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Old 09-23-2011, 09:53 PM   #21
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Of course, the break even point changes depending upon the assumptions that one makes, but I have read several articles that have advised people who think they will live past 80 to delay SS until full retirement age. Thus, your calculation seems to be in the ball park.
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Old 09-23-2011, 09:56 PM   #22
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In my case, I must take my pension early because that is the only way to get the medical insurance I will need from retirment to Medicae eligibility. Because of that, I have decided to hold off on SS until I am at least 66 and perhaps beyond that if my pot of money holds out. This assumes my health stays good. The future is unknowable, so a delayed and higher SS payment will counter an earlier and reduced pension payment. Also, SS has no COLA cap which could prove another great advantage in the future. My pension has a partial COLA, up to 3% a year.
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Old 09-23-2011, 11:44 PM   #23
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My original plan was to take SS at 62. Then depending on my health at age 69 probably pay back the SS and refile for a higher benefit. Of course that option is no longer available. FYI, HaHa I suspect is one of the last 100 or so people in the country to get away with that neat little trick.

My new plan is wait until I am 60 (8 years) and see what the new laws look at that point and not worry about it then.
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Old 09-24-2011, 03:25 AM   #24
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This is also the approach I am using. I am 46 now, and quite a few things may change by the time I reach 62.
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My new plan is wait until I am 60 (8 years) and see what the new laws look at that point and not worry about it then.
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Old 09-24-2011, 09:58 AM   #25
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your plan flys in the face of alot of advice (and analysis) for situations involving married people where the larger wage earner is older than the spouse. longevity insurance for the "poorer" spouse has real value.

btw what rate of return are you assuming for your portfolio? it has to be high considering that SS is increased about a real 7.3% per year (compounded anually for the 8 years) if you wait til age 70 to start taking it. a 7.3% real "return" looks really good at the moment.
I assume 3% inflation and 2.9% return above inflation. Maybe too high. I will re-run the numbers for varying rates of return. Thanks!
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Old 09-24-2011, 12:55 PM   #26
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I assume 3% inflation and 2.9% return above inflation. Maybe too high. I will re-run the numbers for varying rates of return. Thanks!
well then, did you figure the proper rise in SS payments given your inflation assumption? in real terms, for every $1 you would get from SS if you start taking it at age 62 you will get ~$1.76 if you wait till age 70 to start. when you include your assumed 3%/yr inflation, the age 70 starting SS payout increases (yes the SS pay out gets COLAs whether you are taking it or not) from that ~$1.76 to ~$2.23, in nominal terms. so, if you wait, you will get more than twice the payment from SS for the rest of your (and your wife's) lifetime.
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Old 09-24-2011, 01:55 PM   #27
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Oi whutabuncha beancounters. Just got a note from SS to the effect that I can expect my first SS check in December of this year. Taking it at 62, as I suspect qualifications and restrictions for receiving it will become greater rather than less. Also don't anticipate a life span greater than SS actuarial tables. Also think our cat will appreciate the governmental funding of her cat food budget.

Big believer in the "nobody ever went bust taking a profit" maxim.

The gal just got a check last week for cashing in her life insurance, I'll be sending in to cash out on mine October 5th. We waited and are waiting for the 30 day window that allows us to collect the dividend earned for the current year of life insurance. Decades ago having a $25k life policy that the other could collect on made sense, now, as the premiums are going up and our assets are adequate, it doesn't make sense. We'll take our cash value now, thanks.
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Old 09-24-2011, 02:56 PM   #28
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62-70?

Does the 62-70 switcharoo still work? My wife is slightly older than me (6 months), and her SS will be about 1/2 of mine. Her primary concern about early retirement if running out of money if I kick the bucket early. Realistically, that should not be a concern. But for the sake of her peace of mind, the ability to maintain a decent pension/SS cash flow in the event of my early passing is part of the plan.

I have the option of drawing my pension several different ways. I can take an offset which pays more until 62, then less for the balance of my life (and my wife's). Not taking the offset will give us a bit less cash until age 62, but the long term payout remains higher. So I do not take the offset option. Next, I have the option of 0, 55, or 75% survivor benefit. I will take the 75% option. If I die first, she will receive 75% of my pension for the rest of her life.

If the 62/70 SS plan is still valid, I believe she can begin drawing on her SS record when she turns 62. Then I can draw 1/2 of that (when I reach full retirement age?). When I turn 70, I draw the increased amount from my record, and she draws half. On my passing, she would draw the full amount of my SS. As I said, if the 62/70 plan is still available. I really see it as a crap-shoot as to what the ages and rules might be six years from now, when she turns 62.

I am also cultivating an income generating venture. My hope is to generate enough income actively such that following my ER, my pension plus the active income equals or exceeds my previous paycheck. Then the need for SS is diminished, and we can delay that to whatever benefit we feel is appropriate. The need to draw down from investments is also minimized. In the event of my passing, there are several alternatives for the venture, one of which includes a guaranteed 15 year annuity at about 5% return. Or it can be cashed out, depending on what my wife might want to do. If I can tolerate w@rking at megacorp for another 18 months, I might even have the opportunity to double dip prior to retirement, which would build the reserves quite nicely. For now I am step 8 of a 73 step plan...
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Old 09-24-2011, 04:57 PM   #29
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Oi whutabuncha beancounters. Just got a note from SS to the effect that I can expect my first SS check in December of this year. Taking it at 62, as I suspect qualifications and restrictions for receiving it will become greater rather than less.
My feelings exactly ( I was even a been counter before ER at the end of 2002). I also plan on taking SS at 62 next year. I find it difficult to believe that current benefit promises can be maintained far into the future given current fiscal conditions not only in the US but in the rest of the world. The promises of SS payments starting untouched 9 years from now I take with a large grain of salt, promises for payment starting next year less so.

In addition, if I were to delay taking SS to age 70 I would have to start taking additional withdrawals from my own investments. I would rather maintain control of my own funds rather than use them up and rely on promises that may or may not come to pass. My budget works with taking SS at 62 I'll let somebody else collect the big bucks.
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Old 09-25-2011, 03:59 PM   #30
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I worked up a pretty comprehensive spreadsheet of when to take SS comparisons, 62 vs. 66 vs. 70. https://spreadsheets.google.com/ccc?...0d19pTnc&hl=en

There is a cell where you can plug in your assumptions for SS COLA and the earnings you expect to make.

The break-even point is a dismayingly long time. Around 16 to 18 years. That amounts to roughly age 84. Not so good when you consider that the life-expectancy is 81 (for a 62 y.o.) to 83 (for a 70 y.o.)

If you can earn at least 6%-7%, the break-even point approaches infinity.

To my mind, there is now a major risk that SS payments will be drastically cut. But even if that happens, it will only apply to payments after the date of the change. Any money that you colllected before that won't be clawed back, so you'll get to keep the money that has been paid to you.
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Old 09-25-2011, 04:05 PM   #31
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There is a point that these conversations elide over, that I kinda think makes the whole thing moot.

You only have the option of delaying SS if you don't need the SS income. If you are retired at 62 and need to get SS for living expenses, then you don't have the option of delaying until 70.

Therefore, for all practical purposes, if you don't need SS at 62 then you (alomost certainly) don't need it at 70, either. And since the SS is therefore "optional" income, it is of little importance when you start taking it. IMHO
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Old 09-25-2011, 04:08 PM   #32
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For me this is easy as I am divorced and have no one that would benefit from my SS. I'm taking it at 62 because I can. Do I need it? No, though my pension is reduced at age 62 whether I take SS or not so it would require me to take a small amount from investments that are taxable to make up the diff.

My break even is age 78 if taking it at 62 and I can't imagine living that long. On my father's side some are still alive well into their 90's, on my mother's side they lived into early to late 80's. But then my father died at 54 of a heart attack, he smoked and had stress with 3 kids but still..... I'm very healthy, don't smoke or use drugs, a vegetarian for over 25 years, walk on the treadmill daily, grow a lot of my food organically, have very few aches and pains compared to peers, I think I'm more like a 40 year old but maybe not.

Despite all that, I can't imagine being 80. When I was 18 I couldn't imagine being 35. When I was 35 I couldn't imagine being 60. Today at 60 I can't imagine being 80.

My theory is grab the money ASAP and invest it, the time value of money is hard to estimate but I think a bird in the hand.... I'll draw less from investments and maybe that'll allow me to leave a bigger inheritance for siblings that are younger than me. If I do live beyond 78 then I made a mistake but until age 78 I know I'm making the right decision!
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Old 09-25-2011, 04:34 PM   #33
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There is a point that these conversations elide over, that I kinda think makes the whole thing moot.

You only have the option of delaying SS if you don't need the SS income. If you are retired at 62 and need to get SS for living expenses, then you don't have the option of delaying until 70.

Therefore, for all practical purposes, if you don't need SS at 62 then you (alomost certainly) don't need it at 70, either. And since the SS is therefore "optional" income, it is of little importance when you start taking it. IMHO
By "need to get SS for living expenses", you mean NO nestegg at all? Pretty grim, I agree. Because if you have any nestegg, many would spend it down until SS is claimed, and then build it back up to where it was after that.
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Old 09-25-2011, 04:40 PM   #34
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There is a point that these conversations elide over, that I kinda think makes the whole thing moot.

You only have the option of delaying SS if you don't need the SS income. If you are retired at 62 and need to get SS for living expenses, then you don't have the option of delaying until 70.

Therefore, for all practical purposes, if you don't need SS at 62 then you (alomost certainly) don't need it at 70, either. And since the SS is therefore "optional" income, it is of little importance when you start taking it. IMHO
There is some truth to what you say. But let's not forget all those FIRECalc possible paths in our future. Sometimes we might think we are in fat city and then a decade like the last comes along to change assumptions.

In our case delaying for a few years helps in some tax ways. The choice is (1) take SS now and blend IRA+SS+Roth money to get at a decent marginal tax rate, (2) take it later and so reduce RMD's at age 70 by spending down the IRA a bit while avoiding using Roth money. I figure when I take SS I'll have to use the Roth's as planned to keep the marginal tax rate in the lowish range. Of course, tax rates will probably change and they'll probably go up. I'm figuring the SS will not be attacked directly but rather through the following (1) tax it all instead of just up to 85%, (2) revise the inflation adjustment, (3) ask younger people to work a bit longer before receiving SS.

Those assumptions are based on us not having a bad crisis as we see in Greece right now.

BTW rayvt, I took a look at your nice spreadsheet.
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Old 09-25-2011, 04:53 PM   #35
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By "need to get SS for living expenses", you mean NO nestegg at all? Pretty grim, I agree. Because if you have any nestegg, many would spend it down until SS is claimed, and then build it back up to where it was after that.
Aside from theoreticals, I do have some knowledge of many of our (also retired) neighbors who have said that they need their SS for living expenses. They tend to have a smallish nestegg that I would estimate to be in the $100K-$150K range tops. They are deathly afraid of spending it, because once it's gone it's GONE. They took SS as early as they could, so that they don't have to dip into their nestegg.

One of them freaks out everytime the market goes into bear mode, but at least he is smart enough to realize that selling out would just lock in his losses. Funny thing is, he won't listen to his BIL who told him to sell out (because he knows that's a bad idea), but he also doesn't want to discuss advice from me, who he knows is a reasonably good (and active) investor.
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Old 09-27-2011, 10:24 PM   #36
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well then, did you figure the proper rise in SS payments given your inflation assumption? in real terms, for every $1 you would get from SS if you start taking it at age 62 you will get ~$1.76 if you wait till age 70 to start. when you include your assumed 3%/yr inflation, the age 70 starting SS payout increases (yes the SS pay out gets COLAs whether you are taking it or not) from that ~$1.76 to ~$2.23, in nominal terms. so, if you wait, you will get more than twice the payment from SS for the rest of your (and your wife's) lifetime.
Yep! Already had it figured that way. My numbers match yours.

My father turns 82 next month. EVERYONE else in my lines of ancestors has died in their early 70's. This I have considered also.
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Old 09-27-2011, 10:35 PM   #37
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There is a point that these conversations elide over, that I kinda think makes the whole thing moot.

You only have the option of delaying SS if you don't need the SS income. If you are retired at 62 and need to get SS for living expenses, then you don't have the option of delaying until 70.

Therefore, for all practical purposes, if you don't need SS at 62 then you (alomost certainly) don't need it at 70, either. And since the SS is therefore "optional" income, it is of little importance when you start taking it. IMHO
That's faulty logic. Some of us choose to put it off to 70, deplete our nest egg early, then use SS at 70 to live off of. Similar to your neighbors...they could have used their $150k at 62, and then collected a much larger SS at age 70...just sayin'
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Old 09-28-2011, 09:35 AM   #38
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That's faulty logic. Some of us choose to put it off to 70, deplete our nest egg early, then use SS at 70 to live off of.
That approach certainly places a lot of trust on the Government doing the right thing for what may be a very long period of time. It's not too hard to picture scenarios where the unemployment rate climbs substantially for many years hence contributions to SS are much reduced resulting in a far earlier depletion of the SS "trust fund" than the projected 2037. Personally, I would rather hang on to as much of my own resources as possible and depend on Government plans as little as possible but obviously, that's more a personal philosophy not an accounting benefits analysis.
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Old 09-28-2011, 09:46 AM   #39
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If the 62/70 SS plan is still valid, I believe she can begin drawing on her SS record when she turns 62. Then I can draw 1/2 of that (when I reach full retirement age?). When I turn 70, I draw the increased amount from my record, and she draws half. On my passing, she would draw the full amount of my SS. As I said, if the 62/70 plan is still available. I really see it as a crap-shoot as to what the ages and rules might be six years from now, when she turns 62.
This is my plan as well. Please note, you will not receive 50% of her benefit as a spousal benefit at FRA. You will receive 50% of her PIA which is higher than her age 62 benefit.
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Old 09-28-2011, 10:08 AM   #40
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I know it's highly controversial -- the idea that SS will be solvent and we can count on it. I've taken comfort from looking at the Simpson Bowles recommendations (bipartisan deficit reduction committee who reported in late 2010). Comforting because the SS changes they thought were required were not that big (to me) especially for those near taking SS.

Here is a link to slides that summarize some of the report: http://www.fiscalcommission.gov/site...hair_Draft.pdf
See pages 42-50 for the SS part.

Here are the points on page 48:
Quote:
Gradually phase in progressive changes to benefit formula by 2050
Special minimum benefit for lifetime low earners
Index retirement ages to life expectancy
Benefit boost to oldest old retirees
Gradually increase taxable maximum to 90% of covered earnings by 2050
Apply refined cost of living measure (chained-CPI) to COLA
Cover newly hired state and local workers after 2020
Add increased flexibility in retirement claiming options
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