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Old 07-03-2015, 12:07 PM   #181
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Starting SS after 70 for a higher benefit isn't an option, so I don't know why I'd spend any time thinking about it.
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Old 07-03-2015, 12:32 PM   #182
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Old 07-03-2015, 12:54 PM   #183
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Yes, but he hasn't answered the inverse question posed by samclem - what if you could take it even earlier than 62, with further decreases? When would you take it?

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Now. Actually not fair.....I'm getting an annuity supplement at this time....but if I weren't.....NOW.
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Old 07-03-2015, 01:19 PM   #184
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And if we went the other way? What if people who were no longer working at age 50 were eligible to take their SS at that age? If they were due $2000/mo at FRA, they'd instead get about $600 at age 50. I'm sure some would take it, but it would definitely change the "strength" of that leg of the stool. For as long as they live.
We took our pensions earlier than 62, so maybe we would. So far we are still not eating cat food. Our biggest factors to retirement success are sustainable living and low fixed overhead, not increasing income. Cutting unnecessary expenses for us has a huge impact on longevity insurance and not outliving our savings, while when to take SS will not be such not a huge factor in comparison.
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Old 07-03-2015, 01:35 PM   #185
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Our biggest factors to retirement success are sustainable living and low fixed overhead, not increasing income. Cutting unnecessary expenses for us has a huge impact on longevity insurance and not outliving our savings, while when to take SS will not be such not a huge factor in comparison.
If a family wants to live on available resources (pensions, SS, "take" from their portfolio) and it looks tight, and if they have a lot of "fat" in their expenses, then cutting there makes a lot of sense. But delaying SS increases the inflation-adjusted lifetime income from that source by about 8% per year. Finding a place to cut an additional 8% every year is not something most people would want to do for 8 or 10 years.
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Old 07-03-2015, 01:44 PM   #186
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Let's imagine that our investments and DH's SS (he is already taking) would produce for us $60,000 a year. If I thought about everything I wanted to spend and it was $60,000 or less a year then I could potentially see deferring the SS. In that case, the SS money makes no difference to our quality of life. So deferring could be fine.

On the other hand, if I could easily think of $100,000 I wanted to spend as a healthy 70 year old, I could see taking the SS at 70 and enjoying spending that money.

Theoretically I don't "need" $100,000 a year. I can live on $60,000 a year fine, but I could spend $100,000 a year quite happily if I had it.
If I think a 4% (or 3% or whatever) SWR is "prudent", or if I run FireCalc, I think I'll discover that I can prudently spend more money today if I defer SS than I could if I started SS earlier.
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Old 07-03-2015, 01:56 PM   #187
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If a family wants to live on available resources (pensions, SS, "take" from their portfolio) and it looks tight, and if they have a lot of "fat" in their expenses, then cutting there makes a lot of sense. But delaying SS increases the inflation-adjusted lifetime income from that source by about 8% per year. Finding a place to cut an additional 8% every year is not something most people would want to do for 8 or 10 years.
Cutting overhead for us meant needing a boatload less in total retirement funding over a potential retirement of 40+ years. YMMV. Other factors like downsizing or not or part-time work or not are also bigger factors for us in the scheme of things than when to take SS. If taking SS at 62 was a show stopper, then I personally would probably not cut it that close and not semi-ER or ER in the first place until I had more savings.
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Old 07-04-2015, 09:34 AM   #188
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Let's imagine that our investments and DH's SS (he is already taking) would produce for us $60,000 a year. If I thought about everything I wanted to spend and it was $60,000 or less a year then I could potentially see deferring the SS. In that case, the SS money makes no difference to our quality of life. So deferring could be fine.
I would say that if your investments pay enough so that deferring SS makes no difference to your quality of life, then the whole question is moot.

Reading your post, it just struck me that there are other issues than just one's living & lifestyle expenses. Like...you're getting along peachy-keen with your $60,000/yr, and then you decide you'd like to see the world, and something like this Cruise Details comes to your attention. 4 month world cruise, something that you'll only do once, for the two of you costing $60,000 to $80,000.

Substitute any other once-in-a-lifetime large huge discretionary expense, if you wouldn't want to cruise. Maximizing your monthly SS income is one thing, but it doesn't help much for funding a one-time large lump sum. If you've run down your investment portfolio in order to maximize your 70+ SS benefit, then it'll be much harder to come up with this large of a chunk.
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Old 07-04-2015, 09:37 AM   #189
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Yes, but he hasn't answered the inverse question posed by samclem - what if you could take it even earlier than 62, with further decreases? When would you take it?

-ERD50
Well, the lower limit is bounded by the job. You wouldn't take SS while you were still getting W-2 income.
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Old 07-04-2015, 09:41 AM   #190
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Well, the lower limit is bounded by the job. You wouldn't take SS while you were still getting W-2 income.
Artificial limit, assume you are FIRE'd.

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Old 07-04-2015, 10:17 AM   #191
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Substitute any other once-in-a-lifetime large huge discretionary expense, if you wouldn't want to cruise. Maximizing your monthly SS income is one thing, but it doesn't help much for funding a one-time large lump sum. If you've run down your investment portfolio in order to maximize your 70+ SS benefit, then it'll be much harder to come up with this large of a chunk.
All true. Obviously, cash gives options. But how much of one's portfolio is kept "hostage" to the possible need for money to live on when one gets older? Maybe a LOT older? And then we add in the uncertainties of the market, the needed pile gets larger. The increased inflation adjusted income for life that delaying SS provides could, in many cases, be the thing that allows a retired couple to take that cruise rather than feeling the need to leave that 60K in the portfolio "just in case".

There's no way that I'd annuitize all of our portfolio, because we might need a lump sum, because the growth potential is better with it invested, because I don't trust >any< annuity 100%, because I'd just feel uncomfortable without some cushion, etc, etc. But SS plays an important role in diversifying my streams of income, and provides unique attributes not available elsewhere. Delaying to age 70 makes that "leg" about as strong as I'd like it to be.
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Old 07-04-2015, 10:34 AM   #192
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Starting SS after 70 for a higher benefit isn't an option, so I don't know why I'd spend any time thinking about it.
Spending time thinking about extremes is helpful, methinks. Not because you can execute on it, but it provides insight into the decision. There was an earlier post in this thread that listed various things that people found important to the SS timing problem. It might become real obvious which extreme is the best if the thing that's important to you seems like a sweet deal if you could cheat below 62 or above 70.
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Old 07-04-2015, 11:19 AM   #193
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Starting SS after 70 for a higher benefit isn't an option, so I don't know why I'd spend any time thinking about it.
Spending time thinking about extremes is helpful, methinks. Not because you can execute on it, but it provides insight into the decision. There was an earlier post in this thread that listed various things that people found important to the SS timing problem. It might become real obvious which extreme is the best if the thing that's important to you seems like a sweet deal if you could cheat below 62 or above 70.
Maybe, but I have the feeling the person who posed the question was just waiting to pounce on someone who admits they wouldn't wait until 98, and using that to prove it doesn't make sense to wait until 70. All while not answering the pre-62 question posed by ERD.

The more I think about it, the more likely I am to start taking SS when the market seems to be low, as I'd rather be doing less selling of my investments for living expenses. Seems like a good opportunity to do a bit of market timing. If I was 62 now I wouldn't be taking SS, unless my health was declining.
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Old 07-04-2015, 07:00 PM   #194
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Interesting thoughts, RunningBum. My personal market results are down right now but my health is still good. If my health takes a significant turn, it may be worth reviewing my plans (with DW, of course).

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Old 07-06-2015, 08:58 AM   #195
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Interesting thoughts, RunningBum. My personal market results are down right now but my health is still good. If my health takes a significant turn, it may be worth reviewing my plans (with DW, of course).
Somebody else here came up with this. That's why I participate in these threads. I'll give my opinions, but I'll also listen to what others do, and if it makes good sense I'm not too proud to change my plan.
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Old 07-06-2015, 09:04 AM   #196
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The more I think about it, the more likely I am to start taking SS when the market seems to be low, as I'd rather be doing less selling of my investments for living expenses.
Of course, one could have a cash reserve of a year or two's expenses. That should help prevent selling low. Or at least make it less painful.
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Old 07-06-2015, 10:00 AM   #197
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I would say that if your investments pay enough so that deferring SS makes no difference to your quality of life, then the whole question is moot.

Reading your post, it just struck me that there are other issues than just one's living & lifestyle expenses. Like...you're getting along peachy-keen with your $60,000/yr, and then you decide you'd like to see the world, and something like this Cruise Details comes to your attention. 4 month world cruise, something that you'll only do once, for the two of you costing $60,000 to $80,000.

Substitute any other once-in-a-lifetime large huge discretionary expense, if you wouldn't want to cruise. Maximizing your monthly SS income is one thing, but it doesn't help much for funding a one-time large lump sum. If you've run down your investment portfolio in order to maximize your 70+ SS benefit, then it'll be much harder to come up with this large of a chunk.
I'm having trouble seeing how this would work. Maybe some numbers would help. Can you give me an example by filling in the blanks below?

John and Mary are retired, age 62, and have traditional IRAs totaling $_____
If they start SS today, their combined annual benefit will be $_____
If they wait till 70, their combined annual benefit will $______
They feel they can live "well enough" on $60,000 per year.
At age ___
they see an ad with a great, $60,000 price for a once-in-a-lifetime cruise.

Any numbers I put into the blanks result in me saying that starting SS at 62 does not make the cruise any more "doable".

For example, if I use: $900,000; $28,000; $49,000; and 66 I get:

Start at 62 - They withdraw $32,000 per year from their portfolio to support spending. At age 66, they have withdrawn $128,000. The remainder of the portfolio needs to provide them $32,000/year for the rest of their lives.

Start at 70 - They withdraw $60,000 per year from their portfolio to support spending. At age 66, they have withdrawn $240,000. The remainder of their portfolio needs to provide them $60,000 per year for the next 4 years, and $11,000 per year thereafter.

Why can they "afford" the cruise in the first case but not the second?
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Old 07-06-2015, 11:05 AM   #198
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Of course, one could have a cash reserve of a year or two's expenses. That should help prevent selling low. Or at least make it less painful.
Sure, but you can do both, and maybe keep less in cash reserves, because if the market doesn't drop you'd like to have more invested in the markets.
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Old 07-06-2015, 11:18 AM   #199
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...it just struck me that there are other issues than just one's living & lifestyle expenses. Like...you're getting along peachy-keen with your $60,000/yr, and then you decide you'd like to see the world, and something like this ... 4 month world cruise, something that you'll only do once, for the two of you costing $60,000 to $80,000.

Substitute any other once-in-a-lifetime large huge discretionary expense, if you wouldn't want to cruise. Maximizing your monthly SS income is one thing, but it doesn't help much for funding a one-time large lump sum. If you've run down your investment portfolio in order to maximize your 70+ SS benefit, then it'll be much harder to come up with this large of a chunk.
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I'm having trouble seeing how this would work. Maybe some numbers would help. Can you give me an example by filling in the blanks below? ...

Why can they "afford" the cruise in the first case but not the second?
I'll be interested in rayvt's reply. To get more granularity, I put this in a spreadsheet. Without the one-time expense, assuming portfolio keeps up with inflation, the portfolio break-even point is age 80 (well below median LE for a 62 YO).

For delay to 70 case, the WR goes from 3.68%@ age 80, to 4.72 age 86.
For take at 62 case, the WR goes from 10.96%@ age 80, to 32.00 age 86.

Add a one-time $60,000 spend at age 66, and B-E is still age 80 (though numerically improved slightly for delaying).

For delay to 70 case, the WR goes from 4.60%@ age 80, to 6.36 age 86.
For take at 62 case, the WR goes from 13.79%@ age 80, to 80.00 age 86. Yes, 80%! (and they go broke in the next year or two, so have to get by on $28,000 for life.

I've attached the SS for review, in case I flubbed anything.
Attached Files
File Type: xls Forum discusion on delay SS.xls (27.5 KB, 12 views)
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Old 07-06-2015, 01:58 PM   #200
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I'll be interested in rayvt's reply. To get more granularity, I put this in a spreadsheet. Without the one-time expense, assuming portfolio keeps up with inflation, the portfolio break-even point is age 80 (well below median LE for a 62 YO).

For delay to 70 case, the WR goes from 3.68%@ age 80, to 4.72 age 86.
For take at 62 case, the WR goes from 10.96%@ age 80, to 32.00 age 86.

Add a one-time $60,000 spend at age 66, and B-E is still age 80 (though numerically improved slightly for delaying).

For delay to 70 case, the WR goes from 4.60%@ age 80, to 6.36 age 86.
For take at 62 case, the WR goes from 13.79%@ age 80, to 80.00 age 86. Yes, 80%! (and they go broke in the next year or two, so have to get by on $28,000 for life.

I've attached the SS for review, in case I flubbed anything.
I think you're saying that at 0% real interest, deferring to 70 makes sense if one of them will live past 81.

And, at 0% real interest, $32k withdrawals will exhaust at $900k portfolio in 28 years (age 90).

And, one extra $60k withdrawal will cause the portfolio to run out 2 years sooner.

I'll guess that rayvt is expecting more than 0%. But, although higher investment returns eventually favor the age 62 start, the cruise is still "affordable" with the age 70 start.
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