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Old 03-08-2012, 02:28 PM   #241
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Just to add some more reference material on the subject, the following was just published this week:
How to Outsmart Social Security - SmartMoney.com

And relates to the idea of considering taking SS only when we are at a higher interest rate environment. IOW, in today's world, you would be better off delaying. I'll let you read the contents of the article to consider that theory.

It also has refrence to "present value"; something also discussed in this thread.

Just more fuel to put on the fire - but still no "best way" to proceed for most. As always, "it all depends"...
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Old 03-08-2012, 03:17 PM   #242
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"all of this seems menacingly complex, it's because it is. And most retirees don't seem to maximize the present value of their benefits." [from the article]

My understanding of pv is that a crux value is the "discount rate", which tries to capture a person's wish to spend soon than to defer till later. How do the named researchers make the above claim without knowing that? My discount rate sometimes changes hourly when things look dodgy, which just reinforces "it all depends"
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Old 03-08-2012, 03:45 PM   #243
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Quote:
Originally Posted by bld999 View Post
"all of this seems menacingly complex, it's because it is. And most retirees don't seem to maximize the present value of their benefits." [from the article]

My understanding of pv is that a crux value is the "discount rate", which tries to capture a person's wish to spend soon than to defer till later. How do the named researchers make the above claim without knowing that? My discount rate sometimes changes hourly when things look dodgy, which just reinforces "it all depends"
They do it based on the "real rate" of a safe return, which takes into account both the discount rate and inflation in one fell swoop.
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Old 03-08-2012, 05:03 PM   #244
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They do it based on the "real rate" of a safe return, which takes into account both the discount rate and inflation in one fell swoop.
Is it not fairly described here?:


Time preference - Wikipedia, the free encyclopedia

"In economics, time preference (or "discounting") pertains to how large a premium a consumer places on enjoyment nearer in time over more remote enjoyment....Time preferences are captured mathematically in the discount function. The higher the time preference, the higher the discount placed on returns receivable or costs payable in the future."

I always thought when it came to individuals, a broader view of preference was considered.
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Old 03-09-2012, 02:37 PM   #245
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Is it not fairly described here?:


Time preference - Wikipedia, the free encyclopedia

"In economics, time preference (or "discounting") pertains to how large a premium a consumer places on enjoyment nearer in time over more remote enjoyment....Time preferences are captured mathematically in the discount function. The higher the time preference, the higher the discount placed on returns receivable or costs payable in the future."

I always thought when it came to individuals, a broader view of preference was considered.
That says nothing about inflation though. Maybe I'm missing your point.
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Old 05-01-2012, 07:51 AM   #246
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A new paper was published this week at NBER. Here's the pertinent text:
Social Security benefits may be commenced at any time between age 62 and age 70. As individuals who claim later can, on average, expect to receive benefits for a shorter period, an actuarial adjustment is made to the monthly benefit amount to reflect the age at which benefits are claimed. We investigate the actuarial fairness of this adjustment. Our simulations suggest that delaying is actuarially advantageous for a large subset of people, particularly for real interest rates of 3.5 percent or below. The gains from delaying are greater at lower interest rates, for married couples relative to singles, for single women relative to single men, and for two-earner couples relative to one-earner couples. In a two-earner couple, the gains from deferring the primary earner’s benefit are greater than the gains from deferring the secondary earner’s benefit. We then use panel data from the Health and Retirement Study to investigate whether individuals’ actual claiming behavior appears to be influenced by the degree of actuarial advantage to delaying. We find no evidence of a consistent relationship between claiming behavior and factors that influence the actuarial advantage of delay, including gender and marital status, interest rates, subjective discount rates, or subjective assessments of life expectancy.

The highlighting is mine. If you plan to retire/claim in 10 years interest rates might be much higher and therefore the accepted recommendations about when to apply might change. I guess the best retirement plan allows for a lot of flexibility. The report is here: The Decision to Delay Social Security Benefits: Theory and Evidence
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Old 05-01-2012, 08:47 AM   #247
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A new paper was published this week at NBER. Here's the pertinent text:
Social Security benefits may be commenced at any time between age 62 and age 70. As individuals who claim later can, on average, expect to receive benefits for a shorter period, an actuarial adjustment is made to the monthly benefit amount to reflect the age at which benefits are claimed. We investigate the actuarial fairness of this adjustment. Our simulations suggest that delaying is actuarially advantageous for a large subset of people, particularly for real interest rates of 3.5 percent or below. The gains from delaying are greater at lower interest rates, for married couples relative to singles, for single women relative to single men, and for two-earner couples relative to one-earner couples. In a two-earner couple, the gains from deferring the primary earnerís benefit are greater than the gains from deferring the secondary earnerís benefit.

We then use panel data from the Health and Retirement Study to investigate whether individualsí actual claiming behavior appears to be influenced by the degree of actuarial advantage to delaying. We find no evidence of a consistent relationship between claiming behavior and factors that influence the actuarial advantage of delay, including gender and marital status, interest rates, subjective discount rates, or subjective assessments of life expectancy.

The highlighting is mine. If you plan to retire in 10 years interest rates might be much higher and therefore the accepted recommendations about when to apply might change. I guess the best retirement plan allows for a lot of flexibility. The report is here: The Decision to Delay Social Security Benefits: Theory and Evidence
The first part agrees with things that I see posted here.
The "We then use panel data ...." is interesting. It says that real people aren't making decisions based on those differences.
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Old 05-01-2012, 11:36 AM   #248
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I assume that means that if we can invest our early-SS income at a real return of >3.5% then we'd be ahead taking it early. Not just an "inerest rate" but a personal rate of return. And probably close to or larger than many conservative investors here are planning for.
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Old 05-01-2012, 12:55 PM   #249
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Money isn't milk - it doesn't go off. Unless the actuarial difference is visible from space, I'd take it early every time. For one thing, there's a 10% or so chance that a 62 year old won't make it to 70 at all.
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Old 05-01-2012, 01:08 PM   #250
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Money isn't milk - it doesn't go off. Unless the actuarial difference is visible from space, I'd take it early every time. For one thing, there's a 10% or so chance that a 62 year old won't make it to 70 at all.
I hear you. Neither of my parents lived long enough to collect SS. If I'm still around I will definitely be the first on line the day I'm eligible to collect.
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Old 05-01-2012, 02:01 PM   #251
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Quote:
Originally Posted by BigNick View Post
Money isn't milk - it doesn't go off. Unless the actuarial difference is visible from space, I'd take it early every time. For one thing, there's a 10% or so chance that a 62 year old won't make it to 70 at all.
I hear you. Neither of my parents lived long enough to collect SS. If I'm still around I will definitely be the first on line the day I'm eligible to collect.
well then, congrats, you will die with a larger estate and live your life spending less each year you are alive. your heirs should thank you, but then, it will be too late, you will be dead.
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