Social security, disability and or 401 withdrawals
Hi Terry,
Thanks for all of your great advice on WGN.
My husband and I just retired (both 62) We will need to supplement his monthly pension income. We are trying to decide whether to start drawing Social Security or take withdrawals out of 401s (290,000) or Roth (395,000.). I think I will qualify for S.S. Disability which would allow me to receive Medicare earlier than age 65. My SS disability amount would be 1364. a month, compared to 1464. at Full R age.
Any advice to direct our plans?
Thanks in advance 🙂
Terry Says
Whew, this is why they have Certified Financial Planners who can model the impact of all these decisions. My first, and most obvious, question is whether either or both of you could do some part-time work so you wouldn’t have to choose between the options you have outlined?
Waiting until full retirement age is, I think, the best thing you can do. It’s like getting an 8% increase every year — and that is the higher base on which future inflation adjustments will be made. But if you do take SS early, then you will be penalized for any significant income you earn. Avoid that by waiting to take SS until at least FRA.
Meanwhile, your husband needs health insurance even if you qualify for Medicare early. What are you gong to do about that? THIS is the open enrollment period for Obamacare — the Affordable Care Act. IMMEDIATELY go to www.Healthcare.gov and sign him up!! With little or no projected income for next year, he will get a large subsidy. But you must act NOW!!
And in case you don’t get disability, you should also take out an ACA policy. You can always cancel if you get early Medicare. But an uninsured illness could wipe out all your savings.
Last resort is to take money out of your retirement accounts. And since you can take money out of the Roth without impacting your income, that would be the place to take withdrawals to keep cost of insurance low until you both are on Medicare.
