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new fidelity social security tool
Old 12-14-2015, 11:45 AM   #1
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new fidelity social security tool

fidelity introduced a new tool for in house use for optimizing social security benefits .

within days they had to pull it back since the rules changed on file and suspend and restricted application .

so they cancelled our appointment .

well they re-introduced it and we had our consultation today .


just got back from our meeting at fidelity .

we ran a few different scenario's . they run an average life expectancy and an extended one .

the most optimized involved me delaying to 70 .

to give you an idea what it calculated here is the plan. no cola's are added in to these numbers .

i am 63 and my wife 2 years older.

so here is what they have .

my wife is collecting the last 3 years ever since she was 62 . the plan has her stopping in august of 2016 and suspending her early benefit of 707 a month ..

she resumes her benefits in august 2020 when she is 70 at 933.00

i file a restricted application against her record for spousal at 471 per month at age 67 and 10 months , i am 63 now .

i switch to benefits on my record at 70 getting 3345.00 per month .

my wife adds a spousal benefit to her benefit when i file bringing her up to 1258.00 a month .


it really shows how complex things can get if you want to maximize your benefits and reduce dependency on markets and interest rates .
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Old 12-14-2015, 12:02 PM   #2
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Originally Posted by mathjak107 View Post
it really shows how complex things can get if you want to maximize your benefits and reduce dependency on markets and interest rates .
I'm curious as to how much better this strategy is over a simpler one. For example, your wife just keeps collecting her benefit, you start collecting a restricted spousal benefit at 66 and switch to your own benefit at 70. When I looked at a similar more complex strategy for myself, the simpler strategy was ahead until about age 90 at which point the more complex strategy went ahead by $3,000 per year.
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Old 12-14-2015, 01:29 PM   #3
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Just to be clear though, your strategy is not available to those of us who are younger than 62 as of 12/31/15.

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And under this week’s budget legislation, Congress has decided to close these perceived “loopholes” in the Social Security rules. By extending the rules for deemed application, it will no longer be possible to file a restricted application for just spousal benefits. And with an extension of the “suspension” rules that stipulate suspending an individual’s benefits will also suspend any benefits to other people based on the same earnings record, Congress has killed off the various “File and Suspend” strategies to allow spousal and dependent benefits to be paid while still earning delayed retirement credits.

Perhaps most notable for the new Social Security crackdown, though, is the effective date for the rules. While the new limits to Restricted Application will not apply to anyone who is already age 62 or older in 2015, the new crackdown will kick in 6 months from now (thanks to a recent amendment to the original legislation), grandfathering anyone currently going through file-and-suspend but limiting anyone who tries to suspend benefits thereafter.
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Old 12-14-2015, 02:45 PM   #4
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I'm curious as to how much better this strategy is over a simpler one. For example, your wife just keeps collecting her benefit, you start collecting a restricted spousal benefit at 66 and switch to your own benefit at 70. When I looked at a similar more complex strategy for myself, the simpler strategy was ahead until about age 90 at which point the more complex strategy went ahead by $3,000 per year.
the software compares all scenario's and options and selects the one with the biggest dollars . in this case even the month's i would make the changes were optimized for most dollars collected .

just to be clear our plan is based on us being over 62 this year and grand fathered as well as our exact birth dates mattered .
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Old 12-14-2015, 03:56 PM   #5
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the software compares all scenario's and options and selects the one with the biggest dollars .
Then it's not optimizing for the criteria in which I'm most interested. I look for SS to provide important baseline spending in the case of market performance vis-a-vis inflation that lags the norm, or if I live to be 100 (because I've got the "regular" cases covered). I put a much higher value on SS dollars received if my allowable portfolio withdrawals fall (due to poor performance or necessary withdrawals that deplete it) than if the portfolio skyrockets and money isn't a concern.

I want to maximize the >utility< of my SS benefit, not necessarily the expected dollar amount of my total "take" from either SS or SS + portfolio. They could be very different.
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Old 12-14-2015, 04:00 PM   #6
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no way to predict returns or sequences . that was my problem .

i would be spending down invested assets that wil be gone forever if i delay .

i project about a 3-4% average return for a 50/50 mix at least for the near term , maybe 5 years or so . but after that i have no clue .

so you take your pick , longevity risk with ss or markets and interest rate risk taking ss early and being more dependent on markets ..
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Old 12-14-2015, 04:23 PM   #7
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is the tool available on their website or do you have to go in and see someone?
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Old 12-14-2015, 04:26 PM   #8
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it is only used in house .

i am not sure if they are doing it for everyone yet free or even if it will be free ..

we are private access clients so we get a yearly free consultation with our team and i inquired about it for this years .
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Old 12-14-2015, 04:55 PM   #9
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The Bedrock Capital SSAnalyze tool to optimize withdrawals has been updated with the new Social Security rules and has unrestricted access.
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Old 12-14-2015, 05:10 PM   #10
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i would be spending down invested assets that wil be gone forever if i delay .
And the possibly higher SS benefits will be "gone forever" if you take SS earlier. As you say, you can't know what the value of your investments will be in the future, but if they drop (your most critical scenario) then your SS benefits (COLA'd -- for as long as you live) would presumably be more important to you. So, do you seek to "maximize" the upside. or reduce the potential pain from the downside? I know which way I'd lean in my decisionmaking.

Just out of curiosity: would Fidelity benefit by a tool/presentation that encourages people to take SS earlier (and defer taking their assets from their portfolios) or the opposite? I'm not a conspiracy fan, but I do believe that incentives drive actions.
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Old 12-14-2015, 05:15 PM   #11
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anything is possible .

but my entire life i have always planned around what was , what is and what stands a reasonable chance of continuing .

betting on the flyers or what is possible usually never goes well .

as john templton said the most expensive words in the english language is this time is different .
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