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Old 06-30-2015, 02:28 PM   #161
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It appears to me the reason people delay until 70 or after FRA and are already retired is to make sure their spouse gets a bigger check if they go.

As I am about to turn 62 and my wife has enough $$$, no reason for waiting to long. Have pensions,stock dividends, 401K's, real estate, etc....

To date, I haven't claimed. I have many relatives, friends with assets in the 2-4 million range and they all claimed at 62. Not that there right. The only reason they tell me is now they can fill out a form and collect as well as they don't know how long they will live.




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Old 06-30-2015, 02:41 PM   #162
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What would the math be, such that everybody would settle on that age?
A "simple" case: single, no kids, no inheritance, optimizing for total financial pay-out.

In that case you take total expected remaining months x monthly pay-out. Incidently, that's what the actuaries do so when they calculate SS so that won't give you an answer.

Optimize for certainty: take as soon as possible.
Optimize against bankruptcy: take SS at the latest when SS benefit > expenses.
Optimize for high pay-out in case of longevity: delay as long as possible.
Optimize for income diversity: wait until income stream is significant part vs. other income streams.

And that's a "simple" case. Different people in different situations with different goals ..
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Old 06-30-2015, 04:35 PM   #163
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Would people be making the same argument for waiting to 78 that they are now making for waiting to 70?

What would be the crossover point? Surely nobody would advocate waiting to 88 ($2760/mo) or 98 ($3560/mo) ?
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.
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Old 07-01-2015, 10:12 AM   #164
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Rayvt, A great thought experiment that I had not considered of before! Thanks for that insight.
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Old 07-01-2015, 10:35 AM   #165
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As confusing and conflicting as the 'When to take SS?" issues are, let's not forget than one great benefit of the system that we all share is the option to make that decision for ourselves and our loved ones. The government has not forced us into a 'one size fits all' system. I am grateful for that.
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Old 07-01-2015, 12:06 PM   #166
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. . . let's not forget than one great benefit of the system that we all share is the option to make that decision for ourselves and our loved ones. The government has not forced us into a 'one size fits all' system. I am grateful for that.
+1. I appreciate the flexibility. I hope the attention on cutting out "loopholes" doesn't turn to "reducing the "age 70 jackpot for those who delayed and so don't really need the money." If anything, since federal, state, and local govt are on the hook for needs-based poverty relief, the more rational argument would be to deny the ability to file until the recipient would have enough monthly income from SS to assure they don't become a liability on those other programs.
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Old 07-01-2015, 03:37 PM   #167
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But I can imagine, if they offered to extend the deal for a year - if I looked at my situation at age 70, is it conceivable I'd delay another year, or another year? Yes, I think so. If I didn't need the money that year, and still wanted to provide for DW on my passing (after all, she will lose on total SS, and taxes will go up), so I might.
This can become an infinite regress, similar to the One More Year retirement decision. Each year you decide to defer OMY because you'll get more money. Next year, you see that you'll get more if you wait OMY, etc..... until the day that your clock runs out.
At some point you have to say enough is enough. Otherwise you'll wind up like one of my co-workers, who delayed and delayed retiring --- until one day his widow called and said he wouldn't be coming in ever again.

My plan for providing for DW is to have a couple $mill in various broker accounts, and also some check from SS that just messes up balancing the checkbook.
The current absolute maximum SS benefit is ~$42,182/yr. That's 132% of the maximum FRA benefit of $2,663/mo. Most people won't get that high.

4% SWR on $2M is $80,000. Unless she becomes a cougar, that $80K will more than support her. By comparison, median family income (2014) is $54,000. Whatever she gets from SS will just go the the grandkids and charities. Delaying my SS won't benefit her, it'll just benefit whoever she gives the extra money to.

------------------------

FWIW, I just read last night that someone (Obama?) alluded to removing the File-and-Suspend strategy. This is something that would probably be easier for them to do than means testing. Wouldn't have problems about grandfathering, either. Just "no spousal benefit unless you have filed and are receiving benefits. If you have already F&S'ed you just have to un-suspend." The File-and-Suspend is probably an accidental loophole anyway, since the general rule for spousal is "not available until the primary has filed." F&S is just a way to pretend you have filed when, for all practical purposes, you haven't.
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Old 07-01-2015, 04:35 PM   #168
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Once I turn 62 I look as SS as more of an option to start cash flow if my portfolio results are suboptimal and my nestegg declines to a point where I am uncomfortable. If I'm still comfortable, then defer and get the longevity insurance because we are both in good health and have good longevity in the family so we might live long.
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Old 07-02-2015, 11:54 AM   #169
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Would people be making the same argument for waiting to 78 that they are now
making for waiting to 70?
At one point you die and would get nothing. So there's that.
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Old 07-02-2015, 12:10 PM   #170
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At one point you die and would get nothing. So there's that.
But if your spouse is eligible, they get the increased amount for life. So there's that.

Anticipating your next comment - At one point they die and would get nothing. So there's that. So if you care, a break-even analysis might apply to your heirs - but w/o a predetermined date-of-death, that's a crap-shoot.

Personally, I'm much more inclined to want to avoid needing any $ assistance from our kids, than I am in leaving them anything.

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Old 07-02-2015, 01:21 PM   #171
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Personally, I'm much more inclined to want to avoid needing any $ assistance from our kids, than I am in leaving them anything.

-ERD50
Agreed. And it does seem like eliminating the questionable "file and suspend" strategies would go a long way towards this. Why have our kids likely paying higher FICA or having later FRA ages, etc., when we can trim SS expenses with the simple change of eliminating the "suspend" from "file and suspend?" I think the kids have enough of a burden financing their own retirements without picking up the tab for F and S type of schemes likely never intended by Congress.
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Old 07-02-2015, 02:32 PM   #172
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Agreed. And it does seem like eliminating the questionable "file and suspend" strategies would go a long way towards this. Why have our kids likely paying higher FICA or having later FRA ages, etc., when we can trim SS expenses with the simple change of eliminating the "suspend" from "file and suspend?" I think the kids have enough of a burden financing their own retirements without picking up the tab for F and S type of schemes likely never intended by Congress.
Right, to the extent that these 'strategies' draw more from SS, that is pushing more on the younger generation.

I have not run through the hypotheticals of a rule change, or what seems 'fair' and what is a stretch, right now I'm just trying to understand how to apply them for my case (that's hard enough!). And since we don't know our dates of demise, no way to say whether any plan I chose will be a good deal for future SS (our kids) or not.

But offhand, the F&S so spouse can switch back and forth between claiming their benefit or their 'share' of their spouse's benefit (if I said that right?) does strike me as a bit of a stretch from what was intended (but then, they should write what they intended - it's their job). If they disallow it in the future for those reasons, fine, I think it still makes sense for me to delay, and DW can collect on her record alone (while I'm alive). It would likely be less SS for us over our lifetime, but that longevity insurance is what I'm really looking at (my delayed SS becoming her lifetime benefit), so if they make the F&S change, so be it.

If things work out along the lines of what I am planning for, I will not update this thread, as I won't be around to report on it!

-ERD50
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Old 07-02-2015, 03:06 PM   #173
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And since we don't know our dates of demise, no way to say whether any plan I chose will be a good deal for future SS (our kids) or not.
Very true. And you also have to include the variability of investment returns in the equation. As mentioned earlier, I started SS at 62 because of our situation here (wife is impacted by GPO) and got lucky. For the 6 years I've been collecting, I've been investing the monthly electronic check into a market where the S and P 500 has almost tripled! Likely, I have the difference between collecting at 62 and collecting at 70 covered (by the private sector) assuming some level of positive returns, moderate inflation going forward and a typical life span.

But, as you say, who knows? You pay your money, you take your chance. How long you'll live and the investment returns on the money you'll collect early and inflation are all unknowns when you make the SS decision.

I guess my bottom line is that I hope SS survives to do its job to minimize the extent that kids have to directly help to support parents but at the same time SS does not become excessively burdensome to the kids as they struggle to prepare for their own retirement.

In a decade or so when demographics start to change (Boomers start croaking in greater numbers and therefore cast fewer votes), it'll be interesting to see what the politicians do with SS.
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Old 07-02-2015, 03:13 PM   #174
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At one point you die and would get nothing. So there's that.

Why not used that as an excuse to save nothing at all, and go into debt the maximum that foolish lenders will allow you to?

After all when you're dead, what can they do about it?
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Old 07-02-2015, 03:20 PM   #175
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... I guess my bottom line is that I hope SS survives to do its job to minimize the extent that kids have to directly help to support parents but at the same time SS does not become excessively burdensome to the kids as they struggle to prepare for their own retirement.
My parochial attitude is that I hope to save some of our money, which will include some claimed SS benefits, for my children, who will not get the same SS deal ourselves and our predecessors get. Hopefully, they will not need it, and will not spend it all but to pass it on to their offsprings.
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Old 07-02-2015, 04:21 PM   #176
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I think Rayvt's question gets at the point, the reason we will delay benefit is because 1) we can afford to do so 2) the monthly benefit increase provides a cola adjusted longevity insurance for the delay.
I think my answer to the question is yes, given my health situation has not changed I would continue to delay benefit for the increased benefit. Now since I filed and suspended at FRA I always have the option to request the big lump sum from a prior date. I think the system is fair as the government increase is based on actuarial tables, why it's often quoted as actuarially neutral, but as a healthy person with longevity genes I get an advantage relative to the population who makes up the actuarial distribution.


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Old 07-03-2015, 09:18 AM   #177
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Personally, I'm much more inclined to want to avoid needing any $ assistance from our kids, than I am in leaving them anything.

-ERD50
We've already informed each of our kids (individually) that we plan to move in with them when I'm somewhere between 75 and 80. I want to disabuse them of the notion that they'll inherit a pot-load of money when we die.
I've heard too many stories of kids whose retirement plan is "inherit from Mom & Dad" instead of saving & investing on their own.

One DIL already thinks that we should not be going on long cruises, that we should give that money to them (all the kids) instead.
Telling her our terminal plan helped get her mind right.
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Old 07-03-2015, 09:58 AM   #178
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When I read this, I had an insightful new question.

Recalling that anchoring bias is one of the common behavioral fallacies, the question that popped into my head was, "Why do we focus on 70? Other than that's the last age where deferral credit ceases, of course." But what if it didn't stop at 70, what if it kept going at the same rate of 24/36% per month?

If you deferred for another 8 years, you'd get 96% more money, $1960 for each $1000 at FRA. $750 at 62. Waiting 8 years to 70 gets you $570 more, waiting another 8 years gets you $1210 more - an additional $640.

Would people be making the same argument for waiting to 78 that they are now making for waiting to 70?

What would be the crossover point? Surely nobody would advocate waiting to 88 ($2760/mo) or 98 ($3560/mo) -- So there's got to be some age between 62 and 98 where people would agree that you shouldn't defer beyond. What would the math be, such that everybody would settle on that age?
Under current rules, the math argument for deferring from 66 to 67 is stronger than for deferring from 69 to 70. That's because the "actuarially neutral" percentage increase keeps going up as people get older, while the current rule of 8% of the PIA per year actually produces a decreasing percentage increase.

I happen to be in the 66 to 70 window right now. I'm looking more closely at the one-year deferrals and seeing that each one is less valuable to me than the prior deferral.

So, yes, if they simply allowed extra ages at 8% of the PIA, any of us could do the one-year deferral analysis and, depending on our own guesses regarding mortality and investment returns, eventually reach a year when deferring no longer makes sense.

Note, however, that if our hypothetical were that the law would provide a new set of "actuarially neutral" increasing percentages for deferral beyond 70, then the analysis would make deferring attractive as long as I feel I'm in better health than the pool used for those factors.
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Old 07-03-2015, 11:32 AM   #179
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I think rayvt asks a good question. If you could grow SS forever by deferring where would you stop? It is easy to say never, but I'm not sure that increased benefits by themselves are enough. Under that kind of rationale, DH and I would still be working full-time since one way to get more money to spend is to not work.

SS tells me in my last statement that my age 70 payment would $41232 a year. Now, if I got to age 70 and it would still grow each year even if I didn't take it, I could of course still not take it.

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.

It seems that logic could apply to younger ages as well as at age 70. I do think the longevity aspects of SS are a factor, but they aren't the only factor.

On the other hand, if
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Old 07-03-2015, 12:05 PM   #180
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I think rayvt asks a good question. ...
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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