far less dependent on what markets or rates do  once ss kicks in .survivor benefits are bigger too if that matters


I get what you're saying MJ but my personal circumstance is this: I get a pension that more than adequately covers my personal expenses. I don't really need my SS, so I save/invest it. My investments are doing well. I figured out that based on adding the SS money to my investments, I'd get about $300 more a month (if I were to take distributions) than SS would pay starting at age 70.  But since I'm still putting money in, it stands to reason that I don't have to take any distributions. Unless I have a catastrophic illness or a long nursing home stay, I'll never need to touch my investments.  
For years I suffered with atrial fibrillation and really didn't expect to live this long. At age 50 I met my half siblings, but one had died. My sister had the same heart ailment as me. She decided to wait till full retirement age to collect her SS. But she died at age 63. Now I'm healthier than I've ever been, had a cardiac ablation 2-1/2 years ago so no longer have A-Fib. Even so, I don't regret taking SS early. But because of possible changes to SS coming down the pike, I have changed my die hard stance on taking it early to it might be best to wait until full retirement age, at least.


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## mathjak107 (Jul 2, 2018)

there is no ideal point for any of us . each age will have different issues good and bad .

people  have to remember that  taking ss early and investing the money is a double edge sword . if you take ss early you  have the ss money so you either are not pulling money out of invested assets  to replace the ss  to live on or you are investing the ss money . but if this bull dies , which this late in the cycle there is a good chance   and we stagnate then the invested money will grow little .

on the other hand if that does happen there is a good chance the bull will cycle around again  in a few years and that 70% larger ss check  you get by delaying will have one pulling out way less money to live on for the rest of their lives allowing invested assets to grow .

so the point is there really is no guarantee that taking it early and investing the money will beat taking it later and investing the money .

the wild card is when the bull market is .

on the other hand if one delays  and  they are a couple , if even one of them reaches 90 they got the guaranteed return from ss  that a balanced fund would have if markets co-operate .

so really it comes down to do you want more market and rate risk or more longevity risk ?

we opted to go  midway and i took it at 65 and my wife 62


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## StarSong (Jul 2, 2018)

mathjak107 said:


> there is no ideal point for any of us . each age will have different issues good and bad .
> 
> people  have to remember that  taking ss early and investing the money is a double edge sword . if you take ss early you  have the ss money so you either are not pulling money out of invested assets  to replace the ss  to live on or you are investing the ss money . but if this bull dies , which this late in the cycle there is a good chance   and we stagnate then the invested money will grow little .
> 
> ...



MJ, Did you work in the financial analysis field?  Your advice is much appreciated.  

I started SS at 65, my husband will draw spousal benefits when he turns 66 and file for his own benefits at 70.  As you said in earlier posts, chances are excellent that at least one of us will live long enough to make the delay worthwhile.  We also have life insurance policies on each other to help make up for the SS shortfall if one of us passes early.

Can you recommend a website with a tax calculator that will help sort out some of the questions on when to start drawing from IRAs?  We are not yet at the age of MDR, but since we're supplementing our income right now with (already taxed or tax-free) savings/investment draws, we might also be wise to start cashing in some of those IRA funds.  

I wonder: if SS becomes means-tested, are the feds likely to compensate by waiving or reducing taxes on IRA withdrawals?  Any thoughts on that?


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## mathjak107 (Jul 2, 2018)

nope never worked a day in my life in the financial field. i just frequented forums with smart people and picked their brains


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## mathjak107 (Jul 2, 2018)

i never think about what could be . i plan around what what was ,what is and what stands a reasonable chance of continuing. then like nudging a big ship to keep it on course you nudge it along the way if the big picture changes .

most really good work ups are not free calculators . social security solutions is a good company to try . they charge a small fee based on the work ups you want


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## Vinny (Jul 2, 2018)

Both my wife and I recently applied and were approved for Social Security.  You really need to know what you are doing. In my case they did not press delaying my benefits. Instead they kept informing me that I could back date my retirement to age 66 and get a check for that year and then start regular checks at my current age of 67. I told the lade that means I lose the 8% increase that I would get if I started at 67. The second time they called they reminded me again of this. 

Then we wanted my wife to collect spousal benefits. We filled  out the only application and marked spousal benefits only. Sure enough when they called they were going to give my wife her benefits first and make up the difference with mine. I told them that is not what we put down on the application. We wanted my wife to get spousal and then at age 70 switch over to her own rights which would give us a few thousand more a year. 

It really was like the online application meant nothing. Three calls each to go over what we entered on the application and some bad advice. I was curious as to why they were pushing that we file for the previous year instead of getting the higher rate at our current ages. I would have thought that they would push delaying but that was not the case. In fact, they never mentioned it. It seemed that information we provided previously was forgotten about and we had to answer so many questions again and again each call.

Luckily I had bought some software that showed me how to maximize my benefits in what if stituations and dates to apply. I followed that and not what I was being told over the phone. We were also told to mail in a copy of our marriage license and then a few weeks later we were told that we did not have to do that. I am supposed to get my first check in a few weeks for June. Then my wife will start getting hers in August to cover July when she turns 66. I hope they got it right but after talking to them my confidence level was not that great..

My wife told her friends about how we did it to maximize the money we get and none of them were aware of being able to first collect spousal and then switch to their own after it increased 8% each year. They also did not know that they get 8% more each year they delay. Doesn't anyone research anything anymore? I have been learning for the last few years so I knew what I was talking about and was able to get things straightened out. I thought this would be as easy as applying for Medicare with an online application that spelled out exactly what we wanted but that was not the case. I have my finger's crossed until my first check comes in a few weeks.


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## mathjak107 (Jul 2, 2018)

you get an increase in ss of only 6% from 62 to fra , it then increases to 8% from fra to 70.

if you were at least 62 in 2015 you can file restricted application for spousal but only at your own fra .   you can not do restricted application if you  under fra . for those who were younger than 62 in 2015 , game over , you can only get your own benefit  if you have a work record .

you can still get a spousal adder to your own benefit when your spouse files .  they take 1/2 the spouses fra  benefit , subtract your fra benefit from it and anything left over gets added to your own benefit.


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## OneEyedDiva (Jul 3, 2018)

mathjak107 said:


> there is no ideal point for any of us . each age will have different issues good and bad .
> 
> people  have to remember that  taking ss early and investing the money is a double edge sword . if you take ss early you  have the ss money so you either are not pulling money out of invested assets  to replace the ss  to live on or you are investing the ss money . but if this bull dies , which this late in the cycle there is a good chance   and we stagnate then the invested money will grow little .
> 
> ...


Yeah...it could go either way....either way.    I'm surprised you weren't a financial professional !


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## mathjak107 (Jul 3, 2018)

i  like learning but i don't really want a work   lol


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