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Time for Plan B?

My plan for our retirement income needs was to rely on our pensions to pay the bills and draw from taxable savings for extra expenses. We delayed my wife’s Social Security payments until she reached full retirement age (66) and planned to delay my SS to age 70 — unless we needed the money. We still don’t need the money, however, I’m starting to consider starting SS earlier and investing the cash while stocks are getting pummeled. I’m 66 now.

The guaranteed 8% annual increase in SS payments was my primary incentive for delaying, but with a bear market underway, I might be able to match or exceed that percentage through my investments. We also have our IRAs and 401Ks to rely on, but I don’t want to start withdrawing from them until we have to meet required minimum distributions. I have been converting a portion of our IRAs to Roth accounts each year at a rate that doesn’t push us to a higher tax bracket. However, if I start drawing SS, that will push us from the 12% to the 22% bracket, so I’m still not sure that’s a good idea, even with depressed stock prices.

Any opinions?


  • @Tarwheel: I suggest you see tax person & go from there.
  • edited March 16
    Sounds like a tough decision.

    Just a thought ... If not already in a Roth, look into using any additional income to pay taxes on a (whole or partial) conversion of existing assets. I’d convert in blocks, rather than all at once, over weeks or months to take advantage of any further declines.

    Of course there is always the danger that prices will fall substantially further or that the decline will last longer than any of us can envision.
  • Yes, too many balls to juggle.
  • Hank, I’ve already been converting my 401K to my Roth IRA in blocks each year, at a rate that keeps us from bumping to a higher tax bracket. My question really concerns SS, since we will unavoidably jump to the 22% bracket once I start drawing it. We’ve been planning to delay my SS as long as possible as a sort of longevity insurance, however, my family doesn’t have a history of long lifespans, so that might be unnecessary.
  • @Tarwheel: Your last sentence says it all ! You can't take it with you !! So enjoy your $$ while on this side.
  • edited March 17
    Apologies @Tarwheel - The Roth is mentioned in your last 4 lines. I missed it. Someone here was making the Roth conversion suggestion a few weeks ago when markets were much higher. If they liked the idea than, they should love it now. At 73 I’m even giving it a thought. Better deal though for younger ones.
  • @Tarwheel, if family longevity factor is a concern, taking SS at your full retirement age makes sense. Here is more information from Vanguard on the cost-risk analysis and break even point.
  • Thanks for the link, Sven. It looks like the break-even point for me is age 84-85 between drawing SS at age 66 and 70. I rather doubt that I will live older than 85 given my family history but my wife’s family tends to live longer. However, by starting SS sooner, we could avoid withdrawals from our IRAs and 401Ks indefinitely.
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