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Married and retiring at or before age 62?

This worksheet can help you determine when to start Social Security.
Copyright 2007 Henry K. Hebeler Social Security is the best longevity insurance there is. Hence, if you have enough savings and believe your life could be longer than the average person, it may pay you to delay your Social Security benefits to age 70. If your spouse has been a low-income earner, then that spouse may get the maximum lifetime benefits by starting Social Security at age 66. Those who started Social Security at 62 and then live beyond 80 generally regret not having the substantially higher income afforded by starting Social Security at an older age. This program is for couples (age 62 or less) who want to decide the best time to start drawing Social Security. It is not meant to be a comprehensive retirement planning program although it can do a reasonable job if you plan to retire before 62 and your only retirement resources will be Social Security and your savings. If you will have a pension, real estate, part-time work or other resources, we suggest you use one of the more comprehensive programs on www.analyzenow.com. This program tries to accommodate the various Social Security Administration rules, but it may fail to do so in some circumstances. See the disclaimer below and check results with a professional adviser. The program gives the most accurate results for those born between 1943 and 1954, but it is important to keep in mind that we cannot accurately project investment returns, inflation, changes in tax law or Social Security rules. Only make entries in BLUE cells or by using your mouse cursor to click on check boxes or the arrow controls. I accept the disclaimer below. (The program will not work properly unless you check the box.) 54 Your age now (62 or less). You are the person with the larger Social Security benefit quotes. 49 Spouse's age now 55% Survivor spending after the first spouse dies as a % of spending when both were alive. 3.0% Inflation 1.5% Social Security growth rate (Usually less than inflation for retired people) 34,000 New annual savings deposits. (Zero if you have already retired.) 62,000 Taxable and tax-exempt investment balance 500,000 Deferred-tax investment balance (IRA, 401(k), etc.) 562,000 Current total of investments before any tax. 10,000 Less reserves for emergencies 0 Less reserves for large future purchases 0 Less reserves needed for retirement before age 62 * * Multiply years of retirement before age 62 times annual retirement expenses. 0 Plus total of any of spouse's Social Security payments from now till you reach age 62. This only applies in cases when the spouse is older than you and the spouse starts Social Security before you are 62. 552,000 Net current investment less present value of reserves plus spouse's early Social Security payments Returns on investment are combined growth of principal, interest and dividends as a % of investment balances. Before-tax returns might be 7% to 9% before retiring and 4% to 6% after retiring considering more conservative retirement allocations and Reverse-Dollar-Cost-Averaging which reduces reported returns by 0.9% on average. For more information on RDCA, see J. K. Lasser's Your Winning Retirement Plan, John Wiley & Sons Inc., 2001. Before-tax return on investments BEFORE age 62 (See notes above.) 8.0% Before tax return on investments AFTER age 62 (See notes above.) 4.0% Get Social Security quotes from annual SSA reports or www.ssa.gov. At 62 At 66 At 70

1,722 669 Taxes: 21.0% 18.0% 15.0% 20.0% 85.0%

2,508 975

3,231 1,213

Your monthly Social Security quotes Spouse's monthly Social Security quotes

Ordinary income tax rate before age 62 (Also applies to draws from deferred-tax accounts) Ordinary income tax rate after age 62 (Also applies to draws from deferred-tax accounts) Tax rate applicable to taxable investments before age 62, not deferred-tax investments Tax rate applicable to taxable investments after age 62, not deferred-tax investments Taxable part of SS (Currently 0% to 85% depending on income level) See table below for guide.

The taxable part of Social Security largely depends on your Adjusted Gross Income less your Social Security inco Approximate taxable percent of SS for different AGIs less SS income Approx %: 0% 25% 50% 75% 85% Single 20,000 25,000 30,000 32,500 34,000 Married 22,000 32,000 39,000 44,500 47,000

<Estimated AGI less Social S <Estimated AGI less Social S

See 1040 Instructions for calculations, but taxable parts may increase in the future. Currently, 85% is maximum t You should note that the results of this program do not include Medicare deductions from Social Security checks. That is because it is so hard to project Medicare costs in light of the substantial political pressure to increase the benefits and the congressional actions needed to reduce the extraordinarily high Medicare deficits that far exceed those of Social Security. However you can get some perspective from the following table. Double these amounts for a couple. In addition, you may choose to buy Medigap insurance to cover that which Medicare doesn't. These policies can cost more than Medicare. Approximate Medicare Part B monthly deductions per person Income> Less than $80,000 to $100,000 to $150,000 to More than Year $80,000 $100,000 $150,000 $200,000 $200,000 2007 $98.20 $111.20 $130.70 $150.10 $169.50 2009 98.30 137.70 196.70 42.50 52.33 2011 105.90 148.30 211.90 275.40 338.90 2013 113.90 159.40 227.80 296.10 364.40 2015 122.40 171.30 244.80 318.20 391.60 Source: Office of the Actuary, Centers for Medicare and Medicaid Services Annual spending below will be on an after-tax basis because we have already taken out the taxes from your inputs. However this spending will also have to cover Medicare and Medigap insurance costs, whatever they may be.

Control Panel: In the table below, your starting ages are 62, 66 and 70, but your spouse's start age can be 62, 63, 64, etc. up to 70. Use arrows to change spouse's age to start Social Security in each of the three cases below.

Case A

Case B

Case C

You Spouse You Spouse You Spouse 62 62 66 62 70 66 The program below will use a higher benefit than above for the spouse if the spousal benefit would be larger. The spousal benefit is between 35% and 50% of your benefit depending on the spouse's age to start SS. Use arrows on controls below to change values and see effects on graphs. We suggest that you start with a long-lived 90 Your death age*

spouse assumption and vary your own death 95 Spouse's death age age. Then set your death age high and vary 60,000 Annual spending (Increases with inflation) your spouse's death age. * When your death age is less than your age to start Social Security, the program may overstate the survivor's benefit.

Check this box to see today's dollar values in cha

Net* Annual Social Security and Spending


* Sum for both spouses after deducting income tax
70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 60 65 70 75 80 85 90 95 100

After investme support the spe

1,000,000 900,000 800,000 8 700,000 3.7% 0.2% 600,000 832,308 500,000 82,845 400,000 915,152 10,000 300,000 905,152 200,000 2,124 100,000 826 TRUE 0 0.0% 60
-1.5% 4.9% 1.0%

Your Age
Spending Case A Case B Case C

If you have very large investment balances, you may have trouble seeing the differences between cases above. If so, enter only part of your investment balances to better distinguish the results from different ages to start Social Security. Conversely, if your investment balances are very low, you may not be saving enough to support starting Social Security later than age 62. In this case, the Investment Balance chart may not even show a balance remaining. If you start Social Security at 70, the program assumes your spouse will take advantage of "file & suspend" which permits the low income spouse to get benefits from your Social Security before your payments begin. In this case, the higher income spouse files for Social Security when the spouse wants to benefit from the higher-income spouse's Social Security and then suspends payments until an older age. For more information, consult with a SSA representative and see the book, Getting Started in a Financially Secure Retirement , John Wiley and Sons, Inc., 2007. Do you plan to work part-time in retirement before age 66? If you take Social Security before 66, you then will lose $1 of Social Security for every $2 of your wages above a certain threshold. The same is true for your spouse. You may not choose to start Social Security before 66 with this penalty. This penalty is not applied in this program because after your full-retirement-age, the SSA makes an adjustment to recoup the penalty over your life expectancy. 18,350 Gross annual wage threshold for 2012 This threshold generally increases each year with inflation. After retiring, if you will have wages, a pension, or unusual income or expenses, use the more comprehensive planning programs on www.analyzenow.com although this Social Security program should help with best ages to start

Social Security. Additional income from part-time work or pensions will make it easier to delay Social Security.

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ACCOUNTING AND FINANCIAL PLANNING NEEDS. THE USER OF THIS PROGRAM AGREES THAT ANY LEGAL ISSUE S

Your Age 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90

Annual Social Security Payments less Income Tax Case A Case B Case C You Spouse You Spouse You 17,502 0 0 0 0 17,240 0 0 0 0 16,981 0 0 0 0 16,727 0 0 0 0 16,476 0 23,996 0 0 16,229 8,273 23,636 8,273 0 15,985 8,148 23,281 8,148 0 15,745 8,026 22,932 8,026 0 15,509 7,906 22,588 7,906 29,100 15,277 7,787 22,249 7,787 28,663 15,047 7,670 21,916 7,670 28,233 14,822 7,555 21,587 7,555 27,810 14,599 7,442 21,263 7,442 27,393 14,380 7,330 20,944 7,330 26,982 14,165 7,221 20,630 7,221 26,577 13,952 7,112 20,321 7,112 26,179 13,743 7,006 20,016 7,006 25,786 13,537 6,900 19,716 6,900 25,399 13,334 6,797 19,420 6,797 25,018 13,134 6,695 19,128 6,695 24,643 12,937 6,595 18,842 6,595 24,273 12,743 6,496 18,559 6,496 23,909 12,551 6,398 18,281 6,398 23,550 12,363 6,302 18,006 6,302 23,197 12,178 6,208 17,736 6,208 22,849 11,995 6,115 17,470 6,115 22,506 11,815 6,023 17,208 6,023 22,169 11,638 5,933 16,950 5,933 21,836 0 11,463 0 16,696 0

Spouse 0 0 0 0 0 0 0 0 0 11,125 10,958 10,793 10,632 10,472 10,315 10,160 10,008 9,858 9,710 9,564 9,421 9,279 9,140 9,003 8,868 8,735 8,604 8,475 21,509

91 92 93 94 95 96 97 98 99 100

0 0 0 0 0 0 0 0 0 0

11,291 11,122 10,955 10,791 10,629 10,470 10,313 10,158 10,005 0

0 0 0 0 0 0 0 0 0 0

16,445 16,199 15,956 15,716 15,481 15,248 15,020 14,794 14,572 0

0 0 0 0 0 0 0 0 0 0

21,186 20,868 20,555 20,247 19,943 19,644 19,349 19,059 18,773 0

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table below for guide.

ess your Social Security income.

<Estimated AGI less Social Security <Estimated AGI less Social Security

urrently, 85% is maximum taxable part.

m Social Security checks. pressure to increase the are deficits that far exceed ble. Double these amounts h Medicare doesn't. These

t the taxes from your inputs. whatever they may be.

64, etc. up to 70. Ballpark computer assessment: With current savings and spending entries, it is likely that you would want to consider starting Social Security later than age 62. Investment balances below are sensitive to the spending level you choose in row 104. Perhaps start with ballpark annual spending of about $ 53,000 Then try significant increases/decreases in retirement spending

enefit would be larger. 's age to start SS.

ases with inflation)

and or change annual savings in row 31. < Experiment with a range of retirement spending and see what happens to investments below.

e survivor's benefit.

oday's dollar values in charts below:

TRUE After-Tax Investment Balances. After54 investment balances reach zero, you cannot Spouse 62 62 66 support the spending shown on the chart to the left. 90 Your death age 95 Spouse's death age 85 Spouse's age when you die 3000 Spending control Years until age 62 Return before 62 (after tax if applicable) Return after 62 (after tax if applicable) Before tax real growth of Deferred-tax investments less tax at age 62 After-tax growth of other investments Net before deductions PV at 62 of reserves less spouses early SS Investments at 62 less reserves and pre-age 62 retirement costs Your age 66 monthly Social Security quote after-tax Spouse's age 66 monthly Social Security quote after tax Today's $ values 60 Inflation 70 80 90 100 SS growth rate Your Age Return before 62 Return after 62

Case A

Case B

Case C

en cases above. If so, tart Social Security. arting Social Security

"file & suspend" nts begin. In this case, er-income spouse's h a SSA representative

The "breakeven" age is the age at which two lines above cross, so if Case A crosses the line for Case B at age 77, if you live longer than 77, you would be better off having selected Case B, but if you die before 77 your estate would be better off if you chose Case A. The breakeven ages will vary somewhat depending on your assumptions. Survivor Benefits: Unless you have very substantial savings, a long-lived, low-earnings survivor may have almost twice the income if the high-earning spouse started Social Security at 70 instead of both spouses starting at 62.

66, you then will or your spouse. in this program our life expectancy. ach year with inflation.

re comprehensive h best ages to start

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OCUMENT OR PLAN CREATED

EET YOUR REQUIREMENTS, ACHIEVE AND PUBLISHER EXPRESSLY

L RISKS REGARDING THE LEGALITY

S FOR A PARTICULAR USE. UNDER

PECIAL, INCIDENTAL, CONSEQUENTIAL

AM, EVEN IF THEY HAVE BEEN ADVISED

ED TO THE PURCHASE PRICE. SOME

TIES OR DAMAGES. YOU MAY HAVE

ARE NOT PROVIDING LEGAL,

E FOR QUALIFIED PROFESSIONALS.

R LEGAL, INVESTMENT, TAX,

REES THAT ANY LEGAL ISSUE SHALL

Your Age 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90

Investment Balances after Tax Case A Case B Case C 864,371 846,852 846,852 823,248 788,438 788,438 781,786 729,910 729,910 739,988 671,270 671,270 697,859 636,534 612,515 663,680 609,651 553,646 629,068 582,237 494,663 594,026 554,298 435,565 558,559 525,840 405,480 522,671 496,868 386,036 486,368 467,390 365,957 449,653 437,410 345,250 412,530 406,934 323,924 375,005 375,968 301,985 337,081 344,517 279,441 298,762 312,587 256,299 260,052 280,184 232,567 220,956 247,311 208,251 181,477 213,975 183,359 141,619 180,181 157,897 101,386 145,933 131,872 60,781 111,237 105,291 19,809 76,098 78,159 -21,527 40,520 50,485 -63,224 4,507 22,273 -105,278 -31,935 -6,471 -147,685 -68,801 -35,739 -190,442 -106,089 -65,525 -212,370 -122,615 -77,155

Your Age 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90

Annual Soc. Sec. for You & Spou Spending Case A 60,000 17,502 60,000 17,240 60,000 16,981 60,000 16,727 60,000 16,476 60,000 24,501 60,000 24,134 60,000 23,772 60,000 23,415 60,000 23,064 60,000 22,718 60,000 22,377 60,000 22,041 60,000 21,711 60,000 21,385 60,000 21,064 60,000 20,748 60,000 20,437 60,000 20,131 60,000 19,829 60,000 19,531 60,000 19,238 60,000 18,950 60,000 18,665 60,000 18,385 60,000 18,110 60,000 17,838 60,000 17,570 33,000 11,463

91 92 93 94 95 96 97 98 99 100

-234,512 -256,866 -279,431 -302,205 -325,184 -348,368 -371,754 -395,340 -419,124 -419,938

-139,423 -156,512 -173,877 -191,515 -209,423 -227,598 -246,038 -264,739 -283,699 -284,250

-89,130 -101,447 -114,100 -127,087 -140,403 -154,045 -168,008 -182,288 -196,883 -197,265

91 92 93 94 95 96 97 98 99 100

33,000 33,000 33,000 33,000 33,000 33,000 33,000 33,000 33,000 0

11,291 11,122 10,955 10,791 10,629 10,470 10,313 10,158 10,005 0

Soc. Sec. for You & Spouse Case B Case C 0 0 0 0 0 0 0 0 23,996 0 31,909 0 31,430 0 30,958 0 30,494 29,100 30,037 39,788 29,586 39,191 29,142 38,603 28,705 38,024 28,275 37,454 27,851 36,892 27,433 36,339 27,021 35,794 26,616 35,257 26,217 34,728 25,823 34,207 25,436 33,694 25,055 33,189 24,679 32,691 24,309 32,200 23,944 31,717 23,585 31,242 23,231 30,773 22,883 30,311 16,696 21,509

16,445 16,199 15,956 15,716 15,481 15,248 15,020 14,794 14,572 0

21,186 20,868 20,555 20,247 19,943 19,644 19,349 19,059 18,773 0