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Old 11-30-2015, 10:59 AM   #21
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Originally Posted by NW-Bound View Post
OP's wife is only 61 now. By the time she gets to her FRA, OP is already past 70.

With File-and-suspend option going away, some options are no longer possible.
I did not see where he said his DW as 61, but if so, then taking it at 70 means a much greater chance of living longer than the 12 year payback....


I would go with 70....


The good thing in this question is that in reality no answer is bad... IOW, your lifestyle will not change at all which ever way you go... for some it matters...
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Old 11-30-2015, 11:03 AM   #22
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Runner,

Does your state pension continue for your wife when you die? Is it inflation adjusted?

If the answer to either of those is "no," I'd count it as a factor in favor of delaying until 70--and if the first is "no," I'd see it as a major factor.
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Old 11-30-2015, 11:09 AM   #23
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Assuming you don't need the money now, like me and like the OP, there's only one aspect to consider (IMHO). That's the survivor benefit for DW after I'm gone. Even though she'll have plenty too, she's not into managing finances and having the guaranteed larger SS will give her peace of mind in her old age. As far as winning or losing against the gov't, I'm having fun doing that while I'm still alive by manipulating my income and winning the battle of the taxes.
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Old 11-30-2015, 11:11 AM   #24
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Runner,

Does your state pension continue for your wife when you die? Is it inflation adjusted?

If the answer to either of those is "no," I'd count it as a factor in favor of delaying until 70--and if the first is "no," I'd see it as a major factor.
The answer to both is no - the pension can be adjusted upward if there is a surplus in the system.

But this question does highlight the importance of personal circumstances. My wife is a citizen of Belarus (as well as the U.S.), owns a home (in a high-rise) in Belarus, and has all her family in Belarus, where health care is 100% free if you go to government facilities and extremely cheap if you go to private facilities. If she wanted to return to Belarus, our savings and my life insurance would make her quite well-to-do by Belarusian standards, so the SS would be an issue only if I died first and she decided to remain in the U.S.

More than you wanted to know, I'm sure, but it does show how we need to factor all sorts of things into the equation as we near FRA.
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Old 11-30-2015, 11:21 AM   #25
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Or... Skip all the math, take it at 68 and realize you made at least 50% of the right choice applying 0% of your time worrying about it.


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Old 11-30-2015, 11:21 AM   #26
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....Assuming most of the people in this forum are financially independent, isn't this crowd potential targets for social security means testing (income-based or asset-based.) How do you factor in that social security may be reduced or eliminated for people in this position? Wouldn't that argue for taking SS earlier before it disappears? Or do you simply assume it's too tough to forecast and leave it out of your analysis?
I recognize this as a risk but my view (and I know others will disagree) is that it is unprecedented and would be viewed as unfair (the Sue Spender vs Sally Saver argument) so is unlikely enough that I don't consider it in my plans.

Once I turn 62, I view myself as having an option to start SS if we have adverse investment results, it appears that SS will reduce benefits, our joint longevity takes a turn for the worse, etc but based on what I know now we would wait until FRA (for her) and 70 (for me).
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Old 11-30-2015, 11:23 AM   #27
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People who say it's a no-brainer to defer are wrong. It's actually a brainer.

Take a look at my spreadsheet. https://www.dropbox.com/s/gebanzrbr3...0calc.xls?dl=0 Plug in your own estimates and figures.

If you take SS at 66 FRA and invest/save that and earn 3% above inflation, the break-even age is 87.
17 years to break even. To me that's much too long to be attractive.

If you earn nothing above inflation, breakeven is 82, which is 12 years, and to me _still_ too long.

There is no clear-cut right answer, it's largely a matter of personal preference in how you'd like the shape of your income curve to be.
Of course, if you are selling annuities, your answer is going to be influenced by the commission you'll get.
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Old 11-30-2015, 11:27 AM   #28
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Given Mom is still going strong at 85 despite some bad habits I don't have and Gram and Great-Aunt lived into their mid-late 90s plus improving longevity and joint longevity it is a no-brainer for us.
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Old 11-30-2015, 11:57 AM   #29
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People who say it's a no-brainer to defer are wrong. It's actually a brainer.

Take a look at my spreadsheet. https://www.dropbox.com/s/gebanzrbr3...0calc.xls?dl=0 Plug in your own estimates and figures.

If you take SS at 66 FRA and invest/save that and earn 3% above inflation, the break-even age is 87.
17 years to break even. To me that's much too long to be attractive.

If you earn nothing above inflation, breakeven is 82, which is 12 years, and to me _still_ too long.

There is no clear-cut right answer, it's largely a matter of personal preference in how you'd like the shape of your income curve to be.
Of course, if you are selling annuities, your answer is going to be influenced by the commission you'll get.
Right, that is exactly what my quick calculation yielded - the break-even point was 82, which is Pretty Old even under the best of circumstances.

I make a hobby of reading the local obituaries. Yes, some people do live to be 85 in some semblance of health. But I am always struck by how many people "left us suddenly and unexpectedly" at 48, 54, 65, 71 or 73. It's a sobering alternative to the actuarial tables. Which is why I lean toward the "take it at FRA and cheerfully blow it on annual vacations" philosophy. The notion that "by God I'm covered even if I live to be 92" just doesn't do much for me. Concerns about the welfare of my wife would be the only thing driving me in the other direction.
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Old 11-30-2015, 11:57 AM   #30
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I understand... my point was that there is nothing to be gained by her waiting until she is 70. I guess she could claim spousal benefits anytime between when she turns 62 and her FRA.
No, as she did not work in the US, she does not have her own SS, and cannot claim spousal at 62 unless the OP also files.

It used to be that when she reached FRA, the OP can "file-and-suspend" his own benefit so his wife can claim spousal. This option goes away with the recent law change. And then, due to their age difference this point is moot as she will reach FRA about the same time the OP gets to 70 where he will file anyway.

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I did not see where he said his DW as 61, but if so, then taking it at 70 means a much greater chance of living longer than the 12 year payback....
I am a fast reader and often miss important detail, but not this time.

In post #12, the OP wrote "my non-working wife (who is a mere child of 61 now)...".
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Old 11-30-2015, 11:59 AM   #31
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There's always exceptions to every rule when making these decisions. My DW will take her SS at 62. I'll take mine at 66. I found out as I was making this decision that when I kick off she gains $600/mth on her pension and another $1,200/mth tax free from her late husband's VA benefit. So, she comes out ahead when I'm gone. Now I just need to keep an eye on her!
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Old 11-30-2015, 12:00 PM   #32
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My plan depends entirely upon investment returns. I will not be someone with a large enough stash to get down to a 2 or 3 % WR.
I intend to "defer" SS until I see a large drop in my assets at the time I'm due to withdraw my next year's "pay". If stock/bond performance has decreased my stash significantly over the proceeding year, I will file for SS. That could be as early as 62 or as late as 70. In that way, I will only use the guaranteed SS income when it will especially help capital preservation. I plan to fund retirement from my stash; SS will act as sequence-of-return risk insurance and if not needed longevity insurance.
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Old 11-30-2015, 12:11 PM   #33
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No, as she did not work in the US, she cannot claim spousal at 62 unless the OP also files.

It used to be that when she reached FRA, the OP can "file-and-suspend" his own benefit so his wife can claim spousal. This option goes away with the recent law change. And then, due to their age difference this point is moot as she will reach FRA about the same time the OP gets to 70 where he will file anyway.
Right - She can't file for her own benefit until I do, and she will reach FRA just about the time I'm 70. If I took SS at 66 and she took it at 62, her benefit (which is a maximum of 50% of my benefit as long as I'm alive) would be reduced just as if I had taken SS at 62. I was astounded to learn after I married her that she would be eligible for a SS benefit at all since she did not set foot in the U.S. until she was 54. I was alerted to this by a friend in France whose wife has still never lived in the U.S. At the time I thought he was joking.

The ignorance of most people - including me, until recently - about SS is amazing. "Financial expert" Dan Celia tells callers that SS is determined on your 5 highest years of earnings, when one of the first FAQs on the Social Security website describes this as one of the "biggest myths" about SS. I have heard him do this twice; the last time he and the caller went round and round as to whether it is the "last 5 years" or the "highest 5 years" (neither). The last time he did it, I called and alerted his call-screener that he was giving out 100% erroneous information. I even steered her to the SS site. I expected a correction in the next segment of the program ... but nooooooo, "financial experts" apparently don't admit their mistakes.
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Old 11-30-2015, 12:12 PM   #34
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NWB, I'm not sure what your point is. I was responding to the OPs comment that his DW might wait until she is 70 to claim her benefits. There is no point to her waiting anything beyond her FRA... she gains nothing waiting from FRA to 70 and actually loses. See quotes below.

I realize that she can't claim spousal benefits until the OP files now that file and suspend is done so I concede that my comment about her taking spousal anytime between 62 and FRA would be dependent on the OP starting benefits.

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....Actually, if I didn't take SS until age 70 and my non-working wife (who is a mere child of 61 now) waited until age 70 to take her benefit that is calculated as a percentage of mine, we could potentially come out way ahead. At 95, we'll be cackling our toothless heads off at the way we've gamed the system.
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Runner, I think you will find that your DW is best off taking her benefit at FRA, not 70. She doesn't get any larger benefit by deferring from FRA to 70 but just forgoes benefits she could have otherwise had.....
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Old 11-30-2015, 12:23 PM   #35
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Or... Skip all the math, take it at 68 and realize you made at least 50% of the right choice applying 0% of your time worrying about it.


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There's a lot to be said for the elegant simplicity of this approach. It makes sense to me.
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Old 11-30-2015, 12:24 PM   #36
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If you plan to put the SS funds into a low interest savings account, putting it off until age 70 to help your DW is probably the better decision. If you invested the money in low to moderate risk dividend stocks, it may do better in the long run, but does carry more risk. It's very much a personal decision and needs to consider other assets you have, including survivor benefits on your pension. Be sure to include DW in the decision.


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+1

I started SS at 62 in 2009 for DW's protection. (She is ineligible to collect any of my SS either as a spouse or as a survivor due to GPO). Because the markets have been quite favorable since I started SS, the accumulated value of the SS payments + earnings received over the past 6 years is conservatively enough to compensate for not waiting until 70. (My age 62 SS + 4% of the accumulated value of the early SS payments is larger than my age 70 SS would have been.)

But, but, but........ as you say, there are no guarantees. Had I started early SS in a less favorable market, or if I had chosen conservative investments, things would not have worked out this way.
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Old 11-30-2015, 12:31 PM   #37
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"financial experts" apparently don't admit their mistakes.
That's correct and makes perfect sense. Their job is to attract listeners, readers and watchers of the various media outlets. Their job is not to educate people with factual information unless, on the small chance, that happens to be what is attracting the most people. That's how "the media" works.
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Old 11-30-2015, 12:59 PM   #38
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That's correct and makes perfect sense. Their job is to attract listeners, readers and watchers of the various media outlets. Their job is not to educate people with factual information unless, on the small chance, that happens to be what is attracting the most people. That's how "the media" works.
Of course, since this is a financial advice call-in program where the callers are mostly people of modest means to whom SS is vitally important, one would hope that bad advice will eventually catch up with the host.

As one who has all of his eggs in extremely conservative baskets (Series I Savings Bonds are at the "risky" end of my portfolio), I am always struck by how these callers of very modest means live out their investment fantasies. They may only have $10K or $20K to their names, but it's all carefully allocated between gold, silver, Swiss francs, guns, 8 shares of this, 10 shares of that, some real estate scheme they heard about from a "really smart" friend, etc. They want to know if Dan thinks a stash of Singapore dollars would be a prudent addition to their portfolio.

Dan's principal objectives seem to be to (1) convince listeners to support his "ministry" by becoming "partners" for $85; (2) steer callers who have substantial sums toward charitable gift annuities with the American Family Foundation (his program is on American Family Radio); and (3) shill for the Timothy family of funds under the guise that they are "biblically responsible" (as though anything remotely connected with the American economy could qualify as biblically responsible).
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Old 11-30-2015, 01:14 PM   #39
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But this question does highlight the importance of personal circumstances. My wife is a citizen of Belarus (as well as the U.S.), owns a home (in a high-rise) in Belarus, and has all her family in Belarus, where health care is 100% free if you go to government facilities and extremely cheap if you go to private facilities. If she wanted to return to Belarus, our savings and my life insurance would make her quite well-to-do by Belarusian standards, so the SS would be an issue only if I died first and she decided to remain in the U.S.
Even if she returned to Belarus after you die she is entitled to SS based on being your widow. The SS administration is very accustomed to paying out benefits to overseas recipients, directly into their overseas bank account if requested with an excellent exchange rate.

Just mentioned this as you might be thinking that she would lose that on returning home and may affect your calculations.
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Old 11-30-2015, 01:39 PM   #40
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People who say it's a no-brainer to defer are wrong. It's actually a brainer.

Take a look at my spreadsheet. https://www.dropbox.com/s/gebanzrbr3...0calc.xls?dl=0 Plug in your own estimates and figures.

If you take SS at 66 FRA and invest/save that and earn 3% above inflation, the break-even age is 87.
17 years to break even. To me that's much too long to be attractive.

If you earn nothing above inflation, breakeven is 82, which is 12 years, and to me _still_ too long.

There is no clear-cut right answer, it's largely a matter of personal preference in how you'd like the shape of your income curve to be.
Of course, if you are selling annuities, your answer is going to be influenced by the commission you'll get.
comparing it at 62 to 70 the break even is 22-24 years by the time you count :

lost checks you didn't take

spending down invested assets to live on

no spousal adder of 4500.00 a year to my wifes early benefit since she does not get it until i file .

you are not held harmless against medicare increases .

22-24 years just to break even is a long time .

in fact you need to see 90 to even make enough of a difference to delay to 70 .

about the only good thing delaying is less dependency on markets , but then you shift to longevity risk instead .
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