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Old 09-23-2014, 09:06 AM   #121
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I did a rough calculation for this. You stated that you got different results using FireCalc. Some time ago I did a couple of FireCalc calcualtions comparing taking SS at age 62 vs age 66. One calculation said at age 100, my portfoilo would be 1.37 x the amount if I waited till age 66 to take SS vs age 62. Another calculation said I would have 1.9x the amount.

Go figure.
I've got two possibilities:

1) You may have entered some age less than 62, so in both your cases SS was being deferred from your start date.

2) You looked at the average result, I looked at the downside risk.

If we made retirement income decisions based on averages, we'd all be 100% in stocks and 7% would be a SWR. Deferring SS is basically a defensive strategy that's supposed to work best in the unlikely case that we have poor investment returns and live to advanced ages. Many people on this board have enough assets or guaranteed income that they don't need to be defensive, averages work for them. Others need to think about the difficult scenarios.
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Old 09-23-2014, 10:04 AM   #122
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I've got two possibilities:

1) You may have entered some age less than 62, so in both your cases SS was being deferred from your start date.

2) You looked at the average result, I looked at the downside risk.

If we made retirement income decisions based on averages, we'd all be 100% in stocks and 7% would be a SWR. Deferring SS is basically a defensive strategy that's supposed to work best in the unlikely case that we have poor investment returns and live to advanced ages. Many people on this board have enough assets or guaranteed income that they don't need to be defensive, averages work for them. Others need to think about the difficult scenarios.
I just did a couple of FireCalc scenarios at my current situation and now it shows that my portfolio will be 1.26x at age 100 , if I wait until I'm 66 to collect SS. vs age 63.

As far as using averages, remember FireCalc takes into account the standard deviation of returns.
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Old 09-23-2014, 11:36 AM   #123
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I thought I'd explore what taking SS at various ages would do to me. I took the results from the SS Benefit Calculator and plugged them into Fido's RIP. After running simulations it gave me the total assets at 'end of plan' , based on taking benefits each year from age 62 to 70. I divided each total by the first years total and plotted a graph:



Thus, if I wait until 70 to collect benefits, RIP calculates that my end of plan assets will be 2.1 times greater than if I collect them at 62.

I guess I'll be waiting!
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Old 09-23-2014, 01:48 PM   #124
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Thus, if I wait until 70 to collect benefits, RIP calculates that my end of plan assets will be 2.1 times greater than if I collect them at 62.

I guess I'll be waiting!
So you'd have more money to leave but presumably won't be spending as much from age 62 to 70?

Seems like a choice between spending on yourself vs. leaving more money for heirs.

Or is it a concern about portfolio survivability?
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Old 09-23-2014, 02:15 PM   #125
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It's simply a static measure that I can establish a baseline around. I'm not planning on leaving anything to anyone, so now it's easier to play with the spending variable. Apparently, I have to persuade myself to increase that -- not easy once one realizes that ones hobby is being tight-fisted!
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Old 09-23-2014, 05:24 PM   #126
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I thought I'd explore what taking SS at various ages would do to me. I took the results from the SS Benefit Calculator and plugged them into Fido's RIP. After running simulations it gave me the total assets at 'end of plan' , based on taking benefits each year from age 62 to 70. I divided each total by the first years total and plotted a graph:



Thus, if I wait until 70 to collect benefits, RIP calculates that my end of plan assets will be 2.1 times greater than if I collect them at 62.

I guess I'll be waiting!

Interesting. Your graph shows that assets at taking SS @66 are 1.28 times more compared to taking SS @63. Remember, I got 1.26 x using FireCalc
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Old 09-23-2014, 10:11 PM   #127
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I'm planning to take at age 70.

But ... if I take my QLP retirement projection and do a what-if comparing 62 vs 70, the crossover point is age 82... after 82 my net worth is higher taking SS at age 70.

If I compare 66 vs 70 then the crossover point is 87 so in each case I'm better off taking SS earlier for ~20 years and then I'm worse off.

While the difference between the lines of 62 vs 70 is pretty significant, the differences between 66 and 70 are not very different. My net worth at age 100 taking SS at age 70 is 160% of what it is taking SS at 62.
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Old 09-23-2014, 10:37 PM   #128
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Interesting. Your graph shows that assets at taking SS @66 are 1.28 times more compared to taking SS @63. Remember, I got 1.26 x using FireCalc
Probably has to do with my start and end dates; I'm 62 this year and planning to 92. MMMV
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Old 09-24-2014, 09:42 AM   #129
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I just did a couple of FireCalc scenarios at my current situation and now it shows that my portfolio will be 1.26x at age 100 , if I wait until I'm 66 to collect SS. vs age 63.

As far as using averages, remember FireCalc takes into account the standard deviation of returns.
I have to admit that I'm confused. I read your earlier post to say that you would have more money at the end if you started SS at 63, and less money at the end if you started at 66.

This post seems to say the opposite. I'm probably misreading one of them.

FireCalc runs many possible economic scenarios. When you quoted a single number, I assumed you were looking at some average. But, now you're saying "FireCalc takes into account the standard deviation of returns". I'm not sure what that means. FireCalc can use actual past years for its scenarios, or it can randomly create scenarios, I don't know which option you chose.
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Old 09-24-2014, 10:00 AM   #130
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SS payout by itself would be a good candidate for another tool like the FireCalc simulator. Put in your income expectations, life expectancy, etc and have it go thru all the possible start dates and withdrawal schemes (including payback/reset) for singles and couples. Have the tool vary the lifespan(s) and see how likely you are to come out ahead with each scenario. There is just too much to digest for a simple discussion.
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Old 09-24-2014, 11:42 AM   #131
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Probably has to do with my start and end dates; I'm 62 this year and planning to 92. MMMV
Just for fun, I plugged in a different 'end' date and went through the same exercise. It appears that if I were to expire at 82, it won't have made the slightest difference when I started taking SS:



Another argument for longevity?
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Old 09-24-2014, 12:37 PM   #132
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I have to admit that I'm confused. I read your earlier post to say that you would have more money at the end if you started SS at 63, and less money at the end if you started at 66.

This post seems to say the opposite. I'm probably misreading one of them.

FireCalc runs many possible economic scenarios. When you quoted a single number, I assumed you were looking at some average. But, now you're saying "FireCalc takes into account the standard deviation of returns". I'm not sure what that means. FireCalc can use actual past years for its scenarios, or it can randomly create scenarios, I don't know which option you chose.
My first post was based on MY calculations. My breakeven point for taking SS at age 66 vs age 63. was at age 97+ years old. At age 100 my portfolio would still be larger ,if I took SS at age 66, same as FireCalc.

I was using an average number from the FireCalc calculations. In my situation, I used a standard deviation of 7.5% (the S&P 500 index has a standard deviation of 15%). I chose the the portfolio with random performance, with a mean total portfolio return of 4%, 3% inflation, std dev of 7.5%
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Old 09-25-2014, 12:56 PM   #133
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My first post was based on MY calculations. My breakeven point for taking SS at age 66 vs age 63. was at age 97+ years old. At age 100 my portfolio would still be larger ,if I took SS at age 66, same as FireCalc.

I was using an average number from the FireCalc calculations. In my situation, I used a standard deviation of 7.5% (the S&P 500 index has a standard deviation of 15%). I chose the the portfolio with random performance, with a mean total portfolio return of 4%, 3% inflation, std dev of 7.5%
Okay. The FireCalc result is what I'd expect. You gave FireCalc an average return of inflation + 1%. Social Security crossover ages for returns in that neighborhood are around 80, so it makes sense that deferring is solidly ahead when you get to age 100.

Your breakeven calculation seems to say something different. I'd think it takes a return of inflation + 6% to get a crossover age of 97.
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Old 09-25-2014, 02:44 PM   #134
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Okay. The FireCalc result is what I'd expect. You gave FireCalc an average return of inflation + 1%. Social Security crossover ages for returns in that neighborhood are around 80, so it makes sense that deferring is solidly ahead when you get to age 100.

Your breakeven calculation seems to say something different. I'd think it takes a return of inflation + 6% to get a crossover age of 97.

You bring up a good point. Inflation. Using the random performance with a standard deviation of 7.5%, it was impossible to calculate a breakeven point. You can plug in the same numbers and you get totally different amounts, even showing starting SS at age 63 you had a bigger portfolio than starting at age 66. So, I chose 0% standard deviation, or you can use the consistent annual market growth. You get the same results. The break even point is at age 86.
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Old 09-26-2014, 10:55 AM   #135
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You bring up a good point. Inflation.
1) Using the random performance with a standard deviation of 7.5%, it was impossible to calculate a breakeven point.
2) You can plug in the same numbers and you get totally different amounts, even showing starting SS at age 63 you had a bigger portfolio than starting at age 66.
3) So, I chose 0% standard deviation, or you can use the consistent annual market growth. You get the same results.
4) The break even point is at age 86.
1. Yes. The question "How long do I need to live in order to make deferring better than starting now?" depends on future investment returns. Each scenario has it's own answer.
2. Not sure that I understand this.
3. This makes sense in FireCalc.
4. I think I'm now lost on the input assumptions.

I set up FireCalc with a $16,000 SS benefit starting in 2014 or $20,000 starting in 2017. That seems like starting benefits at age 63 with an 80% benefit, or starting at 66 with a 100% benefit.
I specified "A portfolio with consistent annual market growth of 4%, fixed income returns of 4%, and an inflation rate of 3%".
When I compared the year-by-year detail for the two runs, the first was ahead for the first 15 years.
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Old 09-26-2014, 08:30 PM   #136
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You bring up a good point. Inflation.
1) Using the random performance with a standard deviation of 7.5%, it was impossible to calculate a breakeven point.
2) You can plug in the same numbers and you get totally different amounts, even showing starting SS at age 63 you had a bigger portfolio than starting at age 66.
3) So, I chose 0% standard deviation, or you can use the consistent annual market growth. You get the same results.
4) The break even point is at age 86.


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1. Yes. The question "How long do I need to live in order to make deferring better than starting now?" depends on future investment returns. Each scenario has it's own answer.
2. Not sure that I understand this.
3. This makes sense in FireCalc.
4. I think I'm now lost on the input assumptions.

I set up FireCalc with a $16,000 SS benefit starting in 2014 or $20,000 starting in 2017. That seems like starting benefits at age 63 with an 80% benefit, or starting at 66 with a 100% benefit.
I specified "A portfolio with consistent annual market growth of 4%, fixed income returns of 4%, and an inflation rate of 3%".
When I compared the year-by-year detail for the two runs, the first was ahead for the first 15 years.
Point #2 : Because it is random ,due to the standard deviation, the sequence of returns can either have a positive effect or a negative effect. So even if I have an average of 4% return, due to the standard deviation my average return is 4 +/- 7.5% (-3.75% to 11.5% returns)

As far as your breakeven point at 15years instead of mine of 23 years could attributed by the size of the portfolio and the spend down of that portfolio.
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Old 09-27-2014, 03:10 PM   #137
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Point #2 : Because it is random ,due to the standard deviation, the sequence of returns can either have a positive effect or a negative effect. So even if I have an average of 4% return, due to the standard deviation my average return is 4 +/- 7.5% (-3.75% to 11.5% returns)

As far as your breakeven point at 15years instead of mine of 23 years could attributed by the size of the portfolio and the spend down of that portfolio.
That's true. I didn't get that from the earlier post.

It seems to me that if we use the same fixed real interest rate we ought to get the same crossover year. But, it would take a lot of time comparing detailed runs to figure out if that's true - probably more than it's worth.
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Old 05-18-2016, 02:25 PM   #138
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Old 05-18-2016, 04:09 PM   #139
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Old 05-19-2016, 11:31 AM   #140
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A number of us here on the FIRE forum have spouses who won't be collecting a spousal or survivor's benefit from our SS due to GPO. Therefore, to best protect the spouse, starting and investing SS at 62 becomes optimum.

I've been doing this for almost nine years. Thanks to fairly favorable market conditions, the nest egg that's built up from the invested SS income will easily cover the difference between the age 62 SS I'm getting and the higher age 70 SS I won't be getting. Of course, you can't count on favorable market conditions and you might start SS early and not wind up with a nest egg sizable enough to more than cover the difference. It's a crap shoot in that regard.

For married folks without the GPO problem, you should still consider the value of foregone earnings on collected early SS benefits in your calculations. It's way too big a number to ignore.
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