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Post by Mustang on Nov 10, 2022 20:48:21 GMT
I took it and invested it. Wellington has a 10-year return of 8.17%. That includes this year's loss. COLA was basically nothing (below 2%) until the last two years. Our kids can inherit our investments. They can't inherit social security not taken.
Whether someone takes social security early or not depends upon their unique circumstances. It works for some, won't work for others.
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Post by habsui on Nov 10, 2022 21:17:15 GMT
I took it early as most of my spending money comes from other sources (about 80%), and am spending it.
I'll slow down when I get to 85yo anyway..
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Post by retiredat48 on Nov 11, 2022 1:00:18 GMT
I took it and invested it. Wellington has a 10-year return of 8.17%. That includes this year's loss. COLA was basically nothing (below 2%) until the last two years. Our kids can inherit our investments. They can't inherit social security not taken.
Whether someone takes social security early on not depends upon their unique circumstances. It works for some, won't work for others.
My bold added above. No, delaying does not "work" for anyone. See my add'l comments following. R48
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Post by retiredat48 on Nov 11, 2022 1:18:54 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. R48 reply in bold: Simply erroneous. I get the same COLA. Got the same COLA during my sixties. The 4+% in bonds is on a bigger savings base each year.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." Richardsok is making a lot of money those annual SS payments he got. Is he ignoring this?Marshmallow experiment. Delayed gratification works. When you're 85 you'll get it. No...see longevity insurance below.
Even if I use statistics, I'll live past breakeven. Have you seen people? Dragging around 50 extra pounds? Smoking? Couch bound? Check out the small difference in payouts. I will clobber your age 85 payouts by using longevity insurance...see below.
Third rail of politics is also a good bet, at least for us oldsters. Despite Rick Scott or Ron Johnson or Lindsay Graham. Meaning? I don't see any way SS is reduced or eliminated. In any event, by taking early you may fare better.
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. See next paragraph reply.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. R48 reply...NO. You incur a considerable cost. The money you did not take until age 70! Furthermore, and listen up folks, if it's a past-age-80 increased payment you are looking for...like an "annuity"...then simply buy longevity insurance. Here's from a post I made on another forum:
----------------------------------------------------------------------------------
Gee, when I retired at age 48, I planned to age 88, because I was potentially running out of money, then. Our fallback was to call the kids and tell them to come and get us!
So, what about living to age 100?
Don't fret...there is a way to cover this contingency!
The solution: INSURE THE BACKSIDE RISK VIA LOW COST LONGEVITY INSURANCE.
That is, you can buy annuities for very low cost that kick in if you live past, let's say, age 85. They pay income for life. So if you live to be 105, no concern.
The Wall Street journal had an article, 9 April, on how to do this...called How to Create a Pension (With a few catches).
For instance, a 65 year old man buying a regular annuity can get a payout for life of $6950 per $100,000 annuity. However, if you buy now, the same amount policy, that begins at age 85 payouts, you get $63,900 per year. Hey, now we're talking.
So if you are concerned your wife will live to be 105, get a longevity annuity for her..or both of you.
Yes, you give up some principal, but then you may only have to plan for your portfolio to last 20 years, (instead of 30)at which point the annuity payments kick in. Currently, you can tailor-make these to fit your needs, with 45 years out being the longest start time.
And remember States have annuities insured to varied limits, usually $100,000 or slightly more, so a default by the company is not disaster to you.
Disclaimer...I don't have a need to be concerned about age 85 and on, thus do not own such longevity insurance. But for certain investors, this seems a good way to cover this dreaded age 85 and on time period. ------------------------------------------------------ So in the case of early SS or not, you take it early and use the proceeds to buy longevity insurance; in just a year or two, you will "have more than enough age 80 and on coverage." All free money from the gvt to buy the insurance.
R48 in bold.
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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Post by win1177 on Nov 11, 2022 15:29:32 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 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. Actually, I’m leaning towards taking it at Full retirement age, which is 66 and a few months. I’m turning 64 in a few days, so that’s about 2 and a 1/2 years. We do NOT need it, so it will be invested/ sent to Uncle Sam as estimated tax payments, which we have to make every year. We’re very fortunate, in that we’ve been very good savers and investors as a couple, and have accumulated a very large nest egg. We have more than “enough”, so it’s “gravy” for us. I’m also blessed in that I have a state pension (28 & 1/2 years as medial school professor) and lifetime health insurance for me and my wife. So we’re fortunate. I may do some more Roth conversions, have a pretax IRA with about 144K in it, right now cash and intermediate bond funds, but may diversify into some longer term investments. Rest of IRA has already been converted to ROTH, so we’re OK there. Wife has already converted IRA to Roth. Taking it at Full Retirement Age seems a good compromise between “early versus age 70”! Win
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Post by ECE Prof on Nov 11, 2022 15:45:27 GMT
"Our kids can inherit our investments. They can't inherit social security not taken." Exactly. +1. The same holds for state retirements and annuities too. This is where I missed by taking state retirement instead of using CEFs for income. The state retirement will stop when both of use die, and my son cannot inherit it.
In fact, 529 plans are the same gimmicks. CEFs could pay better for college education.
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Post by archer on Nov 11, 2022 16:52:35 GMT
"Our kids can inherit our investments. They can't inherit social security not taken." Exactly. +1. The same holds for state retirements and annuities too. This is where I missed by taking state retirement instead of using CEFs for income. The state retirement will stop when both of use die, and my son cannot inherit it.
In fact, 529 plans are the same gimmicks. CEFs could pay better for college education.
Due to my increased SS delayed benefits, I will seldom touch my savings which will result in leaving more for my kids. This holds true for pensions as well. This is important to include when comparing. Annuities are a different story since they are bought rather than earned.
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Post by ECE Prof on Nov 11, 2022 17:07:13 GMT
archer , True. But, Mustang stated my view 100%. My point was to expand on that. I used my SS money to pay the taxes on the backdoor Roth conversion, and I am saving a ton of cash, keeping Uncle Sam out of my pockets during the past 6 years. Right there, I save 20% by not paying taxes.
By the way, even yesterday, my wife was pointing out why I did not work another 8-9 years like my own classmates back from India to get more SS and more retirement cash. I just quit at the right age but, I am making a lot more money through investments than paying all those taxes, SS, and Medicare, etc.
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Post by retiredat48 on Nov 11, 2022 17:39:01 GMT
at ECE Prof,...my wife never asks anymore about retiring at age 48; however, my 102 y/o living MIL still questions, after 30 years, whether or not I will "make it." R48
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Post by ECE Prof on Nov 11, 2022 19:33:25 GMT
One of my undergraduate classmates worked and retired from TI after 3 or 4 years after I did. He had all his working life in this country, more than a decade before I came here. That is fine to draw better SS. Then, he started working for a state university on a part-time basis for six months and then full time. Guess what? I had to write a reference letter, even though I was already retired. I think that he is supposed to retire this year or next Spring to fulfil the minimum 10-year requirement for the state retirement. Imagine somebody working until the age of 80, paying into SS and medicare, and also paying federal taxes on the top for his salary and his earlier retirement benefits, etc.
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Post by bb2 on Nov 11, 2022 19:40:15 GMT
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. R48 reply in bold: Simply erroneous. I get the same COLA. Got the same COLA during my sixties. The 4+% in bonds is on a bigger savings base each year.Hey 48, the 8% I refer to is the "delayed retirement credit", not a COLA. BTW, that longevity insurance is interesting. You may be on to something, if that price quote is correct. Thanks for the heads up. Of course inflation is another risk there, as I'm thinking the contracted payout isn't linked to CPI. And rates are up, so, maybe a 20 yr US Treasury is relevant? I'd have to do the work. And god forbid, I'd have call an insurance agent. But like I've tried to say, I'm not interested in dealing with all this minutae. I've never considered SS or my house in my planning. So: In case I live past 80, I will maximize my defined, risk-free, inflation protected SS payments by delaying 3 years and 4 months, when I'll be 70. Full stop. Just my personal preference. Too many unknowns to fret about it all or try to maximize total return with SS. 6 of 1, 1/2 dozen of the other.
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Post by liftlock on Nov 11, 2022 21:06:50 GMT
bb2 wrote: "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." Keep in mind, that a portion of 8% delayed retirement credit is simply compensation for the likelihood that one will receive benefits for fewer years. Lets assume one has a life expectancy of 20 years at FRA, and decides to delay benefits for 1 year. They are only likely to receive benefits for 19 years instead of 20 years. That represents a 5% reduction in expected lifetime benefits if there were no delayed retirement credits. So not all of the 8% delayed retirement credit can be thought of as an investment return. Several other factors to consider: Social Security is calculated as a unisex benefit. Delaying the start of benefits favors women who live an average of about 2 years longer than men. When I retired, I calculated the probability of receiving benefits between FRA and Age 100. At that time FRA was age 66. Based on probability of receiving benefits, lifetime benefits were maximized at age 68 for men, and at age 70 for women. When the stock market has declined or is relatively inexpensive, it may make sense to file early and not drawdown financial assets when the market is down. When the market is hitting new highs or is richly valued it may make sense to draw down financial assets and delay claiming benefits. Someone who needs to withdraw 5% or more of their portfolio to cover their essential living expenses is likely to benefit from delaying the receipts of SS benefits. Doing so increases guaranteed income and reduces the risk of running out of money based on 4% -4.5% being a safe and sustainable withdrawal rate without considering longevity insurance as a possible solution as suggested by R48. I haven't done the math on claiming early at age 62 and investing the income until reaching age 70. However, it strikes me that the opposite may also be true. There is a benefit from having a higher income by delaying the income until age 70 as compared to age 62. Higher income may result in lower portfolio drawdowns after age 70. Claiming early may result in lower portfolio drawdowns between age 62 and age 70. One has to factor the impact of the short term loss of income when they delay. The most important factor is to make a claiming decision based on what makes one sleep well at night. Delaying benefits to provide higher guaranteed income may or may not provide peace of mind.
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Post by archer on Nov 11, 2022 23:58:55 GMT
One thing that strikes me a strange with this discussion here and elsewhere, is that when planning for retirement and and withdrawal rates we figure on living to a ripe old age. When considering when to take SS, many people seem to plan on dying much younger, thus the concern for break even age. Why not use the same time horizon for both retirement savings and SS?
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Post by saratoga on Nov 12, 2022 0:57:14 GMT
I received my SS at 70 and am very happy with my decision. There are some good reasons to apply for it early but the vast majority apply for it very early. This indicates to me that many apply early for wrong reasons. At least use a dependable financial planner before your decision. And remember that your spouse could inherit your SS payments - an inflation indexed annuity promised by the government when you maximize it to 70. This is very important if your spouse has no interest/ability in financial matters.
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Post by bb2 on Nov 12, 2022 1:20:32 GMT
One thing that strikes me a strange with this discussion here and elsewhere, is that when planning for retirement and and withdrawal rates we figure on living to a ripe old age. When considering when to take SS, many people seem to plan on dying much younger, thus the concern for break even age. Why not use the same time horizon for both retirement savings and SS? That's an interesting observation. Maybe because delayed gratification is hard? Looking at a few thousand coming in each month sure tempts me. And yes, liftlock, market conditions might be a consideration but still, relying on my success in the markets is the thing I want to eliminate, as far as SS goes. And yea, I don't think I said anything other than waiting gives me about 8% in increased payments for each year delayed. Wait till 70 and I get 26% more. Just one more time - delaying is not an attempt to maximize total retun of SS. I don't know how long I'll live and I don't know how well I'd invest any money I receive if I were to take it at FRA. It's just a sure way of maximizing my SS checks after I hit 70. That's it. And it's impossible to "do the math" on taking SS early and investing because investing is a risk and is uncertain.
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Post by retiredat48 on Nov 12, 2022 2:09:51 GMT
At bb2 ,...who posted: "...BTW, that longevity insurance is interesting. You may be on to something, if that price quote is correct. Thanks for the heads up. Of course inflation is another risk there, as I'm thinking the contracted payout isn't linked to CPI. And rates are up, so, maybe a 20 yr US Treasury is relevant? I'd have to do the work. And god forbid, I'd have call an insurance agent." ---------------------------------------------------------------- Ah, glad your giving this a fair assessment. Many are unaware of this type of insurance. Note the payouts are quite generous compared to the initial purchase amount. To me, inflation should be hedged by a balanced portfolio approach, such that severe inflation is covered by the stock side of investments. While short term downdrafts may occur, companies...owning the means of production and their pricing power, and dividends, have uncanny ways of keeping up with prices. I am not in general favor of annuities; however with longevity insurance, you are participating in an "insurance factor/pool"...spreading/sharing the costs. And most companies are AAA. R48
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Post by bb2 on Nov 12, 2022 16:10:57 GMT
There once was a man from Nantucket Who reached 62 and he took it plucked it (archer's excellent suggestion) But the market did crash and he needed some cash so he drained his longevity bucket
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Post by archer on Nov 12, 2022 16:15:18 GMT
Maybe "plucked it"? :-)
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Post by bb2 on Nov 12, 2022 17:00:03 GMT
Good one, archer.
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Post by Deleted on Nov 12, 2022 17:09:59 GMT
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Post by bb2 on Nov 12, 2022 17:45:07 GMT
Yes, sara, I defy anyone to find anything written that recommends taking SS at any age less than 70 unless one's health is poor or needs the money sooner. But emotions enter, as in all decisions and it does feel pretty good to get that check. ASAP.
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Post by Deleted on Nov 12, 2022 17:53:55 GMT
Yes, but what about the idea of taking at 68 (or 69) based on the following -
Although most experts agree that far more Americans should delay claiming to age 70, the incremental benefit to delaying from age 69 to 70 is far more modest than the benefit from delaying in the year after full retirement age. For example, an average man sees only a $2,959 benefit from delaying between ages 69 and 70 (vs. $9,070 between 67 and 68) and a healthy woman sees a $12,033 benefit (vs. $19,039 between 67 and 68).
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Post by Chahta on Nov 12, 2022 21:41:57 GMT
Yes, sara, I defy anyone to find anything written that recommends taking SS at any age less than 70 unless one's health is poor or needs the money sooner. But emotions enter, as in all decisions and it does feel pretty good to get that check. ASAP. If I get $36,000 at 66 but get $48,000 at 70, how long does it take to make up $144,000 at $12,000 per year? This all before taxes and COLAs.
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Post by FD1000 on Nov 12, 2022 22:26:14 GMT
Most articles about SS usually don't discuss the following: 1) Retirees who have enough VS the others. The ones who have enough can do whatever and must look at the rest 2) There is a good chance that if someone takes SS prior to age 65 + have other income, he/she will pay higher ACA premiums. Real example: if your income is 35K, you get $836 tax credit at age 62 in my state. If you take SS and your income is $60K, you get only $537 tax credit. This means you are losing about $300 monthly x 12 = $3600. 3) SS is invested, not spent because you have enough. In reality, you use SS but you don't sell the equivalent of your invested money. The above is why I started taking SS at age 64 +11 months. I filled 3+ months in advance, it took SS that long to set it up. SS also pays for my Medicare, another nice option. I can also pay taxes from SS. 65 is a great compromise, for the following... The rest are all unknown predictions: 1) Are you going to die too early or live too long? 2) will SS pay the same or may reduce the amount?
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Post by chang on Nov 12, 2022 22:31:08 GMT
I’m taking going to take it at 62. It’s my money, and I want to see it going into my pocket sooner rather than later. I will add it to my discretionary income, or maybe invest it, but I want to spend money on travel and entertainment while I can still enjoy it. And … I don’t trust the government as the trustee of my money. The sooner I can start getting it back, the better.
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Post by archer on Nov 12, 2022 22:40:23 GMT
Most articles about SS usually don't discuss the following: 1) Retirees who have enough VS the others. The ones who have enough can do whatever and must look at the rest
2) There is a good chance that if someone takes SS prior to age 65 + have other income, he/she will pay higher ACA premiums. Real example: if your income is 35K, you get $836 tax credit at age 62 in my state. If you take SS and your income is $60K, you get only $537 tax credit. This means you are losing about $300 monthly x 12 = $3600. 3) SS is invested, not spent because you have enough. In reality, you use SS but you don't sell the equivalent of your invested money. The above is why I started taking SS at age 64 +11 months. I filled 3+ months in advance, it took SS that long to set it up. SS also pays for my Medicare, another nice option. I can also pay taxes from SS. 65 is a great compromise, for the following... The rest are all unknown predictions: 1) Are you going to die too early or live too long? 2) will SS pay the same or may reduce the amount? Good point in red above. While I am currently delaying, I am only doing so due to some current income. Take that away and my choice would be to start drawing down my IRAs or take SS now. If I had to choose between the 2, I would probably take SS now rather than start spending down.
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Post by FD1000 on Nov 12, 2022 23:01:52 GMT
Yes, sara, I defy anyone to find anything written that recommends taking SS at any age less than 70 unless one's health is poor or needs the money sooner. But emotions enter, as in all decisions and it does feel pretty good to get that check. ASAP. If I get $36,000 at 66 but get $48,000 at 70, how long does it take to make up $144,000 at $12,000 per year? This all before taxes and COLAs. Let's see how much money there is after 20 years, at age 90. Simple ( calculator). Let's assume 8% constant annual returns, the money is invested, never taken out, no inflation (BTW, even if starts at age 66, you get COLA too). At age 70, you will have $168K(including 8% returns) if you start at age 66 + $3000 monthly. Start at age 66: 20 years at 8% annually and adding $3000 monthly, starting with $168K gets you close to 2.5 million Start at age 70: 20 years at 8% annually and adding $4000 monthly, starting with $0K gets you close to 2.28 million. I did the above for 6% annual returns, and starting at age 66 is better. Remember, compounding is a huge force. Taking it at age 66 is better.
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Post by liftlock on Nov 12, 2022 23:17:07 GMT
Yes, sara, I defy anyone to find anything written that recommends taking SS at any age less than 70 unless one's health is poor or needs the money sooner. But emotions enter, as in all decisions and it does feel pretty good to get that check. ASAP. If I get $36,000 at 66 but get $48,000 at 70, how long does it take to make up $144,000 at $12,000 per year? This all before taxes and COLAs. 12 years - at age 82.
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Post by FD1000 on Nov 13, 2022 5:00:44 GMT
If I get $36,000 at 66 but get $48,000 at 70, how long does it take to make up $144,000 at $12,000 per year? This all before taxes and COLAs. 12 years - at age 82. The only ones who get it in 12 years are the ones with hardly or no savings + must use all their SS to live on. Someone who saves and invest SS, the break point is further.
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Post by mnfish on Nov 13, 2022 14:01:17 GMT
So, in my simplistic world I looked at PortVis and came up with a scenario between 2 - 62yo with $1m ports. 1 takes SS at 62 @ $30k a year and allows his port to re-invest the other will wait and take SS @ 67, withdraw $2,500 a year for 5 yrs and receive $800 per mo more in SS. Both invested it all in VWIAX 50/50 stock/bond fund with avg 2.5% yield. I started over each 5yr period with the results from the previous period.
62yo w/SS 62yo w/o SS $1,583,101 1st 5yrs $1,402,082 draw $2,500 mo $2,506,209 2nd 5yrs $2,277,564 incld's add'l SS benef $800 mo fixed contribution $3,967,582 3rd 5yrs $3,663,540 incld's add'l SS benef $800 mo fixed contribution
So, it appears that an additional $181k in 5 yrs re-invested by the 62yo w/SS returns about $300k more after 15 years?
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