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Planned parenthood
Old 02-22-2012, 09:37 PM   #41
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Planned parenthood

YW and I are going to use the Planned Parenthood method. I will wait until age 70 to collect my maximum benefit, In the meantime in 3 1/2 years ( when I reach 62) my current and future children will be able to collect 180% of my full (age 66) benefit ($40k a year as I have been retired 24 years already). When I am 85 (parents 94 in good health) my YW will turn 55 and be able to collect on my record as long as we have lived in the states (and she has worked) for a period of time. She plans to retire back in Peru (owns oceanfront property) once I kick the bucket.
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Old 02-22-2012, 10:08 PM   #42
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YW and I are going to use the Planned Parenthood method. I will wait until age 70 to collect my maximum benefit, In the meantime in 3 1/2 years ( when I reach 62) my current and future children will be able to collect 180% of my full (age 66) benefit ($40k a year as I have been retired 24 years already). When I am 85 (parents 94 in good health) my YW will turn 55 and be able to collect on my record as long as we have lived in the states (and she has worked) for a period of time. She plans to retire back in Peru (owns oceanfront property) once I kick the bucket.
Actually it is a lot less than 180% more like 50%.Benefits For Children
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Old 02-22-2012, 10:36 PM   #43
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I guess I miss your point. The money has to come from somewhere to live from 62 till your 70 (assuming your retiring at 62)? So your effectively just trading your savings now for increased SS later. The present value of money has to be calculated into this equation, not just absolute dollars.
Yes, for some reason I frankly do not understand all of these threads of SS at 62 vs 70 (and there have been many) simply ignore the time value of your nest egg that remains invested (i.e. monies you did not take out from your investments to live on)when you start taking SS at 62. When I run the calculations for my own situation, the increase of the next egg vastly exceeds the additional SS payments starting at age 70 as long as the rate of return in you investments exceeds about 5% and inflation remains at about 3%. My own rate of return over many years has been about 7.5% so I'm taking SS at 62
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Old 02-22-2012, 10:38 PM   #44
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I guess I miss your point. The money has to come from somewhere to live from 62 till your 70 (assuming your retiring at 62)? So your effectively just trading your savings now for increased SS later. The present value of money has to be calculated into this equation, not just absolute dollars.
This is a good point, and I thought about it when deciding to wait until 70 as a single man. But today's discount rate if taken off securities with similar safety to SS annuities is very, very low. Also, for couples or even single women the scales are tipped well toward waiting.

Another factor for me is that it gives me just one more reason to live a long time-to finally get something back from My Uncle whom I have supported so royally for so many years.

Ha
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Old 02-23-2012, 07:43 AM   #45
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Actually it is a lot less than 180% more like 50%.Benefits For Children
Sorry, I was "1/2 in the bag" when I wrote that. It is 50% per child, with a maximum family benefit of 180%. In our case we will be collecting 150% of FRA beginning at age 62.
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Old 02-23-2012, 07:48 AM   #46
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I guess I miss your point. The money has to come from somewhere to live from 62 till your 70 (assuming your retiring at 62)? So your effectively just trading your savings now for increased SS later. The present value of money has to be calculated into this equation, not just absolute dollars.
I have plenty of money on hand to cover 62 to 70. Also, above strategy give me(in my situation) $29,000 extra from 66 to 70 drawing on SO record.
My SO is 2 years younger than me.
Go to

Strategies to Max Out Social Security Benefits - SmartMoney.com

and especially read the part on "Bob & Carol.
For the other questioner, I am already retired and will turn 60 this year,
being retired a little over 10 years now.
I just ran my personal numbers using 83 yo for me and 90 for my So and come up with $162190 more from SS total. Present value can not come close to making up that,IMO.
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Old 02-23-2012, 07:54 AM   #47
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After reading that article recently, I went to Social Security Solutions and paid the $50 for their recommendations.

I was very pleasantly surprised to see that they gave me a strategy for maximizing the SS benefits for DW and me that was far and away better than any other I've seen (such as the one at AARP) and much better than I would have come up with on my own.
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Old 02-23-2012, 08:13 AM   #48
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Yes, for some reason I frankly do not understand all of these threads of SS at 62 vs 70 (and there have been many) simply ignore the time value of your nest egg that remains invested (i.e. monies you did not take out from your investments to live on)when you start taking SS at 62. When I run the calculations for my own situation, the increase of the next egg vastly exceeds the additional SS payments starting at age 70 as long as the rate of return in you investments exceeds about 5% and inflation remains at about 3%. My own rate of return over many years has been about 7.5% so I'm taking SS at 62
I'm sure you did, but did you add the 3% inflation to your amount to draw starting at 66 and 70?

Are you single? I'm talking stratagy for married folks.

Do you think you can keep a return of 7% for the next 30 + years?
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Old 02-23-2012, 08:13 AM   #49
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After reading that article recently, I went to Social Security Solutions and paid the $50 for their recommendations.

I was very pleasantly surprised to see that they gave me a strategy for maximizing the SS benefits for DW and me that was far and away better than any other I've seen (such as the one at AARP) and much better than I would have come up with on my own.
Please share your strategy.
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Old 02-23-2012, 08:18 AM   #50
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I have plenty of money on hand to cover 62 to 70. Also, above strategy give me(in my situation) $29,000 extra from 66 to 70 drawing on SO record.
My SO is 2 years younger than me.
Go to

Strategies to Max Out Social Security Benefits - SmartMoney.com

and especially read the part on "Bob & Carol.
For the other questioner, I am already retired and will turn 60 this year,
being retired a little over 10 years now.
I just ran my personal numbers using 83 yo for me and 90 for my So and come up with $162190 more from SS total. Present value can not come close to making up that,IMO.
If Bob and Carol both started at 62 taking the reduced benefits and put the money under their mattress, they would have 130K at 66. I believe all these strategies aren't as dramatically different when the you consider what the money can be doing for you now. Like you said, you have the money to live on, but using that money really has to work into your equation. I do agree if you have dramatic age differences between you and your wife, or a child on SS, waiting later can help them.
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Old 02-23-2012, 08:27 AM   #51
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Are you single? I'm talking stratagy for married folks.
That's where a lot of the conflict comes in with discussions on this subject IMHO.

While DW/me will take the "extended route", I understand where a single person may be justified in going the early route, if they prefer.

Planning for two, including increased average lifespan for one, along with the desire to max out benefits for that person often trumps out just the view from a simple math solution.

Also, you don't have to understand the different options, based upon joint SS benefits as related to file/suspend options (for those spouses that will get less than a 50% matching benefit, on their own), along with the 50% spousal benefit that (depending on age) will allow one person to get SS while delaying their own claim, earning additional DRC's and an 8% annual (plus possible COLA's) for age 66-69, as I will get - starting in two years, BTW.

And most "math solutions" don't touch upon the possibility of excess RMD's (excess meaning having to take out and pay tax on tax-deferred portfolios for money you really don't need for on-going expenses) and using the draw-down of the portfolio rather than use early SS for income - or for further buildup of the portfolio. Remember, there's no RMD's on SS.
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Old 02-23-2012, 08:28 AM   #52
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To the OP: Thanks for the link. This is an interesting thread.

My YOB = 1958 and DW's is 1960. I have always felt a bit uneasy in terms of being on the cusp of those that will be grandfathered in and those that won't.

For now, we are saving all we can and watching the macro-uncertainties: SS plan revisions, inflation and taxation.

Pensions and SS are big part of our RE plans. Only SS has any COLA provisions for us and I can see that trumping PV calculation results.....
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Old 02-23-2012, 09:59 AM   #53
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If Bob and Carol both started at 62 taking the reduced benefits and put the money under their mattress, they would have 130K at 66. I believe all these strategies aren't as dramatically different when the you consider what the money can be doing for you now. Like you said, you have the money to live on, but using that money really has to work into your equation. I do agree if you have dramatic age differences between you and your wife, or a child on SS, waiting later can help them.
Remember, in this example, Carol does begin at 62.
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Old 02-23-2012, 10:18 AM   #54
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Remember, in this example, Carol does begin at 62.
Correct, if we leave Carol out of this, Bob gives up 1500/month from 62-66, then he gives up 700 per month by taking his spousal till 70. This still adds up to $105K he's given up. Then at 70 he takes 2640/month and is gaining 1140 per month till he dies. Which means even if that 105K is under the mattress with zero interest, it'll take him 92 months just to break even, which is the magic 78 years old (which seems to be the break even number for all of social security). If he invests that 105K, it could easily push the break even point into his mid 80's. Everything is a gamble. As you can tell from my posts, I'm a little bit of a bird in the hand is worth two in the bush kind of guy. My wife and I are both the same age, but my worry is I do have a handicapped daughter, so I may try to maximize her SS, rather than mine.
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Old 02-23-2012, 10:22 AM   #55
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I read all these strategies than entail waiting till 70 to get SS, then as I was reading the obituaries this morning, I realized most of the people passing are in their 50's-60's and 70's. We all would like to think we're living till 90, but stuff happens and life can change pretty fast. I'll bet SS has figured out that on average, all these methods work out the same. For every person that chooses to delay and lives to 100, there are those that don't make it.
Actually Jeff you are correct. The various amounts are stated somewhere (can't recall where I read it) to be "actuarially equivalent". IMO one key is to determine whether you will live longer or shorter than those averages.
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Old 02-23-2012, 10:26 AM   #56
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Yes, for some reason I frankly do not understand all of these threads of SS at 62 vs 70 (and there have been many) simply ignore the time value of your nest egg that remains invested (i.e. monies you did not take out from your investments to live on)when you start taking SS at 62. When I run the calculations for my own situation, the increase of the next egg vastly exceeds the additional SS payments starting at age 70 as long as the rate of return in you investments exceeds about 5% and inflation remains at about 3%. My own rate of return over many years has been about 7.5% so I'm taking SS at 62
Here is the arithmetic as I understand it if you delay from 62 to 66:

added benefit = (100%/75%)^(1/4) = 1.075

So by delaying to get 100% instead of 75% at 62, you get a boost each year of 7.5%. But note that is a real return of 7.5% not a nominal return. Also this is a government guaranteed return. Very tough to beat this sort of return in a guaranteed fashion especially given today's low bond real rates. Here is the government table which shows an 8% credit per year for people in my age group: Early or delayed retirement So maybe my 7.5% implied return calculation is too conservative above?

Also taxes raise their ugly head here. Tough to generalize on this one.

BTW, took a peek at your spreadsheet Ejman and it looked reasonable.
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Old 02-23-2012, 10:51 AM   #57
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it's not a government guaranteed return, because it's not a savings account. If you delay taking it till 66 and die at 64, your rate of return is pretty darn small. Most calculations show you have to be 78 to break even (and this is without putting any value on current money), which means more likely break even is in your 80's. Everything about when to take SS is a gamble based on one assumption. How long are you gonna live. And if I knew that.......
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Old 02-23-2012, 10:53 AM   #58
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Correct, if we leave Carol out of this, Bob gives up 1500/month from 62-66, then he gives up 700 per month by taking his spousal till 70. This still adds up to $105K he's given up. Then at 70 he takes 2640/month and is gaining 1140 per month till he dies. Which means even if that 105K is under the mattress with zero interest, it'll take him 92 months just to break even, which is the magic 78 years old (which seems to be the break even number for all of social security). If he invests that 105K, it could easily push the break even point into his mid 80's. Everything is a gamble. As you can tell from my posts, I'm a little bit of a bird in the hand is worth two in the bush kind of guy. My wife and I are both the same age, but my worry is I do have a handicapped daughter, so I may try to maximize her SS, rather than mine.
But we can't leave Carol out, because this is an example for a couple, not a single. That is a very different scenario.remember, after Bob dies, Carol gets an additional $12000 per year for 11 years(she is 4 years younger).
I'm after later years money more than early years money.
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Old 02-23-2012, 11:09 AM   #59
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it's not a government guaranteed return, because it's not a savings account. If you delay taking it till 66 and die at 64, your rate of return is pretty darn small. Most calculations show you have to be 78 to break even (and this is without putting any value on current money), which means more likely break even is in your 80's. Everything about when to take SS is a gamble based on one assumption. How long are you gonna live. And if I knew that.......
I just wanted to get the numbers out there and into this thread.

I agree that it's a bit of a crap shoot, the year you die in is indeed unknown. If one does not have to draw SS early to make ends meet then run FIRECalc with the different numbers and take your pick. You could just spend more as a percent of your nest egg until SS kicks in. Right now I'm planning on taking it at 66 although I realize the data says that the argument to delay is the same up until 70. My parents died in their late 60's but I'm not planning on doing that. Still will probably "cut the baby in half" and pull the trigger at 66. If stocks take off like gang busters in the next few years, I could always delay a bit longer.
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Old 02-23-2012, 11:12 AM   #60
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Pensions and SS are big part of our RE plans. Only SS has any COLA provisions for us and I can see that trumping PV calculation results.....
Remember also that while you are delaying SS it is rising not with COLA, but against the wage index, and the wage index has historically risen faster than COLA. Once you start drawing SS it is COLA'ed.
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