Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 07-08-2016, 07:54 PM   #101
Recycles dryer sheets
 
Join Date: Sep 2014
Location: Miami
Posts: 94
Quote:
Originally Posted by unno2002 View Post
When I took early retirement (2012 – age 57),

Our present intent is to turn on SS payment at the earliest possible moment. Our thinking is that if we wait, we’re foregoing whatever cash we might receive, and such investment return those payments would earn. Whenever I’ve ran a spreadsheet based on SS “early” or at full retirement, using returns similar to our existing rental investments, early payments “win”.
I suggest you check your spreadsheet or look up spreadsheets others have done for you. 1) Are you really going to invest the SS payments or are you going to spend them? 2) what investment returns are you forecasting, what tax rates?
3) How long do models forecast you to live, if you are going to live into your late 80's or 90's taking SS in your late 60's or at 70 should payout the most.
__________________

__________________
FIRE July 2015
Blueskies123 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-09-2016, 09:30 AM   #102
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,642
Quote:
Originally Posted by unno2002 View Post
... If, year by year, the money that went to the SS had instead gone into savings bonds and I held those bonds, at my ("early") retirement in 2012 there would have been $406,234.15

Per the SS statement, supposedly five years later at age 62 I could start to receive $1,692 per month. Of course, if the wife & I die before I turn 62, everything in SS goes “poof”.

When I look at the amount taken in SS tax, I see what could have been the 2012 CASH purchase of four decent small rental units… That would have immediately been paying significantly more than $1,692/month, essentially indefinitely, and leaving a valuable inheritance for the kid…
It looks like you expect a $406,000 investment in rental properties to provide a pure profit of "significantly more" than $1,692 x 12 = $20,300 per year.

That's a return of more than 5%. Assuming you figure you can raise rents to keep up with inflation, that's a real return.

I'll agree with your spreadsheet. When I assume I can get a real return of "significantly more" than 5%, my spreadsheet says that taking SS early dominates waiting, regardless of how long we live.

I don't invest in rental units, so those returns aren't available to me.
__________________

__________________
Independent is offline   Reply With Quote
Old 07-10-2016, 07:33 PM   #103
Full time employment: Posting here.
 
Join Date: Jun 2014
Posts: 719
My full retirement age is 66 and I will take it then. Due to WEP it will be small. Right now I work p.t. and make 25K/year so no sense in taking it now at 62. If I quit working before 66 then I may rethink that.
__________________
Teacher Terry is offline   Reply With Quote
Old 07-20-2016, 04:09 PM   #104
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,524
Quote:
Originally Posted by Teacher Terry View Post
My full retirement age is 66 and I will take it then. Due to WEP it will be small. Right now I work p.t. and make 25K/year so no sense in taking it now at 62. If I quit working before 66 then I may rethink that.
It appears that there is a bi-partisan move in Congress to obtain more funds for the retirement of people who work in the public sector and a bill to eliminate WEP may just pass this year. As a matter of facts the congressmen misrepresent the calculation of social security, there is nothing that cuts benefits in 1/2 of social security if you only work half your life in covered social security jobs, social security it is a quick rising pension plan early in calculations that increases slowly after that with additions to the pension calculation, so this will be quite a benefit increase for the public pension crowd. 10 years at inflation indexed 60K per year gets you $953 month benefit while 20 years at inflation indexed 60K gets you $1,410 30 years gets you $1867

http://www.cnbc.com/2016/07/15/socia...ommentary.html
__________________
Running_Man is offline   Reply With Quote
25% of SS recipients sorry they took payments early...
Old 07-20-2016, 06:00 PM   #105
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 6,751
25% of SS recipients sorry they took payments early...

Quote:
Originally Posted by Running_Man View Post
It appears that there is a bi-partisan move in Congress to obtain more funds for the retirement of people who work in the public sector and a bill to eliminate WEP may just pass this year. As a matter of facts the congressmen misrepresent the calculation of social security, there is nothing that cuts benefits in 1/2 of social security if you only work half your life in covered social security jobs, social security it is a quick rising pension plan early in calculations that increases slowly after that with additions to the pension calculation, so this will be quite a benefit increase for the public pension crowd. 10 years at inflation indexed 60K per year gets you $953 month benefit while 20 years at inflation indexed 60K gets you $1,410 30 years gets you $1867

http://www.cnbc.com/2016/07/15/socia...ommentary.html


I hope you are right. This way it can be a near zero sum game for me and I am fine with that. Obamacare law sacked me for a 300% premium increase since a year ago last January. Now I could get more SS money to eventually get a decent chunk of it back. Provided I live long enough.


Sent from my iPad using Tapatalk
__________________
Mulligan is offline   Reply With Quote
Old 07-20-2016, 07:27 PM   #106
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,071
Quote:
break even is about 84 for total dollars from from JUST social security

but overall dollars breaks even at about 90
I'd love to see the assumptions and the math behind this assertion.

But, regardless, many people ask the wrong question: We shouldn't be trying to maximize the number of dollars (esp given that we usually don't know up front how long we will live). We should be trying to maximize utility--to get the best likelihood of greatest happiness. Having a larger inflation-adjusted monthly check for as long as we live can go a long way to offset market risks, etc that may be inherent in the rest of the portfolio, and such a larger monthly can also safely allow greater spending from the portfolio up front. For many, it is another means of diversifying.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 07-21-2016, 04:58 AM   #107
Recycles dryer sheets
 
Join Date: Apr 2016
Location: warren
Posts: 85
Quote:
Originally Posted by NW-Bound View Post
60 now, so only 2 more years before the question becomes real.

I may go for somewhere in between. Maybe 65? I dunno. Depends a lot on how the market moves.
+1 I'm the same age and just watching what happens in the next couple years. The election, terrorism, the market all may play a part, but obviously especially the market. Plan for now is to take it at 62 right now, then see what things look like in 3 years to decide what my wife does.
__________________
garyt is offline   Reply With Quote
Old 07-21-2016, 05:08 AM   #108
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 4,966
Quote:
it is true that you will get more dollars from social security it self if you wait until 70.

But your net overall financial position will be decreasing during that period from 62-70.

break even is about 84 for total dollars from from JUST social security

but overall dollars breaks even at about 90
depends on age .

it takes 22 -24 years to break even figuring a 6% return on a balanced portfolio being spent down delaying ss with 3% inflation .

by age 90 someone can see a 5% real return from ss which rivals stocks . . michael kitces did the comparison .




__________________
mathjak107 is offline   Reply With Quote
Old 07-21-2016, 07:08 AM   #109
Recycles dryer sheets
 
Join Date: Apr 2013
Location: Fishers
Posts: 284
Quote:
Originally Posted by samclem View Post
I'd love to see the assumptions and the math behind this assertion.

But, regardless, many people ask the wrong question: We shouldn't be trying to maximize the number of dollars (esp given that we usually don't know up front how long we will live). We should be trying to maximize utility--to get the best likelihood of greatest happiness. Having a larger inflation-adjusted monthly check for as long as we live can go a long way to offset market risks, etc that may be inherent in the rest of the portfolio, and such a larger monthly can also safely allow greater spending from the portfolio up front. For many, it is another means of diversifying.
+1

As long as your assets are sufficient for yourself or SO to last to 95+ regardless if one passes earlier, the equation definitely tips towards samclems response
__________________
wmc1000 is offline   Reply With Quote
Old 07-21-2016, 10:36 AM   #110
Thinks s/he gets paid by the post
Huston55's Avatar
 
Join Date: Jul 2011
Location: The Bay Area
Posts: 1,390
Quote:
Originally Posted by unno2002 View Post
When I took early retirement (2012 – age 57), I went thru my records (packrat that I am) re Social Security (SS). During my total working years the amount that went into SS “on my behalf” was $193,818.88. I did a spreadsheet using the historical interest rates for plain old savings bonds. If, year by year, the money that went to the SS had instead gone into savings bonds and I held those bonds, at my ("early") retirement in 2012 there would have been $406,234.15

Per the SS statement, supposedly five years later at age 62 I could start to receive $1,692 per month. Of course, if the wife & I die before I turn 62, everything in SS goes “poof”.

[COLOR=black][FONT=&quot]When I look at the amount taken in SS tax, I see what could have been the 2012 CASH purchase of four decent small rental units… That would have immediately been paying significantly more than $1,692/month, essentially indefinitely, and leaving a valuable inheritance for the kid…
Unno- Your profile says you live in Yuma, AZ. A quick bit of Zillow research confirms you could indeed buy four rental units & earn more than $1,692/mo NET, which would be a great investment in my view.

However, as Samclem notes below, that's perhaps not the right question when risk is considered.

First, you could not have known over the 2+ decades you contributed to SS that you would be able to get this return (or any return for that matter) on rental properties. Whereas, you always knew with virtual certainty you would receive a SS check.

Second, you need to factor risk into your income comparison. The risk of receiving an inflation adjusted SS check is virtually ZERO, whereas the risk of rental properties is significantly more than zero. One recent article suggested the rental risk premium is 3.5% but, it seems to be in the 2-5% range most of the time.

So, one way to evaluate your comparison of SS versus rental properties is to use a risk premium in the range above and see if you still think SS is such a bad "investment." Of course, it's not really an investment, it's insurance but, you see what I mean.

Having said all that, if I lived in Yuma & my quick Zillow research is indeed indicative of that real estate market, and I had $400k laying around, I'd seriously consider investing in rental properties.

Quote:
Originally Posted by samclem View Post
I'd love to see the assumptions and the math behind this assertion.

But, regardless, many people ask the wrong question: We shouldn't be trying to maximize the number of dollars (esp given that we usually don't know up front how long we will live). We should be trying to maximize utility--to get the best likelihood of greatest happiness. Having a larger inflation-adjusted monthly check for as long as we live can go a long way to offset market risks, etc that may be inherent in the rest of the portfolio, and such a larger monthly can also safely allow greater spending from the portfolio up front. For many, it is another means of diversifying.
__________________
You may be whatever you resolve to be.
Huston55 is offline   Reply With Quote
Old 07-21-2016, 12:38 PM   #111
Full time employment: Posting here.
GravitySucks's Avatar
 
Join Date: Feb 2014
Location: Syracuse
Posts: 551
Quote:
Originally Posted by samclem View Post
I'd love to see the assumptions and the math behind this assertion.

But, regardless, many people ask the wrong question: We shouldn't be trying to maximize the number of dollars (esp given that we usually don't know up front how long we will live). We should be trying to maximize utility--to get the best likelihood of greatest happiness. Having a larger inflation-adjusted monthly check for as long as we live can go a long way to offset market risks, etc that may be inherent in the rest of the portfolio, and such a larger monthly can also safely allow greater spending from the portfolio up front. For many, it is another means of diversifying.

+1
To me SS is insurance so the plan is to wait till 70. I see my parents in their 80 s living decently off incomes that are smaller than what my SS at 70 will be. If I blow the portfolio I want to be able to have that livable income.
__________________
“No, not rich. I am a poor man with money, which is not the same thing"
GravitySucks is offline   Reply With Quote
Old 07-21-2016, 04:05 PM   #112
Full time employment: Posting here.
 
Join Date: Jun 2014
Posts: 719
Running man: thanks so much for the link. Getting rid of WEP would be awesome for both my husband and I.
__________________
Teacher Terry is offline   Reply With Quote
Old 07-21-2016, 04:14 PM   #113
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 6,751
Quote:
Originally Posted by Teacher Terry View Post
Running man: thanks so much for the link. Getting rid of WEP would be awesome for both my husband and I.


It would be for me, also Terry. But I would bet there is a less than 5% chance. This has floated around congress for decades with no action. I suspect it would damage the already ailing trust fund and that alone I would guess (along with history of previous attempts) will prevent it from ever happening. But we can always hope, but not spend it yet.


Sent from my iPad using Tapatalk
__________________
Mulligan is offline   Reply With Quote
Old 07-21-2016, 07:48 PM   #114
Full time employment: Posting here.
 
Join Date: Jun 2014
Posts: 719
Mulligan you are raining on my parade) Ugh!!
__________________
Teacher Terry is offline   Reply With Quote
Old 08-27-2016, 11:33 PM   #115
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,355
Quote:
Originally Posted by Mulligan View Post
Ya, I knew I was screwed on SS long ago...But I was getting all excited about the "spousal benefit"...Hmm, maybe me and the long time GF should get married....Wait, GPO? What the hell is that? Crap that kills that idea. Looks like no marriage plans for me...Wait, hold up....but now if Obamacare keeps flying through the roof, paying for a ring to get that $175 a month spousal health insurance with $200 or so yearly deductible may mean marriage is not permanently off the table yet!


Sent from my iPad using Tapatalk
Getting married for the first time at age 70 none of that stuff entered my mind. Silly me . Neither did my previous GF of 29 years allow such considerations.

heh heh heh - managed to ER any how.
__________________
unclemick is offline   Reply With Quote
Old 08-28-2016, 01:21 PM   #116
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 6,751
Quote:
Originally Posted by unclemick View Post
Getting married for the first time at age 70 none of that stuff entered my mind. Silly me . Neither did my previous GF of 29 years allow such considerations.



heh heh heh - managed to ER any how.


First time at 70? Wow.. Well I am sure it was 100% the correct choice as you patiently waited. My GF and I being divorcees have separated the love from the marriage thing. If there is no financial benefit to exploit from a marriage based contract subject to govt rules we are passing. Who knows in 28 years when I am 70 I might follow you. One never knows....


Sent from my iPad using Tapatalk
__________________
Mulligan is offline   Reply With Quote
Old 08-29-2016, 10:38 AM   #117
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 5,346
Quote:
Originally Posted by Mulligan View Post
It would be for me, also Terry. But I would bet there is a less than 5% chance. This has floated around congress for decades with no action. I suspect it would damage the already ailing trust fund and that alone I would guess (along with history of previous attempts) will prevent it from ever happening. But we can always hope, but not spend it yet.


Sent from my iPad using Tapatalk
WEP corrects a quirk in the SS law that unfairly benefits people who have worked at jobs where contributions to SS are not required.

Simply put, SS is designed to give low-income people a better deal than others. It's part of the way we keep older people out of poverty. Otherwise, people who can legally avoid paying into SS during their working life, despite having a good pension (hopefully enhanced by all the money they did not have to pay to SS) would look like low-income people, which they are not.

WEP is simply a way of saying "Look, despite all those zeros in your yearly SS contribution column, we know that you were working and that what would have been SS contributions was available to be used for other retirement investements, so we are not going to treat you the same way we would treat a person who has actually not earned much money in those years."

It is unreasonable to not pay into SS while working, get an enhanced pension or other retirement benefit thanks to being able to invest the what would have been SS contribution money, and then expect to get the better SS deal truly low-income people get, since those exempt from SS contributions are not truly low-income people.

Do the math taking into account the entire retirement compensation picture. Eliminating WEP would be grossly unfair to all of the others who have had to contribute to SS.

The best 'cure' for WEP (and GPO) would be to eliminate the SS exemption for government workers. Then there would be no need for WEP or GPO to correct an unfair situation.
__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline   Reply With Quote
Old 08-29-2016, 10:58 AM   #118
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 6,751
Actually, I agree...But from a more simplistic viewpoint of I knew what I was getting into. If I didnt like it, I should have chosen a different career.
Now some people though have a legitimate beef I suppose. If you split your career in 2 states, with the one state taking SS out and other not then yes you get unfairly hosed a bit. Teaching 15 yrs in 2 separate states, would penalize you.
But nothing would ever be fair... SS for "Viagra trust fund babies", stay at home moms who never have children getting benefits, etc. etc. the list never ends in fairness or unfairness.
But yes, it escapes me totally why mandatory SS contributions were imposed on workers, yet a select group of people were allowed to vote out of it boggles the mind...


Sent from my iPad using Tapatalk
__________________
Mulligan is offline   Reply With Quote
Old 08-29-2016, 11:23 AM   #119
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 5,346
[QUOTE=Mulligan;1774143]Actually,
But yes, it escapes me totally why mandatory SS contributions were imposed on workers, yet a select group of people were allowed to vote out of it boggles the mind...
/QUOTE]

IIRC, correct me if I am wrong, many of those plans opted out years ago. I wonder how many modern workers would vote to opt-out of SS if they had to vote today? At least the opt-out should be up to the individual - "Opt-out and get xx% more pension every year from the State of Anxiety! Stay in SS and get the base amount of your pension." OTOH, many states are going to hybrid DC/DB plans so maybe this is not as big a problem for the future?

The real losers are people like the pensioners who worked for Detroit. Their pension was cut and they did not participate in SS so they don't have SS as a descent income source to fall back on.

If I worked for a government that opted out of SS and was not running its pension plan well - using reasonable rates of return, making the required contributions, etc. (Illinois, I'm looking at you!) I would be very worried.

To get back on topic: I suspect many people who took SS early probably needed the money desperately, or had no present or future need for SS, or bought into the "They will probably cut or cancel it soon, so I will get mine while I can still can" belief.
__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline   Reply With Quote
Old 08-29-2016, 11:33 AM   #120
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 6,751
Yes, I believe it was all done decades ago. Our system had a one time vote over 60 years ago and was never addressed again.


Sent from my iPad using Tapatalk
__________________

__________________
Mulligan is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Any municipal pension recipients working on 'plan Bs'? jon-nyc FIRE and Money 25 10-03-2013 08:38 PM
States Consider Drug Tests for Welfare Recipients samclem FIRE Related Public Policy 46 04-03-2009 08:20 PM
Stimulus for SS Recipients OAG FIRE and Money 2 02-19-2009 05:06 PM
SS recipients get 2.3% raise... Achiever51 FIRE and Money 6 10-18-2007 10:02 AM

 

 
All times are GMT -6. The time now is 01:59 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.