US. income tax after retirement.

[JimGant]

3 hours ago, cmarshall said:

If you count yourself among the rich who just don't need their future SS benefits and can afford to make a casual bet with the government about how long you will live without putting your future security at risk if you lose, then you ought to have pointed this out rather than giving ill-conceived advice, disclaimers notwithstanding, to those for whom SS counts.  

And you, calling yourself a financial sophisticate, also should have made a complete argument.

 

And there's another aspect you failed to address, and one certainly germane to many Yanks married to Thais: If you weren't married to your Thai wife for at least 5 years resident in the States, then, there will be no survivor payout. Thus, even if you don't need the SS payment to live on, or to even enhance your lifestyle, best start collecting at 62, and salting it away in an array of low and medium-low risk investments. Thus, should you die in the your early 70's, your wife will at least have a nestegg vice nothing in survivor benefits. Not exactly the same situation as Marshall's wife, who upon his death, will have an enhanced survivor payout, due to his waiting until age 70 to take SS. Smart choice for him. But not necessarily the situation for many Yanks here in Thailand.

[GinBoy2]

When to take SSI is a bit of a crap shoot.

 

You can argue until the cows come home, whats going to be the max payout you are going to get.

 

We all know the longer you delay after 62 the more monthly income you are going to get.

 

But then a whole bunch of personal factors kick in.

 

Health, Employment, Debt, other Retirement funds.

 

Some folks just have no choice but to take the reduced payments at 62, just to put food on the table.

 

Some of us have the luxury that we can make some qualified decision on when to cash out, but don't decry those you don't have options 

[cmarshall]

23 hours ago, Thaidream said:

Thanks for providing a very professional explanation.

 

Social Security is complicated- one thing most people do not know is one can keep working -draw Social Security benefits- and each year have a recalculation of benefits which raises the monthly amount.

 

I first took reduced Social Security benefits at age 62 and was paid approximately $1200 per month. I continued to work. However, there is a limit each year of earnings one can work up until the first year of full SS. In my case age 66.  After a year of drawing SS- I was sent a letter indicating I was overpaid.  I  had already drawn almost $17,000 of benefits so SS stopped paying me and each month  subtracted $1200 until $17,000 was reached. I didn't pay them- they just did not pay me until the debt was paid.

 

I figured I was  in bad shape but since I was working I was able to live and save based on my salary. Also,Since I was working- SS was being deducted from my salary and sent to the system. I continued to work until almost 70.

 

What I came to realize is that:

 

-The $17,000 was an interest free loan

-Since I continued working- when I finally retired my SS  income had grown to $2100 per month and gets adjusted for  raises each year. 

-The downside was that I ended up paying extra taxes which I had not planned for. The IRS and I battled for years over proper withholding- very stressful.

 

Though I thought I did plan but I did not understand the real effect of  taking early SS- working- and taxes.  The thing that worked out well was that the years I was working past normal retirement were my highest income years.  It ended up OK but not because I had the right plan but pure luck.

 

The bottom line is that each person really needs to study their own situation; study  how taxes affect your situation ; study what monies you get at what age and if you don't understand- get a hold of someone who does and make an informed decision.

 

SS is very complex and the US tax law consists of about 75,000 pages of regulations and situations. The Internet does have websites that use a calculator to figure out if one has any tax liability on their SS.  In addition- the IRS 1040 instructions have a page in which one can figure out the same .  Best wishes tp all.

 

 

 

 

 

 

I don't think people appreciate that for most people the decision on when to take SS benefits is the most important financial decision that will make late in life.  The differences dwarf the effects of most investment decisions.  How SS works should be taught in schools alongside civics.  But it isn't and so we see unfortunate  decisions being made all around.

 

Glad to hear that it worked out for you in the end.

[gk10002000]

On 5/21/2019 at 9:20 PM, mania said:

 

This is what most folks say/think but is it?

 

Lets do a simple what if situation

(these are actual SS graduation amounts given the $823 start amount)

Lets say  recipient

A - Start collecting at age 62 = $823 a month

B - Start collecting at age 66 = $1117 a month

C - Start collecting at age 70 = $1444 a month

 

So if recipients lived till 75 years of age .....

A - collected $128,388

B - collected $120,636

C - collected $86,640

 

If recipients lived till 83 years of age....

A - collected $207,396

B - collected $227,868

C - collected $225,264

 

 

So all said & done recipient C who played the long wait game got what advantage over recipient A in actual $$$ ?

Looks like $225,264 - $207,396 = $17,868 yes?

 

But.... since recipient A  actually pulled in $79,008 before recipient C ever started collecting

$823 x 96 months

Can we ignore that $$ could have been used to invest/earn  all those years?

 

So I cannot say it is just a matter of can you afford to wait...Folks need to look at actual "what if" scenario

for themselves & decide if the risk/reward of waiting is valid.

 

 

You did a decent financial analysis.  But you failed to mention the tax brackets involved or what an individual's individual financial situation may be.  If a person has other income coming in, then taking earlier social security would increase their overall taxation, and the person may be better off postponing taking SS benefits at least a few years and let those benefits increase by 8 per cent each year