Comments on: MONEY: Social Security: Does it pay to delay? (Part2 — continued) http://reinkefaceslife.com/2007/08/06/money-social-security-does-it-pay-to-delay-part2-continued/ Wasting your time with things I find interesting, amusing, or enraging. Fri, 09 Jan 2009 00:38:54 +0000 http://wordpress.org/?v=MU hourly 1 By: reinkefj http://reinkefaceslife.com/2007/08/06/money-social-security-does-it-pay-to-delay-part2-continued/#comment-60356 reinkefj Mon, 10 Dec 2007 11:11:59 +0000 http://reinkefj.wordpress.com/2007/08/06/money-social-security-does-it-pay-to-delay-part2-continued/#comment-60356 >One of the deciding factors is the rate of your state income tax on social security payments. Well, taxability, both federal, state, and possibly local are factors. As well as, the excludability if any. And how it impacts incrementally. For me, personally, when it come time in two years for my wife to collect, then we'll have to make some decisions. My analysis was really focusing on a "dollar" ain't a "dollar" year over year. It's might look the same, but inflation is running at some number that is at best a guess. So, as in any economy in hyperinflation has demonstrated, the holder of paper currency buys anything that will retain value into the next day. My thought was that take the discounted social security and buy gold coins. That preserves the value that it represents. Interesting, but too bad it's too important. >One of the deciding factors is the rate of your state income tax on social security payments.

Well, taxability, both federal, state, and possibly local are factors. As well as, the excludability if any. And how it impacts incrementally.

For me, personally, when it come time in two years for my wife to collect, then we’ll have to make some decisions.

My analysis was really focusing on a “dollar” ain’t a “dollar” year over year. It’s might look the same, but inflation is running at some number that is at best a guess. So, as in any economy in hyperinflation has demonstrated, the holder of paper currency buys anything that will retain value into the next day. My thought was that take the discounted social security and buy gold coins. That preserves the value that it represents.

Interesting, but too bad it’s too important.

]]> By: Joe B http://reinkefaceslife.com/2007/08/06/money-social-security-does-it-pay-to-delay-part2-continued/#comment-60311 Joe B Mon, 10 Dec 2007 00:43:17 +0000 http://reinkefj.wordpress.com/2007/08/06/money-social-security-does-it-pay-to-delay-part2-continued/#comment-60311 I've done similar spreadsheets. One of the deciding factors is the rate of your state income tax on social security payments. I live in Oregon which does not tax social security benefits. This makes spending down other assets that are taxed by Oregon more attractive to use to gain defered larger social security benefits. A smaller factor is the maximum federal taxable amount of social security benefits is 85% of the benefit. Other income is taxed at 100% of that income if it is interest or a distribution from a tax defered asset such as an IRA or 401K. Conversely, if the money used to defer collecting social security comes from capital gains, these are taxed at a lower rate than social security so it may be beneficial to defer the capital gains and take the social security earlier. This topic is far from simple. Obviously, if social security goes belly up all calculations become irrelevent. I would bet on social security issues being solved (do you want YOUR mother living with you or do YOUR children want you living with them?) . If social security is not fixed, there will be a lot of angry grandmothers camped out in Washington DC. I’ve done similar spreadsheets. One of the deciding factors is the rate of your state income tax on social security payments. I live in Oregon which does not tax social security benefits. This makes spending down other assets that are taxed by Oregon more attractive to use to gain defered larger social security benefits. A smaller factor is the maximum federal taxable amount of social security benefits is 85% of the benefit. Other income is taxed at 100% of that income if it is interest or a distribution from a tax defered asset such as an IRA or 401K. Conversely, if the money used to defer collecting social security comes from capital gains, these are taxed at a lower rate than social security so it may be beneficial to defer the capital gains and take the social security earlier.

This topic is far from simple. Obviously, if social security goes belly up all calculations become irrelevent. I would bet on social security issues being solved (do you want YOUR mother living with you or do YOUR children want you living with them?) . If social security is not fixed, there will be a lot of angry grandmothers camped out in Washington DC.

]]> By: reinkefj http://reinkefaceslife.com/2007/08/06/money-social-security-does-it-pay-to-delay-part2-continued/#comment-49905 reinkefj Sat, 25 Aug 2007 23:24:12 +0000 http://reinkefj.wordpress.com/2007/08/06/money-social-security-does-it-pay-to-delay-part2-continued/#comment-49905 I'll start cranking out spreadsheets now. I gotta be the first injineer to win a Nobel Prize for Social Security debunking! I’ll start cranking out spreadsheets now. I gotta be the first injineer to win a Nobel Prize for Social Security debunking!

]]> By: Tom Dalton http://reinkefaceslife.com/2007/08/06/money-social-security-does-it-pay-to-delay-part2-continued/#comment-49904 Tom Dalton Sat, 25 Aug 2007 23:18:28 +0000 http://reinkefj.wordpress.com/2007/08/06/money-social-security-does-it-pay-to-delay-part2-continued/#comment-49904 N. B.: Posted from Prof Dallton's email ------------------------------------------ Hi Fjohn, Thanks for your email. As you know - for academics it is publish or perish. So I’m working on another Social Security article now and would like to write a few more. As I get closer to 62 the topic gets more interesting. Your email and blog have a lot of food for thought. I’m going to take some time to work through your ideas. You appear to have thought through some of the issues more than I have. I may shoot some ideas to you as I go along. Oh . . . don’t disparage them thar injineers. They developed most of the original analysis techniques used in cost accounting and managerial decision making. Accountants just refined the techniques a little and took most of the credit. Tom N. B.: Posted from Prof Dallton’s email
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Hi Fjohn,

Thanks for your email. As you know - for academics it is publish or perish. So I’m working on another Social Security article now and would like to write a few more. As I get closer to 62 the topic gets more interesting. Your email and blog have a lot of food for thought. I’m going to take some time to work through your ideas. You appear to have thought through some of the issues more than I have. I may shoot some ideas to you as I go along.

Oh . . . don’t disparage them thar injineers. They developed most of the original analysis techniques used in cost accounting and managerial decision making. Accountants just refined the techniques a little and took most of the credit.

Tom

]]> By: reinkefj http://reinkefaceslife.com/2007/08/06/money-social-security-does-it-pay-to-delay-part2-continued/#comment-49770 reinkefj Fri, 24 Aug 2007 20:18:00 +0000 http://reinkefj.wordpress.com/2007/08/06/money-social-security-does-it-pay-to-delay-part2-continued/#comment-49770 Dear Professor Dalton, Kudos for moving against the herd. Like you, I'm not so sure about everyone's advice about delaying. A reader of my blog brought your article to my attention. I wanted to call your attention to my thoughts, which are in comparison to yours -- lame at best. But then it reflects that you're an academic CPA and "i r an injineer". We doesn't do that there rithmatic stuff 2 gud! :-) My objection is around the NPV of accelerated collection as opposed to normal or delayed. As you can guess I'm a gold bug. Where both our analysis could use some improvement imho is in the area of spousal taxation both Federal and State. While the 2 for 1 penalty applies if the collector works, what happens to the calculation if you have a joint taxpayer? In my specific case, my wife has a reduced life expectancy. She, sans any calculation at all, wants to start collect asap. I, being the analytical type, said "maybe I should run some numbers". Initially my concern was that higher tax bracket. My initial results say however everyone should grab as soon as they can based on dollar depreciation. My concern now is still taxation. If she collects while I stay working, will her income be substantively offset by our collective higher federal and state taxes. Ouch! That requires more Assumptions and Swags. Luckily, I have two years to work out the right answer for us. You probably have less time. After all, you wouldn't want to be edged out of your Nobel Prize in Economics by an illiterate old injineer. :-) Just thought I'd point out how "democratizing" the inet makes wisdom available. (I was referring to your article; not my blog post. I'd call mine "noise".) Regards, fjohn (Maybe I can get your prof TD to weigh in?) Dear Professor Dalton,

Kudos for moving against the herd. Like you, I’m not so sure about everyone’s advice about delaying.

A reader of my blog brought your article to my attention. I wanted to call your attention to my thoughts, which are in comparison to yours — lame at best.

But then it reflects that you’re an academic CPA and “i r an injineer”. We doesn’t do that there rithmatic stuff 2 gud! :-)

My objection is around the NPV of accelerated collection as opposed to normal or delayed. As you can guess I’m a gold bug.

Where both our analysis could use some improvement imho is in the area of spousal taxation both Federal and State. While the 2 for 1 penalty applies if the collector works, what happens to the calculation if you have a joint taxpayer? In my specific case, my wife has a reduced life expectancy. She, sans any calculation at all, wants to start collect asap. I, being the analytical type, said “maybe I should run some numbers”. Initially my concern was that higher tax bracket. My initial results say however everyone should grab as soon as they can based on dollar depreciation. My concern now is still taxation. If she collects while I stay working, will her income be substantively offset by our collective higher federal and state taxes. Ouch! That requires more Assumptions and Swags.

Luckily, I have two years to work out the right answer for us. You probably have less time. After all, you wouldn’t want to be edged out of your Nobel Prize in Economics by an illiterate old injineer. :-)

Just thought I’d point out how “democratizing” the inet makes wisdom available. (I was referring to your article; not my blog post. I’d call mine “noise”.)

Regards,
fjohn

(Maybe I can get your prof TD to weigh in?)

]]> By: Jiri http://reinkefaceslife.com/2007/08/06/money-social-security-does-it-pay-to-delay-part2-continued/#comment-49762 Jiri Fri, 24 Aug 2007 18:08:57 +0000 http://reinkefj.wordpress.com/2007/08/06/money-social-security-does-it-pay-to-delay-part2-continued/#comment-49762 I, too have been intrigued by the Vanguard recommendation ( I send them an email on the subject). Subsequently, I Googled SC delays and to my surprise I found that nearly all entries have agreed with Vanguard. Yours, being an exception (along with T. Dalton, professor of accounting and taxation). http://www.nysscpa.org/cpajournal/2006/606/essentials/p42.htm If Vanguard only asked any student of accounting about Present Value they might have gotten it right. I, too have been intrigued by the Vanguard recommendation ( I send them an email on the subject). Subsequently, I Googled SC delays and to my surprise I found that nearly all entries have agreed with Vanguard. Yours, being an exception (along with T. Dalton, professor of accounting and taxation).
http://www.nysscpa.org/cpajournal/2006/606/essentials/p42.htm
If Vanguard only asked any student of accounting about Present Value they might have gotten it right.

]]> By: reinkefj http://reinkefaceslife.com/2007/08/06/money-social-security-does-it-pay-to-delay-part2-continued/#comment-49761 reinkefj Fri, 24 Aug 2007 17:46:59 +0000 http://reinkefj.wordpress.com/2007/08/06/money-social-security-does-it-pay-to-delay-part2-continued/#comment-49761 Because they are part of vast gooferment conspiracy to defraud the Ponzi scheme victims even further? Seriously, it's probably because there is nothing that they offer, that pays them a commission, where they can store value. Inflation is not only the biggest tax we pay; it's also the biggest financial hazard we face. The gooferment perpetrates the fraud that a 1977 dollar and a 2007 dollar are the same. And the sheep believe it. Argh! The problem is that you have to adjust for taxes AND that you then have to have something you can invest these early payouts in that preserves the value. Other than bullion coins, I don't have anything. But as they say on Wall Street, "better a small loss than a complete loss". Because they are part of vast gooferment conspiracy to defraud the Ponzi scheme victims even further? Seriously, it’s probably because there is nothing that they offer, that pays them a commission, where they can store value. Inflation is not only the biggest tax we pay; it’s also the biggest financial hazard we face. The gooferment perpetrates the fraud that a 1977 dollar and a 2007 dollar are the same. And the sheep believe it. Argh! The problem is that you have to adjust for taxes AND that you then have to have something you can invest these early payouts in that preserves the value. Other than bullion coins, I don’t have anything. But as they say on Wall Street, “better a small loss than a complete loss”.

]]> By: Jiri http://reinkefaceslife.com/2007/08/06/money-social-security-does-it-pay-to-delay-part2-continued/#comment-49756 Jiri Fri, 24 Aug 2007 17:35:11 +0000 http://reinkefj.wordpress.com/2007/08/06/money-social-security-does-it-pay-to-delay-part2-continued/#comment-49756 Congratulations! Why is it that even most financial advisers do not grasp the concept of present value of money and advise people to delay SC payments? Congratulations! Why is it that even most financial advisers do not grasp the concept of present value of money and advise people to delay SC payments?

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