Prudential White Paper on Maximizing Soc Sec

hogwild · 05-15-2006, 10:37 AM

Here is a link to an interesting paper on maximizing social security income. I got the link from the "Retirement Weekly" publication:

http://www.incomebridge.com

Admittedly, they do have a product to sell, but I think there is a lot of valuable info in the paper.

tednvon · 05-15-2006, 01:12 PM

That bridging idea sounds like a great project for one the really sharp people on this board who like to run numbers...

Is is possible to develope an instrument like FIREcalc where you can put in dollar amounts from your retirement account and run them against Social Security at various ages (we get those numbers in the mail each year) and then look at the difference in tax liabiltiy using Soc Security as age 62, 63, 64 and so on.

Like FIREcalc you could set an income target and then look at the difference if you took X amount from IRA at age 62 to 70, for example, with or without Social Security to make up the difference...
Maybe FIREcalc already does this and I am not smart enough to understand it!!!

If so, I am sorry...

All the best to everbody on this board.....Ted

jdw_fire · 05-15-2006, 01:32 PM

Quote:

Originally Posted by tednvon

That bridging idea sounds like a great project for one the really sharp people on this board who like to run numbers...

Is is possible to develope an instrument like FIREcalc where you can put in dollar amounts from* your retirement account and run them against Social Security at various ages (we get those numbers in the mail each year) and then look at the difference in tax liabiltiy using Soc Security as age 62, 63, 64 and so on.

Like FIREcalc you could set an income target and then look at the difference if you took X amount from IRA at age 62 to 70, for example,* with or without Social Security to make up the difference...
Maybe FIREcalc already does this and I am not smart enough to understand it!!!

If so, I am sorry...

All the best to everbody on this board.....Ted

Yes you can do this with FIRECalc.* You need your SS numbers for all ages from 62 to 70 that you want to compare and it will require a FIRECalc run for each of those years.

hogwild · 05-16-2006, 07:25 AM

Quote:

Originally Posted by jdw_fire

Yes you can do this with FIRECalc.* You need your SS numbers for all ages from 62 to 70 that you want to compare and it will require a FIRECalc run for each of those years.

Actually, I don't think you can use FIREcalc for this.* FIREcalc doesn't distinguish between taxable and tax-deferred accounts.

jdw_fire · 05-16-2006, 11:25 AM

Quote:

Originally Posted by hogwild

Actually, I don't think you can use FIREcalc for this.* FIREcalc doesn't distinguish between taxable and tax-deferred accounts.

You are right, you would have to figure the taxes on your own.

donheff · 05-16-2006, 01:52 PM

Quote:

Originally Posted by jdw_fire

You are right, you would have to figure the taxes on your own.

I thought that was the idea with Firecalc. Taxes are such a moving target that trying to account for them in an application would be a rat's nest of complexity. Rather, Firecalc calculates the income stream and you figure you taxes based on sources. The same would apply here. You plug in a given SS scenario, evaluate the tax implication (based on best guesses about taxes), adjust the scenario appropriately, shake and repeat.

hogwild · 05-16-2006, 02:54 PM

Quote:

Originally Posted by donheff

I thought that was the idea with Firecalc.* *Taxes are such a moving target that trying to account for them in an application would be a rat's nest of complexity.* Rather, Firecalc calculates the income stream and you figure you taxes based on sources.* The same would apply here.* You plug in a given SS scenario, evaluate the tax implication (based on best guesses about taxes), adjust the scenario appropriately, shake and repeat.

That's seems to be the FIREcalc method. However, the link originally provided in this thread offers another perspective on how to handle the tax impact to social security. Another poster suggested FIREcalc could do this as well, but that is not the case.

New Thinking · 05-18-2006, 01:11 PM

"That bridging idea sounds like a great project for one the really sharp people on this board who like to run numbers..."

I already did and that's why I wrote the paper. This isn't a solution for everyone, but there are many who could benefit. At a minimum, understand the long-term implications of your Social Security decisions.

cute fuzzy bunny · 05-18-2006, 03:30 PM

Its a one-sided paper that gives you part of the story in an attempt to get you to buy a product from an insurance company that may not be appropriate for a lot of people.

Read a little more stuff from some other sources before biting.

Try something a little more balanced like this:

http://www.aarp.org/bulletin/socials...daysooner.html

Nords · 05-18-2006, 03:51 PM

Quote:

Originally Posted by Cute Fuzzy Bunny

Try something a little more balanced like this:
http://www.aarp.org/bulletin/socials...daysooner.html

Yup, the first two things that come to mind when I hear the phrase "fair and balanced" are "AARP" and "FOX News".

I don't see the problem in delaying Social Security-- as long as no one has any incentive to ensure that you're dead before you achieve payback...

cute fuzzy bunny · 05-18-2006, 03:56 PM

But an insurance company trying to sell you an annuity is more objective?

Which part of the AARP article did you find misleading or incomplete?

Nords · 05-18-2006, 04:09 PM

Quote:

Originally Posted by Cute Fuzzy Bunny

But an insurance company trying to sell you an annuity is more objective?

Yeah, "Who paid for that research?" is the answer I'm interested in more than the conclusion.

Quote:

Originally Posted by Cute Fuzzy Bunny

Which part of the AARP article did you find misleading or incomplete?

Don't get me wrong, Dan Moreau did a fine job. He could have referenced Bud Hebeler or Scott Burns but I can understand him not wanting to give away his audience. IIRC at least those two are old enough to tell their readers which option they're actually taking.

No, I'm referring to AARP's hypocritical "name" change from the former meaning of its acronym to just "AARP", plus the relentless marketing/branding/selling/politicizing of their name to their many fine direct-mail afternoon-TV affiliates. It's almost as much fun to whisper "AARP" to my MIL as it is to whisper "George Bush" or "Medicare doughnut hole"...

jdw_fire · 05-18-2006, 04:29 PM

Quote:

Originally Posted by New Thinking

"That bridging idea sounds like a great project for one the really sharp people on this board who like to run numbers..."

I already did and that's why I wrote the paper.* This isn't a solution for everyone, but there are many who could benefit. At a minimum, understand the long-term implications of your Social Security decisions.

New Thinking, don't let CFB throw a wet blanket on your idea, he apparently doesn't like annuities even if the numbers show it is a better approach (see my disscussion with him on the "FYI: Ben Stein's views on asset allocation"* thread) for a given situation.*

cute fuzzy bunny · 05-18-2006, 05:27 PM

Hmm, so looking at both sides of the equation is bad. Gotcha.

Straight from the mouths of people who have already acknowledged that they sell annuities. Gotcha.

I have no problems with annuities...they're sensible for a range of people. Just not everybody. Which is what I said.

I saw no numbers from you that show an annuity is a "better approach" except for a specific example you laid out, with a lot of assumptions that I dont think are anywhere near sure things.

You ducked the question: show me an annuity that pays more than 8% return (payout and/or inflation adjustment) that has a survivor benefit and actually adjusts for high local levels of inflation.

I can get that from a boring old low volatility mutual fund like wellesley or target retirement income. You cannot get that from an annuity.

You are trading the profit margin collected by the insurance company for a guarantee of a lower rate of return than you can make yourself. Nice trade for a risk sensitive older person with no heirs. Lousy choice for a 45 year old with a wife and kids that lives in a high inflation area.

Apparently the annuity outfits pay well enough that the sales people are willing to troll retirement boards

Show me an annuity that pays 4% plus CPI or better and I'll buy it. In buckets.

haha · 05-18-2006, 05:38 PM

Quote:

Originally Posted by Cute Fuzzy Bunny

Show me an annuity that pays 4% plus CPI or better and I'll buy it.* In buckets.

So, how would the insurance company fund it?? I mean for a young person?

Ha

New Thinking · 05-18-2006, 06:29 PM

Bunny - You are obviously entitled to your opinion. I came on this forum 3 years ago. Others too, but mostly this one. I read Bud Hebeler, Scott Burns, and Jonathan Clements..I felt that I could not create a product as good as Social Security for retirees..From its inflation-adjustments to no-cost at retirement. I merely created a product that would allow people to maximize their Social Security. What I found along the way was information that no one had ever brought up (or rarely brought up). The ability to create a much larger benefit for a widow...The signficant tax savings if you take a higher SS benefit. The ability to play one spouse's benefit off of the other. These are all items that the AARP article and all the others, never brought up. Keep in mind that article written in 2002 and earlier reflect an earlier Full Retirement Age and lower Delayed Retirement Credits...The ball game has changed in the last couple of years..The annuity is not going to be a big money maker for the firm. But it will be a solution to provide retirement security for many seniors. As others mentioned in the Frontline thread, most people are not like the members of this board who can manage their finances for thirty years of retirement. I have merely tried to create an option that may be appropriate for some. And I "paid for" most of the research myself through work I did at nights and on weekends because I thought it was the right thing to do.

jdw_fire · 05-18-2006, 07:15 PM

Quote:

Originally Posted by Cute Fuzzy Bunny

Hmm, so looking at both sides of the equation is bad.* Gotcha.

Straight from the mouths of people who have already acknowledged that they sell annuities.* Gotcha.

It is you that appears not to want to give fair consideration to both sides.* And when someone stands up to you, you lie and call them an annuity sales man.* I NEVER "acknowledged that I sell annuities".* In fact I DON'T SELL ANNUITIES, which I told you before, but as before you just make up "facts" to suit your mood.* Do you have an ego problem or something that makes everyone who has a different idea from you wrong because you always have to be right?

Quote:

Originally Posted by Cute Fuzzy Bunny

I saw no numbers from you that show an annuity is a "better approach" except for a specific example you laid out, with a lot of assumptions that I dont think are anywhere near sure things.

The only possible reason you didn't see the numbers is because you did not read my posts, because they are there.* Yes there was a specific example and the assumptions were not unreasonable.* Just because it didn't fulfill all the assumptions you would need doesn't make the ones made unreasonable.* If you did read my posts you must have misunderstood them or your ego got in the way again.

Quote:

Originally Posted by Cute Fuzzy Bunny

Lousy choice for a 45 year old with a wife and kids that lives in a high inflation area.

My example was for a 60yo couple not a 45yo couple so maybe it doesn't work for you.* That is no reason to belittle the idea or the presenter.* Please remember that I agreed with you that each individual should run the numbers on any and every investment product and weigh the associated risks and attributes.* When they find a good balance of risk and return that apply to the term of their expected retirement, they should buy those products.

Quote:

Originally Posted by Cute Fuzzy Bunny

Apparently the annuity outfits pay well enough that the sales people are willing to troll retirement boards

I repeat I DO NOT SELL ANYTHING.

Quote:

Originally Posted by Cute Fuzzy Bunny

Show me an annuity that pays 4% plus CPI or better and I'll buy it.* In buckets.

Do the math on the annuity I used in my example.

jeff2006 · 05-19-2006, 05:33 AM

Lurker here, who can't believe the rudeness directed to Newthinking. He is a senior financial professional (read his bio at the end of the paper), and has put together one heck of a good piece of work. Evidently, he is willing to discuss it with people on this forum. Might be a good opportunity for some of the more aggressive, rude posters to actually learn something without trying to assassinate his character or his motives.

Newthinking -- Thanks!! This forum is lucky to have you.

donheff · 05-19-2006, 06:58 AM

Quote:

Originally Posted by Cute Fuzzy Bunny

Show me an annuity that pays 4% plus CPI or better and I'll buy it. In buckets.

I got curious about annuities because of some of the other threads and took a look at Vanguard's annuity quote application. Vanguard tells me they will give me a lifetime annuity with CPI increases (75% option for my spouse) with payments starting on a monthly basis at 4 months shy of 61 (spouse would be 57). It returned a little better than 4% based on the initial annual payout divided by principal investment.

Is there something I missed here? I figured that it sounds about right. Once my spouse and I kick Vanguard keeps anything that is left. Average life expectancy would be in Vanguard's favor. The principal reason I would choose to rely on investing on my own would be the very real possibilty to leave a huge pile for my kids. But I could see why someone might decide to put a chunk of money in an inflation protected annuity to cover fixed expenses. Then they could take more risk with their other "buckets"

I just got around to this thread and couldn't get to the Prudential paper -- the link on their page failed so I will have to look at it later. But I agree with a couple of other posters who thanked the guy who wrote it and posted the link here. There are plenty of people here to poke holes in "new thinking" so I think it is safe to expose us to this stuff

05-15-2006, 10:37 AM	#1
hogwild Recycles dryer sheets Join Date: May 2006 Posts: 113	Prudential White Paper on Maximizing Soc Sec Here is a link to an interesting paper on maximizing social security income. I got the link from the "Retirement Weekly" publication: http://www.incomebridge.com Admittedly, they do have a product to sell, but I think there is a lot of valuable info in the paper.

05-15-2006, 01:12 PM	#2
tednvon Recycles dryer sheets Join Date: May 2005 Posts: 54	Re: Prudential White Paper on Maximizing Soc Sec That bridging idea sounds like a great project for one the really sharp people on this board who like to run numbers... Is is possible to develope an instrument like FIREcalc where you can put in dollar amounts from your retirement account and run them against Social Security at various ages (we get those numbers in the mail each year) and then look at the difference in tax liabiltiy using Soc Security as age 62, 63, 64 and so on. Like FIREcalc you could set an income target and then look at the difference if you took X amount from IRA at age 62 to 70, for example, with or without Social Security to make up the difference... Maybe FIREcalc already does this and I am not smart enough to understand it!!! If so, I am sorry... All the best to everbody on this board.....Ted __________________ Ted

05-18-2006, 01:11 PM	#8
New Thinking Recycles dryer sheets Join Date: Oct 2005 Posts: 150	Re: Prudential White Paper on Maximizing Soc Sec "That bridging idea sounds like a great project for one the really sharp people on this board who like to run numbers..." I already did and that's why I wrote the paper. This isn't a solution for everyone, but there are many who could benefit. At a minimum, understand the long-term implications of your Social Security decisions.

05-18-2006, 03:30 PM	#9
cute fuzzy bunny Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Dec 2003 Location: Losing my whump Posts: 22,540	Re: Prudential White Paper on Maximizing Soc Sec Its a one-sided paper that gives you part of the story in an attempt to get you to buy a product from an insurance company that may not be appropriate for a lot of people. Read a little more stuff from some other sources before biting. Try something a little more balanced like this: http://www.aarp.org/bulletin/socials...daysooner.html __________________ Many an optimist has become rich by buying out a pessimist

05-18-2006, 03:56 PM	#11
cute fuzzy bunny Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Dec 2003 Location: Losing my whump Posts: 22,540	Re: Prudential White Paper on Maximizing Soc Sec But an insurance company trying to sell you an annuity is more objective? Which part of the AARP article did you find misleading or incomplete? __________________ Many an optimist has become rich by buying out a pessimist

05-18-2006, 05:27 PM	#14
cute fuzzy bunny Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Dec 2003 Location: Losing my whump Posts: 22,540	Re: Prudential White Paper on Maximizing Soc Sec Hmm, so looking at both sides of the equation is bad. Gotcha. Straight from the mouths of people who have already acknowledged that they sell annuities. Gotcha. I have no problems with annuities...they're sensible for a range of people. Just not everybody. Which is what I said. I saw no numbers from you that show an annuity is a "better approach" except for a specific example you laid out, with a lot of assumptions that I dont think are anywhere near sure things. You ducked the question: show me an annuity that pays more than 8% return (payout and/or inflation adjustment) that has a survivor benefit and actually adjusts for high local levels of inflation. I can get that from a boring old low volatility mutual fund like wellesley or target retirement income. You cannot get that from an annuity. You are trading the profit margin collected by the insurance company for a guarantee of a lower rate of return than you can make yourself. Nice trade for a risk sensitive older person with no heirs. Lousy choice for a 45 year old with a wife and kids that lives in a high inflation area. Apparently the annuity outfits pay well enough that the sales people are willing to troll retirement boards Show me an annuity that pays 4% plus CPI or better and I'll buy it. In buckets. __________________ Many an optimist has become rich by buying out a pessimist

05-18-2006, 06:29 PM	#16
New Thinking Recycles dryer sheets Join Date: Oct 2005 Posts: 150	Re: Prudential White Paper on Maximizing Soc Sec Bunny - You are obviously entitled to your opinion. I came on this forum 3 years ago. Others too, but mostly this one. I read Bud Hebeler, Scott Burns, and Jonathan Clements..I felt that I could not create a product as good as Social Security for retirees..From its inflation-adjustments to no-cost at retirement. I merely created a product that would allow people to maximize their Social Security. What I found along the way was information that no one had ever brought up (or rarely brought up). The ability to create a much larger benefit for a widow...The signficant tax savings if you take a higher SS benefit. The ability to play one spouse's benefit off of the other. These are all items that the AARP article and all the others, never brought up. Keep in mind that article written in 2002 and earlier reflect an earlier Full Retirement Age and lower Delayed Retirement Credits...The ball game has changed in the last couple of years..The annuity is not going to be a big money maker for the firm. But it will be a solution to provide retirement security for many seniors. As others mentioned in the Frontline thread, most people are not like the members of this board who can manage their finances for thirty years of retirement. I have merely tried to create an option that may be appropriate for some. And I "paid for" most of the research myself through work I did at nights and on weekends because I thought it was the right thing to do.

05-19-2006, 05:33 AM	#18
jeff2006 Recycles dryer sheets Join Date: May 2006 Posts: 174	Re: Prudential White Paper on Maximizing Soc Sec Lurker here, who can't believe the rudeness directed to Newthinking. He is a senior financial professional (read his bio at the end of the paper), and has put together one heck of a good piece of work. Evidently, he is willing to discuss it with people on this forum. Might be a good opportunity for some of the more aggressive, rude posters to actually learn something without trying to assassinate his character or his motives. Newthinking -- Thanks!! This forum is lucky to have you.