Drawing from Retirement Savings to Delay SS

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vested1
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Drawing from Retirement Savings to Delay SS

Post by vested1 »

I didn't get any bites on a comment in another thread so thought it would be beneficial to start a new one on this subject. I would like to see responses from members who are planning to, or are currently delaying SS by spending down a portion of their savings to enable a delay for SS filing. Comments about the inadvisability of delay are not needed but if you feel the urge for some reason be my guest. No comments on the prospects for the future of SS please, in hopes of keeping the thread unlocked.

I was considering asking the first question with a set amount of savings and years of delay, but realized it was not necessary because I am asking it based solely on percentages. Explanation of your reasoning is encouraged. I am asking these questions in order to acid-test my strategy and hope to learn from the responses.

1. How much of your retirement savings in percentages do you plan on depleting in order to fund your delay?

2. Are you currently delaying?

3. Will/does the performance of your portfolio change your savings withdrawal strategy?

4. Will/do you isolate the portion of your savings needed to fund the delay from the rest of your portfolio.

My answers:

1. 25% total for a 6 year term, retiring at 64.

2. Yes, age 63 in less than a week, wife is 62 with the same birthday.

3. Yes, if my portfolio performs well I will feel free to spend half of the gain yearly in addition to my planned withdrawal dollar amount. If my portfolio performs poorly or remains static I will stick to my planned withdrawal dollar amount. Any extra withdrawal will come from non-isolated accounts.

4. Yes, the amount needed for the delay until FRA is isolated in a matured fixed annuity, currently paying a paltry 1.5%. The amount needed from savings will drop drastically at my FRA due to wife filing/me filing restricted. The amount needed for the continued delay from FRA until 70 is inconsequential in my opinion. I don't plan on tapping post-tax to allow for tax free growth unless crossing a tax threshold.
dbr
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Re: Drawing from Retirement Savings to Delay SS

Post by dbr »

vested1 wrote:I didn't get any bites on a comment in another thread so thought it would be beneficial to start a new one on this subject. I would like to see responses from members who are planning to, or are currently delaying SS by spending down a portion of their savings to enable a delay for SS filing. Comments about the inadvisability of delay are not needed but if you feel the urge for some reason be my guest. No comments on the prospects for the future of SS please, in hopes of keeping the thread unlocked.

I was considering asking the first question with a set amount of savings and years of delay, but realized it was not necessary because I am asking it based solely on percentages. Explanation of your reasoning is encouraged. I am asking these questions in order to acid-test my strategy and hope to learn from the responses.

1. How much of your retirement savings in percentages do you plan on depleting in order to fund your delay?

Don't know. Am not worrying about it. Rate of withdrawal is under 6% w/o SS and will fall with SS. The model in various retirement models looks good. That is the best way to evaluate feasibility.

2. Are you currently delaying?

Yes to 70 for me, to FRA for spouse (done).


3. Will/does the performance of your portfolio change your savings withdrawal strategy?

No. Delaying SS to buy longevity insurance is a no-brainer.


4. Will/do you isolate the portion of your savings needed to fund the delay from the rest of your portfolio.

No
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BTDT
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Re: Drawing from Retirement Savings to Delay SS

Post by BTDT »

1. 11%
2. Yes
3. No
4. No
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hulburt1
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Re: Drawing from Retirement Savings to Delay SS

Post by hulburt1 »

This is my plan I'm doing now..It really started 40 years ago. But cut to the chase. I always paid cash for everything but house and paid that off. I'm taking what ever my SS is now out of my IRA. Will increase it every year. I do have a small pension and a job that is PT. I will do the job for ever. I coach at the local HS. I was able to save 2m while only making about $60,000.

monthly
$800 pension
$800 pt job
$1100 IRA =SS
Wife
pt $1500
when she hits 62 we will take SS from her IRA also
If I lose 1/2 of my IRA I'll start taking my SS
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Ged
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Re: Drawing from Retirement Savings to Delay SS

Post by Ged »

vested1 wrote:
1. How much of your retirement savings in percentages do you plan on depleting in order to fund your delay?
About 10%.

2. Are you currently delaying?
Yes, although I only started 2 months ago.

3. Will/does the performance of your portfolio change your savings withdrawal strategy?
No. The funding for this is already established in a short term investment.

4. Will/do you isolate the portion of your savings needed to fund the delay from the rest of your portfolio.
Yes. See ans to (3).
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JDCarpenter
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Re: Drawing from Retirement Savings to Delay SS

Post by JDCarpenter »

Like many on this forum, we plan to do this. Assuming present laws don't change, we will assume longevity and optimize social (although it has not been factored into our retirement spending plan yet). FWIW, we are both past the second bend point, and our spending in first 10+ years in retirement is planned to be well past 50% discretionary.

1. We don't plan to "deplete" the portfolio--although that may well happen depending upon market performance. We tentatively plan to use either VPW or just take a highly variable 5% of investment portfolio, recalculated every year (or, maybe 1.25%, recalculated every quarter). May put some guardrails on it, but still playing with numbers.

2. Not yet retired. Another couple of years, at 57/56.

3. I would be surprised if our overall strategy changed due to performance--unless we cut back on spending even more than the decrease caused by the portfolio drop. (Well, I bet we'd spend less of "this years" money if the overall portfolio dropped 50% on January 15th or whatever; some of that money might be saved for "next year," so if that counts as a strategy change....)

4. We will not isolate nonclaiming years income foregone from the rest of the portfolio. Maybe an argument could be made to isolate the weeks (months?) of spending that could come from claiming SS at 62, but that would be less than the two/three years of spending that we will have in highly liquid, stable assets.
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dbr
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Re: Drawing from Retirement Savings to Delay SS

Post by dbr »

PS I should add that re depletion I am just 70 now and the portfolio is substantially higher now than it was when I was 62, so there has been no depletion.

Now that is not completely accurate. In the first place that data is nominal value and should be computed in real terms, but it would still be no depletion.

The second issue is more subtle but actually more important. The issue is that if one is looking at a plan based on simulation what should the portfolio be as a function of time. Only if you have a plan for the statistical bounds you need to be in to stay successful can you say that some particular amount of "depletion" is a problem. I haven't done the plan that way. Instead I just know that planners give me an assurance of success with withdrawal rates for awhile that are "too high" to be followed by withdrawal rates with SS in place that are very comfortable, all factors considered.
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bengal22
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Re: Drawing from Retirement Savings to Delay SS

Post by bengal22 »

. How much of your retirement savings in percentages do you plan on depleting in order to fund your delay?
Do not have a planned amount but my net worth is still going up with me pulling out about 2%


2. Are you currently delaying?
yes

3. Will/does the performance of your portfolio change your savings withdrawal strategy?

probably not

4. Will/do you isolate the portion of your savings needed to fund the delay from the rest of your portfolio.

no
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Enkidu
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Re: Drawing from Retirement Savings to Delay SS

Post by Enkidu »

1. Probably about 16%. This is a little tricky, depending on what you count, and what the target is. Are you spending at the rate of future SS benefits (70+) or at the rate of forgone income from delaying? In my case I am targeting the top of the 15% bracket and also do annual Roth conversions. I expect that portfolio withdrawals for consumption after 70 will be small, probably zero in most years.

2. I have been delaying for about a year. I plan to file for spousal at FRA and delay my benefits until 70. My wife (lower earner) claimed at 62. This keeps costs relatively low while preserving the benefits of the higher earner.

3. No, I have a relatively high bond allocation and am spending from bonds. I expect to take more risk after establishing a safe floor and taking SS at 70. Pensions and SS should provide all needs. If we need more income after 70 we may consider a SPIA.

4. Not isolated exactly, but I know what funds I will be using. I have access to TSP G fund, as well as other bond funds in my wife's IRA. We are currently pulling from my wife's IRA for State tax purposes, but could change to the G fund if needed.
user5027
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Re: Drawing from Retirement Savings to Delay SS

Post by user5027 »

10.62%
No.
Hopefully not.
No.
livesoft
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Re: Drawing from Retirement Savings to Delay SS

Post by livesoft »

1. How much of your retirement savings in percentages do you plan on depleting in order to fund your delay?
None. I expect portfolio average annual gains to cover sustained withdrawal rate.

2. Are you currently delaying?
I am retired in my 50s, so not eligible yet for SS, so I guess I am "delaying", but my spouse is working. We make withdrawals to pay expenses though.

3. Will/does the performance of your portfolio change your savings withdrawal strategy?
Yes, of course, but not my SS delaying strategy. If portfolio tanks, I will need to withdraw a higher percentage to pay for expenses. If it goes up big time, then I will need to withdraw a lower percentage to pay for expenses.

4. Will/do you isolate the portion of your savings needed to fund the delay from the rest of your portfolio.
No. I do not believe in buckets and see no need to isolate the one big happy portfolio invested tax efficiently.
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winski58
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Re: Drawing from Retirement Savings to Delay SS

Post by winski58 »

1. How much of your retirement savings in percentages do you plan on depleting in order to fund your delay?
17%

2. Are you currently delaying?
Yes, for six years when spouse is 70 and I am 73.

3. Will/does the performance of your portfolio change your savings withdrawal strategy?

No, all funds other than IRA Savings and IRA CDs used to fund delay are in TIAA Traditional and TSP Gfund. (spousal SS for 3 years and my maximum @ 70 SS for 3 years also used to fund delay)

4. Will/do you isolate the portion of your savings needed to fund the delay from the rest of your portfolio?
Yes, see 3.
novicemoney
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Re: Drawing from Retirement Savings to Delay SS

Post by novicemoney »

FYI, I am at 55 and DW is 56. I may pull the retirement trigger at 60, DW is retired and on a pension. Here is our plan (for now);
1. Withdrawal rate for us at 60 will be 4%. If wife takes SS and starts her 403b annui at 62 then it will be 2%.
2. DW will take SS at 62, I will delay to 70 (health willing).
3. No.
4. Current AA has 17.5% in ST bonds/CD's, this is enough for 5 years at our current level of spending.
Of course lots in play. SS rules may change and that might alter our plans. One of us may have health issues and that may change things. For now however this is our plan. FWIW
SGM
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Re: Drawing from Retirement Savings to Delay SS

Post by SGM »

I don't have very high expenses outside of Medicare and taxes. We can't get away much because of a dependent elderly relative. Spousal benefit will kick in very early in 2016. A savings annuity similar to a tax deferred CD is getting a little lower rate than the initial 4.0% because the interest on the interest is currently lower was bought 5 years ago as a way to take 10% out every year in the delay period. I could annuitize it at any time or take out the full amount in two years. The average interest rate of the initial contribution and reinvested interest is now 3.7%. DW could annuitize or take money out of TIAA-CREF if needed.
VinhoVerde
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Re: Drawing from Retirement Savings to Delay SS

Post by VinhoVerde »

I am 61 and wife is 60. I retired last year and my wife will continue to work until she is 63. She'll take SS at 63 and I'll take spousal SS at 66. Will wait until 70 to take full SS.

1. How much of your retirement savings in percentages do you plan on depleting in order to fund your delay?
(17%)

2. Are you currently delaying?
(I'm delaying full SS until 70.)

3. Will/does the performance of your portfolio change your savings withdrawal strategy?
(No, I'm withdrawing from stable value fund to finance this period until age 70.) This part of my portfolio is in my wife's 401k. I expect no "fluctuation" with this investment and it earns around 1.76%. Also, I'm trying to use as much of my tax deferred space now before RMD kicks in at age 70 at the the upper end of the 15% tax bracket. At this level there is no fed tax on dividends.


4. Will/do you isolate the portion of your savings needed to fund the delay from the rest of your portfolio.
(I am isolating portion of portfolio to Stabe Value from 401k to insure stability and reduce RMD after 70 while paying 0 in taxes on dividends.)
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MathWizard
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Re: Drawing from Retirement Savings to Delay SS

Post by MathWizard »

10%
no
no
no
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whaleknives
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Re: Drawing from Retirement Savings to Delay SS

Post by whaleknives »

1. How much of your retirement savings in percentages do you plan on depleting in order to fund your delay?
I'm planning 5 years at a 7% withdrawal rate, converting my entire traditional IRA to Roth. The withdrawal rate with Social Security and no RMD's would then be <1%.

2. Are you currently delaying?
Just starting this year at 65 and 61. I plan on SS filing and suspending at 66. My wife will start spousal SS at her FRA of 66, just 2 months before I start at 70.

3. Will/does the performance of your portfolio change your savings withdrawal strategy?
No, but the emergency backup plan is to start SS earlier, with the option of claiming a lump sum payment back to age 66 if needed, at the cost of forfeiting the delayed retirement credits.

4. Will/do you isolate the portion of your savings needed to fund the delay from the rest of your portfolio.
No. All my money is fungible, except for 1% from a class action settlement that I use to chase gains.
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Re: Drawing from Retirement Savings to Delay SS

Post by Broken Man 1999 »

1. How much of your retirement savings in percentages do you plan on depleting in order to fund your delay?
Our initial portfolio withdrawal is about 2.2%, we will be foregoing $1,131/month by my wife delaying from 62 until 70. The 2.2% withdrawal rate was without early SS for wife.
2. Are you currently delaying?
Almost, wife turned 62 last month
3. Will/does the performance of your portfolio change your savings withdrawal strategy?
It possibly could change our strategy. If things got really bad, rather than seriously depleting our retirement portfolio, wife could file for benefits at any time. And, budgets can be cut. Our budget is not without some fat for flavor. :D
4. Will/do you isolate the portion of your savings needed to fund the delay from the rest of your portfolio.
I don't see any particular strategy as necessary in withdrawing an additional $1,131/month. The amount would be drawn from the same accounts as the other withdrawals, it just means a larger withdrawal from the start of retirement.

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GerryL
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Re: Drawing from Retirement Savings to Delay SS

Post by GerryL »

I began planning for retirement (just short of age 67) 3 years ahead by diverting to a money market account some $$ that would have gone into a non-retirement investment account so that I would have cash to take me to age 70 and SS. I ended up leaving a year earlier with a severance package that equalled for almost a year's salary, which I added to my cash (savings and CDs). This is proving to be enough to take me to 70.

1. How much of your retirement savings in percentages do you plan on depleting in order to fund your delay?
Don't expect to deplete any, but I am doing tIRA to Roth conversions.

2. Are you currently delaying?
Yes.

3. Will/does the performance of your portfolio change your savings withdrawal strategy?
n/a

4. Will/do you isolate the portion of your savings needed to fund the delay from the rest of your portfolio.
n/a but still need to decide whether/when/how to start diverting earnings and gains into IRA money market account for when I need to start taking RMDs.
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MikeWillRetire
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Re: Drawing from Retirement Savings to Delay SS

Post by MikeWillRetire »

1. How much of your retirement savings in percentages do you plan on depleting in order to fund your delay?

I am planning an early retirement. If I postpone social security to somewhere between 67 and 70, my pension and social security will cover my retirement expenses. So I plan to use my retirement savings to allow me to retire early. So I plan on depleting 3/4 of my portfolio for the sweet taste of early retirement.
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Re: Drawing from Retirement Savings to Delay SS

Post by BahamaMan »

I think this is simpler than you are making it out to be.

Myself, I am delaying to 70, in which case my wife and I would get around $50 Grand a year. I took 8 years times $50 Grand to get $400 Grand. I took $400 Grand and put it in Ally Bank. I take $50 Grand a year and add it to my VPW withdrawal of the rest of the portfolio.

Can't see how this would not work.
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Aptenodytes
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Re: Drawing from Retirement Savings to Delay SS

Post by Aptenodytes »

I don't quite understand the motivation behind the question. People delay SS. They pay their bills. What's the big deal? But I'll play along.

1. How much of your retirement savings in percentages do you plan on depleting in order to fund your delay?
I'm about 10 years away, so this is a wild guess: 15%. But you are talking about a 5-year window in which returns will have a huge impact on the actual number -- it could be anywhere from 0 to 20%. Also, if I weren't going to delay, I'd have a whole different approach to withdrawals and allocations, therefore my answer to your questions requires comparing to that scenario, but I'm not going to waste time figuring that counterfactual out.

2. Are you currently delaying?
I'm not retired.

3. Will/does the performance of your portfolio change your savings withdrawal strategy?
It depends.. Some performance outcomes would change withdrawals, some would not.

4. Will/do you isolate the portion of your savings needed to fund the delay from the rest of your portfolio.
That depends on the meaning of the word "isolate." But my guess is that by what you mean by the word, my answer is "no."
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Watty
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Re: Drawing from Retirement Savings to Delay SS

Post by Watty »

I will be delaying but there are so many variables that it will be a year by year decision. One factor you didn't mention is doing Roth conversions which isn't depleting the portfolio.
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Re: Drawing from Retirement Savings to Delay SS

Post by Bill M »

1. planning to deplete about 15% covering 8 years (but that includes the additional taxes due to Roth conversions)
2. currently delaying
3. portfolio performance will not impact the plan
4. pre-70 portion is isolated in TIPS, CDs, and a StableValue fund
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Re: Drawing from Retirement Savings to Delay SS

Post by jebmke »

vested1 wrote:1. How much of your retirement savings in percentages do you plan on depleting in order to fund your delay? No set plan. Spending as needed.

2. Are you currently delaying? Yes

3. Will/does the performance of your portfolio change your savings withdrawal strategy? No; but withdrawal will drop in three years when pension starts and then again in 4 when spouse starts spousal benefit.

4. Will/do you isolate the portion of your savings needed to fund the delay from the rest of your portfolio. No buckets
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heyyou
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Re: Drawing from Retirement Savings to Delay SS

Post by heyyou »

% of portfolio decline for paying to delay: Don't know, don't much care. My no-COLA pension covers over half of our current spending. SS at 70 will be more than our current WD amount. The inflation protection is important to buffer my pension, so the cost of delaying is accepted as a good long term investment. Delayed consumption/gratification has paid well so far.

Currently delaying at age 65.

Current WD rate is low, so good returns are not necessary before boosting spending.

Why isolate the future spending? I'm not doing buckets, and I do own plenty of bonds to spend if equities fall. That is the advantage of feeling that we have enough now, we are not scheming on how to boost our spending, or trying to protect our spending from a portfolio drop. The drop will happen and we will adapt if needed.

If compartments help someone to stay the course, then that is a good path for them. To me, delaying SS for 15 years from my age 55 retirement was always part of the plan, as was Roth conversions, not some special costs that are separate from the rest of my retirement spending. Money is fungible but a spread sheet acts as though it isn't.
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Re: Drawing from Retirement Savings to Delay SS

Post by celia »

1. N/A
2. yes, yes, with spousal
3. no
4. no

We're using the years between working and age 70 to convert the traditional IRAs as our taxable income at age 70 will be higher than when we worked. We were just about to finish the conversions this year, when DH inherited a large traditional IRA, so we're back to square one. Will take withdrawals bigger than the RMDs for inherited IRAs so that age 70+ withdrawals will be smaller as our tax rate will be higher then. Or we'll give the RMDs to charities. Will see.
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22twain
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Re: Drawing from Retirement Savings to Delay SS

Post by 22twain »

vested1 wrote:1. How much of your retirement savings in percentages do you plan on depleting in order to fund your delay?
Based on current spending, I estimate we will need to withdraw about 6% of our current savings over the next 8 years, possibly up to about 8% or 9% if our expenses increase a lot. This is in current dollars (so as not to deal with inflation), and assumes that our savings would otherwise grow at the rate of inflation (i.e. zero real return). I think there is a very good chance we will end up with more money than now, even after adjusting for inflation.
2. Are you currently delaying?
No and yes. I am currently 61 (hence not yet eligible to collect SS) and my spouse is currently 66 (hence eligible to collect SS). At the moment we receive enough compensation from work to cover our expenses, but this will end within the next two years. We have nearly equal PIAs and we both plan to delay collecting SS until 70 because we both had long-lived parents. I will claim spousal benefits from age 66 through 69.
3. Will/does the performance of your portfolio change your savings withdrawal strategy?
Probably not, unless the performance is truly disastrous, worse than 2008-09.
4. Will/do you isolate the portion of your savings needed to fund the delay from the rest of your portfolio.
No. Overall, our savings are invested rather conservatively, with about 1/3 in stocks or stock funds, the rest in a bond fund, stable-value fund and CDs.
Last edited by 22twain on Tue Jun 30, 2015 6:10 am, edited 1 time in total.
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Re: Drawing from Retirement Savings to Delay SS

Post by The Wizard »

I retired two years ago at 63.
I have annuity income to cover most of my expenses and am taking additional withdrawals from my tax sheltered pile in lieu of SS.

My annual withdrawal rate is just a bit over 4% of my balance, so I suppose one could extrapolate that to be a 30% spend down over seven years. But since I keep that portfolio fully invested at my desired AA, there's a fair chance it could grow in excess of 4% per year, as it has thus far.

Once I start SS at age 70, this former in lieu withdrawal transitions to being my RMD with very little change if things hold reasonably steady...
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wormtail
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Re: Drawing from Retirement Savings to Delay SS

Post by wormtail »

1. 50% (assuming no growth in portfolio which is unlikely) for 11 years till age 70.

2 No, retiring in 18 mos

I could work longer but I've won the game, why wait?
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vested1
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Re: Drawing from Retirement Savings to Delay SS

Post by vested1 »

I appreciate the varied replies and especially the different outlooks on creating a separate bucket to fund the delay. I can't take credit for that idea of course, and some of you don't think the idea has any merit at any rate. The one true thing about this exercise is that it's always good to have options.

My calculations are influenced by my conservative outlook and the anticipation that gain is not guaranteed. I've factored in zero growth for that reason, even though the 75% of our portfolio that isn't isolated into a ultra safe low interest bearing products is, and will stay at a 60/40 allocation. This forum has allowed me to have a firm conviction that I can resist the urge to sell in a bear market.

I don't pretend to have the slightest idea how my portfolio will perform, but knowing that we have a guaranteed and separate amount set aside to fund the delay no matter what happens helps to cement that resolve. If I lose out on possible gain for the next 3 years on that portion that was set aside, then so be it. At least the delay will result in less taxes at RMD and a much larger percentage of COLA protected income that will eclipse our expenses at age 70. If the gain on the 75% of the rest of the portfolio is greater than zero, then the ensuing 4 years until my age 70 look even better.

In my opinion the assumption of zero growth can't hurt, just like discounting SS when I was younger didn't hurt either. It certainly caused me to save more.

Is it possible that our plan will alter somewhat and that my wife will file earlier than 65? Possible, but unlikely barring some catastrophe not connected to our portfolio.
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Re: Drawing from Retirement Savings to Delay SS

Post by vtMaps »

vested1 wrote: Yes, age 63 in less than a week, wife is 62 with the same birthday.
<snip>
The amount needed from savings will drop drastically at my FRA due to wife filing/me filing restricted.
Why will you file restricted at your FRA?

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22twain
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Re: Drawing from Retirement Savings to Delay SS

Post by 22twain »

(oops, accidentally duplicated my previous post when I meant to edit it)
Last edited by 22twain on Tue Jun 30, 2015 6:11 am, edited 2 times in total.
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Cernel
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Re: Drawing from Retirement Savings to Delay SS

Post by Cernel »

vested1 wrote:I didn't get any bites on a comment in another thread so thought it would be beneficial to start a new one on this subject. I would like to see responses from members who are planning to, or are currently delaying SS by spending down a portion of their savings to enable a delay for SS filing. Comments about the inadvisability of delay are not needed but if you feel the urge for some reason be my guest. No comments on the prospects for the future of SS please, in hopes of keeping the thread unlocked.

I was considering asking the first question with a set amount of savings and years of delay, but realized it was not necessary because I am asking it based solely on percentages. Explanation of your reasoning is encouraged. I am asking these questions in order to acid-test my strategy and hope to learn from the responses.

1. How much of your retirement savings in percentages do you plan on depleting in order to fund your delay?

I am 62 and have been retired for 6 years and I am delaying my SS. To date, both the nominal and real returns of our portfolio has been greater than the amount withdrawn to fund our yearly expenses.

2. Are you currently delaying?

Yes. My wife who is a few months older than myself and has a FRA benefit of < 50% of mine will start to draw her SS Benefit at FRA (66). When I turn 66 a few months later, I will file a Restricted Application for 50% of her benefit while allowing my benefit to grow. Then when I turn 70, I will file for my benefit and she will file for Spousal Benefit.

3. Will/does the performance of your portfolio change your savings withdrawal strategy?

Probably not. What did change my withdraw strategy was Obamacare. Prior to 2014, I had primarily been withdrawing from my IRA and doing partial Roth IRA conversions with the idea of lowing my anticipated RMD amounts when I turned 70. My anticipated RMD will be sufficient enough to put me in a higher tax bracket. But in 2014 and continuing to 2017 when I go on Medicare, I will be withdrawing from my Individual Account (non-retirement account) since I can control which lots I sell. What this has afforded me is the opportunity to have no Federal tax liability, thus all my capital gains have been tax free and I also qualify for a hefty Premium Tax Credit and the Cost Reduction Savings associated with Obamacare.

4. Will/do you isolate the portion of your savings needed to fund the delay from the rest of your portfolio.

No

My answers:

1. 25% total for a 6 year term, retiring at 64.

2. Yes, age 63 in less than a week, wife is 62 with the same birthday.

3. Yes, if my portfolio performs well I will feel free to spend half of the gain yearly in addition to my planned withdrawal dollar amount. If my portfolio performs poorly or remains static I will stick to my planned withdrawal dollar amount. Any extra withdrawal will come from non-isolated accounts.

4. Yes, the amount needed for the delay until FRA is isolated in a matured fixed annuity, currently paying a paltry 1.5%. The amount needed from savings will drop drastically at my FRA due to wife filing/me filing restricted. The amount needed for the continued delay from FRA until 70 is inconsequential in my opinion. I don't plan on tapping post-tax to allow for tax free growth unless crossing a tax threshold.
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vested1
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Re: Drawing from Retirement Savings to Delay SS

Post by vested1 »

vtMaps wrote:
vested1 wrote: Yes, age 63 in less than a week, wife is 62 with the same birthday.
<snip>
The amount needed from savings will drop drastically at my FRA due to wife filing/me filing restricted.
Why will you file restricted at your FRA?

--vtMaps
My wife will be 65 and I will be 66 (FRA) when she files. By filing a restricted application my benefits continue to grow at 8% a year until 70. I will receive over $1,000 a month on the restricted application.
Dandy
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Re: Drawing from Retirement Savings to Delay SS

Post by Dandy »

1. How much of your retirement savings in percentages do you plan on depleting in order to fund your delay?
I

I was forced to retire at age 60 in 2008 :oops: I made sure I had enough in Savings accounts, CDs, and LTD term tax exempt to fund expenses to age 70. It was about 20% of my investment portfolio. While most was set aside at the beginning some was added to via taxable distributions, tax refunds etc - as needed.

Given the timing in 2008 I wasn't sure that the cash set aside would be needed for other purposes but it was intended for SS. The nice feature is if circumstances change you can stop the delay and take SS at that time.

2. Are you currently delaying?


Yes, now 67, wife has taken her SS and I have taken a supplemental on her SS, the market has recovered etc so funding seems secure. Expenses have remained somewhat stable. As my pension will be cut in half upon my death I want my wife to have the highest inflation protected SS payment as possible and not have to rely on investments for support.

3. Will/does the performance of your portfolio change your savings withdrawal strategy?


The investment side has done well which aides in sleeping and feeling secure. The savings portion is winding down as planned. I did
decide to increase my TIRA CD ladder to keep a solid "no loss of principal" amount as part of my total portfolio.

4. Will/do you isolate the portion of your savings needed to fund the delay from the rest of your portfolio.


I usually have one year worth of drawdown in an on line savings account that automatically feeds my monthly needs to my regular checking. I had a taxable CD ladder that fed the on line savings account when that needed replenishing. Other or "extra" money was kept in Ltd Term Tax exempt (and some in intermediate).

While the SS delay money is generally isolated I have adopted WM Bernstein's idea of having enough "safe" products to fund our retirement until age 90 - without considering my SS at age 70. So, I have more "safe" in taxable than I need to cover expenses to age 70.
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Re: Drawing from Retirement Savings to Delay SS

Post by vtMaps »

vested1 wrote: My wife will be 65 and I will be 66 (FRA) when she files. By filing a restricted application my benefits continue to grow at 8% a year until 70. I will receive over $1,000 a month on the restricted application.
So you are filing a restricted application in order to receive spousal benefits? What if you do it the other way... that is, she waits until she reaches FRA and then files a restricted application and collects spousal benefits for four years?

I presume your PIA is higher than hers, therefore she will collect four years of a higher spousal benefit than the spousal benefit that you will collect. Furthermore, by filing restricted at her FRA, her own benefit will grow so that when she reaches 70 you will BOTH have the maximum benefits possible.

--vtMaps
Historical Fact: Justin Smith Morrill represented Vermont in congress, had a dog named 'Trump', and wrote legislation establishing the Land Grant Colleges.
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Re: Drawing from Retirement Savings to Delay SS

Post by vtMaps »

Cernel wrote:My wife who is a few months older than myself and has a FRA benefit of < 50% of mine will start to draw her SS Benefit at FRA (66). When I turn 66 a few months later, I will file a Restricted Application for 50% of her benefit while allowing my benefit to grow. Then when I turn 70, I will file for my benefit and she will file for Spousal Benefit.
I don't think that makes sense. Why not wait until you reach FRA and then file and suspend? She can then claim spousal benefits on your account that will be higher than the spousal benefits that you can claim on her account.

--vtMaps
Historical Fact: Justin Smith Morrill represented Vermont in congress, had a dog named 'Trump', and wrote legislation establishing the Land Grant Colleges.
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Cernel
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Re: Drawing from Retirement Savings to Delay SS

Post by Cernel »

vtMaps wrote:
Cernel wrote:My wife who is a few months older than myself and has a FRA benefit of < 50% of mine will start to draw her SS Benefit at FRA (66). When I turn 66 a few months later, I will file a Restricted Application for 50% of her benefit while allowing my benefit to grow. Then when I turn 70, I will file for my benefit and she will file for Spousal Benefit.
I don't think that makes sense. Why not wait until you reach FRA and then file and suspend? She can then claim spousal benefits on your account that will be higher than the spousal benefits that you can claim on her account.

--vtMaps
I've looked at both of these scenarios, along with 6 others, and the reason why my stated strategy works out better than me "Filing and Suspending" at age 66 is that my wife's SS Benefit is close to 50% of mine, actually 45%. If I "File & Suspended, I could not file a "Restricted Application on her benefit and would thus lose those 4 years of getting 50% of her benefit. For our numbers we will be getting about $5.4K more per year for those years between 66-70 with me filing a Restricted Application versus me "Filing and Suspending.
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Re: Drawing from Retirement Savings to Delay SS

Post by DFrank »

1. The total spending from our portfolio during the period I am delaying will be about 25% of the starting value of the portfolio. As someone else pointed out this doesn't account for any gains in the portfolio over a nearly 10 year period, which seems rather unlikely. My wife will work for the first 3-4 years after I retire (she is 9 years younger than me), so our inital withdrawal rate will be under 2%, but will jump up to about 4% when she stops working. It will then drop to about 3% once I start drawing social security.

2. No. I am planning to retire next year when I am 61.

3. Perhaps, but it's that's more likely going to be a factor that influences our decision about when my wife will draw her benefit.

4. Sort of. About 25% of our portfolio is in a non-qualified deferred comp plan that I have selected to have distributed to me over the first 10 years after I retire, so this happens to be where most of the needed withdrawals are going to come from. At the moment I have no plans to use an allocation in that account that is any different than the rest of our portfolio though.
Dave
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Re: Drawing from Retirement Savings to Delay SS

Post by vtMaps »

Cernel wrote: I've looked at both of these scenarios, along with 6 others, and the reason why my stated strategy works out better than me "Filing and Suspending" at age 66 is that my wife's SS Benefit is close to 50% of mine, actually 45%. If I "File & Suspended, I could not file a "Restricted Application on her benefit and would thus lose those 4 years of getting 50% of her benefit. For our numbers we will be getting about $5.4K more per year for those years between 66-70 with me filing a Restricted Application versus me "Filing and Suspending.
Only one of you can collect spousal benefits. Your PIA is more than twice her PIA... I think the two of you would be better off if she collected 50% of your PIA than if you collected 50% of her PIA.

--vtMaps
Historical Fact: Justin Smith Morrill represented Vermont in congress, had a dog named 'Trump', and wrote legislation establishing the Land Grant Colleges.
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Cernel
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Re: Drawing from Retirement Savings to Delay SS

Post by Cernel »

vtMaps wrote:
Cernel wrote: I've looked at both of these scenarios, along with 6 others, and the reason why my stated strategy works out better than me "Filing and Suspending" at age 66 is that my wife's SS Benefit is close to 50% of mine, actually 45%. If I "File & Suspended, I could not file a "Restricted Application on her benefit and would thus lose those 4 years of getting 50% of her benefit. For our numbers we will be getting about $5.4K more per year for those years between 66-70 with me filing a Restricted Application versus me "Filing and Suspending.
Only one of you can collect spousal benefits. Your PIA is more than twice her PIA... I think the two of you would be better off if she collected 50% of your PIA than if you collected 50% of her PIA.

--vtMaps
My understanding is that only 1 can collect spousal benefits at any given time. Our strategy has me collecting spousal benefits while she is on her own benefit. I come off spousal benefit when I start drawing on my own at age 70 and at that time she would go on spousal benefit. I could be wrong on this assumption, so I will need to do some research.
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vested1
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Re: Drawing from Retirement Savings to Delay SS

Post by vested1 »

vtMaps wrote:
vested1 wrote: My wife will be 65 and I will be 66 (FRA) when she files. By filing a restricted application my benefits continue to grow at 8% a year until 70. I will receive over $1,000 a month on the restricted application.
So you are filing a restricted application in order to receive spousal benefits? What if you do it the other way... that is, she waits until she reaches FRA and then files a restricted application and collects spousal benefits for four years?

I presume your PIA is higher than hers, therefore she will collect four years of a higher spousal benefit than the spousal benefit that you will collect. Furthermore, by filing restricted at her FRA, her own benefit will grow so that when she reaches 70 you will BOTH have the maximum benefits possible.

--vtMaps
The reason is because of our ages and situation. We go from nothing to about 35k a year in three years (as of a couple of days from now). If we did it the way you suggest it would be with me filing and suspending at FRA. So that would be zero for 4 years until my wife turns 66, about $15,000 for 3 years in today's dollars from her FRA until I turn 70 and about 80k instead of 70k a year at our age 70 (with an average of 2% COLA a year). 70k will cover our expenses by itself and the extra 50k from savings for 3.5 years (I'll work another 6 months) until my FRA and the difference between that and her restricted application and 50k, 36k for 3 more years would push us to more like 283k from savings, instead of about 185k with our plan. My wife also has a 30k a year pension. ( I see I misstated the percentage taken from savings, instead of 25% it's 19.27% for the delay).

I have considered doing as you suggest, as it is the most optimal for combined cumulative benefits if we both live until break even, which with your suggestion would be much longer than ours is at 77.3. That being said I don't give any credence to "break even' and only cite it because some people use it for comparison purposes.

We need an added influx of money when my wife turns 65 because the chronic medication she takes will no longer be subsidized by the manufacturer at Medicare age. The copay is astounding, but it's currently covered with a copay of $10 every three months. That changes to a copay of about $8,000 a year at Medicare for the single medication. We're hoping that recently proposed legislation covers this chronic medication under Medicare within 3 years when she turns 65. If it does we may have her delay longer.
Independent
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Re: Drawing from Retirement Savings to Delay SS

Post by Independent »

1. How much of your retirement savings in percentages do you plan on depleting in order to fund your delay?
about 20%
2. Are you currently delaying?
One of us started at 66 to claim spousal benefits. The other is 68 and hasn't started yet.
3. Will/does the performance of your portfolio change your savings withdrawal strategy?
Sure, we're withdrawing a lot more in the early years.
4. Will/do you isolate the portion of your savings needed to fund the delay from the rest of your portfolio.
We had segregated "low volatility" assets that covered the extra withdrawals.
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