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Re: Return more than planned
Old 12-09-2006, 10:50 AM   #61
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Re: Return more than planned

Quote:
Originally Posted by rmark
I suspect your friends will want more $$$ from me now that my daughter is graduating college and probably off to law school. Its a painful day when your only deduction leaves home.
Not as painful as having the deduction and paying for law school for her.
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Re: Return more than planned
Old 12-09-2006, 11:23 AM   #62
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Re: Return more than planned

My brother asked what she wanted for christmas. I suggested
1. scholarship to law school
or
2. wal-mart gift card.

For some reason he preferred choice number 2.
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Re: Return more than planned
Old 12-11-2006, 10:18 AM   #63
 
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Re: Return more than planned

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Originally Posted by CCdaCE
In regards to delaying SS, maybe you'll have to reference the original conversation... and I missed this part but...

What about the $125K you gave up based on NOT getting roughly $1300/month or $15.6K for the 8 years between 62 and 70. The $15.6K income times 25 would require a portfolio of $390K.

There must be a breakeven analysis in here somewhere...
-CC
I agree that I have an error in my calculation, but you have a larger one in yours. Let me explain and correct it.

Yes, there is the $125K plus some interest you forego by not taking SS at age 62. This would work out roughly to $150K at age 70. This would throw off an additional $6K of income with a SWR of 4% from age 70 on. So with an extra $14K of income at age 70 offset by $6K would still give you $8K more per year - Or the Equivalent of needing an extra $200K in your portfoilo, if you took SS at age 62 to match the income gained by delaying to age 70.

The extra 15.6K of income that you referred to would not require a portfoilo of $390K because it only lasts for 8 years. Rather than a 40 year span which the 4% is usually calculated from.

So, even ignoring some tax advantages, delaying SS to age 70 allows you to spend an extra $200K+ from age 62-70 and still be in the same portfoilo position as if you did not spend it and took SS at age 62!

The break-even point that you reference is irrelevant, if you are concerned with spending money instead of heaping it in a pile to leave to some heirs! I used to think about it this way, until I started thinking in terms of spending the money instead of piling it up!
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Re: Return more than planned
Old 12-11-2006, 02:09 PM   #64
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Re: Return more than planned

Fantastic.

Yeah, others corrected me, that it wouldn't take $390K for only 8 years. I agree.

Your new number sounds better.

-CC
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Re: Return more than planned
Old 12-11-2006, 02:34 PM   #65
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Re: Return more than planned

Cut-Throat- sounds good:
So, even ignoring some tax advantages, delaying SS to age 70 allows you to spend an extra $200K+ from age 62-70 and still be in the same portfoilo position as if you did not spend it and took SS at age 62!

BUT I tried a few FireCalc runs and could not get it to give me that dough! I compared taking SS at 62 with the corresponding benefit from my annual report to starting SS at age 70 with the higher benefit, got the same WR and %! What could I be missing (ignoring the "Tax Torpedo" for now)?

Thanks
DoS
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Re: Return more than planned
Old 12-11-2006, 03:42 PM   #66
 
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Re: Return more than planned

Quote:
Originally Posted by Duke of Sands
Cut-Throat- sounds good:
So, even ignoring some tax advantages, delaying SS to age 70 allows you to spend an extra $200K+ from age 62-70 and still be in the same portfoilo position as if you did not spend it and took SS at age 62!

BUT I tried a few FireCalc runs and could not get it to give me that dough! I compared taking SS at 62 with the corresponding benefit from my annual report to starting SS at age 70 with the higher benefit, got the same WR and %! What could I be missing (ignoring the "Tax Torpedo" for now)?

Thanks
DoS
OK, I played with FireCalc a bit, and I indeed got a higher SWR for delaying SS to age 70.

I took all the FireCalc defaults and plugged in my SS at age 62 (which I set for this year) and got a 6.10% SWR for the default 30 year plan. I then plugged in my age 70 SS numbers for 8 years from now. I indeed got a 6.29% withdrawal rate for Delaying SS to age 70.

This is not as dramatic as being able to spend an extra $200K between age 62-70, but remember this is for the entire life of the plan - 30 years.

Play around with the defaults of FireCalc first and once you are convinced you get different numbers, then you can start varying the other numbers for your personal plan.
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