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Mike

Older lesser younger higher

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Hello,

I am older and make less than younger wife. I want to retire at 62 and possibly claim SS. Wife wants to retire early too and take spousal benefit, delaying her SS as long as possible. We only have my 403B as backup and a small VA pension in my name. 403B is match on traditional at 6% and Roth side at 30% of income. Would it be better to use my 403B up first then SS? Or the opposite. Leaving the Roth alone and supplement the SS with the traditional side funds until they run out? 

Edited by Mike

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Mike...it's nearly impossible to advise you based on the limited information I have. Your personal strategy will depend on the amount of income you need, the available income sources and the balance of your retirement account. 

There are multiple scenarios that could make sense:

1) Delay SS and take income from traditional balance. This way your SS would increase and when you filed you could supplement with the Roth balance. This benefit of a strategy such as this is that your Roth distributions are not counted for purposes of Social Security taxation (traditional distributions are). It could be that you would be able to take your entire SS check without taxes. 

2) File for SS now and supplement with traditional balances. This way your Roth balances should increase. Any increase to a tax free vehicle will increase the total tax-free distributions. 

The combinations are endless. If you'd like some help, I've available for an hourly consult. 

  • Thanks 1

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Thanks Devin, I think what your kinda suggesting is in line with my thought process as well. We are firm believers in the KISS principle and apply this to our savings vehicles and retirement planning strategies as well. We are minimalists and live very frugally but have a higher middle income stream thru our careers. The goal is to retire early and enjoy the fruits of our endeavors. We subscribe to your YouTube Channel and have recently enjoyed this blog page. Please keep the info coming as we see your strategies falling right in line with our retirement goals.

 

Sincerely,

Mike Tracy

US Navy Vet(Gulf War)

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Simpler variation of "older lesser younger higher"  above on a strategy to maximize payments. Assume both Spouces will file at FRA.  Spouce1 is turning 66 in December 2019 and is the lower earner but eligible for small SS payment .  Spouse2 who has max 35 years of earnings turns 66 in August 2020. 1/2 of Spouce2 will be much more than Spouce1 FRA payment.  Is it good strategy for Spouce1 to file for small benefit on 66 birthday(FRA), receive her full, but small SS payment for 9 months, then would get top off on Spouce2 66th birthday when Spouce2 files at FRA?  The other option is to wait for Spouce2 to file in August of 2020 then have Spouce1 would file to get hers plus top off to 1/2 of Spouce2 but it appears Spouce1 would be leaving $$ on the table for 9 months of small retirement payment between December 2019 and august 2020!

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