Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 08-04-2016, 10:30 AM   #61
Recycles dryer sheets
lem1955's Avatar
 
Join Date: Mar 2007
Posts: 117
Send a message via Yahoo to lem1955
Quote:
Originally Posted by racy View Post
FWIW, Laurence Kotlikoff's MaximizeMySocialSecurity website & service uses 100 years as the default death age. Their view is that SS is longevity insurance. Here's what they say in their FAQs section:
"An analogy may help convey our position. Consider homeowners insurance. No one analyzes buying homeowners insurance from a breakeven perspective because we don't have thousands of homes over which to pool the risk of small and worst case losses, such as our house burning to the ground. Because we only have one house, we can't play the odds. We can't decide whether buying a homeowners policy will break even on average. If we made such a calculation we'd never buy homeowners insurance. Why? Because the cost of homeowners insurance always exceeds the expected payout on the policy we buy due to the insurance company needing to charge its fee.
What holds for homeowners insurance holds for longevity insurance. We only have one life to lose, not thousands, so we can't pool risk over when we will die. We will die just once and it may well be at 100 or whatever is our maximum age of life. This is why our software values Social Security benefits through one's maximum, not one's expected age of life. This is not just our company's policy. This is also precisely what the economics and financial theory of longevity risk tells us to do."
I definitely see SS as longevity insurance and plan to wait until 70 to claim. My grandmother died at 105. I am physiologically young at 61. I may have to plan on 110 years on the planet. Plus, I don't expect my conservatively invested portfolio to grow at 8% annually, whereas, SS should. I do think I will decrease my total portfolio over the course of the next nine years and thereby reduce my RMD's so the tax hit is less when I take that larger SS payout.
__________________

__________________
Retired 12/16/2015 at 60.
lem1955 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 08-04-2016, 11:23 AM   #62
Recycles dryer sheets
 
Join Date: Jul 2013
Posts: 171
I am 56 and my wife is 53. I am retiring in December. I will take SS at 62 because I fear that it will be played with for high income earners. SS played no role in my retirement decision . For people in the same situation it would not surprise me if the benefits are curtailed or changed in some way. I know the argument that "they can't change it for people over 50" but to pay for all of the programs being promised (i.e. free college etc....) the money will need to come from somewhere. For my entire working life I have been a part of that "somewhere". I suspect I will also be part of that "somewhere" during retirement.

I am jumping on the bandwagon as early as possible to get some of my money back.
__________________

__________________
phil1ben is offline   Reply With Quote
Old 08-04-2016, 11:32 AM   #63
Thinks s/he gets paid by the post
nash031's Avatar
 
Join Date: Jun 2013
Location: Coronado
Posts: 1,309
SS may well be longevity insurance for most. Those with DB pensions, especially COLA-adjusted and particularly with survivor benefits may not need it to serve that purpose. Or, it may well serve that purpose in lieu of a survivor benefits plan. It's a complex puzzle, to be sure.


We have to decide soon whether to opt in to survivor benefits on my military pension. My initial thought is that we will, which would lean me more towards taking SS early as DW would then have a COLA-adjusted pension plus her SS which she could defer until later if I start taking early. Those two combined would probably come pretty close to her baseline expenses if/when I die before her.


Plan A is to make none of this matter. :-)
__________________
"So we beat to our own drummer in the sun;
We ask for nobody's permission to run.
I just wanna live in a world like that;
Now I'm gonna live in a world like that!" - World Like That, O.A.R.
nash031 is offline   Reply With Quote
Old 08-04-2016, 12:56 PM   #64
Recycles dryer sheets
Pilot2013's Avatar
 
Join Date: Mar 2015
Location: Greenville
Posts: 227
I'm not sure I can "not plan SS" as according to current estimates it will be $60k of income when both are up and running.
__________________
Pilot2013 is offline   Reply With Quote
Old 08-04-2016, 01:29 PM   #65
Recycles dryer sheets
 
Join Date: Oct 2014
Posts: 212
Quote:
Originally Posted by nash031 View Post
SS may well be longevity insurance for most. Those with DB pensions, especially COLA-adjusted and particularly with survivor benefits may not need it to serve that purpose. Or, it may well serve that purpose in lieu of a survivor benefits plan. It's a complex puzzle, to be sure.


We have to decide soon whether to opt in to survivor benefits on my military pension. My initial thought is that we will, which would lean me more towards taking SS early as DW would then have a COLA-adjusted pension plus her SS which she could defer until later if I start taking early. Those two combined would probably come pretty close to her baseline expenses if/when I die before her.


Plan A is to make none of this matter. :-)
Sort of similar situation except we have 2 COLA military pensions. Neither of us elected the survivor benefit option for the following reason: Not a good deal. The surviving spouse gets half of your 50%. So estimated 70K for you. She would get 35K. Check the monthly cost. Didn't work for us. Cheaper to get an insurance policy.

Our plan is for me to take at 62. DW is 6 years younger. She will take at 70. At FRA we are close to the same. She will also have a gov pension at 57 to go with her military pension. DW taking the larger amount at 70 will offset loss of my pension at death (estimated at early/mid 80's) and end of term insurance policy. If I go before she takes SS at 70, she will then take SS at that point and have her current military pension and gov pension at 57 and still be inside of the term insurance policy.

If DW goes before me, I have a life insurance policy on her up until I turn 62. We also have 2 rental properties with 200K plus equity (now) (currently only $200/mo pos cash flow) that I would sell in the event of lose of DW.

At 50(me) and 44(DW) we still have many years to change our plans.

Best of luck with your SS and survivor benefit decisions.
__________________
-Big Dawg-FI since 9/2010. ER in 2015(failed-mentally not $$). Now back for TMY's.

" People say I'm lazy, dreaming my life away Well, they give me all kinds of advice designed to enlighten me When I tell them that I'm doing fine watching shadows on the wall "Don't you miss the big time, boy. You're no longer on the ball" -John Lennon-
Bigdawg is offline   Reply With Quote
Old 08-04-2016, 01:39 PM   #66
Thinks s/he gets paid by the post
 
Join Date: Feb 2013
Posts: 4,681
Quote:
Originally Posted by Pilot2013 View Post
I'm not sure I can "not plan SS" as according to current estimates it will be $60k of income when both are up and running.
+1. I don't have enough other retirement income to not even consider SS. The NPV of SS for a couple each making max benefits would be well over $1M, and even at the lower ends is over $.5M:

" At a maximum Social Security benefit of $2,642/month (for those who maxxed out the Social Security wage base for 35 years), the value of Social Security amounts to about $572,000 for men and $683,000 for women!"

Source: https://www.kitces.com/blog/valuing-...balance-sheet/
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
daylatedollarshort is offline   Reply With Quote
Old 08-04-2016, 01:53 PM   #67
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,079
Quote:
Originally Posted by Bigdawg View Post
Sort of similar situation except we have 2 COLA military pensions. Neither of us elected the survivor benefit option for the following reason: Not a good deal. The surviving spouse gets half of your 50%. So estimated 70K for you. She would get 35K. Check the monthly cost. Didn't work for us. Cheaper to get an insurance policy.
Foregoing the SBP might work for your family due to the overlapping pensions, etc, but there is >no way< that an insurance policy bought by a person about to retire can provide the benefits of the SBP for a lower price than SBP premiums. It would need to be linked to some sort of (government backed) lifetime annuity with a full COLA. I'd love to see the math on that. And, the SBP premiums are tax deductible, which makes the difference even greater. So, yes, I'd encourage everyone to "check the monthly cost"--and the benefits that are being purchased. After doing that, we bought the SBP.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now   Reply With Quote
Old 08-04-2016, 02:38 PM   #68
Moderator Emeritus
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 15,626
Quote:
Originally Posted by ducky911 View Post
My wife is three years younger and half of mine is a bit higher than all of hers. The optimum is.
1. For here to file for ss at 62
2. For me to file for spousal off of hers at 66
3. For me to file at 70 and her to go onto spousal at the time
Have you already done this? I imagine you have fully investigated it if not, but you might not have these options any more. This article talks about changes to SS this year and has some links to calculators within it: Social Security's New Rules Call for a Calculator

I only mention this because we found it complicated to fgure out when the laws started changing early this year. We were still able to file strategically because I was older than 62 by the deadline and waited til my FRA to begin collecting (first check next month! yay!), first restricted to DH's record (who had started collecting at his FRA) and when I turn 70, to switch to my own (which will by then exceed half of DH's). This was as close to optimum as it would get for us.
__________________

Bestwifeever is offline   Reply With Quote
Old 08-04-2016, 02:48 PM   #69
Thinks s/he gets paid by the post
nash031's Avatar
 
Join Date: Jun 2013
Location: Coronado
Posts: 1,309
Quote:
Originally Posted by samclem View Post
Foregoing the SBP might work for your family due to the overlapping pensions, etc, but there is >no way< that an insurance policy bought by a person about to retire can provide the benefits of the SBP for a lower price than SBP premiums. It would need to be linked to some sort of (government backed) lifetime annuity with a full COLA. I'd love to see the math on that. And, the SBP premiums are tax deductible, which makes the difference even greater. So, yes, I'd encourage everyone to "check the monthly cost"--and the benefits that are being purchased. After doing that, we bought the SBP.
Interesting discussion, guys. Thanks!

I'm leaning toward going with SBP. We have term life insurance to carry us through 62/59, which carries us through incoming DD's college years. We aren't planning any life insurance once those expire, and we will probably cancel them earlier if/when we reach FI-plus enough.

I did not know the "premium" was tax-deductible. That's a good little nugget. Given that men generally die before women, and the women in her family demonstrate better longevity than the men in mine, I'm guessing she'll outlive me by 10-13 years. In that case, I think SBP makes the most sense, along with me taking SS early and delaying hers even though I am currently the primary breadwinner. She may work much longer and eventually eclipse my SS payment anyway, especially since our allowances aren't included in the SS calculation, but make up a significant portion of our pay.

Admittedly, I have much more digging to do into SBP before decision time.
__________________
"So we beat to our own drummer in the sun;
We ask for nobody's permission to run.
I just wanna live in a world like that;
Now I'm gonna live in a world like that!" - World Like That, O.A.R.
nash031 is offline   Reply With Quote
Old 08-04-2016, 06:10 PM   #70
Recycles dryer sheets
ducky911's Avatar
 
Join Date: May 2010
Posts: 355
Quote:
Originally Posted by Bestwifeever View Post
Have you already done this? I imagine you have fully investigated it if not, but you might not have these options any more. This article talks about changes to SS this year and has some links to calculators within it: Social Security's New Rules Call for a Calculator

I only mention this because we found it complicated to fgure out when the laws started changing early this year. We were still able to file strategically because I was older than 62 by the deadline and waited til my FRA to begin collecting (first check next month! yay!), first restricted to DH's record (who had started collecting at his FRA) and when I turn 70, to switch to my own (which will by then exceed half of DH's). This was as close to optimum as it would get for us.
The new rules are hard to understand and I can see how you think they apply to me.

quote
  • The rules affect individuals filing for Social Security benefits on or after May 1, 2016. Benefits may still be suspended between ages 66 and 70 to earn DRCs; however, spousal benefits generally can no longer be collected while the primary benefit is suspended.
I think the word primary is key



Two things. First; my wife will not be collecting spousal benefits while my benefits are suspended. Second; I will not be collecting spousal benefits from her until see files and collects.


I have had this confirmed this year by Maximize your Social Security software.


But still reading this I am not completely sure and will confirm just before decision time next year.
__________________
You've got to ask yourself one question: Do I feel lucky? Well, do ya, punk?

Retired July '11 investments 60/40 in very low cost index and mutual funds, balance once a year at best.
ducky911 is offline   Reply With Quote
Old 08-04-2016, 06:46 PM   #71
Full time employment: Posting here.
 
Join Date: Jun 2014
Posts: 734
also if you earn I think it is more then 15k/year and take it early that they take a dollar for every 2 you make over that amount. For that reason I wont take it until FRA unless I quit teaching my college class before that time.
__________________
Teacher Terry is offline   Reply With Quote
Old 08-04-2016, 07:21 PM   #72
Moderator Emeritus
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 15,626
Quote:
Originally Posted by ducky911 View Post
The new rules are hard to understand and I can see how you think they apply to me.

quote
  • The rules affect individuals filing for Social Security benefits on or after May 1, 2016. Benefits may still be suspended between ages 66 and 70 to earn DRCs; however, spousal benefits generally can no longer be collected while the primary benefit is suspended.
I think the word primary is key



Two things. First; my wife will not be collecting spousal benefits while my benefits are suspended. Second; I will not be collecting spousal benefits from her until see files and collects.


I have had this confirmed this year by Maximize your Social Security software.


But still reading this I am not completely sure and will confirm just before decision time next year.
It is complicated, for sure. There are qualifiers (dob needing to be before 1/1/54, waiting til FRA, etc., etc.) that made our heads spin deciding when to file! There are new rules about suspending benefits (https://www.ssa.gov/planners/retire/suspendfaq.html) and about the filer being deemed to be filing for the max and not being able to change it later (https://www.ssa.gov/planners/retire/deemedfaq.html)
but I am sure the Maximize Your Social Security software took them into consideration when you ran your numbers. Just mentioned this because we just went through it.
__________________

Bestwifeever is offline   Reply With Quote
Old 08-04-2016, 09:02 PM   #73
Dryer sheet aficionado
hpnutty's Avatar
 
Join Date: Oct 2011
Location: Houston, TX
Posts: 29
Quote:
Originally Posted by racy View Post
FWIW, Laurence Kotlikoff's MaximizeMySocialSecurity website & service uses 100 years as the default death age. Their view is that SS is longevity insurance. Here's what they say in their FAQs section:
"An analogy may help convey our position. Consider homeowners insurance. No one analyzes buying homeowners insurance from a breakeven perspective because we don't have thousands of homes over which to pool the risk of small and worst case losses, such as our house burning to the ground. Because we only have one house, we can't play the odds. We can't decide whether buying a homeowners policy will break even on average. If we made such a calculation we'd never buy homeowners insurance. Why? Because the cost of homeowners insurance always exceeds the expected payout on the policy we buy due to the insurance company needing to charge its fee.
What holds for homeowners insurance holds for longevity insurance. We only have one life to lose, not thousands, so we can't pool risk over when we will die. We will die just once and it may well be at 100 or whatever is our maximum age of life. This is why our software values Social Security benefits through one's maximum, not one's expected age of life. This is not just our company's policy. This is also precisely what the economics and financial theory of longevity risk tells us to do."
Wouldn't it be better to use 120 years as the maximum age?
Genesis 6:3 (New International Version)
Then the LORD said, "My Spirit will not contend with humans forever, for they are mortal; their days will be a hundred and twenty years."

https://en.wikipedia.org/wiki/Oldest_people
__________________
hpnutty is offline   Reply With Quote
Old 08-04-2016, 09:15 PM   #74
Thinks s/he gets paid by the post
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 2,402
DW took SS at 62 and I will wait until 70. Biggest factor is to increase DW's survivor benefit when I die. We made a calculated-risk decision NOT to enhance my pension's survivor benefit. Thus, the better survivor benefit within SS balances out that decision. Getting right down to it, we have not needed my SS yet AND it has allowed us to spend down some qualified money to avoid more taxes as RMDs go into effect. It's all quite complicated when you realize you are somewhat blind (how long will we live, will SS change, will taxes go up or down, etc. etc.) None of us has a crystal ball, so we do the best we can with the info we have. I suppose the good news is that we have had choices. That means we have had enough resources to allow those choices to be made. Not everyone is that fortunate, so I feel very blessed. YMMV
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote
Old 08-04-2016, 09:47 PM   #75
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 13,752
Quote:
Originally Posted by ShokWaveRider View Post
Not in our case. At our current expense rate IRAs will last 36 years. Cash and cash equivalents will last another 36 years and that does not take into account SS or the return on the funds at all.
But it is not how many years your IRA will last that is important... what is important is how many years are there if you do Roth conversions if the amount you would convert each year exceeds what you need to live. You can convert and not spend it just like you can withdraw and not spend it but reinvest it in taxable accounts... either way you pay the same amount in tax whether you withdraw or convert.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
pb4uski is online now   Reply With Quote
Old 08-04-2016, 09:47 PM   #76
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 13,752
Quote:
Originally Posted by hpnutty View Post
Wouldn't it be better to use 120 years as the maximum age?
Genesis 6:3 (New International Version)
Then the LORD said, "My Spirit will not contend with humans forever, for they are mortal; their days will be a hundred and twenty years."

https://en.wikipedia.org/wiki/Oldest_people
That's nutty.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
pb4uski is online now   Reply With Quote
Old 08-04-2016, 10:23 PM   #77
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,079
Quote:
Originally Posted by nash031 View Post
Admittedly, I have much more digging to do into SBP before decision time.
If you want to do some detailed crunching, the best site I've found for SBP analysis is the DoD Actuary's page (click on the "SBP" tab at the top right).
Plenty of ability to put in your own numbers and see "what if's."
On the spreadsheet, note the "subsidy" page--that tells you a lot about whether the program is a "good deal" or not. For most couples, it is.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now   Reply With Quote
Old 08-05-2016, 07:09 AM   #78
Thinks s/he gets paid by the post
 
Join Date: Jun 2003
Location: St. Augustine, Fla.
Posts: 1,213
Quote:
Originally Posted by pb4uski View Post
But it is not how many years your IRA will last that is important... what is important is how many years are there if you do Roth conversions if the amount you would convert each year exceeds what you need to live. You can convert and not spend it just like you can withdraw and not spend it but reinvest it in taxable accounts... either way you pay the same amount in tax whether you withdraw or convert.

That is a good point. It is like putting it in a bank account really. Hmmm. Thanks
__________________
"Arguing with an Engineer is like rolling in the mud with a pig. Just remember that the pig likes it."
ShokWaveRider is offline   Reply With Quote
Old 08-05-2016, 08:23 AM   #79
Thinks s/he gets paid by the post
Htown Harry's Avatar
 
Join Date: May 2007
Posts: 1,509
I find it interesting that statistical studies like this rarely mention smoking history as a consideration in estimating life expectancy and break-even claiming analyses. CDC says between 15 and 20% of US adults are smokers and that smoking reduces life expectancy by 10 years or more.

Those are statistics reflected in the overall mortality statistics, of course, but it seems to me that researchers and advice-givers are missing a significant individual case variable in their analysis of optimal claiming strategies.

In other words, logic says a non-smoker should tilt toward choosing a later claiming age and a smoker toward early claiming. I don't recall ever seeing this discussed or evaluated in any detail.
__________________
No doubt a continuous prosperity, though spendthrift, is preferable to an economy thriftily moral, though lean. Nevertheless, that prosperity would seem more soundly shored if, by a saving grace, more of us had the grace to save.

Life Magazine editorial, 1956
Htown Harry is offline   Reply With Quote
Old 08-05-2016, 08:49 AM   #80
Recycles dryer sheets
 
Join Date: Oct 2014
Posts: 212
Quote:
Originally Posted by samclem View Post
Foregoing the SBP might work for your family due to the overlapping pensions, etc, but there is >no way< that an insurance policy bought by a person about to retire can provide the benefits of the SBP for a lower price than SBP premiums. It would need to be linked to some sort of (government backed) lifetime annuity with a full COLA. I'd love to see the math on that. And, the SBP premiums are tax deductible, which makes the difference even greater. So, yes, I'd encourage everyone to "check the monthly cost"--and the benefits that are being purchased. After doing that, we bought the SBP.
U r right. SBP didn't work for us and what we have done will not work for most. Not an apples to apples comparison. For 1/6th the monthly cost of SBP I have a 1mil decreasing term policy that will take us up to DW's planned SS draw at age 70. Estimated to be over 3k/mo. The points you made about SBP seem to make sense for a guy like Nash(assuming his DW is not military).
__________________

__________________
-Big Dawg-FI since 9/2010. ER in 2015(failed-mentally not $$). Now back for TMY's.

" People say I'm lazy, dreaming my life away Well, they give me all kinds of advice designed to enlighten me When I tell them that I'm doing fine watching shadows on the wall "Don't you miss the big time, boy. You're no longer on the ball" -John Lennon-
Bigdawg is offline   Reply With Quote
Reply

Tags
social security


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
Making the mistake of being informed hotwired Other topics 4 11-23-2011 08:00 AM
Am I making a big mistake? Caroline Health and Early Retirement 24 08-07-2007 10:22 AM
Am I making a mistake? semtex FIRE and Money 75 04-03-2007 06:09 PM
Building new house- am I making a mistake boutros Young Dreamers 15 05-30-2006 09:46 PM

 

 
All times are GMT -6. The time now is 11:27 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.