If you are not working, why would someone wait until 70 to collect Social Security?

[Forced to Retire]

Few posters have done a math analysis of the costs of the extra TAXABLE 401K and IRA withdrawals that would be necessary to support their lifestyle from age 62-70 years old while they wait to collect Social Security. (You are paying the full tax rate to withdraw money from your 401K or IRA.)

OR:

The cost of pulling the money out of the savings and 401K, IRA during the years they are 62-70 if there is a bear stock market during that period. If you are collecting social security during that period you would not need to be taking as much money out during those bear market years and will have more money in your retirement accounts at age 70 going forward.

 

[mathjak107]

But it works both ways . i rather increase the ss payment by a pretty healthy percentage by spending down the assets losing money or not growing

 

[RunningBum]

Few posters have done a math analysis of the costs of the extra TAXABLE 401K and IRA withdrawals that would be necessary to support their lifestyle from age 62-70 years old while they wait to collect Social Security. (You are paying the full tax rate to withdraw money from your 401K or IRA.)

OR:

The cost of pulling the money out of the savings and 401K, IRA during the years they are 62-70 if there is a bear stock market during that period. If you are collecting social security during that period you would not need to be taking as much money out during those bear market years and will have more money in your retirement accounts at age 70 going forward.

Do whatever you want. In general, there is no known right or wrong answer. For specific situations, one way or another may have a better chance for an individual or couple to get ahead.

But don't tell us what analysis people have or haven't done. You don't know.

I would think you have more immediate concerns right now, based on your other thread, but I guess that's your business.

 

[RunningBum]

But it works both ways . i rather increase the ss payment by a pretty healthy percentage by spending down the assets losing money or not growing

Right, if I think a bear market is coming, I'd rather be pulling money out of the market. That's selling high, a good thing.

Once it hits, and I think it's at or near the bottom, I would be likely to start taking SS at that point, to avoid selling low. It's not a 62 or 70 decision; I can decide at any time between then to start.

I'm not a market timer, but choosing when to take SS might be one time when I am.

 

[ivinsfan]

Few posters have done a math analysis of the costs of the extra TAXABLE 401K and IRA withdrawals that would be necessary to support their lifestyle from age 62-70 years old while they wait to collect Social Security. (You are paying the full tax rate to withdraw money from your 401K or IRA.)

OR:

The cost of pulling the money out of the savings and 401K, IRA during the years they are 62-70 if there is a bear stock market during that period. If you are collecting social security during that period you would not need to be taking as much money out during those bear market years and will have more money in your retirement accounts at age 70 going forward.

Why don't you show us some figures on those 2 items? Use your own portfolio as the starting point.

 

[Bestwifeever]

Few posters have done a math analysis of the costs of the extra TAXABLE 401K and IRA withdrawals that would be necessary to support their lifestyle from age 62-70 years old while they wait to collect Social Security. (You are paying the full tax rate to withdraw money from your 401K or IRA.)

OR:

The cost of pulling the money out of the savings and 401K, IRA during the years they are 62-70 if there is a bear stock market during that period. If you are collecting social security during that period you would not need to be taking as much money out during those bear market years and will have more money in your retirement accounts at age 70 going forward.

I might not be one of them but what I adore about the posters in this thread and in general on these boards is their ability to thoughtfully analyze in depth the ramifications of almost every financial decision one might make in their lives and all the variables involved, which has taught me so much. Just because their analyses might not support the decisions I make doesn't mean they aren't doing a "math analysis."

 

[marko]

Few posters have done a math analysis of the costs of the extra TAXABLE 401K and IRA withdrawals that would be necessary to support their lifestyle from age 62-70 years old while they wait to collect Social Security. (You are paying the full tax rate to withdraw money from your 401K or IRA.)

I thought I provided my personal analysis within 20 minutes of your original post. (see post #4, third paragraph)

More broadly, I think that MOST posters in this forum have done the math analysis at some point; whether they care to share it is another matter.

 

[Andre1969]

My plan has always been to take SS at 62, simply because I don't fully trust the government. I figure the sooner I get on board, the sooner I get grandfathered in, and they won't screw with me as badly as they will the younger generations.

However, all that aside, I ran the numbers through FireCalc, and it seems irrelevant whether I take it at 62, 70, or anywhere in between. Now, this is for a single guy with no dependents who intends to be retired long before 62, so your outcome may vary if you have a spouse or other beneficiary on record. And I guess it could vary depending on your age. But in my case, when I decided to take SS never changed the success ratio by more than maybe 1%.

I guess that would make sense, too. Your SS benefit increases around 7-8% for every year you wait to collect. But, on average, the stock market goes up about 7-8% a year (just not consistently), so maybe that's what tends to make it a wash, at least using Firecalc's data?

 

[Huston55]

Folks who are modeling 7.5% or 5.2% real returns, or 3% for that matter, for a diversified portfolio in the near term (e.g. 8 years, the period affected by the "early or late SS decision") aren't viewing the investment world in the same way I am. Not that they are right or wrong. But it does impact the break-even point (which, again, is not an especially useful metric IMO).


But if one did expect something more like 1-2% real real returns for the next decade, followed by less predictable returns after that (e.g. possibly back to historical mean, or tanking for a period of a decade or more) . . . . the higher SS checks obtained by delayed SS claiming would be useful in the case of "tanking" and of no harm in the case of "portfolio growing to the sky."

Agreed.

I simply used the poster's return #s to make the point that any analysis should use real, risk-adjusted return #s for any comparison.

Following that line of thinking, the 20+/- year 'break-even' point that's often cited in SS delay/don't delay discussions is also very likely much shorter in today's low return environment. Here's some data from another Kitces post, which demonstrates that @ 4% inflation & 6% return, the break-even is just 15 yrs. One could extrapolate downward (shorter break even periods) from there for less optimistic scenarios.

Excerpt:
According, the graph below shows the original benefit delay (at 3% inflation and 8% growth), and an alternative scenario with 4% inflation and only 6% growth. In this case, it takes only 15 years to breakeven, instead of 20


https://www.kitces.com/blog/the-asy...cial-security-benefits-as-the-ultimate-hedge/

Whether the 'break-even point' is a useful metric or not, I do get the strong sense that it plays a large role in the decisions people make regarding what age to start SS; they want to 'win' with their decision. So, I expect that a 10yr or 15 yr break-even point would pull a lot of folks into the "delay SS" camp.

Perhaps we should start a poll.

 

[Forced to Retire]

Today's low return environment? What? The stock market has gone up three fold since 2009 and the bond market has done great too. (This low return everyone is talking about is fiction and meant to sell annuities and get people to click on links to sell advertising.

Following that line of thinking, the 20+/- year 'break-even' point that's often cited in SS delay/don't delay discussions is also very likely much shorter in today's low return environment. Here's some data from another Kitces post, which demonstrates that @ 4% inflation & 6% return, the break-even is just 15 yrs. One could extrapolate downward (shorter break even periods) from there for less optimistic scenarios.

 

[Chuckanut]

My plan has always been to take SS at 62, simply because I don't fully trust the government. I figure the sooner I get on board, the sooner I get grandfathered in,

But, aren't you trusting the government to grandfather you in?

IMHO, you are placing a lot of trust in the government and your fellow citizens to allow early claimers to go on collecting their enriched booty, while the rest of us who waited get less. Personally, I would not place my trust there.

For example: The recent changes in filing a restricted application had an exception for people already above a certain age, whether you had already filed a restricted application or not.

Still, we each do what we think is best for us in our individual circumstances, and I won't try to tell anybody what they must do.

 

[GravitySucks]

I've done the math considering taxes.... For Bull, Bear, and Neutral markets. As a single man it didn't make a huge difference.
My decision was to take at FRA unless my portfolios real value is higher than at retirement date, if that's the case postpone to 70. The reason is I believe SS has a better chance of being there when needed than my investments do. I can survive on SS 62, live decently on SS FRA, and live pretty well including a couple of trips a year on SS 70. The insurance consideration is more valuable than the few dollars difference the three options actually provided.
The kids are on board as they'd rather have a smaller inheritance than have me living in their basements.
If I'm wrong I'm wrong, doubt my last thoughts will be SS got the better of me.

All moot now as I found I will be eligible for a small survivor benefit at 60. I'd have to really screw the pooch on investments or find I have a fatal health condition to take it early now.

Anyone who thinks different is wrong! (Not really. YMMV.)

 

[samclem]

Today's low return environment? What? The stock market has gone up three fold since 2009 and the bond market has done great too.

What are CDs yielding today?
What are bond yields today?
What is the history of the US stock market when stock prices are at present levels relative to earnings? (For more info, Google "Schiller PE10" and scan some articles).
Here are two good ones to start with:
Kitces: CAPE's predictive value,long and short term.
ER-ORG thread: Future Returns

The consensus of those who have nothing to gain by selling people something is rather gloomy right now.

Would you expect stocks to do better for the 10 years after a large run up in prices (as we've seen since the 2009 crash), or would you expect them to do worse after such a run up?

Nobody has a crystal ball that gives precise answers about the future. But still there are useful indicators that can point to the likely range of future returns.

 

[MichaelB]

Today's low return environment? What? The stock market has gone up three fold since 2009 and the bond market has done great too.

Everyone here understands that "low return environment" is a forward-looking term.

 

[merlin3942]

.... But I'm generally in the "cheap longevity insurance" camp, since I do plan to live forever

... and as Steven Wright would say about his plan to live forever, "So far, so good".

 

[Katsmeow]

My plan has always been to take SS at 62, simply because I don't fully trust the government. I figure the sooner I get on board, the sooner I get grandfathered in, and they won't screw with me as badly as they will the younger generations.

I have never felt that it was likely that people of the same age who had taken benefits would be treated differently in the event of program changes than people who had not taken benefits.

I never felt that I would "grandfathered in" by doing that.

I do, however, take the possibility of future benefit reductions into consideration. That is, I would hate to spend down my portfolio until age 70 based upon a projection of what benefits I think I would get at age 70 (based upon current law) and then, well into it, have the law changed so that at age 70 I was going to get less money than I had planned for.

So, I do think there is something to be said for getting the money while it is here recognizing that there could be reductions in the future.

I once felt that they wouldn't make significant changes for those over 55 but I'm not so sure now. For example, I turned 62 this year and had been seriously considering taking spousal while allowing my own benefit to grow. But, when I was 61 the law was changed to make it available only for those who were 62 that year (I missed the cutoff by a few months).

 

[Forced to Retire]

Regarding the post below: I see today's stock market and economy (economic indicators) no different than January 2013. Back then the Internet was full of articles promising that the future stock market returns would be terrible and to sell now after 4 year BULL MARKET. In early 2013 the stock market was at record highs and CD rates were low and bond yields at record lows.

What did the stock market do since January 2013 regardless of the experts? It went UP, UP AND UP!

What are CDs yielding today?
What are bond yields today?
What is the history of the US stock market when stock prices are at present levels relative to earnings? (For more info, Google "Schiller PE10" and scan some articles).
Here are two good ones to start with:
Kitces: CAPE's predictive value,long and short term.
ER-ORG thread: Future Returns

The consensus of those who have nothing to gain by selling people something is rather gloomy right now.

Would you expect stocks to do better for the 10 years after a large run up in prices (as we've seen since the 2009 crash), or would you expect them to do worse after such a run up?

Nobody has a crystal ball that gives precise answers about the future. But still there are useful indicators that can indicate the likely range of future returns.

 

[Andre1969]

But, aren't you trusting the government to grandfather you in?

IMHO, you are placing a lot of trust in the government and your fellow citizens to allow early claimers to go on collecting their enriched booty, while the rest of us who waited get less. Personally, I would not place my trust there.

For example: The recent changes in filing a restricted application had an exception for people already above a certain age, whether you had already filed a restricted application or not.

Still, we each do what we think is best for us in our individual circumstances, and I won't try to tell anybody what they must do.

Well, naturally I'll fine tune, and continue to re-run my calculations, as I get closer to retirement, and take whatever the gov't does into account. FWIW, I've also run another set of calculations, assuming I'll get nothing for SS (a bit harsh, I know, but I figured I'd go for the extreme). In that case, having no SS at all only puts off my retirement by 1-2 years. For example, if I wanted to retire at age 50, living off of $60K per year, and with a 95+% chance of success, without SS I'd have to put it off to 52.

I'm not going to worry too much about when to take SS, at least not until I get closer to making that decision.

 

[Koolau]

Regarding the post below: I see today's stock market and economy (economic indicators) no different than January 2013. Back then the Internet was full of articles promising that the future stock market returns would be terrible and to sell now after 4 year BULL MARKET. In early 2013 the stock market was at record highs and CD rates were low and bond yields at record lows.

What did the stock market do since January 2013 regardless of the experts? It went UP, UP AND UP!

Your point is well taken. However, the principle (stocks are less likely to continue going up after a long run-up) is indisputable. The "sneezes" we have seen in the stock market when the FED even HINTS of a rate increase indicates to ME how vulnerable the stock market is. Whether that turns out to be the case, we will only know in hind sight. Supposedly, everything is always baked in to the prices - but then why do bubbles burst and "surprise" everyone??

I guess if you have a long-term view of the stock market and you have a good AA already set, it doesn't really matter about relatively short term (a few years or less) of down turns. Still, each slump seems like "this time it's really different." As always, YMMV.

 

[Teacher Terry]

Also if you are still working p.t. and making above 15k then they start taking $ back so it does not make sense to take it until FRA.

 

[Chuckanut]

Well, naturally I'll fine tune, and continue to re-run my calculations, as I get closer to retirement, and take whatever the gov't does into account.

+1 Bingo!

And, I will add, you can continue to do that after age 62 if you don't take SS at 62. It's not a 62 or 70 decision even though one might think so while reading discussions on the topic. One can decide to take SS at 64 and 5 months or 68 and 3 months, etc. Or, here's a radical thought, take it at your full retirement age!!

I believe there are several people on this forum who took SS earlier than planned when the crash of 2008 hit them hard.

 

[samclem]

Regarding the post below: I see today's stock market and economy (economic indicators) no different than January 2013. Back then the Internet was full of articles promising that the future stock market returns would be terrible and to sell now after 4 year BULL MARKET. In early 2013 the stock market was at record highs and CD rates were low and bond yields at record lows.

What did the stock market do since January 2013 regardless of the experts? It went UP, UP AND UP!

True. In the short term (3 years or so) maybe the [-]bubble[/-] well-supported increase in stock prices will continue and [-]a speculator[/-] an investor may be able to get historic rates of return (annual 5% real or more) over that short period. For a person that intends to get all out within the next few years and can afford to lose a lot of their money if they are wrong, then playing that game may make sense.

You made fast work of those links I passed! So you saw that the CAPE is not especially useful as a predictor of "now through a few years" but is a very good predictor of stock market returns for the window of "today through 8-15 years out", and that prediction today is for very low returns. I figured that time window might apply to your situation, but maybe not.

 

[haha]

Regarding the post below: I see today's stock market and economy (economic indicators) no different than January 2013. Back then the Internet was full of articles promising that the future stock market returns would be terrible and to sell now after 4 year BULL MARKET. In early 2013 the stock market was at record highs and CD rates were low and bond yields at record lows.

What did the stock market do since January 2013 regardless of the experts? It went UP, UP AND UP!

Go for it man! With your excellent track record and obvious interest, you'll soon be a multimillionaire!! You be sure to come back and clue us in.

Ha

 

[gerntz]

The older I get, the lower the chances I can even remember 62.

 

[pb4uski]

....The cost of pulling the money out of the savings and 401K, IRA during the years they are 62-70 if there is a bear stock market during that period. If you are collecting social security during that period you would not need to be taking as much money out during those bear market years and will have more money in your retirement accounts at age 70 going forward.

That is the beauty of deferring though... if my investment returns are good then no need to start drawing... if things go sideways to the extent that things get uncomfortable then any day that I want I can start SS benefits and slow withdrawals.... best of both worlds.