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Laurence Kotlikoff - Maximize my SS.com
Old 06-14-2015, 12:31 PM   #1
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Laurence Kotlikoff - Maximize my SS.com

I have explored several of the options regarding when to claim SS for me and my DW. Has anyone used the program from Maximizemysocialsecurity.com? The program does not take into account the tax ramification of RMDs, but it may help clarify some alternatives for us.

Thanks to all for your input - or suggestions.
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Old 06-14-2015, 12:44 PM   #2
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Just don't pay any money for it.

All you really need to know is what the SSA says about when to claim. And what they say is "it is actuarially neutral, no matter when you claim".

All the rest of it is personal preference as to the shape of the income stream from SS. More dollars/mo for fewer years, vs. fewer dollars/mo for more years. Vanilla icecream vs. chocolate.

All the other information about SS tweaks you might want to know is freely available on the web, no need to pay $40 for that info.
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Old 06-14-2015, 12:51 PM   #3
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Just don't pay any money for it.

All you really need to know is what the SSA says about when to claim. And what they say is "it is actuarially neutral, no matter when you claim".

All the rest of it is personal preference as to the shape of the income stream from SS. More dollars/mo for fewer years, vs. fewer dollars/mo for more years. Vanilla icecream vs. chocolate.

All the other information about SS tweaks you might want to know is freely available on the web, no need to pay $40 for that info.
All good points, rayvt.

As far as taxes and RMDs, we model with the FIDO RIP - it does take into account taxes and it is free. You can get a spreadsheet with taxes by year that include RMDs. It is pretty basic on the tax part. Ours are usually less than what they show due to deductions, but I think for us it allows worst case tax planning, at least based on current tax rates.
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Old 06-14-2015, 01:18 PM   #4
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All good points, rayvt.

As far as taxes and RMDs, we model with the FIDO RIP - it does take into account taxes and it is free. You can get a spreadsheet with taxes by year that include RMDs. It is pretty basic on the tax part. Ours are usually less than what they show due to deductions, but I think for us it allows worst case tax planning, at least based on current tax rates.
Glad to see someone address this. It looks a little suspicious to me too, but having a worst case in front of you helps me plan.
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Old 06-14-2015, 01:38 PM   #5
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Glad to see someone address this. It looks a little suspicious to me too, but having a worst case in front of you helps me plan.
I think their medical costs are too high as well, so I adjust for that. But otherwise I find it a very helpful program.
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Old 06-14-2015, 01:43 PM   #6
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I have explored several of the options regarding when to claim SS for me and my DW. Has anyone used the program from Maximizemysocialsecurity.com? The program does not take into account the tax ramification of RMDs, but it may help clarify some alternatives for us.
I'm going to disagree with rayvt--the Kotlikoff program looks to be well worth the money for most people. With all the different angles and claiming strategies regarding spousal benefits, the fact that "actuarily neutral" ain't the same as "of equal utility to the claimant", etc, it looks like $40 well spent considering the hundreds of thousands of dollars in benefits we're talking about. One good idea from the program is all you'd need to regain the 40 clams, and even if you change nothing you'll know you've explored all the options. Some of these decisions are hard/impossible to undo. He's not a fly-by-night author, he's a widely recognized go-to guy on SS claiming strategies. When I get closer to needing it, I intend to buy. Yes, the info is also somewhere on the web, but being walked through the decisions by someone who has studied the ins and outs is useful.
Use the search function to find more on this here--we've discussed his program before.

I have no financial interest in Kotlikoff's books or program.
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Old 06-14-2015, 02:52 PM   #7
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I read this someplace and liked it. Here is one guy's rationale for taking SS at age 70, after constructing these 4 scenarios:
1) Take SS at 62 and die sooner than average. -- I paid more into SS than I collected, but I'm dead and don't care.
2) Take SS at 70 and die sooner than average. -- I paid more into SS than I collected, but I'm dead and don't care.
3) Take SS at 62 and die much later than average. -- Taking lower SS could hurt me if my retirement portfolio is not enough for my unexpected long life. Potentially a large cost.
4) Take SS at 70 and die much later than average. -- I'm getting the maximum, inflation adjusted SS benefit at the same time I'm spending more than expected from my retirement portfolio. Potentially a large advantage.

The absolute amount of dollars received is outweighed by the utility of those dollars in each scenario.
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Old 06-14-2015, 04:44 PM   #8
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All good points, rayvt.

As far as taxes and RMDs, we model with the FIDO RIP - it does take into account taxes and it is free. You can get a spreadsheet with taxes by year that include RMDs. It is pretty basic on the tax part. Ours are usually less than what they show due to deductions, but I think for us it allows worst case tax planning, at least based on current tax rates.
What is this FIDO RIP ?

So far, my plan is to spend some $$ on one of these calculator programs when the time comes, as I'm too worried about missing some important points. I think of it as a confirmation insurance payment that my actions at the time will be correct.
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Old 06-14-2015, 04:45 PM   #9
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I'm going to disagree with rayvt...
+1 I would agree with him for singles, but for married people or people with children under 18 it is more complicated and certain claiming strategies are optimal and others are suboptimal. Given the $ involved in a claiming decisions, I'd spend the $40.
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Old 06-14-2015, 04:55 PM   #10
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What is this FIDO RIP ?
https://www.fidelity.com/calculators...income-planner
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Old 06-14-2015, 08:20 PM   #11
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I have my own home grown spreadsheet, too, but we used the RIP to validate that my numbers were in right ballpark. RIP and the CES were what we used for reasonableness tests and validation in our planning.

The one thing I really like about the Fido RIP is it provides a year by year snap shot with likely portfolio balances, taxes, expenses, etc. Part of the reason we are looking at age 62 for SS is that it provides a bit more income and portfolio balance smoothing than some of our other options, which we can see in one chart.

Some of the calculators we looked at in the past just had ending numbers and we do have a higher "retirement plan termination" balance with delaying SS. But it is at the cost of maybe a bit bumpier ride and more dips along the way. We both looked at the different charts from the RIP and liked the smoothing idea. YMMV.
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Old 06-14-2015, 10:01 PM   #12
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Originally Posted by jpjr View Post
I have explored several of the options regarding when to claim SS for me and my DW. Has anyone used the program from Maximizemysocialsecurity.com? The program does not take into account the tax ramification of RMDs, but it may help clarify some alternatives for us.

Thanks to all for your input - or suggestions.
I tried that site. I wanted to double check my calcualtions how DW's GPO affected her SS survivor benefit. And I found my corroboration. The only issue I have with them is there could be better explanations of their black box calculations.
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Old 06-15-2015, 08:34 AM   #13
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I read this someplace and liked it. Here is one guy's rationale for taking SS at age 70, after constructing these 4 scenarios:
1) Take SS at 62 and die sooner than average. -- I paid more into SS than I collected, but I'm dead and don't care.
2) Take SS at 70 and die sooner than average. -- I paid more into SS than I collected, but I'm dead and don't care.
3) Take SS at 62 and die much later than average. -- Taking lower SS could hurt me if my retirement portfolio is not enough for my unexpected long life. Potentially a large cost.
4) Take SS at 70 and die much later than average. -- I'm getting the maximum, inflation adjusted SS benefit at the same time I'm spending more than expected from my retirement portfolio. Potentially a large advantage.

The absolute amount of dollars received is outweighed by the utility of those dollars in each scenario.
Yah, it's easy to "prove" that what you want to do is the best of all possible alternatives --- if you ignore the alternatives that show the opposite.

Here's a couple he didn't list:
5) Take SS at 62, use the money for your dream vacation hiking Machu Picchu.
6) Take SS at 70, watch Machu Picchu programs on Discovery cable channel, wishing there was a way to lug your oxygen tank and wheel-chair to the Peru highlands.


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The absolute amount of dollars received is outweighed by the utility of those dollars in each scenario.
The sole value of money is what it buys you. Otherwise it's nothing more than Monopoly Dollars. A million $ is worthless to a man on a desert island.
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Old 06-15-2015, 09:52 AM   #14
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SSAnalyze - Bedrock Capital Management

Totally free and provides strategy for claiming that maximizes the family expected benefit. (taxes are not really considered)
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Old 06-15-2015, 10:00 AM   #15
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Here's a couple he didn't list:
5) Take SS at 62, use the money for your dream vacation hiking Machu Picchu.
6) Take SS at 70, watch Machu Picchu programs on Discovery cable channel, wishing there was a way to lug your oxygen tank and wheel-chair to the Peru highlands.
The sole value of money is what it buys you. Otherwise it's nothing more than Monopoly Dollars. A million $ is worthless to a man on a desert island.
Except that you're completely wrong! .... You actually get to spend more money at age 62, by delaying S.S. to age 70 .... Just do the math.

************************************************** *****
Forget trying to calculate how much 'You'll Get'...Focus on How much you get to spend.

Here is a pretty simple calculation for those that wish to spend more money in retirement and do not care about leaving an estate. For those that have a Big enough Portfolio and can afford to wait until 70 to take SS, you'll have more to spend every year of retirement.

Let's Say you retire this year at age 62 with the $1 Million Portfolio and decide to take a 4% SWR. You get Social Security of $19,476 per year at age 62 and delaying to age 70 would get you $34,092 per year. Let's assume no inflation for ease of calculations.

Scenario age 62. Your SWR is $40K per year and Social Security of $19,476 gets you a Spending total of $59,476 for each year of your retirement period.

Scenario age 70.
You stash 8 years of $34,092 from your portfolio into a savings account for a total of $272,736. Your portfolio is now down to $727,264. Your 4% SWR is now $29,090 per year and you remove $34,092 from your savings account giving you a total of $63,182 to spend each year for the rest of your 30 year retirement period.

The Delay to age 70 gives you $3,706 more every year starting at age 62 with no more increased risk.

No need for any stupid 'break even analysis'.

If your WR is more conservative, such as a majority of the people here and myself, the results are even more compelling. At a 3% WR plus SS at age 62 scenario is a total of $49,476 and the age 70 scenario is $55,910. The delay of SS to age 70 now increases your annual spending by $6,434.

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Old 06-15-2015, 10:03 AM   #16
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SSAnalyze - Bedrock Capital Management

Totally free and provides strategy for claiming that maximizes the family expected benefit. (taxes are not really considered)
Interesting calculator, thanks. I am single and plan to stay that way. The real variable on this calculator is the expected age of death. Up to age 81 it says I should file at 62. From 82 to 84 it says I should file at age 68. From 85 to 88 it says age 69 and 89 years old an and up to file at 70. Fact is nobody knows what age they will die. Good health can be ruined by a car accident. I practiced a life of delayed gratification so I could retire, in retirement it's all about recognizing mortality and diminishing abilities as I age, I am adjusting to live in the present. I am taking it at 62 without reservations.

In addition taking SS before 65 provides me with some taxable income needed to get into subsidy range for the ACA.
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Old 06-15-2015, 10:06 AM   #17
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If your WR is more conservative, such as a majority of the people here and myself, the results are even more compelling. At a 3% WR plus SS at age 62 scenario is a total of $49,476 and the age 70 scenario is $55,910. The delay of SS to age 70 now increases your annual spending by $6,434.
If you live long enough to reach past the crossover point and taxes and benefits do not change. Otherwise if you die earlier, your estate is smaller than it might have been. This is the actuarially neutral part. If you claim early and die early you win (sort of) or claim late and live to a ripe old age you / your estate comes out ahead.

Taxes will probably be a big consideration for us. I am not sure how helpful a program that didn't account for taxes would be. That would be like using a vacation planning site that looked at room rates without letting you know when hurricane season starts.
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Old 06-15-2015, 10:46 AM   #18
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Old 06-15-2015, 12:26 PM   #19
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If you live long enough to reach past the crossover point and taxes and benefits do not change. Otherwise if you die earlier, your estate is smaller than it might have been. This is the actuarially neutral part. If you claim early and die early you win (sort of) or claim late and live to a ripe old age you / your estate comes out ahead.
I don't consider estate impact. That is quite literally Somebody Else's Problem. It may be critical to somebody, but that somebody isn't me. I'm dead, deceased, and pining for the fjords.

I treat SS income as longevity insurance. The only goal is to maximize monthly income in case other sources of revenue fail, in which case there isn't much of an estate to fret about. In my particular case, DW is involved and maximizing survivor monthly income is included in the plan.
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Old 06-15-2015, 12:44 PM   #20
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I don't consider estate impact. That is quite literally Somebody Else's Problem. It may be critical to somebody, but that somebody isn't me. I'm dead, deceased, and pining for the fjords.

I treat SS income as longevity insurance. The only goal is to maximize monthly income in case other sources of revenue fail, in which case there isn't much of an estate to fret about. In my particular case, DW is involved and maximizing survivor monthly income is included in the plan.
I think that is why there is no single correct answer to the SS question for every household. We all have different priorities and goals to maximize.
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