Working and receiving (reduced) SS before FRA.

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Godot
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Working and receiving (reduced) SS before FRA.

Post by Godot »

Am curious to know how many, if any, BH's both took SS before FRA and either continued to work, or returned to work, receiving a reduced benefit, of course ($1 for every 2$ over the max allowed), but also increasing the amount of SS when reaching FRA, since the amount would be recalculated. Is this an intentional thing that some retirees do for the sake of flexibility? I think it was Nisiprius who wrote that this happened to him when he lost his job at 62, but wonder if anybody does/did this intentionally, as a kind of flexible claiming strategy. Not necessarily a good/useful strategy, mind you, but an accidental one, if strategies can be accidental.
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Makefile
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Re: Working and receiving (reduced) SS before FRA.

Post by Makefile »

I suppose it depends on whether you actually need the Social Security benefit for those years or not.

If not, I would think that taxable income space would be too valuable to use on early SS benefits, and would be better used on Roth conversions.
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celia
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Re: Working and receiving (reduced) SS before FRA.

Post by celia »

It also depends on how much you’ve saved in tax-deferred, as many Bogleheads realize soon after retiring that their age 72 RMDs are going to push them into higher tax brackets if they don’t do Roth conversions for several years before then. By delaying SS as long as possible, they end up with more room to do Roth conversions in each tax bracket. (This also implies that if the survivor of a married couple was the lower wage earner, s/he may get a higher SS benefit as a survivor.)

I also think that giving up $1 for every $2 earned is pretty punitive. In the world of Bogleheads, I doubt many people here would do as you’re thinking, but then, again, we have higher than average savings.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
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Re: Working and receiving (reduced) SS before FRA.

Post by Godot »

Makefile wrote: Mon Jun 21, 2021 7:04 pm I suppose it depends on whether you actually need the Social Security benefit for those years or not.

If not, I would think that taxable income space would be too valuable to use on early SS benefits, and would be better used on Roth conversions.
Makes sense. Primary reasons for exploring this are 1: Potential progression of a serious health condition, coupled with 2. Potential for irregular but substantial contract work from 62-66.
"The day you die is just like any other, only shorter." | ― Samuel Beckett
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Godot
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Re: Working and receiving (reduced) SS before FRA.

Post by Godot »

celia wrote: Mon Jun 21, 2021 8:06 pm It also depends on how much you’ve saved in tax-deferred, as many Bogleheads realize soon after retiring that their age 72 RMDs are going to push them into higher tax brackets if they don’t do Roth conversions for several years before then. By delaying SS as long as possible, they end up with more room to do Roth conversions in each tax bracket. (This also implies that if the survivor of a married couple was the lower wage earner, s/he may get a higher SS benefit as a survivor.)

I also think that giving up $1 for every $2 earned is pretty punitive. In the world of Bogleheads, I doubt many people here would do as you’re thinking, but then, again, we have higher than average savings.
Well put. Thank you, Celia.
"The day you die is just like any other, only shorter." | ― Samuel Beckett
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