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Post by bb2 on Oct 24, 2022 21:44:57 GMT
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Post by ECE Prof on Oct 24, 2022 22:20:49 GMT
It all depends on expected life-span. I am a diabetic. One of my colleagues like me died just 3-years after retirement. So, I thought that I was going to die soon. I took my SS at 100% and did not wait, although I had worked only 25 years in this country, and they were going to fill up with zero earnings for another decade. My SS income is smaller amount compared to most people. My own classmates worked many more years to fulfil that 35-year mark. Do I regret? No, not at all.
So, I went to YMCA and brought down my A1C. I am 80 now and still living, but I do have a lot of problems. I fell in the staircase and hurt myself because of the balancing problem. Furthermore, I have a wound on my right leg because I hit the edge.
So, decide based on your own health conditions and hereditary. My father died young at 72, but my mother (my grandmothers too) lived long. So, there is no one shoe that fits all.
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Post by retiredat48 on Oct 25, 2022 21:39:58 GMT
At bb2...I decided to read this article.
Sure enough, I consider it has the same fundamental flaw...a fatal flaw, that some other articles have as well. The flaw is this:
The article completely ignores that one taking SS early, can invest this money and have it grow, as opposed to those waiting to age 70. Here's an explanation:
One is generally in one of these camps...They retire at age 62, and NEED to take SS to live on; OR, they retire early age 62 and DO NOT NEED to take SS early. Here is how each fares:
NEED SS at age 62. If you assume one will wait to age 70 for higher payouts, you must take the assets needed to live on in retirement, from somewhere else! Like an IRA or 401.K...or other taxable account assets. Thus you need to SUBTRACT these annual withdrawals (and growth) from your total return outlook for the delay-to-70 person.
Or:
DO NOT NEED to take SS at age 62. Then by all means, the only comparison for apples-to-apples is to assume the amount taken at age 62, and each year thereafter to age 70, is saved and invested.
The article does neither.
You cannot game the system more by having large COLAs, small COLAs or any COLAs. Breakevens are still into the age eighties...or more, depending on a persons success in investing monies saved early.
Disclosure: I retired early; 14 years later at age 62 I took early Social Security. This annual income enabled me to WITHDRAW THE EXACT AMOUNT LESS from my Trad IRA. This larger trad IRA then kept growing into very large amounts.
R48
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Post by Deleted on Nov 7, 2022 3:02:31 GMT
I am 60, retired 2 years ago. I am waiting on SSN because I would like to do Roth conversions for next few years. I do have cash to get by for next 5 years but planning on taking SSN at 64.
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Post by win1177 on Nov 7, 2022 21:20:46 GMT
My wife and I are taking SS at age 65 because: 1) My calculation show very little difference between age 62 to 70. 2) 65 is a good compromise number 3) I use SS to pay Medicare and taxes. 4) If you are retired and getting SS at age 62 to 65, it will likely raise your ACA(health care) monthly payment. Without it, you may pay almost nothing if you know what to do. After re-reading this entire post, I’m leaning towards taking SS at 65 also, when I sign up for Medicare. Our income is still high even in retirement (great “problem” to have), and I’ll just direct most of it to the IRS instead of paying huge estimated tax payments. Fortunately, we don’t “need” the money, but it’s always nice to have more income! Win
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Post by archer on Nov 8, 2022 6:33:33 GMT
I'm holding off until 68 because:
I don't need the money now.
By the time I am 68 yrs old, SS will more than cover my needed expenses.
It will be taxed at a very low rate due to minimal withdrawals from my IRA.
My health is excellent so far, and my parents, grand parents, most aunts and uncles lived into their 90's, one over 100.
If I do die before break even, I don't think I will care about it if things go well and if not, from what I hear, if things don't go well, my finances in this lifetime will be the least of my problems.
I also just can't see the point in taking less early and investing it in a taxable account and having to withdrawal more from savings later for living expenses, and paying taxes on that as well as increased taxes on my SS. (according to online tax calc programs)
If predictions for the market being a few % less annually over the next 10 yrs prove true, I'd rather depend less on my PF.
I ran all different starting ages for SS through a pretty complex planning app and 68 was the sweet spot for me, mostly due to an income source running out at that time.
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Post by ECE Prof on Nov 8, 2022 14:55:08 GMT
you may pay almost nothing if you know what to do. After re-reading this entire post, I’m leaning towards taking SS at 65 also, when I sign up for Medicare. Our income is still high even in retirement (great “problem” to have), and I’ll just direct most of it to the IRS instead of paying huge estimated tax payments. Fortunately, we don’t “need” the money, but it’s always nice to have more income! Win The age for 100% is more now – probably 67. Did you mean 67? At 65, your SS payment will be reduced from the 100%. Check your case from the SS website. I assume that you can open an online account with SS. When I retired, my full retirement age was 65+10 months. They kept adding 1 or 2 months, as the years went by until it reached 67. Since I retired almost 15 years ago, the full retirement age would have reached 67 for 100% benefit.
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Post by Deleted on Nov 8, 2022 15:08:29 GMT
After re-reading this entire post, I’m leaning towards taking SS at 65 also, when I sign up for Medicare. Our income is still high even in retirement (great “problem” to have), and I’ll just direct most of it to the IRS instead of paying huge estimated tax payments. Fortunately, we don’t “need” the money, but it’s always nice to have more income! Win The age for 100% is more now – probably 67. Did you mean 67? At 65, your SS payment will be reduced from the 100%. Check your case from the SS website. I assume that you can open an online account with SS. When I retired, my full retirement age was 65+10 months. They kept adding 1 or 2 months, as the years went by until it reached 67. Since I retired almost 15 years ago, the full retirement age would have reached 67 for 100% benefit. For those born in 1960 or later, the FRA is 67.
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Post by bb2 on Nov 8, 2022 19:56:22 GMT
Great thread here - lot's of POVs. Just wanted to emphasize the inflation consideration. Many break even claculators ignore inflation. As mentioned up in the thread, inflation might not be dead after all and it's certainly seeing a big bump now. SS COLA for 2023 is 8.7% and it was 5.9% in '22. And this compounds while waiting till 70. www.ssa.gov/oact/cola/colaseries.htmlSO I'll again post this COLA compounding example, which uses a steady 2.5% rate and is revealing in the benefit increase obtained for waiting till 70. cannonfinancialstrategists.com/wp-content/uploads/How-COLAs-Affect-SS-Benefits.pdf(I don't fully understand how the COLA is applied to SS but the pdf describes it to an extent. The final numbers are shown in the tables. I should research the how further but no time now. It's complicated and SSA doesn't seem to give us recipients a lot of detail. You can see you yearly earnings in the "MySSA" login but I've not seen much more on the site about exactly how those figures are used to get a PIA or apply COLAs.) I'm tempted to take the money at FRA, like the kid in the Stanford marshmallow self control experiment. But these numbers are striking. Beware dumb online break even calculators. I think my approach at this point is to treat SS as an annuity and therefore wall it off from my portfolio. The idea of a guarantee appeals to me. Also, an 8%/year minimum return for waiting, more with conpounding COLAs, isn't bad. Health issues and a financial need would change this POV.
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Post by bb2 on Nov 8, 2022 22:16:32 GMT
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Post by ECE Prof on Nov 8, 2022 22:55:30 GMT
bb2, "to treat SS as an annuity" It is a two-life annuity. That is what it is. All those calculators take the average lifespan only into account. It is fine. But, you have other factors also into account. There are at the least three in my opinion. (1) your health condition, (2) your hereditary, and (3) relative age of your spouse. Then, you can also take the cash and reinvest in the market that could grow more than the government increase. Today's market is not necessarily the condition of the future. It is a great time to invest now, but the real problem is the uncertainty in the global conditions, and how the world prices would affect our living. This has a far more effect than the FED's interest rate hike, and therefore, there is also uncertainty on the FED's actions. We do not live on an island.
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Post by Deleted on Nov 8, 2022 23:03:38 GMT
I wonder if delaying SS to age 70, for those with a FRA of 67 will increase the benefit as much as it did for others in the past. The difference being a three year delay compared to a five year delay.
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Post by Chahta on Nov 9, 2022 14:06:04 GMT
SS for full retirement age of 67 is costly for early benefits. For me taking it at 62 would have been a 25% reduction. For a FRA of 67 the reduction is 30%.
Delaying benefits for a FRA of 67 increases only 24% at age 70. For a FRA of 66 waiting until 70 the benefit increases 32%. Makes sense.
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Post by racqueteer on Nov 9, 2022 15:15:06 GMT
1. You want the money early: a) You don't expect to live long enough to break even. b) You expect SS to become insolvent. c) You need money early to do whatever - travel, health, bills, etc. d) You expect money NOW to be more valuable due to inflation. e) You want to have room in your tax bracket to convert IRA to Roth before your income level makes that impossible. 2. You want to take it later: a) You expect to live longer than the average. b) You don't need it now to live, play, etc. c) You want to use bracket room to convert IRA funds to ROTH. c) You want to maximize your eventual benefit. After that, everything is personal preference; since the actuarial tables suggest there is no advantage to one over the other. What did I miss?
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Post by shipwreckedandalone on Nov 9, 2022 16:56:33 GMT
Most proponents of "take it early and invest it" who create spreadsheets forget to tax the SS income taken at age 62 model. If you do not take SS yet, nothing is taxed.
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Post by bb2 on Nov 9, 2022 17:58:37 GMT
I also see SS as a diversifier. I've lived off risk assets for 20 years and it'll be nice to have a little income from a defined, risk-free, inflation protected source separate from my investing decisions and I'd like to maximize that source.
Longevity TIP: A nurse told me this: Don't strain while sitting on the pot. Lots of strokes in the bathroom.
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Post by retiredat48 on Nov 9, 2022 20:35:29 GMT
So in over 15 years of posting, the forums every year have threads on when to take Social Security.
And each time there is a large contingent that thinks they can get more by waiting to age 70.
Yet each time it is refuted, there is never a discussion on the fatal-flaw with the arguments to wait to age 70. Just had a thread on the Fido forum postulating the COLA benefits of waiting, but the sponsoring posters didn't address the cola benefits to taking early, and saving the proceeds. No redo of the spreadsheets.
I posted in this thread on 25 October above...showing the flaw in the article referenced. I don't think anyone has tried to refute this flaw. If you can, please do. I would love to be shown incorrect.
Otherwise, fatal-flaws continue to be just that...a fatal flaw in the conclusion/ outcome.
Good day...
R48
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Post by bb2 on Nov 9, 2022 21:09:23 GMT
No argument there, 48. As you say in your Oct. 25 post, "...depending on a persons success..". You're lucky, as we all are, to have benefited from a big bull market. You betting that'll continue forever? And like I said, I like the diversification of having an income source divorced from my success/failurein hte markets. Which is why I consider it an annuity. And why I'm waiting till 70.
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Post by racqueteer on Nov 9, 2022 21:11:22 GMT
1. You want the money early: a) You don't expect to live long enough to break even. b) You expect SS to become insolvent. c) You need money early to do whatever - travel, health, bills, etc. d) You expect money NOW to be more valuable due to inflation. e) You want to have room in your tax bracket to convert IRA to Roth before your income level makes that impossible. f) You can invest it with the expectation that it will benefit you more overall.
2. You want to take it later: a) You expect to live longer than the average. b) You don't need it now to live, play, etc. c) You want to use bracket room to convert IRA funds to ROTH. d) You want to maximize your eventual benefit. e) Taking it early has negative tax implications.After that, everything is personal preference; since the actuarial tables suggest there is no advantage to one over the other. What did I miss?
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Post by Deleted on Nov 9, 2022 21:38:21 GMT
1. You want the money early: a) You don't expect to live long enough to break even. b) You expect SS to become insolvent. c) You need money early to do whatever - travel, health, bills, etc. d) You expect money NOW to be more valuable due to inflation. e) You want to have room in your tax bracket to convert IRA to Roth before your income level makes that impossible. f) You can invest it with the expectation that it will benefit you more overall.
2. You want to take it later: a) You expect to live longer than the average. b) You don't need it now to live, play, etc. c) You want to use bracket room to convert IRA funds to ROTH. d) You want to maximize your eventual benefit. e) Taking it early has negative tax implications.After that, everything is personal preference; since the actuarial tables suggest there is no advantage to one over the other. What did I miss?
Taking it late has negative tax implications, too. Added by Edit: IRMAA (income penalties for Medicare Parts B & D) where one additional dollar of taxable income can double or triple premiums.
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Post by FD1000 on Nov 9, 2022 21:38:23 GMT
Most proponents of "take it early and invest it" who create spreadsheets forget to tax the SS income taken at age 62 model. If you do not take SS yet, nothing is taxed. If you work, you will likely pay taxes. If you don't work, you will likely need to use ACA health care insurance, which will be higher on everything above a certain amount (in my state, it's about $14K). ACA can be hundreds more per months and thousands more for deductions. My numbers show min difference between 62 to 70. I applied to SS 3 months prior to age 65 because I know they are slow. I was correct, I start getting SS at age 64 and 11 months. It was a perfect timing. SS pays for my Medicare. If you don't have enough, you don't have a choice. If you have enough, the easiest decision in most cases is age 65 because you will pay more taxes on these early payments at age 62-65. Of course, there are the lucky ones who get pension + health benefit, usually Gov/State/School/College employees
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Post by ECE Prof on Nov 9, 2022 22:56:02 GMT
"pension + health benefit, usually Gov/State/School/College employees ?
FD Not all states provide this. Some states do, and some don't.
I am not a lucky one. I was paying more for all the premiums when I had the state coverage (our HR does it automatically from the day of retirement). I had to pay BCBS coverage for my wife also from my retirement. Then, I had to get Part D from Humana. So, it was very expensive. So, I moved to MA plan, all in one, and paid less premium. Of course, I had to pay to the state for her BCBS coverage, until she became eligible for medicare.
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Post by Capital on Nov 9, 2022 23:09:42 GMT
In my situation (1) I am 8.5 years older that my spouse (2) Lifespan for those in my spouse's family are in their late 90s (3) my SS benefit will be higher that hers no matter what now. While deferred credits do not accrue to the spousal benefit they do accrue to the survivor benefit. When looking at when I take my SS we look at my spouse's lifespan. In theory, if I wait until 70, my benefit will be drawn from my spouse's age 62 to age 97 or 35 years. She will need the higher benefit after I'm gone to help her make ends meet. As for her benefit it starts when she starts to draw it and ends at my demise. We look at my lifespan when looking at her SS benefit.
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Post by archer on Nov 10, 2022 0:19:49 GMT
Most proponents of "take it early and invest it" who create spreadsheets forget to tax the SS income taken at age 62 model. If you do not take SS yet, nothing is taxed. If you work, you will likely pay taxes. If you don't work, you will likely need to use ACA health care insurance, which will be higher on everything above a certain amount (in my state, it's about $14K). ACA can be hundreds more per months and thousands more for deductions. My numbers show min difference between 62 to 70. I applied to SS 3 months prior to age 65 because I know they are slow. I was correct, I start getting SS at age 64 and 11 months. It was a perfect timing. SS pays for my Medicare. If you don't have enough, you don't have a choice. If you have enough, the easiest decision in most cases is age 65 because you will pay more taxes on these early payments at age 62-65. Of course, there are the lucky ones who get pension + health benefit, usually Gov/State/School/College employees There is a work around that helps with higher ACA premiums You can claim low income and pay a maximum $1300 penalty for under declaring. Since my only declared income was some interest from a savings account, and roth conversions, I claimed the minimum allowable income and paid $1.00 month for ACA premiums. At tax time I paid $1300 for the penalty. Due to the size of my previously unknown Roth conversions, I would have had to pay much more. This is all allowable and completely legal in the ACA, and the IRS.
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Post by FD1000 on Nov 10, 2022 0:45:47 GMT
A better idea is to make exactly the min and pay nothing for ACA, depends on which plan you select...and no penalty. My neighbor has been doing it for several years. ACA would not allow me to use it if the income was lower than 14k. She tried 13K and it wouldn't let her continue unless made 14k. Otherwise, if your income is too low, medicaid may be notified, not sure this happens.
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Post by retiredat48 on Nov 10, 2022 0:52:33 GMT
I also see SS as a diversifier. I've lived off risk assets for 20 years and it'll be nice to have a little income from a defined, risk-free, inflation protected source separate from my investing decisions and I'd like to maximize that source. Longevity TIP: A nurse told me this: Don't strain while sitting on the pot. Lots of strokes in the bathroom. bb2 ,...a rebutal: You are calling Social Security a "risk-free" diversifier. Well, social security payouts come from the government, right. So as an alternative, take the early social security payments and buy Treasury Bonds. You now can get 4.25+%, and using the same risk-free investment as SS. You just never sell it. It grows and grows. Annuitize later if you like. But the starting points for either are still the same. Start at age 62, and collect SS annually, invest in Treasuries at 4+%, and at age 70 you may have about $200,000 cash on hand. Undenyable. Also undenyable is if you wait to age 70 to begin, and you die in the first week, you left $200,000 on the table. Your heirs may be dumbfounded as to why one would do this. Finally, OK...so you live onward past age 70. Let's say to age 76...still a loser compared to the person whio took SS early. So the issue becomes where is the breakeven point? Past calculations by many people running the numbers shows at a conservative rate of return of 2-4% on ones investments, the breakeven is mid age eighties. However, run the numbers at 4.25%, the rate available on LT Treasury Bonds today, you likely get into age 90+. And even then the amounts of the annual payment differences in favor of the late taker, is not substantial. And if the fed tames inflation back down, (reduced COLAs going forward) you come out way more ahead because you can lock in the Treasury rate for 20...or 30 years, if you like. After all, this is "house money" you took early. You can't game SS. The feds/Treasury know all these numbers and aspects, and have designed the system to not favor any one sequence. R48
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Post by mnfish on Nov 10, 2022 11:54:16 GMT
In my case I took it at 62. My thinking was that I would slow the spend down of my portfolio and allow the reinvestment of funds equal to my annual benefit, which would leave more for my heirs. (2 daughters and 4 grandkids) I'm single and you can't leave your SS to anyone. I look at it as a bond fund that raises its monthly payment with inflation.
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Post by richardsok on Nov 10, 2022 12:40:36 GMT
My wife and I are taking SS at age 65 because: 1) My calculation show very little difference between age 62 to 70. 2) 65 is a good compromise number 3) I use SS to pay Medicare and taxes. 4) If you are retired and getting SS at age 62 to 65, it will likely raise your ACA(health care) monthly payment. Without it, you may pay almost nothing if you know what to do. After re-reading this entire post, I’m leaning towards taking SS at 65 also, when I sign up for Medicare. Our income is still high even in retirement (great “problem” to have), and I’ll just direct most of it to the IRS instead of paying huge estimated tax payments. Fortunately, we don’t “need” the money, but it’s always nice to have more income! Win That is exactly what I did, win. "When-to-take-it?" is a perpetual conversation starter. Opinions abound but I could not find a compelling optimal age so I split the diff and took SS at 65. Nine yrs later & no buyer's regrets.
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Post by Deleted on Nov 10, 2022 13:24:30 GMT
I took SS Survivor Benefits and switched to my own at age 70. One-third of the monthly amount is deducted to pay Medicare related insurance premiums, IRMAA charges, and some federal tax. What is bank deposited pays state income taxes and some expenses. Major expenses are paid from my cash management brokerage account. I automate as much as possible.
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Post by bb2 on Nov 10, 2022 19:08:30 GMT
Hey 48, I'm not buying your numbers on taking early and investing in bonds and coming out ahead. By waiting, I get an automatic 8% increase in the form of a delayed retirement credit. Beats 4.x% in bonds, no mysterious spreadsheet needed. www.fool.com/investing/2022/09/17/should-you-claim-social-security-early-to-invest/This strikes me: From richardsok on page 1 of this thread: "They are now in their 70s, and after years of inflation, are sour they could have gotten so much more each month had they only waited a little bit -- and are regularly bitter their COLAs are so meagre." Marshmallow experiment. Delayed gratification works. When you're 85 you'll get it. Even if I use statistics, I'll live past breakeven. Have you seen people? Dragging around 50 extra pounds? Smoking? Couch bound? Third rail of politics is also a good bet, at least for us oldsters. Despite Rick Scott or Ron Johnson or Lindsay Graham. So, another way to put it is that I'm not trying to maximize the SS benefit by taking the money now and investing it. I don't need more feedstock for my "genius" that's been so evident in the crazy roaring bull market of the last 15 years. (Sarcasm, ICYDK.) I'm maximizing the annuity aspect of SS, the bet is I'll live past 80. And I get a taste of what my retired cop friends have. And every year past 80 is gravy. In a higher inflationary period especially, the checks declined at 62 or 66 will recede into my rear view mirror all the faster. People buy annuities to de-risk longevity. That's all I'm doing. Giving up the opportuity to invest and beat a guaranteed 8+%/yr, for maximizing that annuity is the cost I incur. Simple as that. Back to the OP. It seems clear to me the conventional thinking is correct, once again, as stated many times here. If you don't need it and you're in decent health, wait till 70. Unless you have great confidence in your investing genius in all market environments and are willing to ignore a certain 8% gain. And actually, I'm thinking even if you do need it and are healthy, waiting is even more important if you can pinch as long as possible. A little sacrifice now will pay dividends in the future. Nothing worse that being old AND poor. Old is bad enough. I get taking it at FRA. Not a big difference in the end. And it's not easy to delay gratification. The horse is dead. For this year.
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