Hmm. Sounds like there's a possible strategy available, depending on how much you want your wife to spend.
Lot's of people behave similarly.
Hmm. Sounds like there's a possible strategy available, depending on how much you want your wife to spend.
Angst wrote: ↑Mon Sep 13, 2021 9:47 amI genuinely find this fascinating:mary1492 wrote: ↑Mon Sep 13, 2021 4:32 am I will take it at 62 as will my spouse. No concerns, no decisions, we've known all along this would be what we do and it is the best choice for us.
We are not into gambling, especially on the amount of time we have to live or how the SS system may change in the future. Give us what we have coming ASAP. A bird in hand...
While some of us consider delaying Social Security to be "buying insurance" (that's me), others consider it "gambling".
Imagine the arguments we'd be having if the actuaries at Social Security set things up so we could claim as early as 52 or delay as late as 80!
cowdogman wrote: ↑Mon Sep 13, 2021 9:58 amIt's "gambling" no matter when you you decide to take SS. Ditto doing (or not) Roth conversions. Ditto investing (or not) in the stock market. Ditto buying (or not) life insurance. Ditto choosing (or not) to exercise regularly. But if every consequential decision is gambling, "gambling" loses it meaning.
Chuckles960 wrote: ↑Mon Sep 13, 2021 12:37 pmBuying insurance IS gambling. Not buying insurance is also gambling. Getting SS at 62 vs 70 is also gambling. You are just betting on different outcomes.
Of course, when you buy (say) life insurance or home insurance, the desired outcome is to lose money by paying premiums but not having a claim. If Uncle Fred gambles that he'll live a long time, but dies before optimizing his SS, well, he probably doesn't care since nothing is very important when you're dead. That's different from gambling in Vegas, where the desired outcome is to win money. So there are some differences in details...but it's all gambling.
I don't decide how much she spends. She decides. And she's frugal. If we had $1 million in our account or $10 million, it wouldn't matter. She won't want to "waste" money. It's not like I would be able to trick her by moving money each month from the retirement accounts into a checking account.
My definitions:
Actually, loghound, I've found a great deal of value in the thoughtful comments I've received. And I am now considering delaying for a few years.
Just because I think in a similar way ("is this decision reversible?"), I am intrigued by the option to claim early, but then suspend benefits from 67 to 70. From Mike Piper's website:
Suspend Benefits at Full Retirement Age
If you’ve been receiving benefits for 12 months or more, it’s not possible to pay back your benefits and start over. You can, however, suspend benefits once you reach full retirement age and choose not to start them again until age 70.
Example: Greg begins claiming benefits at age 62. Three years later, he changes his mind and wishes he had waited. Once he reaches his full retirement age of 66, he can ask for his benefits to be suspended. If he waits until age 70 to start them again, he’ll earn 4 years’ worth of “delayed retirement credits,” which will help offset the fact that he originally claimed benefits prior to full retirement age.
fyre4ce,fyre4ce wrote: ↑Mon Sep 13, 2021 1:47 pm Maybe I missed it (just skimmed the thread, sorry) but I'm not seeing an explicit reason TO take SS early. Okay, it's -$65k in net present value compared to taking at 69.5, and that's not significant compared to your net worth. But, if I offered you the choice of two checks, one for $500k and one for $435k, would you take the smaller check because, well, why not? No, not without some independent reason. My concern is that you may be over-spending compared to your assets, and wanting to take SS early to facilitate that consumption. But by taking an NPV hit by doing so, you may be entering or accelerating a downward spiral.
I agree it is somewhat analogous. The NPV calculations are done using a risk-free discount rate, because the "return" (in the form of larger payments for delaying SS) is "guaranteed". If you run the numbers assuming that early SS payments are invested in higher-return assets, the results will favor taking SS early. But I don't like this approach, because unless you are already 100% stocks, you can compensate for the larger SS payments by increasing your equity allocation. If your guaranteed payments are enough to cover your basic needs in retirement, it could be reasonable to go 100% stocks in your portfolio.iceport wrote: ↑Mon Sep 13, 2021 1:59 pmfyre4ce,fyre4ce wrote: ↑Mon Sep 13, 2021 1:47 pm Maybe I missed it (just skimmed the thread, sorry) but I'm not seeing an explicit reason TO take SS early. Okay, it's -$65k in net present value compared to taking at 69.5, and that's not significant compared to your net worth. But, if I offered you the choice of two checks, one for $500k and one for $435k, would you take the smaller check because, well, why not? No, not without some independent reason. My concern is that you may be over-spending compared to your assets, and wanting to take SS early to facilitate that consumption. But by taking an NPV hit by doing so, you may be entering or accelerating a downward spiral.
It's not so much about wanting to spend more, as it is about preserving, or actually continuing to contribute to, retirement savings. It's about favoring the hard assets over the income stream. Kind of like what HomerJ has been talking about, I really have an aversion to spending down the portfolio.
Think about the decision to take a pension as either a lump sum or an annuity. The annuity almost always results in the highest payout, usually by a mile. But there are some individual circumstances, most notably if there is a perceived need to leave assets to heirs, in which taking the lump sum has its advantages.
This isn't the same question, and I don't specifically have an issue with heirs, but it is somewhat analogous.
I think you're right. A U.S. News and World Report article stated, "Only 6% of women and 4% of men held out until age 70 or older in 2018, according to Social Security Administration data."
It would be interesting to hear from any Bogleheads that have done this.iceport wrote: ↑Mon Sep 13, 2021 1:50 pmActually, loghound, I've found a great deal of value in the thoughtful comments I've received. And I am now considering delaying for a few years.
Just because I think in a similar way ("is this decision reversible?"), I am intrigued by the option to claim early, but then suspend benefits from 67 to 70. From Mike Piper's website:
Suspend Benefits at Full Retirement Age
If you’ve been receiving benefits for 12 months or more, it’s not possible to pay back your benefits and start over. You can, however, suspend benefits once you reach full retirement age and choose not to start them again until age 70.
Example: Greg begins claiming benefits at age 62. Three years later, he changes his mind and wishes he had waited. Once he reaches his full retirement age of 66, he can ask for his benefits to be suspended. If he waits until age 70 to start them again, he’ll earn 4 years’ worth of “delayed retirement credits,” which will help offset the fact that he originally claimed benefits prior to full retirement age.
I understand.
If that is the case, then you are only kicking the can down the road. If you are always going to resist spending down the portfolio, then all the discussions that we had over the 4% SWR issue have been useless as they all *assume/allow* the portfolio depletion.HomerJ wrote: ↑Mon Sep 13, 2021 1:25 pmI don't decide how much she spends. She decides. And she's frugal. If we had $1 million in our account or $10 million, it wouldn't matter. She won't want to "waste" money. It's not like I would be able to trick her by moving money each month from the retirement accounts into a checking account.
Nor could I buy a SPIA, because that would first entail pulling out a huge chunk of the portfolio.
But if SS sends her a check for $2000, she'll be far more likely to spend it, since that will feel like "income" to her, instead of spending down savings.
Heck, I'm mostly the same way to be honest. I won't like spending down savings either. I anchor to our portfolio value, and only want it to go up.
Good thing they are some of my favorite people on the planet.
Well, I assume it will become easier the older we get. At least for me. Once I hit 70, I'll probably stop worrying about living longer than the 30 years implicit in the 4% SWR.wrongfunds wrote: ↑Mon Sep 13, 2021 3:06 pmIf that is the case, then you are only kicking the can down the road. If you are always going to resist spending down the portfolio, then all the discussions that we had over the 4% SWR issue have been useless as they all *assume/allow* the portfolio depletion.HomerJ wrote: ↑Mon Sep 13, 2021 1:25 pmI don't decide how much she spends. She decides. And she's frugal. If we had $1 million in our account or $10 million, it wouldn't matter. She won't want to "waste" money. It's not like I would be able to trick her by moving money each month from the retirement accounts into a checking account.
Nor could I buy a SPIA, because that would first entail pulling out a huge chunk of the portfolio.
But if SS sends her a check for $2000, she'll be far more likely to spend it, since that will feel like "income" to her, instead of spending down savings.
Heck, I'm mostly the same way to be honest. I won't like spending down savings either. I anchor to our portfolio value, and only want it to go up.
Yes, the preponderance of the standard advice is what gave me pause. However, what I don't see discussed much — if ever — is how the analysis might appropriately change if the person already has a significant, reliable income stream. That's the factor that, I believe, could change the analysis.fyre4ce wrote: ↑Mon Sep 13, 2021 2:28 pm The standard advice is to take SS early only if you have health issues that shorten your life expectancy, or if you have financial needs that can't be reasonably met another way. I don't think either apply to you, so I would suggest delaying, despite what you've said here.
The ironic part of the quoted text is that "extract the last dollars" is usually associated with "I want mine now" aka get it at 62 and NOT to the waiting until 70 cohorts. You are probably the 1st person here who has ascribed that motive to wait until 70 crowd.iceport wrote: ↑Mon Sep 13, 2021 3:14 pm...fyre4ce wrote: ↑Mon Sep 13, 2021 2:28 pm The standard advice is to take SS early only if you have health issues that shorten your life expectancy, or if you have financial needs that can't be reasonably met another way. I don't think either apply to you, so I would suggest delaying, despite what you've said here.
There are extreme cases, and I'm not one of them. But I do know plenty of former colleagues who retired with pensions in the ballpark of $125,000/year. For those folks, is it still so very important to wait until 70 to wring every last dollar out of their SS benefits? (Of course, their PIAs are probably much bigger than mine, also, so there's that...)
...
Everyone gets to decide if they want to get the most from their benefits or if they don't care about the extra money.
LOL!! Yeah, I see what you mean. That was probably poor wording, because I was actually trying to describe the goal of wringing every last dollar of guaranteed lifetime income out of their benefit, possibly at the expense of the overall lifetime payout if they don't live as long as expected.wrongfunds wrote: ↑Mon Sep 13, 2021 3:20 pmThe ironic part of the quoted text is that "extract the last dollars" is usually associated with "I want mine now" aka get it at 62 and NOT to the waiting until 70 cohorts. You are probably the 1st person here who has ascribed that motive to wait until 70 crowd.iceport wrote: ↑Mon Sep 13, 2021 3:14 pm...fyre4ce wrote: ↑Mon Sep 13, 2021 2:28 pm The standard advice is to take SS early only if you have health issues that shorten your life expectancy, or if you have financial needs that can't be reasonably met another way. I don't think either apply to you, so I would suggest delaying, despite what you've said here.
There are extreme cases, and I'm not one of them. But I do know plenty of former colleagues who retired with pensions in the ballpark of $125,000/year. For those folks, is it still so very important to wait until 70 to wring every last dollar out of their SS benefits? (Of course, their PIAs are probably much bigger than mine, also, so there's that...)
...
There is no guaranteed "extra" money, Joe for waiting. If you die before 80-81, waiting gets you less. You might get more by waiting, or you might not. Half of people will get less, half will get more.
Mike has addressed this before:Godot wrote: ↑Mon Sep 13, 2021 2:43 pmIt would be interesting to hear from any Bogleheads that have done this.iceport wrote: ↑Mon Sep 13, 2021 1:50 pmActually, loghound, I've found a great deal of value in the thoughtful comments I've received. And I am now considering delaying for a few years.
Just because I think in a similar way ("is this decision reversible?"), I am intrigued by the option to claim early, but then suspend benefits from 67 to 70. From Mike Piper's website:
Suspend Benefits at Full Retirement Age
If you’ve been receiving benefits for 12 months or more, it’s not possible to pay back your benefits and start over. You can, however, suspend benefits once you reach full retirement age and choose not to start them again until age 70.
Example: Greg begins claiming benefits at age 62. Three years later, he changes his mind and wishes he had waited. Once he reaches his full retirement age of 66, he can ask for his benefits to be suspended. If he waits until age 70 to start them again, he’ll earn 4 years’ worth of “delayed retirement credits,” which will help offset the fact that he originally claimed benefits prior to full retirement age.
iceport wrote: ↑Sun Sep 12, 2021 2:39 pm Hi all,
I could use a better-informed second opinion on this topic. As noted, I am planning to claim Social Security at 62. Now that I’m only about 2½ years away, though, and in the face of nearly universal advice to the contrary, I wonder if I’m looking at the question wrong. Is there something I haven’t considered?
I’ve gone to the Social Security Calculator to accurately compute the PIA. Then I’ve gone to Open Social Security, Mike Piper’s free, open-source Social Security strategy calculator.
From the net present value analysis using the program defaults, the recommended age to claim SS is 69 years, 7 months, based on expected longevity. That’s for a single male my age.
However, when I test the age 62 alternative, the present value of the benefit — again, based on expected longevity — is only about $65k less. (A few years ago it was only ~$22k, so I’m assuming the discrepancy is from a lowering of the discount rate since 2018.) While that’s nothing to sneeze at, in the big picture, given the inherent uncertainties, it seems more or less negligible. So I’m not really concerned at all with leaving an estimated $65k on the table by claiming early. Being single really simplifies the SS questions!
The only other factor I’ve considered is longevity risk. I believe that’s why most people advocate waiting: to address the risk of living longer — and possibly much longer — than expected.
My answer to that is a modest but meaningful government pension that supplies enough income for daily living. I’ve been living on only that pension for 4½ years now. It won’t cover large foreseen and unforeseen expenses all by itself, but it’s a lifeline. It’s got a fixed-rate 2% COLA (actually, it’s a 2% floor, but the potential to exceed that is fairly limited, so I ignore it), so it won’t completely keep up with inflation, but it won’t lose ground too rapidly, I hope. It does virtually guarantee that 85% of all my SS income will be taxed, always. But it also makes it relatively easy to delay claiming SS.
Now if I claim SS early, it will boost my annuitized income stream by 50%. The total, I believe, is plenty to fund all the expenses I ever envision having. And that’s before ever considering tapping the portfolio, which after this strong market surge is theoretically capable of sustaining an income stream in the same ballpark as the pension alone.
The bottom line is that I think I have enough guaranteed income for life, even if I live longer than expected. So I don’t see a huge downside in claiming at the earliest possible date, favoring growth in the portfolio, and the flexibility it provides. (I might have an irrational aversion to spending down the portfolio if I don't need to...)
Is this situation one in which it would be reasonable to claim SS at 62, 70, or anything in between?
Or am I missing something?
(Long term care considerations, maybe? I don't know how to factor this in.)
Thanks for any insight you could offer.
My mom bought into a very nice continuing care retirement community (CCRC) when she went into independent living. We used the proceeds of the sale of her house for this. The agreement was that if she ran out of money she would be able to continue to live there. (Of course they would take her social security each month if that happened.)iceport wrote: ↑Mon Sep 13, 2021 12:51 pmYes, it's paid off, but I never "bought into" a McMansion just because I could possibly afford one. So it's a very modest place, representing a relatively minor portion of my net worth. This is a very valid point, and one which accomplishes a very necessary step should I find myself needing LTC, but I would probably need to reserve more than the house's value in retirement savings to cover LTC expenses.HomerJ wrote: ↑Mon Sep 13, 2021 12:42 pmDo you have a paid off house? As a single person, you can always sell the house if you have to go to an assisted living place.iceport wrote: ↑Sun Sep 12, 2021 3:24 pmYes, I started thinking about this. Back in 2012-2013 my mom was in a place that was no frills (but with excellent care and lots of familiar faces) and it cost ~$9k/mo. That's kind of scary. The plan so far, and tentative as it is, would be to have enough of the portfolio left over to cover the costs that exceed the income.
Thanks radiowave. I don't believe this applies to pensions, however. I think it only applies to earned income.radiowave wrote: ↑Mon Sep 13, 2021 5:55 pm OP, there is a limit to how much income you can make if drawing social security before full retirement age before SS starts reducing your monthly benefit:
https://money.usnews.com/money/retireme ... security
I do not know if pensions count as income.
Yes, that's exactly what happened with my mom. It killed me to no end to see her life savings depleted like that, knowing what she must have sacrificed to build them. I just know she would have been aghast to see it burned through so quickly. She had a sum most here would consider tiny, but given her income, I found it astounding. The only saving grace was that she was distracted with lots of other stuff by the time she went into the facility, and we never discussed money with her, and she never brought it up. So I can only hope she was not aware of the costs and the spending. Either that, or she knew and just accepted it with the same stoicism that she had in accepting her physical condition.LilyFleur wrote: ↑Mon Sep 13, 2021 6:01 pm I think if you could become aware of what that cost might be in addition to the equity from your home, set that aside. Also, if you start at full-pay in a nursing home, many Bogleheads have shared here that their parent was able to continue as a Medicaid patient after beginning as a full-pay and then running out of funds. The key is to get into a nice facility and start as a full-pay resident.
No, WEP doesn't apply.
Wow, this subject really has been discussed a lot... I never bothered reading them before!tj wrote: ↑Mon Sep 13, 2021 5:28 pmMike has addressed this before:Godot wrote: ↑Mon Sep 13, 2021 2:43 pm
Suspend Benefits at Full Retirement Age
If you’ve been receiving benefits for 12 months or more, it’s not possible to pay back your benefits and start over. You can, however, suspend benefits once you reach full retirement age and choose not to start them again until age 70.
Example: Greg begins claiming benefits at age 62. Three years later, he changes his mind and wishes he had waited. Once he reaches his full retirement age of 66, he can ask for his benefits to be suspended. If he waits until age 70 to start them again, he’ll earn 4 years’ worth of “delayed retirement credits,” which will help offset the fact that he originally claimed benefits prior to full retirement age.
It would be interesting to hear from any Bogleheads that have done this.
viewtopic.php?p=5550225#p5550225
I don't think I used the word "guaranteed". Let me check.... nope.HomerJ wrote: ↑Mon Sep 13, 2021 5:16 pmThere is no guaranteed "extra" money, Joe for waiting. If you die before 80-81, waiting gets you less. You might get more by waiting, or you might not. Half of people will get less, half will get more.
And it is important to remember that the reason the person with SS can spend more is because the other person has normally has a much larger estate. On average the person who takes SS early is going to end up with a 2 million dollar estate (i.e. on average you normally about double your money in real terms over 30 yers) while the person who delays is going to be more like 1.2 million (only 22 years of returns from a portfolio that is 25% smaller because they spend it down over 8 years). You got to spend a 120k more at the expense of having 800k less when you die. Depending on your priorities, that might be a pretty unappealing tradeoff. And obviously you could choose to spend that money when you are alive. Like if you enter the nursing home at 90.... And obviously you are taking on risk to get the higher returns. You need to decide if you can handle it.iceport wrote: ↑Mon Sep 13, 2021 6:46 pm
Wow, this subject really has been discussed a lot... I never bothered reading them before!
Skimming that thread led to this one from Cut-Throat: Delay Social Security to age 70 and Spend more money at 62
So that gave me the bright idea to run the simulation over at cFIREsim (because it's more convenient there than at FIRECalc to test alternatives) to test Cut-Throat's analysis using the historic data. So I ran the same numbers I've been running for years, first claiming SS at 62, and then waiting until 70.
Sure enough, waiting until 70 produced the higher theoretical spending rate, but the difference wasn't nearly as large as in Cut-Throat's example. It amounted to a 1.67% increase in spending over 30 years.
Now I'm sure BobK will come around with his hand out when I say this, but seriously, that's just rounding error. Isn't it?
It is actuarily neutral for the pool of population as a whole. I suspect in a self selecting pool of the population that knows they are healthier than the average it is far greater than a 50/50 preposition.HomerJ wrote: ↑Mon Sep 13, 2021 5:16 pmThere is no guaranteed "extra" money, Joe for waiting. If you die before 80-81, waiting gets you less. You might get more by waiting, or you might not. Half of people will get less, half will get more.
You also need to consider that if you go into LTC then most of your other expenses will stop.iceport wrote: ↑Mon Sep 13, 2021 12:51 pmYes, it's paid off, but I never "bought into" a McMansion just because I could possibly afford one. So it's a very modest place, representing a relatively minor portion of my net worth. This is a very valid point, and one which accomplishes a very necessary step should I find myself needing LTC, but I would probably need to reserve more than the house's value in retirement savings to cover LTC expenses.HomerJ wrote: ↑Mon Sep 13, 2021 12:42 pmDo you have a paid off house? As a single person, you can always sell the house if you have to go to an assisted living place.iceport wrote: ↑Sun Sep 12, 2021 3:24 pmYes, I started thinking about this. Back in 2012-2013 my mom was in a place that was no frills (but with excellent care and lots of familiar faces) and it cost ~$9k/mo. That's kind of scary. The plan so far, and tentative as it is, would be to have enough of the portfolio left over to cover the costs that exceed the income.
Thank you, Watty, for your perspective and the link. That looks like a valuable resource.Watty wrote: ↑Mon Sep 13, 2021 9:10 pmYou also need to consider that if you go into LTC then most of your other expenses will stop.iceport wrote: ↑Mon Sep 13, 2021 12:51 pmYes, it's paid off, but I never "bought into" a McMansion just because I could possibly afford one. So it's a very modest place, representing a relatively minor portion of my net worth. This is a very valid point, and one which accomplishes a very necessary step should I find myself needing LTC, but I would probably need to reserve more than the house's value in retirement savings to cover LTC expenses.HomerJ wrote: ↑Mon Sep 13, 2021 12:42 pmDo you have a paid off house? As a single person, you can always sell the house if you have to go to an assisted living place.iceport wrote: ↑Sun Sep 12, 2021 3:24 pmYes, I started thinking about this. Back in 2012-2013 my mom was in a place that was no frills (but with excellent care and lots of familiar faces) and it cost ~$9k/mo. That's kind of scary. The plan so far, and tentative as it is, would be to have enough of the portfolio left over to cover the costs that exceed the income.
That may mean that if you go into LTC you mainly need to be concerned about the gap between the LTC costs and your normal budget. Your home equity may be able to cover that gap for a long time even if you own a relatively modest house. For example if a nursing home costs $90K a year where you live but your normal retirement budget was $60K then the amount you need to be concerned about would be more like $30K a year
The term Long Term Care is also very misleading and can mean a lot of different things like;
1) Assisted living
2) A skilled nursing facility(nursing home)
3) A memory care facility
All these have very different expenses and assisted living is a lot less expensive than the other levels of care.
You can get an idea of what the different levels of care might cost where you live on this web site.
https://www.genworth.com/aging-and-you/ ... -care.html
If you live in a lower cost of living area and you have an ample retirement budget it is even possible that your expenses could even go down if you move into assisted living which costs less than other levels of LTC.
Yes, your comment and running these numbers through what Otar describes as "aft-casting" really hones in on exactly the trade-off I am grappling with!randomguy wrote: ↑Mon Sep 13, 2021 8:05 pmAnd it is important to remember that the reason the person with SS can spend more is because the other person has normally has a much larger estate. On average the person who takes SS early is going to end up with a 2 million dollar estate (i.e. on average you normally about double your money in real terms over 30 yers) while the person who delays is going to be more like 1.2 million (only 22 years of returns from a portfolio that is 25% smaller because they spend it down over 8 years). You got to spend a 120k more at the expense of having 800k less when you die. Depending on your priorities, that might be a pretty unappealing tradeoff. And obviously you could choose to spend that money when you are alive. Like if you enter the nursing home at 90.... And obviously you are taking on risk to get the higher returns. You need to decide if you can handle it.iceport wrote: ↑Mon Sep 13, 2021 6:46 pm
Wow, this subject really has been discussed a lot... I never bothered reading them before!
Skimming that thread led to this one from Cut-Throat: Delay Social Security to age 70 and Spend more money at 62
So that gave me the bright idea to run the simulation over at cFIREsim (because it's more convenient there than at FIRECalc to test alternatives) to test Cut-Throat's analysis using the historic data. So I ran the same numbers I've been running for years, first claiming SS at 62, and then waiting until 70.
Sure enough, waiting until 70 produced the higher theoretical spending rate, but the difference wasn't nearly as large as in Cut-Throat's example. It amounted to a 1.67% increase in spending over 30 years.
Now I'm sure BobK will come around with his hand out when I say this, but seriously, that's just rounding error. Isn't it?
Thanks. I appreciate your perspective.randomguy wrote: ↑Mon Sep 13, 2021 8:05 pm Depending how you frame the problem, you can make either scheme workout. If you want to live off SS+pension (versus maximizing spend), I would feel very comfortable taking SS early. Odds are you end up with a bigger pile of money when your 80+ with those added 8 years of returns versus spending down the account and reaccumulating by saving more of your SS check after 70. I am guessing if you run this using historical data, you rarely get many cases where delaying SS pays off.
Thanks SGM. I remember you helped me when I was starting Roth conversions, also. And I am also very pleased with how that is going.SGM wrote: ↑Mon Sep 13, 2021 9:06 pm The majority of the men I talk to have waited until age 70 to collect SS. They were the higher earners. Several with medical issues and family history of early MIs have taken SS earlier.
We delayed SS until age 70. I was able to file and suspend and DW took half my SS amount at age 66 until she filed her own at 70. The law changed in 2016. I expect at least one of us will be long lived. So I looked at the SS claiming decision as one of additional insurance of having higher income at a later date. I also made Roth conversions prior to taking SS. This has been one of my better decisions as the Roth accounts have gone up greatly in value since the conversions.
We have more income now than when I started working part time at 62 and when I retired at 66.
I re-read my post and that first sentence came out overly harsh -- I'm glad you interpreted it correctly (literally, I was trying to say "It sounds like you have options so it's OK to do what you want and not worry about if it's a 'perfect' answer or not).
. Return assumptions and portfolio spend down matter but the big one in the example is spending 4k more per year for 30 years. it is the old 4k invested instead of spent will be worth 20k in 30 years. The main point is that just looking at income ignores a good chunk of what most people care about.iceport wrote: ↑Tue Sep 14, 2021 12:52 pm Yes, your comment and running these numbers through what Otar describes as "aft-casting" really hones in on exactly the trade-off I am grappling with!
Seeing some of the numbers generated through this imperfect but still vary valuable analysis illustrates exactly what I've been thinking about. The thing is, my numbers don't show nearly the stark differences in ending portfolio balances as what you are describing. I suspect a big part of that is that so much more of my spending is covered by the pension and SS, so the effect on the portfolio balance is more muted than if it were *mostly* portfolio withdrawals supplemented by SS alone.
This is the only reason I could see that you give, iceport, for wanting to start SS early. You are correct, of course, that if one delays, the forsaken SS benefit must be taken out of the portfolio -- or at least it prevents the portfolio from growing as much. But you should also look at the other side of the coin. By delaying, one increases the probable value of the future SS benefits. This can be more than the amount the portfolio is reduced.
Code: Select all
Row ColA Col B Col C Col D Col E Col F Col G Col H Col I
1 Born 1962
2 NRA 67
3 PIA 2,500
4 Rate -0.57%
-- Life Expectancy -- Annual ---- Change in PV ----
5 Age % PIA Man Woman Either Benefit Man Woman Either
Code: Select all
6 62 70.00% 20.08 22.90 26.91 21,000
7 63 75.00% 19.35 22.07 26.02 22,500 30,800 35,400 42,200
8 64 80.00% 18.62 21.26 25.13 24,000 29,500 34,000 40,700
9 65 86.67% 17.89 20.45 24.25 26,000 37,800 43,500 52,200
10 66 93.33% 17.18 19.65 23.37 28,000 36,200 41,700 50,100
11 67 100.00% 16.47 18.86 22.50 30,000 34,600 39,900 48,200
12 68 108.00% 15.77 18.07 21.64 32,400 39,700 45,800 55,400
13 69 116.00% 15.07 17.30 20.78 34,800 37,900 43,800 53,100
14 70 124.00% 14.39 16.54 19.93 37,200 36,100 41,700 50,800
Code: Select all
B2: 67 = MIN(67,66+MAX(0,B1-1954)/6)
B6: 70% = IF($A7<$B$2,1-(5/900)*MIN(36,($B$2-$A7)*12)-(5/1200)*MAX(0,($B$2-$A7)*12-36),1+(8/1200)*($A7-$B$2)*12)
G7: 30,800 =-ROUND(PV($B$4,C8,$F8-$F7,0,0),-2)
That's surprising. According to the SSA, only 5% of men delay until 70.
Indeed surprising! The vast vast majority I know or heard of, 62-65 seems to be the chosen age.
34% take it as soon as possible at 62 ....
Well said.
The "lots of people I know" argument is always misleading. Everyone's in a bubble and it's hard to look outside it. If you and your friends are very successful financially, then you can all wait until 70 and it's strictly a mathematical decision because you don't need the money. That is a small minority of Americans, unfortunately. If you and your friends are like average Americans, then not only can't you wait until 70, you don't even have enough money to retire. And there are millions of people in between those extremes. My point is that let's stop using "the people I know" argument.
Why take such offense, I'm a faceless poster sharing my experience. I'm not making an "argument " for anything. Btw you missed the part where I mentioned people I've heard of, not just "know". The fact is simple the vast majority don't wait til 70.Tom_T wrote: ↑Wed Sep 15, 2021 6:30 amThe "lots of people I know" argument is always misleading. Everyone's in a bubble and it's hard to look outside it. If you and your friends are very successful financially, then you can all wait until 70 and it's strictly a mathematical decision because you don't need the money. That is a small minority of Americans, unfortunately. If you and your friends are like average Americans, then not only can't you wait until 70, you don't even have enough money to retire. And there are millions of people in between those extremes. My point is that let's stop using "the people I know" argument.