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Re: SS at 62 or 65
Old 01-12-2006, 04:53 PM   #21
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Re: SS at 62 or 65

Whodathunkit: I'm sorry you feel we're all bullying thugs who want to railroad you from your own version of the facts. A particular "objective" financial analysis using numbers that dont necessarily apply to anyone does make a case to wait. The "objective" analyses I've looked at say the opposite. But thanks again for taking a lot of time to tell us why we're bad people and why you wont debate your point.

Bongo: Can you tell me exactly what you put in and where? I did a pair of runs using my numbers (changing ONLY the first 5 boxes - withdrawals, starting portfolio, lifespan, the amounts of SS (I used the two #'s you suppled...17.9k and 24.3k) and the year to start withdrawals. I also changed the inflation from PPI to CPI. What may be weird in my case is a 45 year lifespan of the withdrawal. In my runs, firecalc says if I take SS at 62 I can take an extra $660 per year @ 95% survival for all 45 years vs waiting until 67.

So one of us is doing something funny, or perhaps firecalcs small 650k default port size causes more failures than most ER's might see. Maybe my change from ppi to cpi did something odd? I'll run it again using PPI...

Edit: I tried it using PPI and the results were even more compelling: I get to spend an extra $880 a year for 45 years by taking SS early vs waiting.
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Re: SS at 62 or 65
Old 01-12-2006, 05:11 PM   #22
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Re: SS at 62 or 65

Whoda.... I think you are being attacked a bit by () for some reason... but, as you say it does not bother you...

BUT, I will debate a bit. I am looking at it for my sister and it is NOT a slam dunk... yes, if you are looking at it as an annuity it most definately is a slam dunk, but if you invest in stock and earn a bit more, then it is a wash or you win by taking early..
And as everybody else has said, if you want to spend more money NOW than later, it is not a win..
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Re: SS at 62 or 65
Old 01-12-2006, 06:47 PM   #23
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Re: SS at 62 or 65

Quote:
Originally Posted by WhodaThunkit
I have listed several references that make a case for waiting to take SS.* To this list I would add the work of Henry Hebeler (analyzenow.com).

Question -- has anyone seen an analysis published in a vetted outlet by an analyst of equal standing that recommends taking SS at age 62?

Note -- I'm NOT saying that such a thing does not exist.* I'm not directing this as a rhetorical question toward any person in particular.* I'm just asking the question so that I can read the analysis, for my own information, if it does exist.
I don't think such an analysis could exist. The reasons for waiting- given reasonably good health and no immediate need- are very compelling rationally. The reasons for taking it now are very compelling emotionally.

As we all know, emotions are more powerful than reason, so many people take it early.

The argument that you can do better with stocks is just hope, and even so, you need fixed income, and a COLA annuity growing at 8% pa dominates any possible choice in that domain.

The early choice is especially doubtful, since the decision to take it is irrevocable, whereas delay is just that- you can start anytime once you are past 62.

Several years ago when this first came up on this board I went through this, referencing Hebeler's book in particular, as well as several papers. No one debated with me, they just totally ignored any of the things I said. I guess they figured what could some old peckerwood know about this anyway?

Hey, come to think of it, that might be* point to ponder.*

Ha

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Re: SS at 62 or 65
Old 01-12-2006, 07:41 PM   #24
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Re: SS at 62 or 65

Quote:
Originally Posted by Texas Proud
Whoda.... I think you are being attacked a bit by () for some reason... but, as you say it does not bother you...
I dont think so. I started out trying to find out if whodathunkit actually had any significant points to make and wished to debate them so I could possibly learn something and perhaps change my point of view. However, he felt his opinions were statements of fact, that any other opinions expressed here were not worth anything, and that he he has no need to explain his point of view...we should simply accept it...or better still, dont because he doesnt care in the first place. ?!?

So yeah, I poked him a little. I think it was well deserving. If you dont agree, then I'm open to that debate as well. Maybe re-read the whole thread and tell me what you think?

Ha - I tried modelling waiting vs not waiting with many investment mixes as part of my total financial picture - not just equities - I mentioned some above. I couldnt find any reasonable mixes (20:80 to 80:20) that made any difference. I always had better portfolio survivability and a higher withdrawal rate by taking SS sooner. That jibes with what I thought.

That the financial aspect is superior, I dont have to factor in survivability or quality of life possibilities...well...I'm still having a hard time finding the reason to wait.

That Scott Burns compared taking it early unfavorably with an annuity, or unfavorably compared to a stated investment return (7%) that is lower than I'm seeing on a long term basis isnt swaying me either.

Perhaps if Bongo can help me find where I screwed up with firecalc to produce the numbers I did, and the results do show a favor towards waiting, I'd change my feelings about it.

But then again I have about 20 years to work it out. By then the decision may have been made for me...
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Re: SS at 62 or 65
Old 01-12-2006, 08:12 PM   #25
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Re: SS at 62 or 65

The other item you need to ask yourself is whether you want to pay taxes on your income or not after age 70. If you do want to pay taxes, take the SS at 62 and supplement that income with IRA withdrawals..The result is that both will be taxed. If you don't want to pay taxes on your income after your delayed SS age, take your IRA withdrawals first and double up on the SS..It often escapes taxation...And keep growing with COLAs
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Re: SS at 62 or 65
Old 01-13-2006, 12:25 AM   #26
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Re: SS at 62 or 65

Not to stir things up too much, but in my opinion, based on my planned circumstances, I will need about $65k per year to live in the manner to which I want to be accustomed. I have a combination of taxable capital gains, IRAs 401ks, and some Roths (only about 70k in it). I can cover either through leaving SS till 66 or take less from IRAs and taxable capital gains, and claim SS at 62. Given the tax situation and the reduction of income after certain limits with SS, it would seem to be better to wait till 66 to being SS, and not have to incur those problems. Or am I missing something on that line of reasoning?
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Re: SS at 62 or 65
Old 01-13-2006, 05:56 AM   #27
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Re: SS at 62 or 65

Yep

I know of no way around running the numbers for 'your individual stituation.' As Scott Burns has pointed out - the back door tax on SS above certain incomes/sources - with the ROTH loophole makes it interesting. Can't locate it now - but Vanguard had a calc a while back - which showed my breakpoint at age 75 (early vs 66) - contrast that with my 84.6 allowible age to croak from the IRS. Throw in your availible resources - mix in your planned lifestyle in retirement and WHEW!

So - after Katrina and two unplanned deaths in the immediate family - I have successfully torn up my original plan and started a new one.

1. Moved 1000 miles north - bought a house with a mortgage instead of renting.
2. Early SS next month - instead of waiting - at one point considered as long as age 70 - had planned to run the tradeoff numbers each year.
3. Loosen up on frugal. Cruise in Feb - my first step out of cheap bastardhood.

And - of course - any excess - against my own advice - hobby stocks. It's a male thing - gotta putz.

And yes - it will cost me more in taxes.

heh heh heh

AND - bought $5000 deductible health insurance this year after going naked 1993-2005. At 62 - getting old and gunshy.
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Re: SS at 62 or 65
Old 01-13-2006, 08:35 AM   #28
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Re: SS at 62 or 65

I've also heard the one about the guy who will twist data to suit his predetermined outcome. Nords had you nailed from the get go.

I would see no reason to deplete my portfolio to "set aside a bridge" to cover the gap between where I would have taken SS early or late. That seems to create a situation whereby the portfolio ratios are altered to produce a reduced rate of return. That artificial construction that doesnt appear to have any obvious positive benefits allows you to prove your point.

In fact, the only thing I would consider changing about my portfolio in this situation is that as I approach 62 I might defer reducing my equity holdings or increase my equity holdings - I can take on more risk as I have a defined and steady income stream to help me reduce my withdrawal rate to compensate for increased volatility.

Tax management is obviously an issue, but anyone with enough money to retire early probably has a pretty good idea of how to handle the tax issues, or pays someone who does.

Under those scenarios where I maintain or increase equity holdings, I can make even more money. Should I do absolutely nothing with my portfolio mix as I age (which is my plan), in 90%+ of scenarios I'd be able to leave my wife or son an additional one to seven hundred thousand dollars that would have accumulated by reducing portfolio withdrawals. That beats the hell out of a few extra thousand dollars a month in survivors benefits, and nobody has to 'qualify'. Although in my case since my wife will have worked a lot longer than I have, her benefits will actually be higher than mine.

Its occurred to me that this is simply the mortgage 'discussion' in a different form. A number of people show up with their minds made up from non factual information, then create their own 'facts' to support that predisposition. As with that decision, running your own numbers is the only way to come up with the right answer. At least from the fleshing out thats been done here, people know what all the parameters are.

The second dumbest thing in the world you can do is try to frame this decision in a vacuum, rather than as part of your total financial, investment and lifestyle perspective. The sudden appearance of an income stream changes everything, or has the potential to. Look for both opportunities to make positive changes in other places or to be able to avoid negative changes.

I'll save someone from going for the setup "whats the dumbest thing": basing your decision on what a newspaper columnist who doesnt want to retire early thinks, or basing it on a book written by a "marketing executive" who specifically touts this issue to help sell his book. While concurrently ignoring free advice from a large body of people who are already engaged in evaluating this decision. And doing it because that suits the emotionally driven decision you've already made.

Ok whodamajingy, time for another one of your snarky comments about how we all suck and why nobody should debate issues. Now where have I heard this before? Someone who told us they had all the answers but couldnt debate them right now? Do you happen to have a magic tool too?

This reminds me of that old star trek episode where the gang defeats the horde of ultra smart androids by telling them "I never lie. I'm a liar" and they all short circuit from the conundrum..."I'm posting on an internet discussion group...dont listen to anyone on an internet discussion group".
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Re: SS at 62 or 65
Old 01-13-2006, 09:18 AM   #29
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Re: SS at 62 or 65

At least you can follow directions.
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Re: SS at 62 or 65
Old 01-13-2006, 10:05 AM   #30
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Re: SS at 62 or 65

() and you say you are not being 'mean'? Sure seems that way to my reading.

The financial analysis is pretty clear that taking it early is best if you 'will' die early and take it later if you 'will' die later... for most low rate of returns there is a break even point somewhere in the 70s (maybe early 80s, I have not done the calc recently)...

Someone, if they are willing, can figure out the needed rate of return to make it best for early all the time.. but I do not see anybody that has done that calc as Whoda keeps pointing out... and I am not talking about your number on FIRECALC.. I am talking about an A and B analysis of two 'investments'...
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Re: SS at 62 or 65
Old 01-13-2006, 10:40 AM   #31
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Re: SS at 62 or 65

As we used to tell clients who wanted the "perfect" will. Tell me exactly when you are going to die and we can get you pretty close. If you don't know that, we have to make some assumptions, compromises and educated guesses. That's the best we can do.

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Re: SS at 62 or 65
Old 01-13-2006, 10:47 AM   #32
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Re: SS at 62 or 65

(), when I rean the FIREcalc numbers I used the defaults that show up when you open the page, but changed the lifespan to 20 years (to correspond to your "soup" comment after 80). *The reason for our difference is that you are looking several years before the decision, while I am looking at the day of the decision. *You didn't say how far out you were from 62, so I used 17 years (and 21 years for the comparison SS "late"), but kept all the other inputs the same. *FIREcalc gives a starting withdrawal of $33.1k for SS early, and $32.1k for SS late. *What's happening is that sometimes when you get 17 years out you've had a bad run and you're at the point where you're withdrawing 20+% of your portfolio, but good results are just around the corner. *In that case you need the SS to stop the bleeding, and take advantage of the stock market. *1965 is one example where the SS early succeedes and SS late fails. *When you get to 1982 (right before the run of the bull market) you're low on cash ($370k), you're spending $85k a year, and you are on the brink of several years of great investment results. *If you take SS right away you can squeak through.

So I guess the lesson is, 1) if you had to decide today you would take it early, 2) if you are really desparate for the cash you should take it early (no surprise), but 3) if you're still looking at a reasonable WR at 62 you should take it late.

By the way, you mentioned inheritance. *This analysis is inherently selfish (for you and anyone else drawing on your benefits). *Considering the estate value as well as the survival value will make an annuity (or SS) less desirable. *I'm not sure that it would change the answer, but I can't say for sure that it wouldn't either.
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Re: SS at 62 or 65
Old 01-13-2006, 10:48 AM   #33
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Re: SS at 62 or 65

I'm not good with numbers. *In figuring these break even points, does growth in your portfolio due to the money you did NOT take out of it get counted? *Also, 2nd to running out of money, we want to maximize what our beneficiaries will get. I guess you can get that comparison by looking at end result portfolio value?
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Re: SS at 62 or 65
Old 01-13-2006, 11:40 AM   #34
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Re: SS at 62 or 65

Quote:
Originally Posted by WhodaThunkit
I think that the analyst might need to distinguish between an average rate of return, which is probably not all that high to push things in favor of early SS and all-stocks, and a "safe withdrawal" rate.* *
Nope, the analysis is with no withdrawal rate... if you have a withdrawl rate you 'need' the money... the analysis (that I would do) is that you never spend any of your SS and see which ones grows the biggest.. there is some (average) rate of return that will have the early always higher than the later.. and the higher the rate when it is low the later the crossover will be... maybe I will work on it this weekend... but maybe not..
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Re: SS at 62 or 65
Old 01-13-2006, 07:12 PM   #35
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Re: SS at 62 or 65

Nice article from AARP on the topic:

http://www.aarp.org/bulletin/socials...daysooner.html

And a very nice index of articles here:

http://www.aarp.org/bulletin/socialsec/

Key points:

- 6 in 10 retirees take social security 'early', as soon as they qualify for it
- The social security 'benefit' as a function of payments and the IRS life expectancy table are a wash; as long as you live exactly as long as the IRS thinks you will, taking it early, later or somewhere in the middle makes no difference in how much you receive. If you think you'll live longer than the IRS does, receive more from them if you wait. If you die sooner, you'll receive more if you take it earlier.
- They estimate the break even point of taking it later vs earlier at 80+ if the money is invested.
- "Experts agree there's almost never any reason to wait to take benefits until you turn 70—unless your spouse needs your benefits to meet living expenses."
- "There's no compelling argument that the government is the best place for you to invest your money. Better to have cash flow on your side."

They offer these as the key points towards making the decision:

* Your health and life expectancy. While you can't outlive your Social Security benefits, taking them early can change from a smart move to a not-so-smart move if you live long enough. The better your health and the longer your life expectancy, the wiser it may be not to take benefits early.

* Your spouse's income needs. Your spouse's needs could be a big factor if he or she is much younger and likely to collect survivor's benefits for many, many years. If your spouse was not in the paid labor force, your Social Security benefits could represent the lion's share of his or her retirement income.

* The power of money. Don't forget that the money you already have in retirement accounts could keep growing tax deferred if you were living instead on Social Security benefits.

* How long you want to keep working. Work often provides health care coverage and other benefits that can otherwise cost you plenty.

After reading through a lot of information (I heartily recommend doing some of your own googling, I learned a lot of anciliary stuff along the way), I found lots of good material from all of our heroes and anti-heroes. Few claimed a non-invested payback sooner than 74, most claimed an invested payback at 81+.

Texas Proud: if you'd care to share specifically where you think I became 'mean' in an unwarranted manner, I'd be glad to explain my comments. I think I allowed plenty of leeway to an apparently hostile poster, who said several 'mean' things to me while I was barely further outside the envelope of sarcastic.
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Re: SS at 62 or 65
Old 01-14-2006, 10:02 AM   #36
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Re: SS at 62 or 65

Quote:
Originally Posted by ()
* The power of money. Don't forget that the money you already have in retirement accounts could keep growing tax deferred if you were living instead on Social Security benefits.
Excellent point... I'm gonna have to keep that one in mind.
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Re: SS at 62 or 65
Old 01-14-2006, 03:45 PM   #37
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Re: SS at 62 or 65

For me it will be an easy decision.

Unless I greatly improve my investment saavy by age 62 and do a better job than SSA,
if I don't need the money at 62 for several years, i'll wait til 63.
if I don't need the money at 63 for several years, i'll wait til 64.
if I don't need the money at 64 for several years, i'll wait til 65.
etc. etc. etc.

With my father turning 96 in several months, I am banking that unless I get hit by a truck while riding my bicycle, I plan to live to til ...... so I think I can beat the odds by waiting til 66 or later and collecting fatter check for 25 + years.
I am also not hung up on getting all "my money" back from the government before I croak.

MJ

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Re: SS at 62 or 65
Old 01-14-2006, 04:06 PM   #38
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Re: SS at 62 or 65

Quote:
Originally Posted by MJ
With my father turning 96 in several months, I am banking that unless I get hit by a truck while riding my bicycle, I plan to live to til ......
My mom made it to 92, my dad to 90. My two brothers and I used to say the exact same thing you are saying above....until one of them was hit by a truck two years ago. He died more than 20 years short of the yardstick many of us use to help guesstimate how long we will be around. For my brother, taking SS at 62 was the right decision.



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Re: SS at 62 or 65
Old 01-14-2006, 06:16 PM   #39
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Re: SS at 62 or 65

Quote:
Originally Posted by REWahoo!
My mom made it to 92, my dad to 90.* My two brothers and I used to say the exact same thing you are saying above....until one of them was hit by a truck two years ago.* He died more than 20 years short of the yardstick many of us use to help guesstimate how long we will be around.* For my brother, taking SS at 62 was the right decision.
My brother didn't make it to 62 so I'm sure I will take it then if I'm still around. Dad died at 83 and Mom still alive so it's hard to say what the future holds for me.*
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Re: SS at 62 or 65
Old 01-15-2006, 04:38 PM   #40
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Re: SS at 62 or 65

Quote:
* Your spouse's income needs. Your spouse's needs could be a big factor if he or she is much younger and likely to collect survivor's benefits for many, many years. If your spouse was not in the paid labor force, your Social Security benefits could represent the lion's share of his or her retirement income.
These is key for us ... as my DW will likely outlive me by 10+ years. So I always plan to take SS at late a feasible. Just put it in the bond part of the wad (as 14 x annual payout per Bogel's recommendation) and forget about it.
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