SS at 66 or 70 - not such an easy question?

[mathjak107]

i have not done the math but i think rebalancing when equity's were rising 200-300 % and going in to bonds may have hurt more than helped . last 3 years have seen about 1.40% on a totaL bond fund including interest . last 5 years 2.97%

 

[Runner]

Rayvt; I've seen your conclusions before which run counter to most conventional wisdom, or if not counter, then much later cross over points. Your spreadsheets look impressive, however I have no idea if there are any mathematical errors in your computations or if you are failing to factor in any important assumptions. But for the moment if one were to accept your premise, have you done any calculations on the results for those who are collecting spousal benefits at FRA while letting their own benefits accumulate between FRA and age 70? Wouldn't that scu your results by reducing the BE point?

Of course, the true spreadsheet aficionado plugs in a genealogical tree dating back at least five generations, a full-body scan and multi-phase personality profile of himself of herself, traffic and crime statistics for his or her current location and anticipated location at retirement, and geopolitical projections for Social Security, America and the World over the next 25 years (the Cosmos may be ignored at this point, but not indefinitely). Whereupon, the true spreadsheet aficionado can confidently say, "Oh, whatever, I think I'd better just take it now and spend it as quick as possible" or perhaps, "Yep, I'll still be hitting the ball 265 yards when I'm 95." (Thanks to spellcheck for the spelling of "aficionado," because this is frankly not close to how I would have spelled it.)

 

[audreyh1]

i have not done the math but i think rebalancing when equity's were rising 200-300 % and going in to bonds may have hurt more than helped . last 3 years have seen about 1.40% on a totaL bond fund including interest . last 5 years 2.97%

Rebalancing imrpoves returns when you go through a volatile period of stocks with lots of ups and downs, like the strong two bear markets since 2000.

 

[audreyh1]

(Thanks to spellcheck for the spelling of "aficionado," because this is frankly not close to how I would have spelled it.)

That's because it's a Spanish word.

 

[mathjak107]

Rebalancing imrpoves returns when you go through a volatile period of stocks with lots of ups and downs, like the strong two bear markets since 2000.

not always , it is very time sensitive . i am not so sure it helped this time

 

[REWahoo]

not always , it is very time sensitive . i am not so sure it helped this time

But, as you say, you haven't done the math...

 

[mathjak107]

no i have not , just a seat of the pants guess .

 

[2017ish]

The problem being, how many 85 or 90 year olds have anything resembling "quality of life" versus "wish they were dead and probably would be better off dead"? We can all point to exceptions, but I have considerable actual experience with the very elderly and it is not a state that I look forward to (even though, at 66, I have zero health problems and am fitter than 99.9% of my peers). Most of the very elderly that I know are miserable regardless of whether they are in state-run warehouses or private facilities. Those who are happiest (relatively speaking) seem to be those who remain in their homes, even long after this is a safe alternative. I just don't see worrying about what my situation is going to be if and when I'm 87 or 93 as even being part of the equation.

I do not have considerable experience with the very elderly outside of my family, so take this admitted anecdote for what it's worth. It indisputably will impact our social claiming strategy (ceteris paribus)...

In laws are both past 85. He plays tennis 3+ days a week, she walks at the gym every morning at 6 am (bilateral knees in her 60s, hip in 70s....). Both mentating at high levels, likely with a little slowing compared to past. My grandmother--only nonsmoker of my grandparents, died at 97 after making a considered decision against surgical intervention. She was still critiquing Mike Matheny's bullpen moves for the Cardinals 6 weeks before her death, and when I saw her three weeks before, she knew my sons by name and city (out of 50+ great grandchildren).

Demographics are split: Grandma didn't graduate high school, had little money in her life, and lived in a private, church-affiliated senior home for her last 20 years. In-laws both with at least college degree, worked in skilled professions, still live at their home, and are not out of the aging norm among their relatives.

Worrying about the situation at 87 or 93 is what I do for DW; definitely part of her equation. As for me, I ignore the early tobacco-related deaths of males on my line, and hope to be along to carry her bags.

 

[pb4uski]

no i have not , just a seat of the pants guess .

Ok, its harder when facts get in the way of your arguments.

 

[mathjak107]

Ok, its harder when facts get in the way of your arguments.

unless you want to do the math you can't say it helped either .

 

[pb4uski]

First, the returns from Wellesley and Wellington that I provided are both managed portfolios and would implicitly include rebalancing and are significantly higher than the returns you provided and some of that return is likely due to rebalancing.

Second, I'm not going to do your research for you... I'm retired and have better things to do.

But in the spirit of at least providing some facts instead of just the stuff that comes from the seat of the pants (aka BS ), the Vanguard Balanced Fund grew from $10k to almost $24k since 1/1/2000, a 5.9% average annual return and a 2.7% real return.

 

[pb4uski]

You're omitting a very important reason Karen.

Folks who have a significant other in their life who cannot collect either spousal benefits or survivor benefits that you want to protect financially should you predecease them. In that case it's best to start SS early and invest the money with the dependent as beneficiary of the account.

Two unmarried committed partners fall into this category as well as situation were the SO is impacted by GPO.

I concede that is a good reason youbet, but suggest that it impacts relatively few couples.

 

[mathjak107]

First, the returns from Wellesley and Wellington that I provided are both managed portfolios and would implicitly include rebalancing and are significantly higher than the returns you provided and some of that return is likely due to rebalancing.

Second, I'm not going to do your research for you... I'm retired and have better things to do.

But in the spirit of at least providing some facts instead of just the stuff that comes from the seat of the pants (aka BS ), the Vanguard Balanced Fund grew from $10k to almost $24k since 1/1/2000, a 5.9% average annual return and a 2.7% real return.

that is consistent then with the results i posted of 2.90% in real return. so whats the issue ?

i was looking at the s&p which was below 2% .

i show the last 15 years vti was up 5.15% and vbtlx total bond 4.96% with inflation at 2.60%

so a 50/50 mix would be at a 5.50% return less 2.60% for inflation = 2.90% real return.

that may be hard to get going forward with a balanced fund looking at 4% possibly in nominal returns if guesstimates are correct . about 6% from equity's and 3%-4% from bonds .

 

[pb4uski]

[mod edit]

That would be like the person with a rare disease disagreeing with it being characterized as rare because they have it.

Nonetheless, I'll agree to disagree on that but the source below suggests that GPO affects only 1% of all beneficiaries and is not greater than what I was thinking it was.

GPO: According to the Congressional Research Report for Congress 2013, 568,000 had their spousal benefits reduced by the GPO — 1% of all beneficiaries (not counting those who did not apply) Of those people penalized by GPO 80% are women and of those women, 74% lose their entire Social Security benefit.

 

[pb4uski]

that is consistent then with the results i posted of 2.90% in real return. so whats the issue ?

If you go back and read the thread, I was objecting to this statement that you made:

.....those who did this in 2000 saw less then a 2% real return over 15 years ...

I missed that you admitted that your statement above of a 2% real return was wrong in a subsequent post.

 

[mathjak107]

no problem ....

 

[harley]

unsubscribe

 

[MichaelB]

We're among friends, so let's all disagree without being disagreeable.

 

[Bigdawg]

That's how I think of it too and I just had this conversation with someone the other day who is still working and doesnt' see the need to stop before 70 as they are in real estate and like what they do.

The other thing it that if you look at longevity statistics, a couple where one member lives to 95 is not that out of the question especially if both spouses are already in their 60s and still in good health. So if you factor that in, waiting till 70 so that you get better payouts from 70-95 would be my preference.

To me the only reason not to take it when your 70 is A) you don't plan to live very long due to current health issues B) you need the money now C) You have plenty of money and would rather have a "guarantee" of getting as much back out of the government as possible to leave your heirs should you pass early.

Count me in the C group

 

[Bigdawg]

We're among friends, so let's all disagree without being disagreeable.

it's all Runner's fault for starting this thread yesterday. jk

is the horse officially dead?

 

[pb4uski]

no, the horse is on life support waiting to turn 70 to claimed delayed benefits.

 

[mathjak107]

i was going to take ss earlier depending on what markets did .

i was thinking of filing for ss if markets were poor rather then spend down invested assets .

but after thinking about it that is the wrong thing to do .

if the gain on ss is beating what the investments are doing i am better off letting the ss ride and delay . spending down the assets with the lower return is likely the way i will go .

 

[user5027]

no, the horse is on life support waiting to turn 70 to claimed delayed benefits.

I hope the horse has long term care covered. <ducks and covers>

 

[Bir48die]

I hope the horse has long term care covered. <ducks and covers>

Great! Now a new thread starts on LTC. When will this ever end?

 

[rayvt]

Rayvt; But for the moment if one were to accept your premise, have you done any calculations on the results for those who are collecting spousal benefits at FRA while letting their own benefits accumulate between FRA and age 70? Wouldn't that scu your results by reducing the BE point?

Yes, I started looking at that. The preliminary work is in the latest version of the spreadsheet that I uploaded.
It gets very complicated very fast.
The biggest complexity was in the file-and-suspend scenario -- but that was just eliminated.

My current impression is that in most (not all, but most) cases, there is little interplay between the spouses, that changing the filing strategy for spouse A does not change the optimal filing strategy for spouse B. If that is indeed the case, then A should do whatever filing strategy is best for him, and B sould do whatever filing strategy is best for her.
All this is different than your family financial stuff up to now. We are still getting our heads around the fact that (on Medicare) we no longer have family health insurance -- we each have our own policy that incompletly independent from the other's. Even thought it's the same Medicare Supplement policy form from the same company.

In broad terms, the lower-earning spouse get the higher of their own SS benefit or half the higher-earning spouse's benefit. There are some minor tweaks you can make revolving around the cutoffs at FRA, but the monetary effect in actual dollars is small. Certainly nowhere near the "This little trick will get a married couple an extra $15,000/yr {click here}".

Most of the confusion about all this is that so many people ignore the time value of money.
They think that $750 today is less money than $1000 in 4 years which is less than $1320 in 8 years -- when actuarially and proper discounted, they have (approximately) the same NPV.

And as we just found out withe 2016 Medicare increase and the "hold harmless" rule, deferring can cost you actual cash money. That's something that I've never read about before.