SS break even formula?

[Genug]

I agree with Rothlev. You need to understand this option better. There is a price to pay for the social security leveling

If they increase your pension by $800 at 55, they will permanently reduce your pension by a larger amount at 65. You need to factor in the reduction amount as compared to the actual social security that you will receive to complete your analysis

But of course as others have said, life expectancy is the biggest wildcard.

 

[youbet]

Ignorance of the mortality tables might be one reason that people choose to take SS early, but that's not the only reason. In my case, the young wife will likely survive me. She is a teacher who won't be eligible for SS on her own and won't get benefits based on my record due to the GPO. For us, it makes sense for me to take SS early, so as to preserve our nest egg to support her after I die and the SS checks stop entirely. I know there are others on the board who have made the same calculation.

Yep, there sure are.

Started my SS at 62 to maximize our FIRE portfolio at my demise for DW's benefit since she'll have no SS. The timing has worked out well since we've been in a boom market for the 4.5 yrs since I started collecting. Money we didn't withdraw from the portfolio, due to collecting SS, has grown nicely.

 

[Dcharles]

Our FA said that if you can afford to hold off until 70, assuming you expect to live longer than 70, then it is best to not take SS Due to the guaranteed rate of return. We will wait, unless our health fails.

 

[brownred]

Ok, lets turn this around a little. What would you do or how would you take the money if you were in my shoes?

55 yrs. old, Single, no kids
$500,000 in 401K/Roth
$3000 month pension
$800 SS now (level income as described above by rothlev), or $1800 at 62
Tired of working/hate my job and company
Family history is dead by mid 70's
I don't want to die with a lot of excess $ on the table

Also, an interesting little tidbit here. I have been on BP meds for probably 25/30 yrs. I got 2 1/2 weeks off this last Christmas. I forgot to take my BP meds. I would remember every 2nd or 3rd day but said ahh, I will take it tomorrow but kept forgetting. I had a scheduled Drs. appt. 10 days into my 2 1/2 weeks off. My BP was 114/73!

 

[brownred]

Our FA said that if you can afford to hold off until 70, assuming you expect to live longer than 70, then it is best to not take SS Due to the guaranteed rate of return. We will wait, unless our health fails.

I am "receptive" to waiting till 62 but absolutely no later.

 

[Ready]

Do you have long term care insurance?

 

[springnr]

Yep, there sure are.

Started my SS at 62 to maximize our FIRE portfolio at my demise for DW's benefit since she'll have no SS. The timing has worked out well since we've been in a boom market for the 4.5 yrs since I started collecting. Money we didn't withdraw from the portfolio, due to collecting SS, has grown nicely.

I've been looking at this as 62 is fast approaching....
My premise was that drawing SS at 62 allowed the same amount of funds to remain in my IRA and earn $$$. (Excel says)
At 4% earnings a year 62 vs 70 catch each other at 86.
At 5% earnings, starting at 62 is winning over starting at 70 into my 90s.

Also at 70 are you going to pay more taxes due to higher SS payout + RMD?

 

[robnplunder]

Ok, lets turn this around a little. What would you do or how would you take the money if you were in my shoes?

55 yrs. old, Single, no kids
$500,000 in 401K/Roth
$3000 month pension
$800 SS now (level income as described above by rothlev), or $1800 at 62
Tired of working/hate my job and company
Family history is dead by mid 70's
I don't want to die with a lot of excess $ on the table

Also, an interesting little tidbit here. I have been on BP meds for probably 25/30 yrs. I got 2 1/2 weeks off this last Christmas. I forgot to take my BP meds. I would remember every 2nd or 3rd day but said ahh, I will take it tomorrow but kept forgetting. I had a scheduled Drs. appt. 10 days into my 2 1/2 weeks off. My BP was 114/73!

If I were in your shoes, I go with 62. Although if your BP stays at current level, you may wait longer. You could be the odd ball in your family who ends up living past 100.

(For me, 70 for reasons already listed here)

 

[Dave J]

Do you have long term care insurance?

Since he is single, no kids, does he really need it?

 

[brownred]

Do you have long term care insurance?

I have that through my union but stops when employment ends. I do not have it beyond that.
I have briefly looked at it but I is awfully expensive for me due to me being on BP and Cholesterol meds.

 

[Dave J]

Ok, lets turn this around a little. What would you do or how would you take the money if you were in my shoes?

55 yrs. old, Single, no kids
$500,000 in 401K/Roth
$3000 month pension
$800 SS now (level income as described above by rothlev), or $1800 at 62
Tired of working/hate my job and company
Family history is dead by mid 70's
I don't want to die with a lot of excess $ on the table

Also, an interesting little tidbit here. I have been on BP meds for probably 25/30 yrs. I got 2 1/2 weeks off this last Christmas. I forgot to take my BP meds. I would remember every 2nd or 3rd day but said ahh, I will take it tomorrow but kept forgetting. I had a scheduled Drs. appt. 10 days into my 2 1/2 weeks off. My BP was 114/73!

Is your home paid for, and what is your annual living costs. If you live like I do, you could retire now.

PS: I mostly retired at 47 and totally at 57. My situation is somewhat different than yours.

 

[brownred]

If I were in your shoes, I go with 62. Although if your BP stays at current level, you may wait longer. You could be the odd ball in your family who ends up living past 100.

(For me, 70 for reasons already listed here)

I went back on the BP meds as soon as I went back to work.
My point was that it appears that my BP went to normal when I wasn't going somewhere I didn't want to be....work!

Don't get me wrong, I'm not anti work or lazy. I've Just been with the same company since I was 20, almost 35 years now. I just don't want to go there anymore.

 

[brownred]

Is your home paid for, and what is your annual living costs. If you live like I do, you could retire now.

PS: I mostly retired at 47 and totally at 57. My situation is somewhat different than yours.

I owe $20,000 on my home, scheduled to be paid off July 2016.
I was working on my living costs but that got out of wack due to a water pipe breaking in my house a month ago and spending money I normally wouldn't.
I am not a big spender.

I'm assuming your situation is different because you have more money? Correct?

 

[Hermit]

Looks like your situation is more "Can I retire?" Answer these questions: Some Important Questions to Answer Before Asking - Can I Retire?
This thread is a great start to figuring out your SS situation, but there are some more questions to answer before you can decide if you have the resources to retire. Good Luck.

 

[kaneohe]

At 4% earnings a year 62 vs 70 catch each other at 68. A

Does this make sense? If you are drawing extra funds at 62, isn't 62 ahead until at least 70 when the other guy finally starts drawing SS? Perhaps you meant 78 instead of 68?

 

[Ready]

Since he is single, no kids, does he really need it?

Well, my Dad is in a nursing home now due to dementia. We have him in a home that he can afford, but it's certainly no place I would want to spend my last few years on earth. As much as I want to die spending every last dollar I earned, the one thing that holds me back is the reminder that I never want to go anywhere near a dreaded nursing home if I can't take care of myself. But bringing people to care for you into your home can be quite expensive. LTC helps, but if you don't have it, I would just want to know that I have enough to live somewhere that isn't the worst case, miserable nursing facility that people go to when they are broke. I'd rather have the extra SS money in ten years and know that I could use it to avoid the worse case scenario.

 

[springnr]

Does this make sense? If you are drawing extra funds at 62, isn't 62 ahead until at least 70 when the other guy finally starts drawing SS? Perhaps you meant 78 instead of 68?

;.) dyslexic much? Nope not me, meant to type "86" not "68"

Good catch. (I fixed my original post)

 

[walkinwood]

I would have a professional look over this - lawyer or CPA - so that you have someone with your interests foremost explaining it to you.

 

[Dave J]

I owe $20,000 on my home, scheduled to be paid off July 2016.
I was working on my living costs but that got out of wack due to a water pipe breaking in my house a month ago and spending money I normally wouldn't.
I am not a big spender.

I'm assuming your situation is different because you have more money? Correct?

I'm married with a son and Grandkids. Wife worked until 52 +/- . Health Ins. from wife's retirement. Very frugal family. Debt free for a long time.Somewhat more assets, less pension. Until you say what your normal annual spending is, I can't say retire or not.

 

[Dave J]

Well, my Dad is in a nursing home now due to dementia. We have him in a home that he can afford, but it's certainly no place I would want to spend my last few years on earth. As much as I want to die spending every last dollar I earned, the one thing that holds me back is the reminder that I never want to go anywhere near a dreaded nursing home if I can't take care of myself. But bringing people to care for you into your home can be quite expensive. LTC helps, but if you don't have it, I would just want to know that I have enough to live somewhere that isn't the worst case, miserable nursing facility that people go to when they are broke. I'd rather have the extra SS money in ten years and know that I could use it to avoid the worse case scenario.

We live in a rural area of the Midwest, my MIL is in a nursing home. All the nursing homes in our area accept Medicaid and the rooms and care are the same, for private pay vs: Medicaid. I have yet to see a nursing home I would want to be in. Since he is single no kids, I don't see an upside for him due to high premiums. Just my opinion. YMMV.

 

[daylatedollarshort]

If we are working at 62, we'll probably delay SS otherwise I'm going to take the money and run.

My LTC plan is a combination of proper Medicaid planning, simple living in retirement and trying not to run down the portfolio, leaving adequate reserves in our retirement plan for LTC with death at any age, possibly becoming an ex-pat, and covering undergrad and grad school for the kids. (I am not expecting our kids to support us in our old age, but we are trying to give them every opportunity we can to get ahead and be financially self sufficient as adults.)

I think the most logical option for us in regards to LTC and longevity insurance is simply not staying in the U.S. for retirement where health care costs are many times over the rest of the world and LTC costs seem to be double most other developed countries. I believe that leaves us with a short list of every other country on the planet to choose from. Or at least the ones that welcome self supporting retirees, which still seems to leave us with a long list of potential retirement spots.

 

[BBQ-Nut]

I haven't seen any discussion on the 'overall' impact of taking SS early or deferring considering other assets an ER candidate has.

In my situation, I have taxable, tax deferred and tax free assets.

If I retire early, then I will need to draw on these assets in phases.

By electing to draw SS early at 62 I reduce the 'drain' on these assets - and depending on how I 'run the numbers' with different real returns (after accounting for inflation), I end up with more at 'end game' (death) than if I defer SS to 70.

The differences can be an overall portfolio that remains constant or one that is substantially bigger if I assume say a 'real return' on investments of 3% per year.

 

[Dave J]

I haven't seen any discussion on the 'overall' impact of taking SS early or deferring considering other assets an ER candidate has.

In my situation, I have taxable, tax deferred and tax free assets.

If I retire early, then I will need to draw on these assets in phases.

By electing to draw SS early at 62 I reduce the 'drain' on these assets - and depending on how I 'run the numbers' with different real returns (after accounting for inflation), I end up with more at 'end game' (death) than if I defer SS to 70.

The differences can be an overall portfolio that remains constant or one that is substantially bigger if I assume say a 'real return' on investments of 3% per year.

I'm kind of in the same boat you are with a mix of assets. I'll be 62 this year. Previously, I was sure I would draw at 70 and my SO would draw at 66 or 70.Partly due to this thread and some other info., I have changed my plan to both of us starting at 62. I've been working on this for several days and ran a boatload of scenarios, and I'll have more dollars every year up to between 84 and 88. At 70, I'm ahead 235k, at 75 190k, at 80 119k and 85 24k.The amounts going forward from mid 80's up were not that much (at 90 would be ahead 102k waiting until 70).I tried to take into account inflation, COLA's, taxes and assets.
I was sure before I was on the correct tract, but my figures have proven my earlier assumptions were not correct in my situation. Others very well may have a different outcome. My assets are about equal in after tax dollars, Roth dollars and tax-deferred dollars(IRA and I-Bonds)

 

[JerryinPA]

Medical Insurance Cost?

Don't forget to include health insurance costs in your calculations if your employer is paying them now, but you intend to buy private health insurance after retirement....

I had a quote from a local insurer for myself that ranged around the $400 per month, or $9600 per year figure.

This factor is primarily what is keeping me working at my age of 62 1/2. That, and my wife won't allow me to retire!

Regards,

Jerry.

 

[Dave J]

Don't forget to include health insurance costs in your calculations if your employer is paying them now, but you intend to buy private health insurance after retirement....

I had a quote from a local insurer for myself that ranged around the $400 per month, or $9600 per year figure.

Regards,

Jerry.

For me, already retired and insurance from wife's former employer.
My figures are when to start SS, not weather to retire early or not.

Also, please clarify your quote. $400 month is not $9600, unless 400 EACH.