New subscribe. Their monthly expenses are way too high. What are they spending their money on? 🤔 Take a vacation every other year if they refuse to cut expenses. Why haven’t they paid off that small mortgage already? The sad part is FDR never meant for SS to be taxed but a certain Pres and party did that but that’s another story. Great breakdown on their taxes. I retired this past Oct at 55 and blessed to have a military pension and VA disability. I’m looking to take SS at 62 and investing it. The Rule of 55 also applies to me but I don’t plan to use it and will let my retirement accounts continue to grow. Great video and info!
While I love having a fully paid off mortgage, if this couple has a low mortgage rate it would make sense to just let it ride while keeping that money invested. Congrats on 55 retirement! I am hoping for 56 myself. Cheers.
I agree, their withdrawal rate is too high for the investable assets. Personally I would look to reduce expenses and/or find a part time job (if possible). I would also suggest the highest earner delay until 70 for the survivor benefit. In addition I would employ a dynamic SS strategy where I delay SS as long as the portfolio is not rapidly depleting. We often look at worst case, but markets are up ~ 3 out of 4 years on average.
Thank you for bringing this SS claim strategy. I claimed my SS retirement benefit this month (June 2024), at my FRA (66-1/2 born 1957). I’m initiating a strategy to recoup the 3-1/2 years (or an 8% per year) of increase in waiting until 70 to claim. I’ll invest 100% of my monthly SS benefit in high-risk high-return ETFs, for 42 months, or at least until I turn 70. See where we’re at then. The distinction here for return is simple interest (a straight 8% which is static cash flow), and personal investment which generates compound interest). I collect four hard pensions with zero debt, so I can afford to play high roller for awhile. We'll see how the "great experiment" pans out. Best of luck to your clients!
Several things to think about. Before taking SS pull all of the needed money from the IRAs and let the brokerage account grow. When SS kicks in at 70 take enough from the IRA so that their provisional income is such that less that 50% of their SS is taxable and pull the rest of their spending needs from the brokerage account. I think this will provide the best performance and the lowest taxes.
Why aren't they drawing down that tax deferred account while they have such a low tax rate? What about Roth conversions while they;re still at a low tax rate? Why use up their after tax brokerage only to be hit with higher RMD taxes and possible additional tax on their SS payments by waiting? Doesn't sound like the way I would approach the SS age to start drawing from!
Good question. I discuss forward looking multi-year tax planning by using Roth conversions in this video th-cam.com/video/Ukdkb5hR7bM/w-d-xo.htmlsi=N43OZeMVxUyTOTur
Lisa aged quickly from 63 to 64, lol. I question not looking at Lisa claiming SS today while Don delays to age 70. Preserve and grow the highest SS benefit for the surviving spouse. Also, consider tapping the IRA now whether for cash flow or Roth Conversion. Taxes are on sale in 2024-2025 so take advantage of them! The taxable account can be accessed strategically instead of being exhausted first. The tax plan should look further down the road than just 2025 and 2026. Lots of planning opportunities to evaluate annually.
Good eye! Lisa is currently 63 but based on her DOB will be 64 by end of year (hence why it shows her at 64 on the cash flow breakdown). One factor on getting Dons benefit highest was because Lisa had another piece of guaranteed income via her pension. Didn’t get into Roth conversions in this specific video but I’ve covered that in a few others. Thanks for watching!
How does it work if you have plans for the low earner to take SS at 62 and the high earner to take it at 70, and the high earner dies at 68 or 69 unexpectedly?
How many viewers of this video actually fall into this level of financial wealth??? The point is, how relevant is this to the viewers or is this just a FLEX as in look how smart I am. For the average couple these decisions aren’t applicable.
@@bilo6832 anyone who has $2M Plus and asks the question…… “can I retire” are out of touch with society. Just because you’re wealthy apparently doesn’t mean you’re smart.
Yes, often these videos are talking about $Millions? Most people NEED to take Social to Survive? Millionaire don't even need that money? Yes, they earned it but don't Need it.
I would have Lisa take SS at 63 and Don at 70. Assuming Don is the highest earner. This gives Lisa the higher survivor benefit. The only reason they would both wait until 70 is if they were doing Roth conversions. But they’re aggressively spending their portfolio early in retirement. So they don’t really qualify there.
Good video. One comment. You mentioned the 8% in deferred SS benefit in the context of not other wise being able to generate a comparable gain if not deferring but that is not the right comparison. When you. Defer the 8% is on income you are not yet receiving. Even a 5% income on money you actually have compares favorably. Simple example. $100 today grows to $105k at 5% after year 1 compared to deferred balance of zero. Year 2 you get another $100 plus your $105 plus 5% for balance of $215k vs $108k growing to $113.4K. After 11 years of collecting in option 1 you have $1,400 vs $1,350 in option 2. That is age 78. Option 2 does eventually catch up and surpass option 1 but the point is that it takes more than a decade comparing the 8% gain by delaying vs earning 5% on your money collecting a year earlier.
Both taking at 67 if both have good earnings records is likely a mistake. The higher earner delaying often is the best compromise. Assuming both die close together goes against the reality of most couples, so a large survivor check is desirable. The lower check goes away!
Everyone's situation is different and mine is way different than the example. If I took social security at age 62 I would only get $2,074 a month and since I can't afford to live on $2,074 I will still be working and with my income It would reduce my social security to nothing. If I wait until 67 I will get $3,084 and that still isn't enough to live on where we live. Our home wouldn't be paid off yet. By waiting until age 70 my Social Security will be $3,897 a month and by then my retirement account should have grown to a comfortable amount. in addition my wife will be at full retirement age when I turn 73 and the home will be paid off when I am 73. and then with both of us we should have a nice amount from Social Security along with having our retirement accounts to have grown to a comfortable amount.
As of now, my husband and I are taking SS the moment we turn 62! If anyone thinks SS will be the same in 7-8 yrs, you are wrong. They will tax everyone on SS and maybe cut SS by 20% for everyone with a net worth of over 1 million or something like that. It's a joke, and not fair to the people who have paid into the system like everyone else.....why should people be punished for having more money in retirement??? It's gonna happen! We will take that money and invest it the day we are turn 62!
You said that by taking SS at 67, their legacy to their heirs will be less. So it seems like in the long run they are better off delaying. Also I would be withdrawing some portion of their tax deferred income in early years rather than getting hit with bigger RMD’s later pushing taxes into higher brackets. In your scenario you are depleting the taxable acct before touching tax deferred. But passing on assets with a low basis to your heirs would be the best assets to pass on (aside from Roth) given the step up in basis they would get.
Good comment. I discuss forward looking multi-year tax planning by using Roth conversions in this video th-cam.com/video/Ukdkb5hR7bM/w-d-xo.htmlsi=N43OZeMVxUyTOTur
I am 62, have modest pension, work part time for the rest of this yr? Delaying Soc Sec. And considering Annuities ? Then i wud have 3 streams of Income for Life! I wud have stable Income Floor of $60k but my IRA Wud be down to around $200K after buying the Annuities.
Why would people throw away $12000 a year for a vacation (s) ? Generally vacations are meant for, as being an 'escape route" from your normal life. Why not find a MORE enjoyable "normal" life, first? You may save some money! $1000 each month to enhance your normal life.
What a sad comment. Obviously vacations are different for everyone. For us they can be life changing experiences, relaxation, learning, and exploring. We spend $25k per year as we have the money. We “vacation” meaning not being at home, about 15 weeks per year. When we were young we spent $5000 for a 2 month trip through most of Europe. We also love our home and where we live. Vacations in retirement are not at all an “escape route”. Perhaps when working it can be considered as a way to relax and get away from the rat race, but that clearly isn’t the case in retirement. You will not take any money with you when you die, so if you can afford it spend on yourself.
In many areas 10k/month is quite realistic. $3-4k/month alone for mortgage/property tax/home insurance and that is not for a big house, add utilities and other essential expenses and it quickly adds up. And don’t forget taxes, and if you have kids it easily gets to that without any pricy vacations. I can understand that for many living in areas with lower costs may be difficult to understand, and moving is not always a simple option.
@@thepokerpilotapp that's not really the important question though. A more apt question would be "what percentage of people that are consuming TH-cam content about the subtleties of retirement planning have this wealth?" I would guess that number is a lot higher.
New subscribe. Their monthly expenses are way too high. What are they spending their money on? 🤔 Take a vacation every other year if they refuse to cut expenses. Why haven’t they paid off that small mortgage already?
The sad part is FDR never meant for SS to be taxed but a certain Pres and party did that but that’s another story.
Great breakdown on their taxes. I retired this past Oct at 55 and blessed to have a military pension and VA disability. I’m looking to take SS at 62 and investing it. The Rule of 55 also applies to me but I don’t plan to use it and will let my retirement accounts continue to grow.
Great video and info!
Congrats and thanks for your service!
While I love having a fully paid off mortgage, if this couple has a low mortgage rate it would make sense to just let it ride while keeping that money invested.
Congrats on 55 retirement! I am hoping for 56 myself. Cheers.
I agree, their withdrawal rate is too high for the investable assets. Personally I would look to reduce expenses and/or find a part time job (if possible). I would also suggest the highest earner delay until 70 for the survivor benefit. In addition I would employ a dynamic SS strategy where I delay SS as long as the portfolio is not rapidly depleting. We often look at worst case, but markets are up ~ 3 out of 4 years on average.
Thank you for bringing this SS claim strategy. I claimed my SS retirement benefit this month (June 2024), at my FRA (66-1/2 born 1957). I’m initiating a strategy to recoup the 3-1/2 years (or an 8% per year) of increase in waiting until 70 to claim. I’ll invest 100% of my monthly SS benefit in high-risk high-return ETFs, for 42 months, or at least until I turn 70. See where we’re at then. The distinction here for return is simple interest (a straight 8% which is static cash flow), and personal investment which generates compound interest). I collect four hard pensions with zero debt, so I can afford to play high roller for awhile. We'll see how the "great experiment" pans out. Best of luck to your clients!
Several things to think about. Before taking SS pull all of the needed money from the IRAs and let the brokerage account grow. When SS kicks in at 70 take enough from the IRA so that their provisional income is such that less that 50% of their SS is taxable and pull the rest of their spending needs from the brokerage account. I think this will provide the best performance and the lowest taxes.
Why aren't they drawing down that tax deferred account while they have such a low tax rate? What about Roth conversions while they;re still at a low tax rate? Why use up their after tax brokerage only to be hit with higher RMD taxes and possible additional tax on their SS payments by waiting? Doesn't sound like the way I would approach the SS age to start drawing from!
Good comments. He could do a forward looking tax plan to help resolve a lot of those issues he doesn't cover.
Good question. I discuss forward looking multi-year tax planning by using Roth conversions in this video th-cam.com/video/Ukdkb5hR7bM/w-d-xo.htmlsi=N43OZeMVxUyTOTur
Yes! Spend down Pre-tax to avoid RMD tax bomb. Aftertax account provides tax advantaged income.
8% per year 67 to 70
Lisa aged quickly from 63 to 64, lol. I question not looking at Lisa claiming SS today while Don delays to age 70. Preserve and grow the highest SS benefit for the surviving spouse. Also, consider tapping the IRA now whether for cash flow or Roth Conversion. Taxes are on sale in 2024-2025 so take advantage of them! The taxable account can be accessed strategically instead of being exhausted first. The tax plan should look further down the road than just 2025 and 2026. Lots of planning opportunities to evaluate annually.
Good eye! Lisa is currently 63 but based on her DOB will be 64 by end of year (hence why it shows her at 64 on the cash flow breakdown). One factor on getting Dons benefit highest was because Lisa had another piece of guaranteed income via her pension. Didn’t get into Roth conversions in this specific video but I’ve covered that in a few others. Thanks for watching!
How does it work if you have plans for the low earner to take SS at 62 and the high earner to take it at 70, and the high earner dies at 68 or 69 unexpectedly?
How many viewers of this video actually fall into this level of financial wealth??? The point is, how relevant is this to the viewers or is this just a FLEX as in look how smart I am. For the average couple these decisions aren’t applicable.
We do and are just getting ready to retire. So these types of analysis are helpful. But we recognize we are not “average”.
@@bilo6832 anyone who has $2M Plus and asks the question…… “can I retire” are out of touch with society. Just because you’re wealthy apparently doesn’t mean you’re smart.
Yes, often these videos are talking about $Millions? Most people NEED to take Social to Survive? Millionaire don't even need that money? Yes, they earned it but don't Need it.
I do. And I find this type of info highly relevant to my situation.
I would have Lisa take SS at 63 and Don at 70. Assuming Don is the highest earner. This gives Lisa the higher survivor benefit. The only reason they would both wait until 70 is if they were doing Roth conversions. But they’re aggressively spending their portfolio early in retirement. So they don’t really qualify there.
Good video. One comment. You mentioned the 8% in deferred SS benefit in the context of not other wise being able to generate a comparable gain if not deferring but that is not the right comparison. When you. Defer the 8% is on income you are not yet receiving. Even a 5% income on money you actually have compares favorably. Simple example. $100 today grows to $105k at 5% after year 1 compared to deferred balance of zero. Year 2 you get another $100 plus your $105 plus 5% for balance of $215k vs $108k growing to $113.4K. After 11 years of collecting in option 1 you have $1,400 vs $1,350 in option 2. That is age 78. Option 2 does eventually catch up and surpass option 1 but the point is that it takes more than a decade comparing the 8% gain by delaying vs earning 5% on your money collecting a year earlier.
Both taking at 67 if both have good earnings records is likely a mistake. The higher earner delaying often is the best compromise. Assuming both die close together goes against the reality of most couples, so a large survivor check is desirable. The lower check goes away!
Everyone's situation is different and mine is way different than the example. If I took social security at age 62 I would only get $2,074 a month and since I can't afford to live on $2,074 I will still be working and with my income It would reduce my social security to nothing. If I wait until 67 I will get $3,084 and that still isn't enough to live on where we live. Our home wouldn't be paid off yet. By waiting until age 70 my Social Security will be $3,897 a month and by then my retirement account should have grown to a comfortable amount. in addition my wife will be at full retirement age when I turn 73 and the home will be paid off when I am 73. and then with both of us we should have a nice amount from Social Security along with having our retirement accounts to have grown to a comfortable amount.
My Spouse will get no survivor SS benefits due to WEP rules. That makes waiting until 70 problematic..
As of now, my husband and I are taking SS the moment we turn 62! If anyone thinks SS will be the same in 7-8 yrs, you are wrong. They will tax everyone on SS and maybe cut SS by 20% for everyone with a net worth of over 1 million or something like that. It's a joke, and not fair to the people who have paid into the system like everyone else.....why should people be punished for having more money in retirement??? It's gonna happen! We will take that money and invest it the day we are turn 62!
5 to 7 years of withdrawals in cash??! Wow😳😳 way too conservative! 3 years max is fine
You said that by taking SS at 67, their legacy to their heirs will be less. So it seems like in the long run they are better off delaying. Also I would be withdrawing some portion of their tax deferred income in early years rather than getting hit with bigger RMD’s later pushing taxes into higher brackets. In your scenario you are depleting the taxable acct before touching tax deferred. But passing on assets with a low basis to your heirs would be the best assets to pass on (aside from Roth) given the step up in basis they would get.
Good comment. I discuss forward looking multi-year tax planning by using Roth conversions in this video th-cam.com/video/Ukdkb5hR7bM/w-d-xo.htmlsi=N43OZeMVxUyTOTur
The main reason I'm choosing to delay to 70 is to maximize survivor benefit.
I am waiting to 70 to maximize my ROTH conversions.
I am 62, have modest pension, work part time for the rest of this yr? Delaying Soc Sec. And considering Annuities ? Then i wud have 3 streams of Income for Life! I wud have stable Income Floor of $60k but my IRA Wud be down to around $200K after buying the Annuities.
Why would people throw away $12000 a year for a vacation (s) ?
Generally vacations are meant for, as being an 'escape route" from your normal life.
Why not find a MORE enjoyable "normal" life, first?
You may save some money! $1000 each month to enhance your normal life.
What a sad comment. Obviously vacations are different for everyone. For us they can be life changing experiences, relaxation, learning, and exploring. We spend $25k per year as we have the money. We “vacation” meaning not being at home, about 15 weeks per year. When we were young we spent $5000 for a 2 month trip through most of Europe. We also love our home and where we live. Vacations in retirement are not at all an “escape route”. Perhaps when working it can be considered as a way to relax and get away from the rat race, but that clearly isn’t the case in retirement.
You will not take any money with you when you die, so if you can afford it spend on yourself.
Social Security TRAP? Everyone is different, I am not comparing myself to others.
59 .. you look 75
Assets way over average retirees,get real
For some of us it’s right in the right ballpark, so it’s very real. He can’t make videos that don’t apply precisely to you?
In many areas 10k/month is quite realistic. $3-4k/month alone for mortgage/property tax/home insurance and that is not for a big house, add utilities and other essential expenses and it quickly adds up. And don’t forget taxes, and if you have kids it easily gets to that without any pricy vacations. I can understand that for many living in areas with lower costs may be difficult to understand, and moving is not always a simple option.
@@richardb9419Yea right. What percentage of people have this wealth? 1-2%?
@@thepokerpilotapp that's not really the important question though. A more apt question would be "what percentage of people that are consuming TH-cam content about the subtleties of retirement planning have this wealth?" I would guess that number is a lot higher.
@@circusfreakRob I disagree.