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Old 09-04-2016, 01:49 PM   #81
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Originally Posted by fritz View Post
I've included my earlier post for your review in case you didn't see it. When people have asked me about taking Social Security, I've always said, "If you're confident you won't need it, consider taking it. If you aren't sure, you might want to wait".

I made the reference in my earlier post to taking SS at 62 (both wife and I) as we don't need it to retire. Leaving the equivalent amount of funds to grow in our IRAs should provide more than enough funds to replace the amount of difference between my SS @ 62 and @ 70 (in the 8 year difference).

You can verify this for yourself with an investment calculator (see attached link). Input the amount you're getting monthly for SS, choose your investment growth percentage (I used 7.5% as I average more than this now).

Investment Calculator - daveramsey.com

Then take the difference of your SS at 62 and at 70 and withdraw it from the total figure on the investment calculator - using this calculator.

https://www.calcxml.com/calculators/...-last?skn=#top

This should work successfully single as well a married couples (last 30+ years). As I also stated earlier - retirement is as individual as fingerprints and this isn't considered ideal for everyone.
Thank you. Good information. I obviously lean towards your way of thinking based on our current circumstances.
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Old 09-04-2016, 02:00 PM   #82
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Originally Posted by Joylush View Post
Do you mean 1 million more than you have now? Unfortunately it's impossible to know what your comfort level is without knowing what you have now.

You could have 5 million now so 6 million would make you feel safe in taking the SS early. Or you could have 1 million, no debts etc...meaning 2 million would work for you. And of course your age would be a factor too.

I seem to have been mocked a bit at my assertion that I won't need SS but that's not entirely fair without knowing my personal situation.

Thus I was curious to know what might make others confident in feeling the same.

I agree that nobody can know if you will need SS or not except you...

So I am one to believe you.... I do not understand why someone would say otherwise... heck, you could have $100 mill and unless you spend very unwisely is way more than enough to not need SS.... and if you did have this kind of money and blew it all, then SS is such a drop in the bucket that it really does not matter anyhow...
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Old 09-04-2016, 04:43 PM   #83
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Originally Posted by Joylush View Post
Do you mean 1 million more than you have now? Unfortunately it's impossible to know what your comfort level is without knowing what you have now.

You could have 5 million now so 6 million would make you feel safe in taking the SS early. Or you could have 1 million, no debts etc...meaning 2 million would work for you. And of course your age would be a factor too.

I seem to have been mocked a bit at my assertion that I won't need SS but that's not entirely fair without knowing my personal situation.

Thus I was curious to know what might make others confident in feeling the same.
I did mean 1MM more. After I posted this and was driving to pick up lunch I realized there really was a better way rather than an arbitrary extra 1MM.

If I take SS at 70 and live to 90 (optimistic but good reason for delay of SS)
Compare that to if I take it at 62 and live to 90.
The total difference is X.
Now folks will say I can invest the amount from 62 to 70 for 5% to get Y.

So while this is pretty simple, I would need at a minimum X - Y

Using SSA.gov site for monthly max values of SS in 2016
Age 62->90 = 28 yrs at $2,102 = $706,272
Age 70->90 = 20 yrs at $3,576 = $858,240

So the difference (ignoring inflation adjustments and the 5% earning on early takers) is = $151,968

I would not feel comfortable with just an extra 150K to take SS later as it provides other benefits:
- I could live longer than 90. (longevity insurance)
- Inflation protection as inflation could be super high for a number of years in a row (remember 1980 at 13.58%, or 1945 at 14.65%), what if we got inflation like some South American countries of 80% per year.
- It is unaffected by a terrible sequence of returns (ex 1929).
- If the gov every stopped paying out SS, you can be sure everything else is worthless due to some catastrophic calamity, so it will be the last to go.
- Delaying allows me to burn off some IRA money at low tax rates before RMD's set in.
- My heirs may not be all that deserving of my extra effort to reward them and my in fact simply blow the money on stupid/fun/worthless stuff, or give it away to charity (which I could do instead and be the nice guy).


It is really hard to put a value on those extra benefits of SS, but having run the numbers I would now revise my answer to say if the govt gave me $250,000 tax free to take SS at 62 instead of 70, I'd do it.
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Old 09-04-2016, 06:17 PM   #84
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Originally Posted by Sunset View Post
I did mean 1MM more. After I posted this and was driving to pick up lunch I realized there really was a better way rather than an arbitrary extra 1MM.

If I take SS at 70 and live to 90 (optimistic but good reason for delay of SS)
Compare that to if I take it at 62 and live to 90.
The total difference is X.
Now folks will say I can invest the amount from 62 to 70 for 5% to get Y.

So while this is pretty simple, I would need at a minimum X - Y

Using SSA.gov site for monthly max values of SS in 2016
Age 62->90 = 28 yrs at $2,102 = $706,272
Age 70->90 = 20 yrs at $3,576 = $858,240

So the difference (ignoring inflation adjustments and the 5% earning on early takers) is = $151,968

I would not feel comfortable with just an extra 150K to take SS later as it provides other benefits:
- I could live longer than 90. (longevity insurance)
- Inflation protection as inflation could be super high for a number of years in a row (remember 1980 at 13.58%, or 1945 at 14.65%), what if we got inflation like some South American countries of 80% per year.
- It is unaffected by a terrible sequence of returns (ex 1929).
- If the gov every stopped paying out SS, you can be sure everything else is worthless due to some catastrophic calamity, so it will be the last to go.
- Delaying allows me to burn off some IRA money at low tax rates before RMD's set in.
- My heirs may not be all that deserving of my extra effort to reward them and my in fact simply blow the money on stupid/fun/worthless stuff, or give it away to charity (which I could do instead and be the nice guy).


It is really hard to put a value on those extra benefits of SS, but having run the numbers I would now revise my answer to say if the govt gave me $250,000 tax free to take SS at 62 instead of 70, I'd do it.
Of course if you wait until 70 to take it and die at 68 you get nothing.

Good reminder though about drawing down first on those accounts requiring eventual minimal distributions. I need to consider converting them to Roths before then. I prefer maximum flexibility. Honestly I don't treasure the idea of being forced to take distributions I don't need but probably best to since the tax rate will be less than the inheritance/estate tax would be.
At this point I guess I'd feel worse waiting and dying without getting any of my SS than taking it when I can even though I don't need it.
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Old 09-04-2016, 08:10 PM   #85
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Originally Posted by fritz View Post
I've included my earlier post for your review in case you didn't see it. When people have asked me about taking Social Security, I've always said, "If you're confident you won't need it, consider taking it. If you aren't sure, you might want to wait".

I made the reference in my earlier post to taking SS at 62 (both wife and I) as we don't need it to retire. Leaving the equivalent amount of funds to grow in our IRAs should provide more than enough funds to replace the amount of difference between my SS @ 62 and @ 70 (in the 8 year difference).

You can verify this for yourself with an investment calculator (see attached link). Input the amount you're getting monthly for SS, choose your investment growth percentage (I used 7.5% as I average more than this now).

Investment Calculator - daveramsey.com

Then take the difference of your SS at 62 and at 70 and withdraw it from the total figure on the investment calculator - using this calculator.

https://www.calcxml.com/calculators/...-last?skn=#top

This should work successfully single as well a married couples (last 30+ years). As I also stated earlier - retirement is as individual as fingerprints and this isn't considered ideal for everyone.
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Originally Posted by Joylush View Post
Thank you. Good information. I obviously lean towards your way of thinking based on our current circumstances.
You're welcome. Like I said "this isn't considered ideal for everyone".

I did this analysis for my wife and I when we first retired 7 years ago (58/57). It was good to revisit it, to recheck my numbers (they still work). Happy to share the process with someone else in our shoes who questioned taking SS @ 62 vs. 70 when you really don't need it, and leaving your investments grow during that time frame.

For us when all is said and done, investing both our age 62 start SS's for those 8 years at an annual 7.5% - and then taking just the difference between my SS @ 62 and @ 70, lasted over 30 years (+100 years of age). It also has a remaining balance of +$700k (it continued to grow as the withdrawal rate was 4.3% against the 7.5% earned annually. I run 52% stock and 48% bonds - earning over 8% based on the funds we invest in currently (which should remain as-is throughout retirement). These calculators are simple, and results would most likely be lower when run on a retirement calculator model using monte carlo simulations, but I think you get my point.

I've used our real SS numbers, and earnings of the funds we invest in since inception (although past performance is no guarantee of future results). Assuming I'll pass on before my wife - she'll step up to my 62 start SS, but will have these funds available during the rest of her years (or pass along to our children).

I'm sure that when you plug your numbers in - you'll see results similar to ours, if you're married. Even if you were single and earned just 5% during the accumulation and withdrawal phases - you'd still match your age 70 SS rate until you're 90. Age 70 start SS would win over 90 then, but you'd be positive at just 5% earnings during those 8 years of accumulation and aro.20 years of withdrawals up until then. Remember, you don't have to take the funds at 70 - you can let them still grow until you need them, if ever (unlike SS which stops the age increases at 70).....
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Old 09-04-2016, 08:33 PM   #86
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I had always planned on waiting until 70 because, well, the amount paid at 70 is simply a lot more than the amount paid at 62.

But then I ran Firecalc for both scenarios, and based on the same rate of spending it always shows I have more of my own money left at the end of 30 years if I start at 62.
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Old 09-04-2016, 08:59 PM   #87
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Originally Posted by Looking4Ward View Post
I had always planned on waiting until 70 because, well, the amount paid at 70 is simply a lot more than the amount paid at 62.

But then I ran Firecalc for both scenarios, and based on the same rate of spending it always shows I have more of my own money left at the end of 30 years if I start at 62.
Same here. Spending more of their money and less of your own money is always good. And the benefit piles up over the years.

Moral of the story: If you want to keep more of your own money: Take SS early.

I made the same observation a long time ago, maybe it was here or maybe on another forum I used to hang at. It was not well received.
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Old 09-04-2016, 11:15 PM   #88
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Yes, I know, you get an 8% increase every year you wait from age 62 but I still wonder about the logic and the math. Help me understand.
All my points have been made by others so far - but for me specifically:

SS is an insurance policy. It insures against my running out of money when I am old. I don't much care about whether I leave money on the table by dying early. It also insures DW against my early death. She will then get the max survivor benefit which helps make up for me taking a reduced survivor benefit on my pension.

Taking SS later give me more time to complete the process of Roth conversion at 15% tax rate.

Forced To Retire may not fit this scenario at all. Still, it DOES make sense for some of us. I say "great" that SS has so many options to fit the needs of its participants.

Personally, I am looking forward to the $3 grand plus/month I will be claiming here in a few months. Maybe now I'll be willing to spring for first class airfare - Nahhhh!
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why take SS at 62
Old 09-05-2016, 03:02 AM   #89
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why take SS at 62

I took it at 62 for two reasons:

1. It allowed us to have the "extra money" to travel more, spend winters in FL, etc.

2. If I die tomorrow, I will have at least gotten back part of what I paid in. It annoys me to think that those who wait, but die first, could lose a lifetime of contributions since nothing gets passed on to the heirs (except those with spousal benefits).

I am not concerned about the benefits of having more in the future since we do nicely on the SS plus other income. Plus, there will be another check when my wife turns 62.
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Old 09-05-2016, 03:35 AM   #90
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I am waiting for 70 because I get half of my ex's while I wait. So 900 a month from 66-70 gets me a much higher amount the rest of my life. Grandma, great grandma and a great aunt lived to 97-98 mom died at 86 which seemed really young, she had cancer. I am 68 and so expect to live to 86-98 since I am in good health.
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Old 09-05-2016, 04:22 AM   #91
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As some above said " It's cheap longevity insurance." If the market takes a dump and your nest egg drops you can always go in and file. My plan is to take it one year at a time. I can file at any time between 62 and 70.
+1 This is where I fall. If the terms were going to change to my disadvantage, there would be some notice and I could go ahead and file to lock it in. As things are, I am one of those who does not need the money early, am in good health, and I see it as future inflation adjustment to wait.
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Old 09-05-2016, 04:29 AM   #92
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Same here. Spending more of their money and less of your own money is always good. And the benefit piles up over the years.

Moral of the story: If you want to keep more of your own money: Take SS early.

I made the same observation a long time ago, maybe it was here or maybe on another forum I used to hang at. It was not well received.
our results when spousal benefits were considered was opposite . assuming average life expectancy for a couple we had more left over of our own delaying ss . it also gave us a higher draw rate day 1 since the ss has no sequence risk to account for so no extra powder has to be kept dry . our budget is bigger day 1 delaying than taking ss since we can refill down the road with a check 69% bigger plus colas with no sequence risk to account for .
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Old 09-05-2016, 05:23 AM   #93
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.... choose your investment growth percentage (I used 7.5% as I average more than this now). ...
Ah, the sweet smell of recency bias.
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Old 09-05-2016, 05:33 AM   #94
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I previously posted this in another thread back in March, but it is relevant to this topic and the notion of delay being equivalent to buying longevity insurance:

Quote:
For someone who turns 62 in 2016, the maximum SS is $2,102 per month. Since that is discounted 25%, if infers that for someone who turns 62 in 2016 and is at the maximum that their FRA benefit would be $2,803/month ($2,102/(1-25%)) and that their age 70 benefit would be $3,700/month ($2,803 * 132%).

So if they defer until 70 they "pay" $201,792 (foregone benefits from 62 to 70) in exchange for (an extra) $1,598 a month for life or a 9.5% payout rate. The FIXED annuity payout rate for a 70 year old would be 7.8% for a male or 7.11% for a female or 6.26% for joint life according to immediateannuities.com ... so 9.5% that has a COLA is really good (if you can afford to defer). Many of us have savings and can afford the $202k and I'm willing to invest that amount for a COLA life annuity (and arguably a joint life annuity at that since DW inherits my benefit).

In my case, we are both in good health so the breakeven point with 0% interest of 80.5 is a calculated bet on our part. But better yet, by not starting SS early we can do more Roth conversions at low tax rates (~10% each f the last 3 years) versus the high taxes we will likely pay on RMDs.

If we pass on before we turn 70 or 80.5 then we lost the bet... just like if we made $2,102/month premiums for 8 years to an insurance company and then died..... but.....if we live long which would seem likely given our current good health, family longevity, better longevity of wealthier people and improving longevity, then it will be a good bet.

And yes, we recognize that it is possible that benefits might be reduced but our bet implicitly assumes that any reductions will be modest. In 35 years or so we can compare notes and see how things came out.
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Old 09-05-2016, 06:09 AM   #95
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But then I ran Firecalc for both scenarios, and based on the same rate of spending it always shows I have more of my own money left at the end of 30 years if I start at 62.
Same here. I found my SWR was slightly higher by taking SS at 62.
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Old 09-05-2016, 07:23 AM   #96
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as usual ' an interesting look at delaying by kitces



https://www.kitces.com/blog/how-dela...money-can-buy/
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Old 09-05-2016, 07:44 AM   #97
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Originally Posted by fritz
.... choose your investment growth percentage (I used 7.5% as I average more than this now). ...


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Ah, the sweet smell of recency bias.
On my post #85 - I stated I used the average earnings on my funds since inception to base this figure (which is lower than that average of those funds). One started in 1929 and one in 1970.

....I've used our real SS numbers, and earnings of the funds we invest in since inception (although past performance is no guarantee of future results)....

I was responding to Joylush's posts about not needing SS in retirement, but taking it @ 62 to allow personal funds to continue to grow. It's an option I explored (as well as others here have done/posted). I mentioned more than once
"this isn't considered ideal for everyone" - in an effort to not offend those who don't agree (just an option for those who wish to explore this scenario).
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Old 09-05-2016, 08:00 AM   #98
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as usual ' an interesting look at delaying by kitces



https://www.kitces.com/blog/how-dela...money-can-buy/
I made a reference to Kitches in my post #44 recalling from memory that the breakeven in his study was over 85. I stand corrected - a quick read (apologize for the quick read) is 22years (age 84), and this is using 6% with 3% inflation. One can always seek the wisdom of a financial planner for making these decisions for retirement.
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Old 09-05-2016, 08:20 AM   #99
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it could be longer than 22 years if spousal benefits are involved . as an example my wife does not get a 4500.00 dollar adder to her early benefit until i file .
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Old 09-05-2016, 09:49 AM   #100
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Originally Posted by fritz View Post
I've included my earlier post for your review in case you didn't see it. When people have asked me about taking Social Security, I've always said, "If you're confident you won't need it, consider taking it. If you aren't sure, you might want to wait".

I made the reference in my earlier post to taking SS at 62 (both wife and I) as we don't need it to retire. Leaving the equivalent amount of funds to grow in our IRAs should provide more than enough funds to replace the amount of difference between my SS @ 62 and @ 70 (in the 8 year difference).

You can verify this for yourself with an investment calculator (see attached link). Input the amount you're getting monthly for SS, choose your investment growth percentage (I used 7.5% as I average more than this now).

This should work successfully single as well a married couples (last 30+ years). As I also stated earlier - retirement is as individual as fingerprints and this isn't considered ideal for everyone.
Absolutely agree with the "...as individual as fingerprints..." comment, and appreciate you sharing your analysis used to make the decision for yourself & your DW.

Personally, I like discussing and re-discussing (is that a word?) this subject over and over because, it's important for almost everyone, and I always seem to learn (or relearn) something with each new thread. However, after a reread of Kitces' article, I remain swayed by his argument to delay SS until 70 (barring some catastrophe) for these reasons:

1. It's the cheapest longevity insurance: We are planning for a couple
2. It's the highest investment return: The analysis of the options (early@62, FRA, or late@70) must be risk adjusted to be most effective. (Note that your 7.5% [actually 5.2% inflation adjusted] falls short of even the lowest break even IRR in Kitces analysis.)
3. It provides the most flexibility: If our plan is to delay, we can always change our mind (depending on circumstances) any time btwn 62 & 70.
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