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Old 08-27-2014, 10:58 AM   #21
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Originally Posted by Easypick View Post

Can you think of any reasons not to take the money and run?
If you do the simple math with a 4% (or 3%) SWR, you'll discover that you can safely spend a little more now if you defer SS.

If you're risk averse, and concerned about the double whammy of low investment returns coupled with a long life, deferring SS provides some insurance (this is just a re-statement of the first point).

Fortunately, the differences are so small, due to the SS adjustment in monthly income, that you can't make a "wrong" decision on this.
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Old 08-27-2014, 11:07 AM   #22
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I would take the SS at 62. We can all look back and say what we should have done. In you case with already having heart disease take the money at 62. oldtrig
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Old 08-27-2014, 11:13 AM   #23
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Originally Posted by Easypick View Post
...

• Wife has a state teacher’s pension of $30K per year (no SS contributions)
• My SS at 62 would kick in about $24K per year for a delta of $6K....
Can you think of any reasons not to take the money and run?
Should she die first, would you receive survivor benefits on her pension plus your full SS amount or does GPO come into play in that case too?
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Old 08-27-2014, 11:20 AM   #24
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Should she die first, would you receive survivor benefits on her pension plus your full SS amount or does GPO come into play in that case too?
Good question.

Very curious to see if anyone has a definitive answer.
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Old 08-27-2014, 11:41 AM   #25
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I agree with do the math, in my mind the hardest variable to decide on is life expectancy.

The SSA has piles of raw data here: Life Tables

I have a calculator that uses that data and it says the following:

A 61 year old Male today has the following probabilities of survival:

20% chance of living to 92.
33% chance of living to 89.
50% chance of living to 85.
A 70% chance of living to 78.

Of course these are national averages so you adjust for good and bad health/lifestyle a bit.

This may be obvious to some, but when I did the math it was interesting (but obvious once you think about it) to realize that the older you get the older you can expect to live to at any given probability, so the odds change for you every year (positively).

Once you put a stake in the ground on this, the rest is just modeling the policy. I don't think benefits are that likely to be cut for anyone as close to retirement as you are, but your guess is as good as mine.
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Old 08-27-2014, 11:55 AM   #26
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Originally Posted by 34rlsa View Post
Good question.

Very curious to see if anyone has a definitive answer.
You could quickly satisfy your curiosity with a quick glance at SS.gov which I suggest you do. But, in a nutshell, GPO would not impact survivor benefits of the teacher's pension. GPO impacts survivor and spousal benefits of SS.
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Old 08-27-2014, 12:03 PM   #27
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I don't get the regret thing at all. Unless I know I am going to die early (which makes it a no-brainer to collect as early as possible), I'm going to spend the same whether I'm collecting SS or taking it out of my account. If I do happen to die early, I really doubt I'll be regretting that I spent more of my own money rather than SS money. For one, I'll be more concerned about dying than I am about financial details, and 2) it didn't matter anyway since I wouldn't have spent money differently. Do people who die early also regret that they didn't have a 15% or 20% WR? Most would say that's ridiculous because you wouldn't spend that much in case you didn't die. But it's kind of the same thing.

Too bad for my heirs that I was spending more of my own money rather than SS money, but they could still get more money, and sooner, than if I live to be a lot older.

What I would regret, though, is living into my 90s and every month getting a smaller SS check because I took it early. Maybe I'll be spending less then, but maybe not, because I might need assistance, or want to be able to keep the heat on higher during the winter, help my heirs more while living, etc.

Being single I don't have the factors which may favor one spouse taking SS earlier.

The one thing that gnaws at me is changes (reductions) to the system. I don't believe that the government will make direct reductions to those already eligible without factoring in some fairness for those waiting until 70, but it could happen. What I think is much more likely is that SS becomes fully taxable, which if it happens in my late 60s means I'd have missed getting some tax-free or tax-reduced SS benefits.
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Old 08-27-2014, 12:16 PM   #28
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Yes but in this case this is absolutely untrue.............. I find it impossible to believe that 96K is more valuable than 7K per year COLA's for life for his wife.
I'll suggest your use of the word "absolutely" might not be appropriate. Depending on investment returns on the 4 yrs of SS payments and how long the wife lives beyond 66, delaying SS might or might not be the winner.

I have no problem with the strategy of delaying SS. Everything has it's pros and cons. But it isn't a strategy that's "absolutely" guaranteed to win. It depends....... primarily on the investment returns on the invested SS dollars, the particular tax situation, how long you live, your spouse's financial particulars and how long your spouse lives.

Personally, for folks not impacted by situations such as GPO, I think that if you invest early SS dollars prudently, we have reasonably positive markets and neither you or your spouse have unusually long or short life spans, it isn't going to make much difference whether SS is started at 62, 66, 70.........

I started SS at 62 because of GPO, our particular circumstances and my desire to protect DW financially should I predecease her. So far, the strategy is working thanks to the favorable investment climate during the five years I've been collecting and investing the money for her.
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Old 08-27-2014, 12:28 PM   #29
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Personally, for folks not impacted by situations such as GPO, I think that if you invest early SS dollars prudently and we have reasonable positive markets and neither you or your spouse have unusually long or short life spans, it isn't going to make much difference whether SS is started at 62, 66, 70.........
That's true. During the huge market run up in the 90s I remember talking about it with co-workers also getting rich on stock options and deciding it made sense to take the money early and invest it. However, you would have to take some risk to match the return. Not necessarily and imprudent risk, but a risk nonetheless.
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Old 08-27-2014, 12:40 PM   #30
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I'll suggest your use of the word "absolutely" might not be appropriate. Depending on investment returns on the 4 yrs of SS payments and how long the wife lives beyond 66, delaying SS might or might not be the winner.

I.
My use of the word absolutely was in regards to your quote. I think people are underestimating just how valuable the social security survivor benefit becomes.

"Because your wife is impacted by GPO, it would be to her benefit if you started SS at 62."

Yet the benefits of deferring Social Security is totally unaffected by his wife's GPO, as I calculate the figures, every dollar the OP gains in deferring social security will absolutely go to his wife as a survivor benefit as well. As a matter of fact, since she will have no social security benefit prior to his death, this deferral is even more valuable than a normal spouse where you would have to exceed the spouse's own social security benefit in order for a benefit to accrue. This means this is an example of the survivor benefit accruing at the highest possible value in social security since the OP is also at the absolute maximum of social security payouts.

As for needed returns an annuity with just a 2% annual step up on the Fidelity web site for a 70 year old and a 68 year old today would cost $432,000 and this isn't even a COLA amount. Deferring for 4 years to age 66 gains $7,000 per year and would cost about $200,000 for a couple at that point with today's quotes. That is over 18% per year US government guaranteed return on a $96,000 investment for deferral. The need to overcome this will be a doubling of the stock market over the next 4 years assuming the OP was 100% in stocks.
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Old 08-27-2014, 12:41 PM   #31
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I'll suggest your use of the word "absolutely" might not be appropriate. Depending on investment returns on the 4 yrs of SS payments and how long the wife lives beyond 66, delaying SS might or might not be the winner.

I.
My use of the word absolutely was in regards to your quote, not the benefits accrued. I presume this is referencing the loss of spousal benefits while both are alive.

"Because your wife is impacted by GPO, it would be to her benefit if you started SS at 62."

I think people are underestimating just how valuable the social security survivor benefit becomes.

The benefits of deferring Social Security is totally unaffected by his wife's GPO, as I calculate the figures, every dollar the OP gains in deferring social security will absolutely go to his wife as a survivor benefit as well. As a matter of fact, since she will have no social security benefit prior to his death, this deferral is even more valuable than a normal spouse where you would have to exceed the spouse's own social security benefit in order for a benefit to accrue. This means this is an example of the survivor benefit accruing at the highest possible value in social security since the OP is also at the absolute maximum of social security payouts.

As for needed returns an annuity with just a 2% annual step up for 17,000 per year on the Fidelity web site for a 70 year old and a 68 year old today would cost $432,000 and this isn't even a COLA amount. Deferring for 4 years to age 66 gains $7,000 per year and would cost about $200,000 for a couple at that point with today's quotes. That is over 18% per year US government guaranteed return on a $96,000 investment for deferral of just 4 years. The need to overcome this will be a doubling of the stock market over the next 4 years assuming the OP was 100% in stocks.

One extra added benefit of deferring at least to FRA is that his SS @FRA is $31,000 which means the pension of his wife would be a guaranteed minimum by his social security from cuts and loss to inflation of her teachers pension's while he is alive to $15,500, versus the $12,000 protection the claiming at age 62 SS provides.
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Old 08-27-2014, 12:57 PM   #32
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I'm 50 so I haven't really worried too much about SS yet...since my situation will undoubtedly be very different in 12 years than it is now. I however did a little comparison of the total payout year by year of SS if I were to take it at 62, 67 and 70 years old.

It is interesting that the crossover point where starting SS at 67 would have a total gross payout greater than if I started at 62 occurs after I am 76. If I compare 62 to may expected gross payout when I'm 70, that occurs when I am over 78.

But this doesn't take into account the growth of my investments I could leave in my accounts if I used the SS payments to fund expenses instead of withdrawing from investments. My SS payment at 62 is $21,252. If I leave that in my investments it will continue to grow.

Another way to look at it.. IF I live till 90, then the total payout from 62=$612,766, 67=$755,898, 70=$823,250.

Its not an easy or obvious decision... Lots to think about and it will depend on what my expenses are when I'm nearing 62. I've got some expensive plans for when I retire.

I'd love to hear more about how people made the decision one way or the other.
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Old 08-27-2014, 02:05 PM   #33
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An interesting point that the ss.gov site said was that no matter what age you take ss the average person will get about the same. In other words if you live to the average life expectancy. Of course not everyone is average but to me a bird in the hand is better than two in the bush.
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Old 08-27-2014, 02:14 PM   #34
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I would take the SS at 62. We can all look back and say what we should have done. In you case with already having heart disease take the money at 62. oldtrig
I think this way too.
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Old 08-27-2014, 02:21 PM   #35
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An interesting point that the ss.gov site said was that no matter what age you take ss the average person will get about the same. In other words if you live to the average life expectancy. Of course not everyone is average but to me a bird in the hand is better than two in the bush.
The "about the same" relates to a single life and would be true for a single person.

For a couple you're talking about joint mortality so more analysis is required because in many cases a couple will get more if they defer because of joint mortality unless both people have poor longevity prospects due to hereditary factors or poor health.
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Old 08-27-2014, 06:02 PM   #36
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Originally Posted by LongTerm View Post
I'm 50 so I haven't really worried too much about SS yet...since my situation will undoubtedly be very different in 12 years than it is now. I however did a little comparison of the total payout year by year of SS if I were to take it at 62, 67 and 70 years old.

It is interesting that the crossover point where starting SS at 67 would have a total gross payout greater than if I started at 62 occurs after I am 76. If I compare 62 to may expected gross payout when I'm 70, that occurs when I am over 78.

But this doesn't take into account the growth of my investments I could leave in my accounts if I used the SS payments to fund expenses instead of withdrawing from investments. My SS payment at 62 is $21,252. If I leave that in my investments it will continue to grow.

Another way to look at it.. IF I live till 90, then the total payout from 62=$612,766, 67=$755,898, 70=$823,250.

Its not an easy or obvious decision... Lots to think about and it will depend on what my expenses are when I'm nearing 62. I've got some expensive plans for when I retire.

I'd love to hear more about how people made the decision one way or the other.
I look at this way too, and soon to turn 52, I, like you, have some time until this becomes a concern. I put together a spreadsheet that compares various scenarios against average rates of return and inflation if I invest the SS payments. The crossover point is usually early to mid 80s. The only thing it doesn't take into account is tax implications of getting SS early. I should probably update it to take that into account.
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Old 08-27-2014, 06:04 PM   #37
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Wow, thanks for all the replies. It certainly gives me more to think about.

The GPO offset mentioned by youbet and others was a primary driver for wanting to take SS early. The ideal was to leave “our” money to grow while using SS.

Running Man made the point about the effect of waiting until 70 she would get almost as much as my early SS amount.

Decisions, decisions

It sounds like I need to dust off the spreadsheet and add a few columns. I’ll provide feedback when I get things sorted out.

Thanks again. What a great group.
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Old 08-27-2014, 06:32 PM   #38
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I'd love to hear more about how people made the decision one way or the other.
I'm going to put off SS until at least 66 (FRA) or perhaps 67. The reason is that when I do get The Big Ache the pension drops by 30% for DW. The longer I put off SS the less that affects her income (and thus her options) post-me. I've seen what happens when people fail to take into account unplanned-for events so I'm trying to cover all the bases.

I'm six years older than her, we are both in reasonably good health given our ages so believing that she will outlive me is a reasonable assumption. Her SS benefit is less than half of mine so that is no small thing.

We have everything we need and most of what we want (which being human will never be satisfied) so there is little to be gained by taking SS early. What matters most to me is that I will know she will not be deprived of options if/when I am not there.
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Old 08-27-2014, 07:06 PM   #39
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This critically depends on what ESP planner assumes for equity returns. Do you know what assumptions it uses and what was the variance in outcomes?

Personally I see taking SS at 70 as the best longevity insurance one can buy.
Re the ESPlanner equity return prediction, I actually input a predicted return myself. I used a return that is about 3/4 of the return that I'm getting now from fixed income. The good news about ESPlanner is that once the data is loaded it's possible to test different earnings percentages and see how they affect living standard.
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Old 08-27-2014, 11:01 PM   #40
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I am 61 and the wife is 59. We both have upcoming birthdays, so I am facing the “do I take SS early or not”. I think it is a good move based on the following:

• Our annual expenses less travel are $60K
• Wife has a state teacher’s pension of $30K per year (no SS contributions)
• My SS at 62 would kick in about $24K per year for a delta of $6K
• Her health is good. I had bypass ten years ago (runs in the family), but still doing great
• A 3% withdrawal rate would easily cover the balance ($30K) and travel if no SS taken

Can you think of any reasons not to take the money and run?
Sorry if this common question is already answered.

1. If you need the money now, you have no choice.

2. If have good genes, (know you are going to live a long time), wait.

3. If you have plenty of current money, wait, so you heirs will have more.
or just enjoy life.

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