U.S. topic -- Another unexpected thing to consider when choosing social security benefits start date

[Jingthing]

It's too late for me as I chose 62 which means I have a permanently reduced benefit, but there is something I realized later that might be of interest to others making the decision.

 

Assuming many or most U.S. oldsters here are either retired in Thailand or interested in same, it can't be ignored that Thailand's retirement system is on an annual basis and the rules can and will change. Not to mention this tax stuff in the news now.

 

So sooner or later many expats will feel encouraged to leave Thailand or have no choice but to leave.

 

So then what?

 

Well you can go back to the US (if you can afford it) or you can move to another country.

 

Each country has their own rules but most are based on a minimum pension level.

 

IF you take your SS benefit early your benefit is more likely to be UNDER the minimum number for a number of countries.

 

This indeed has happened to me!

 

IF I had delayed the benefit, I could qualify for the majority of those countries that are out for me now.

 

Sure there are COLA raises, but not much, and not likely to raise the level to make a difference for retirement visas.

 

There is at least one exception where you might be better off visa-wise by taking it early. MEXICO. The most popular choice for retired American expats.

 

In the case of Mexico the income level needed is quite high and so are the show money levels for temporary and permanent residence.

 

If you take your SS early there is a greater chance that your savings, retirement accounts, etc. will be preserved and grow to meet the levels for Mexico as there is a choice there to use income or savings (which can be in the US including IRAs).

 

If you have enough (it gets raised annually) you can qualify for basically INSTANT LIFETIME permanent residency in Mexico without having to ever import a dime or showing the money again after the first application (outside Mexico). Or for much less (but much more than 800k baht) you can get temporary residence which leads to perm after five years.

 

Something else to consider that I doubt many people have considered in making the SS benefit start decision. 

 

In my case I still do have SOME options, but unfortunately FEWER of them. 

Edited January 1 by Jingthing

[poobear]

Taking you Social security early is not a one way street You can suspend your benifits after you have stared them.

 

Suspending Your Retirement Benefit Payments (En español)

If you have reached full retirement age, but are not yet age 70, you can ask us to suspend your retirement benefit payments. By doing this, you will earn delayed retirement credits for each month your benefits are suspended which will result in a higher benefit payment to you. 

If you qualify for benefits as a Survivor, your full retirement age may be different.

Before you make a request to suspend your benefits, keep in mind that:

• If you apply for benefits and we have not yet made a determination that you are entitled, you may voluntarily suspend benefits for any month you have not received a payment.
• If you are already entitled to benefits, you may voluntarily suspend retirement benefit payments up to age 70. Your benefits will be suspended beginning the month after you make the request.
• We pay Social Security benefits the month after they are due. If you contact us in June and request that we suspend benefits, you will still receive your June benefit payment in July.
• You do not have to sign your request to suspend benefit payments. You may ask us orally or in writing.
• If your benefit payments are suspended, they will automatically start again the month you reach age 70.
• If you change your mind and want the payments to start before age 70, just tell us when you want your benefits reinstated.
• Voluntary suspension begins no earlier than the month after the month of the request. We may accept advance requests for voluntary suspension; however, suspension cannot begin earlier than:
  • The month after the month of the request.
  • Your full retirement age.
  • Your month of entitlement to benefits (for initial claims only). 
• If you voluntarily suspend your retirement benefit and you have others who receive benefits on your record, they will not be able to receive benefits for the same period that your benefits are suspended. However, a divorced spouse will be able to continue receiving benefits.
• If you voluntarily suspend your retirement benefit, any benefits you receive on someone else’s record will also be suspended. Your Medicare Part B premiums cannot be deducted from your suspended benefits. 
• If you request voluntary suspension we will only permit benefit reinstatement the month after your request.

 

 

[Thailand J]

15 minutes ago, poobear said:

Taking you Social security early is not a one way street You can suspend your benifits after you have stared them

I thought you can only cancel application within 12 months of application, have to pay back the benefits, and reapply on a later year.

[Jingthing]

18 minutes ago, Thailand J said:

I thought you can only cancel application within 12 months of application, have to pay back the benefits, and reapply on a later year.

Thats something else.

 

What was posted is correct but can't be done until FRA.

 

In other words for example a claim at 62, FRA at 67, you can suspend until 70.

No payback and your benefit will increase until 70.

It's a good point relevant to this topic as such increases could mean more countries to be eligible for retirement visas.

 

 

Edited January 1 by Jingthing

[Jingthing]

1 hour ago, poobear said:

Taking you Social security early is not a one way street You can suspend your benifits after you have stared them.

 

Suspending Your Retirement Benefit Payments (En español)

If you have reached full retirement age, but are not yet age 70, you can ask us to suspend your retirement benefit payments. By doing this, you will earn delayed retirement credits for each month your benefits are suspended which will result in a higher benefit payment to you. 

If you qualify for benefits as a Survivor, your full retirement age may be different.

Before you make a request to suspend your benefits, keep in mind that:

• If you apply for benefits and we have not yet made a determination that you are entitled, you may voluntarily suspend benefits for any month you have not received a payment.
• If you are already entitled to benefits, you may voluntarily suspend retirement benefit payments up to age 70. Your benefits will be suspended beginning the month after you make the request.
• We pay Social Security benefits the month after they are due. If you contact us in June and request that we suspend benefits, you will still receive your June benefit payment in July.
• You do not have to sign your request to suspend benefit payments. You may ask us orally or in writing.
• If your benefit payments are suspended, they will automatically start again the month you reach age 70.
• If you change your mind and want the payments to start before age 70, just tell us when you want your benefits reinstated.
• Voluntary suspension begins no earlier than the month after the month of the request. We may accept advance requests for voluntary suspension; however, suspension cannot begin earlier than:
  • The month after the month of the request.
  • Your full retirement age.
  • Your month of entitlement to benefits (for initial claims only). 
• If you voluntarily suspend your retirement benefit and you have others who receive benefits on your record, they will not be able to receive benefits for the same period that your benefits are suspended. However, a divorced spouse will be able to continue receiving benefits.
• If you voluntarily suspend your retirement benefit, any benefits you receive on someone else’s record will also be suspended. Your Medicare Part B premiums cannot be deducted from your suspended benefits. 
• If you request voluntary suspension we will only permit benefit reinstatement the month after your request.

 

 

Thanks for posting this.

I was aware of that option and should have mentioned it as it does provide somewhat of a "fix it" that can make a difference in some cases. Depending of course on initial early benefit, when the suspension is done and for how long, and the retirement visa qualification level of any target countries. Of course it presumes a person can AFFORD to suspend the benefits.

Edited January 1 by Jingthing

[Thailand J]

"Cancellation of benefit" (withdrawal of application)is when you started the benefit at say 62 and change your mind, you have 12 months to do so and have to pay back the benefits.

"Suspension of benefit" is after 67 you can halt the benefit to have it restarted later with a bigger payout.

 

For example in my case I have started the benefit at 62 more then a yr ago, I can't cancel but I can suspend the benefit when I reach FRA at 67.  Good to learn something new. Thanks.

 

https://www.aarp.org/retirement/social-security/questions-answers/social-security-going-back-to-work/

 

 

 

 

 

Edited January 1 by Thailand J

[poobear]

Thanks for the additional info. That works great for me. I started my social security at 62 because I received an additional 600 dollars a month for the next five years until my son reaches his 18th birthday. That was a pleasant surprise but may suspend my benefits for a few years after his 18th birthday.

[Jingthing]

37 minutes ago, poobear said:

Thanks for the additional info. That works great for me. I started my social security at 62 because I received an additional 600 dollars a month for the next five years until my son reaches his 18th birthday. That was a pleasant surprise but may suspend my benefits for a few years after his 18th birthday.

That's great to hear.

I didn't know about the suspension of benefits option after FRA to age 70 until very recently myself. It's really the kind of thing that should be more widely publicized.

[thaicurious]

I waited for full-age but do have other incomes such that I could suspend Social Security (which I was not aware of, so thanx on that) and I just read on https://www.aarp.org/ that "During a suspension, you earn delayed retirement credits, which boost your eventual benefit by two-thirds of 1 percent for each suspended month (or 8 percent for each suspended year). When you resume collecting Social Security, you’ll have locked in a higher monthly payment for life"

 

So then you'd have to factor in that 8% (which is a good certain return) against what you might get on your existing investments and factor in what taxes you'd pay on continuing Soc Sec (vs taxation on increased later payments) as opposed to on additional current withdrawals from investments plus of course having decreased investments going forward, plus as well the health risks which increase as we age.

 

This might make more sense if you began with reduced payments as opposed to having begun at full which I did. Either way I'd have to see studies both hypothetical (https://www.fidelity.com/learning-center/personal-finance/retirement/readjust-your-claiming-strategy) and actual (looking for these now) on break even points and which averages out to the better depending on expected longevity.

 

To a place like Mexico for an American, I'd add that might also provide benefit of being able to access Medicare which you've paid into all your working years thus possibly reducing cost of international med insurance which looks to me can get quite expensive in later years for comprehensive coverage.

[impulse]

IMO, you're overthinking this.  I chose to go on SS when I qualified for Medicare at 65, simply so I don't have to come out of pocket the $150-200 a month to pay into Medicare.   Nor do I need to take any action on a monthly basis.

 

Since I don't need the funds, they accumulate in my bank account and unless I do something stupid like buy a boat or some other toy that I don't need, the funds will still be there when I turn 70 and offset the lower payments I'll be receiving.  (Unless I die in the meantime, then my heirs will get the $$$)  

 

The idea that I can predict Thai tax law, Thai (or Mexican) retirement requirements, the date of my death, interest rates, or any of 100 other unknown variables didn't figure into my decision.  My crystal ball just isn't that good.

 

Edit:  That doesn't mean I don't appreciate the good flow of information.  I'm open to the possibility I made a booboo.

 

Edited January 2 by impulse

[TheAppletons]

4 minutes ago, impulse said:

IMO, you're overthinking this.  I chose to go on SS when I qualified for Medicare at 65, simply so I don't have to come out of pocket the $150-200 a month to pay into Medicare.   Nor do I need to take any action on a monthly basis.

 

Since I don't need the funds, they accumulate in my bank account and unless I do something stupid like buy a boat or some other toy that I don't need, the funds will still be there when I turn 70 and offset the lower payments I'll be receiving.  (Unless I die in the meantime, then my heirs will get the $$$)  

 

The idea that I can predict Thai tax law, Thai (or Mexican) retirement requirements, the date of my death, interest rates, or any of 100 other unknown variables didn't figure into my decision.  My crystal ball just isn't that good.

 

 

  Wouldn't you be better off investing the SS payments rather than letting them "accumulate in my bank account"?  

 

  By collecting early you're passing up 6-8% annual appreciation of the benefit (plus COLAs on a larger base amount).  If you aren't generating that return on the funds you're collecting, then you are potentially giving up gains you would have received otherwise.

 

  (Perhaps that's what you meant and you were using bank account as a euphemism for investment.  If so, please disregard.)

[impulse]

8 minutes ago, TheAppletons said:

 

  Wouldn't you be better off investing the SS payments rather than letting them "accumulate in my bank account"?  

 

  By collecting early you're passing up 6-8% annual appreciation of the benefit (plus COLAs on a larger base amount).  If you aren't generating that return on the funds you're collecting, then you are potentially giving up gains you would have received otherwise.

 

  (Perhaps that's what you meant and you were using bank account as a euphemism for investment.  If so, please disregard.)

 

That's a good point, and I'll probably roll it into one of my investment accounts when the amount gets substantial (I'm just 66 so it's not a huge amount).  But I'm still a little butthurt by one of my family's "trusted" investment advisors that was making stupid trades to bump up his commissions on my inheritance account.  Then when I got back to the States after being gone for years, his office staff chuckled at me when I bitched about the lousy (in fact, negative) return.  It is a different market now.

 

[DrPhibes]

8 hours ago, thaicurious said:

I waited for full-age but do have other incomes such that I could suspend Social Security (which I was not aware of, so thanx on that) and I just read on https://www.aarp.org/ that "During a suspension, you earn delayed retirement credits, which boost your eventual benefit by two-thirds of 1 percent for each suspended month (or 8 percent for each suspended year). When you resume collecting Social Security, you’ll have locked in a higher monthly payment for life"

 

So then you'd have to factor in that 8% (which is a good certain return) against what you might get on your existing investments and factor in what taxes you'd pay on continuing Soc Sec (vs taxation on increased later payments) as opposed to on additional current withdrawals from investments plus of course having decreased investments going forward, plus as well the health risks which increase as we age.

 

This might make more sense if you began with reduced payments as opposed to having begun at full which I did. Either way I'd have to see studies both hypothetical (https://www.fidelity.com/learning-center/personal-finance/retirement/readjust-your-claiming-strategy) and actual (looking for these now) on break even points and which averages out to the better depending on expected longevity.

 

To a place like Mexico for an American, I'd add that might also provide benefit of being able to access Medicare which you've paid into all your working years thus possibly reducing cost of international med insurance which looks to me can get quite expensive in later years for comprehensive coverage.

I assume you mean use of Medicare since you are in close proximity to the United States.  There are 3 instances when Medicare will possibly cover you outside of the United States.  I have attached a .pdf from Medicare that describes these situations and what is covered.

 

Something I did not know until a couple of years ago (from a guy in a bar who I thought was full of it) was this thing about dependents for Social Security.

 

Like another gentleman on this forum, I am going to reap the extra benefits of my wife and 6yr old child (both US citizens) come October this year (when my full SS benefits begin) when all 3 of us will start receiving SS up to the family max so about an extra $2,721/mo (after this last COLA) divided equally between my wife and child until the child turns 16 when the wife's part stops, then the child gets another couple of years of a boost up to $2,721/mo for his part (all of his is college money savings).  I figure about 8 years of this extra boost added to my SS and I will have recouped what I have paid in all my life taking into account the tax hit on my wife's and mine and the fact that I will still be self-employed until I hit 70 at least so still paying in as part of Self-Employment taxes but not accounting for inflation or earnings I could have made on the money.  Could not take it early as SS would have pulled back all they sent me due to working until I hit full SS age anyway.  The self-employment is part year client based so I can reduce the size of the clientele as my energy wanes with age (it also keeps my mind very active).

 

Hope this helps.

11037-medicare-coverage-outside-united-states.pdf

[thaicurious]

1 hour ago, DrPhibes said:

I assume you mean use of Medicare since you are in close proximity to the United States.  There are 3 instances when Medicare will possibly cover you outside of the United States.  I have attached a .pdf from Medicare that describes these situations and what is covered.

Yes, exactly, sorry if I was not clear. Was thinking something like Tijuana for lower cost of living paired with easy driving distanced San Diego for accessing Medicare payable medical facilities especially for the more major items. Then just carry minimal insurance instead of an expensive comprehensive plan for when not in the US.

[Jingthing]

8 hours ago, thaicurious said:

Yes, exactly, sorry if I was not clear. Was thinking something like Tijuana for lower cost of living paired with easy driving distanced San Diego for accessing Medicare payable medical facilities especially for the more major items. Then just carry minimal insurance instead of an expensive comprehensive plan for when not in the US.

Tijuana is unacceptably violent but yes a lot of Americans so living in upper Baja Cali do take advantage of that.

Going further into Mexico which is a much larger country than many people realize, that becomes much more problematic especially with acute situations.

[thaicurious]

12 hours ago, Jingthing said:

Tijuana is unacceptably violent but yes a lot of Americans so living in upper Baja Cali do take advantage of that.

Going further into Mexico which is a much larger country than many people realize, that becomes much more problematic especially with acute situations.

Haven't seen Tijuana but I've heard of the crime there and was using only as a geographic example with an easy drive. But also, a more touristy place like Cancun where I have been and like is about a 500 mile flight from Miami. But for all that, another option might be simply a low cost area of the states. So my example was just maintaining the expat factor. My personal solution after too many changes of plans since early retirement, much not by my doing but by "things happen" wound up with me staying put since covid in the US but with future funds for 5 or 6 months overseas in lower cost expat areas (my preference) or maybe two or three in a more expensive western spot each year (after vaccines improve, of course, as I'm not risking viral brain fog--aging sucks enough all on its own).

 

I haven't priced such a hybrid plan but I'd think given Medicare access for comprehensive, then getting emergency care for serious conditions would be less overall than no medicare but only a comprehensive international plan, especially heading into the 70s or 80s & beyond. I remember pricing out overseas ins back in my 50s and it seemed very doable but when I price it now given inflation it looks to me way more expensive than my earlier projections.

[GypsyT]

I think it's very smart to keep connection to the US.

I don't like politics and 75% of anything else but still I feel my money is safe thanks to FEDs overseeing everything.

When I was living there full time I was investing to risk banks with highest rates. 3 of them went under, Fremont one of them. I was one of many standing in line to get my check from FED's official for full amount PLUS full interest up to fatal date.

I was so impressed and really thankful something is so well taken care of!

I never lost anything since I always kept just under max insurance amount. I still do the same.