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Old 02-28-2012, 09:01 PM   #161
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... but like you point out the cost of higher payments later is lost income now.
"higher payments later" allows you to spend more now. read this post Social Security at 62, 66 or 70? and see how taking SS at age 70 allows you to spend more between the ages of 62 and 70
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Old 02-28-2012, 10:07 PM   #162
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Did you read the rest of that thread, or just the one post? Same range of opinions then as now.

Offhand, his suggestion seem pretty risky to me. Spend all your own money between 62 and 70, ignoring all the SWR stuff because you only care that it lasts for 8 years.

Totally depend on snagging SS at 70. Nothing better go wrong, or you'll end up smashed on the rocks.
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Old 02-29-2012, 12:52 AM   #163
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Did you read the rest of that thread, or just the one post? Same range of opinions then as now.

Offhand, his suggestion seem pretty risky to me. Spend all your own money between 62 and 70, ignoring all the SWR stuff because you only care that it lasts for 8 years.

Totally depend on snagging SS at 70. Nothing better go wrong, or you'll end up smashed on the rocks.
of course i read the rest of that thread, i was writing in it. i used a very extreme example to emphasize my point, which was (and still is) that if you delay taking SS till age 70 you can spend more between the ages of 62 and 70. however if you think about it SS is about the most secure COLAed annuity you can get.

did you read the 4th paragraph in that post? it contains a little more palletable (for alot of people) example.

did you read my post before my last 1 Social Security - When to start benefits..? another example of creating more spending by taking SS at 70 instead of 62
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Old 02-29-2012, 07:57 AM   #164
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I've read those and was not swayed. Rapidly spending down your own money with the intention of grabbing onto the SS safety net just as your rope runs out strikes me as a risky thing to do. If anything goes wrong you're f**ked.

There is no Plan B. And I learned a long time ago that the person with the best Plan B ususally comes out best.
Off the top of my head, here's some easily forseeable things that could go wrong:
* SS dramatically reduces the COLA computation. Has happened before.
* Increased income tax on SS. There used to be no tax. Increasing the tax is a much easier change than adding it on in the first place.
* Changing the ages. 62/66/70 might go to, say, 64/68/72.
* Means testing the SS benefit. With a look-back a la Indigent(?) Medicaid to prevent people from gaming the system by spending all their money in the previous few years.

Plus some low probability possibilities:
* Inflation soars to 15%. (Hello, Jimmy Carter!). SS Cola capped at a small percentage of that.
* SSA runs low on money, benefits get cut to 75% of current payout.
* SS benefits get not only taxed as income, but FICA gets tacked on.

If any of these occur, what's your Plan B?
Can't be to take a part-time job as Walmart Greeter. In my area, there's a waiting list for that job.
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Old 02-29-2012, 08:21 AM   #165
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There is no Plan B. And I learned a long time ago that the person with the best Plan B ususally comes out best.
<snip>
If any of these occur, what's your Plan B?
While I don't agree with those who think that SS will go away or be seriously damaged, I do think that the plan to spend most or all of one's personal savings before 70 and then getting a bigger SS benefit has some risk. I think diversificastion is still the best way to limit risk at the least cost. For me diviersification means having several sources of income in case one falters. For that reason alone I would not let my personal savings fall too low, no matter how much larger the SS payment will be. My 2 cents.
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Old 02-29-2012, 09:19 AM   #166
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I do think that the plan to spend most or all of one's personal savings before 70 and then getting a bigger SS benefit has some risk.
Except no one said that.
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Old 02-29-2012, 10:04 AM   #167
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Except no one said that.
I would agree (unless it is part of the article posted).

While DW/me could take SS at 62 (we're both currently 64), we've opted for the 66/70 split (DW at 66, with me claiming 50% of her benefits at that time).

While we're fortunate to have options - we don't need to take SS at age 62, nor will it impact us to any great extent if the government changes the rules along the way, it just came down to the best option financially, analyzed at this point in time.

That was not done in a vacuum, but using the facility of several forecast programs that not only looked at SS benefits, but also taxes and impact of drawing down our tax-deferred accounts and the impact of RMD's.

Again, it's not a simple exercise and our conclusions/decision/execution probably don't apply to everybody. That's why it's not an easy question to answer, and no answer applies to everybody - and every situation.

I'm afraid that some posters don't feel the same (but hey, that's their opinion )...
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Old 02-29-2012, 10:12 AM   #168
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"higher payments later" allows you to spend more now. read this post Social Security at 62, 66 or 70? and see how taking SS at age 70 allows you to spend more between the ages of 62 and 70
Oh, I read it. Multiple times.
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Old 02-29-2012, 10:26 AM   #169
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There are several different ways you can factor SS into the equation depending on your tolerance for risk/faith in what the government will or will not do.

This has been an interesting and useful thread for me. The highest WR I think I could tolerate on my portfolio in these, my very early days of ESR/ER, is the highest one that still gives me a 100% success rate according to Firecalc. The knowledge that something at least will be coming from SS will act to help me ride out any portfolio lows I might experience. As I get closer to SS eligibility age, I'd most likely feel more comfortable about accepting a slightly higher WR.

In other words, I'm currently withdrawing less than the amount that will give me a 100% success rate according to Firecalc without SS factored in at all. It's early days, and I want to put as little strain on the portfolio as possible. However, after reading this, and similar threads, I think I'd feel comfortable going up to the highest WR that still gives me a 100% success rate, knowing that some SS will be there (if I feel that I need to).

That, to me, is the biggest advantage of insurance - the feeling of security that there will be something as a cushion just in case the main plan falters somewhat. I'm not going to rely on it completely, so that when it comes, the majority of that money will be a fun and welcome extra. (W2R's wh** word seems particularly appropriate here.)
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Old 02-29-2012, 12:13 PM   #170
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In other words, I'm currently withdrawing less than the amount that will give me a 100% success rate according to Firecalc without SS factored in at all. It's early days, and I want to put as little strain on the portfolio as possible.
Like you, I am spending less than what FIRECalc says I can spend with a 100% success rate, and I haven't claimed SS yet (I am 63). I really prefer a relatively simple life anyway so I don't feel especially deprived.

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However, after reading this, and similar threads, I think I'd feel comfortable going up to the highest WR that still gives me a 100% success rate, knowing that some SS will be there (if I feel that I need to).

That, to me, is the biggest advantage of insurance - the feeling of security that there will be something as a cushion just in case the main plan falters somewhat. I'm not going to rely on it completely, so that when it comes, the majority of that money will be a fun and welcome extra. (W2R's wh** word seems particularly appropriate here.)
Yes, exactly! I do like the security of knowing it is there, just in case.

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Old 02-29-2012, 01:56 PM   #171
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Well, I know how to run a PV calculation, and I know how to figure the break-even period of "take at 62 and save it for 4 or 8 years, then draw on the savings account to suppliment SS and bring the total up to the delayed benefit amount".

The break-even period is more than 15 years. Too long for my preference. Others may differ.

Like I said earlier, the right answer for you depends on how you choose to view it.
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Old 02-29-2012, 05:40 PM   #172
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The break-even period is more than 15 years. Too long for my preference. Others may differ.
If you die at 14 years, you will be able to tell us that you were right and are now happy that you took your SS at age 62. And your heirs will be even happier as you spent the government's money, instead of the money in your estate.
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Old 02-29-2012, 07:27 PM   #173
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If you die at 14 years, you will be able to tell us that you were right and are now happy that you took your SS at age 62. And your heirs will be even happier as you spent the government's money, instead of the money in your estate.
Now your getting it! OPM - It's like OPB (other peoples boat) except with money!
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Old 02-29-2012, 08:11 PM   #174
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I'll give you another reason to delay S.S. to age 70......The Afordable Health Care Insurance reform that was passed by both houses of Congress and signed into law by the President specifies Health Care exchanges and Tax Credits for lower income people.

This all takes effect in January of 2014. When my wife retires then we will have very little income as we will be living on savings from taxable accounts. Our Health insurance will probably only cost us $1K with the tax credits. It is not tested on Net Worth, but A.G. Income.

When we start drawing S.S., we will be eligible for Medicare.

try this Calculator out........I for one am very thankful for this legislation.
Health Reform Subsidy Calculator - Kaiser Health Reform (Health Reform Subsidy Calculator - Kaiser Health Reform)
Are you saying that your healthcare premium for the two of you will be $1,000 per year? What do you pay now?
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Old 03-01-2012, 10:52 AM   #175
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I think goals play a large role in the "right" answer to this question. For me personally, my goal for retirement planning is to maintain my desired spending level for as long as I live.

If I delay SS and die before the payback period, I won't care as my portfolio would have been much larger than needed to survive that short of a lifespan. My retirement planning goal would have been accomplished.

What if I live to 90-100? That is the tail end of my planning period, so there is a very real chance that my portfolio underperformed my cautious expectations and can no longer maintain my spending level. That is the scenario when delaying SS pays off.

So for myself there is no benefit to taking SS at 62, but there is a potential benefit to waiting to 70.

Now if my goal was to maximize inheritance to my children if I lived to my expected lifespan while receiving decent returns on investments, then I would certainly come to a different conclusion.
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Old 03-01-2012, 11:18 AM   #176
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I have the perfect way to merge the two most contentious topics on these boards, when to take SS and whether to pay off the mortgage.

Simply, keep the 4% 30 yr FRM, take SS as soon as you retire, and set up automatic bill-pay to direct the SS check to the mortgage payment.
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Old 03-01-2012, 11:32 AM   #177
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Here is an interesting chart from a blog that Midpack linked to earlier. Basically, only 3% of the SS recipients in 2004 and earlier elected to wait until 66 years or older to start receiving SS. Half of them elected to start at 62.



From Pensions, Retirement Planning, and Economics Blog: Annuities and Delayed Social Security

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Old 03-01-2012, 11:33 AM   #178
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I have the perfect way to merge the two most contentious topics on these boards, when to take SS and whether to pay off the mortgage.

Simply, keep the 4% 30 yr FRM, take SS as soon as you retire, and set up automatic bill-pay to direct the SS check to the mortgage payment.
Ray, I hope you realize that if you take away the "when to take SS" thread option, we'd have a serious discussion hole here. It's a lot more fun to philosophize and show our financial acumen here so please, no good solutions.
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Old 03-01-2012, 12:08 PM   #179
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Here is an interesting chart from a blog that Midpack linked to earlier. Basically, only 3% of the SS recipients in 2004 and earlier elected to wait until 66 years or older to start receiving SS. Half of them elected to start at 62.
...
Interesting chart, thanks. If you're over at the Bogleheads site, you'd think the whole USA was waiting until at least age 66. I suspect many of the posters there are under 60 and not ER'd.
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Old 03-01-2012, 01:27 PM   #180
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Interesting chart, thanks. If you're over at the Bogleheads site, you'd think the whole USA was waiting until at least age 66. I suspect many of the posters there are under 60 and not ER'd.
Maybe there are just less people around to take it if they wait until 66+?
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