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Old 05-26-2016, 01:28 PM   #21
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Originally Posted by Looking4Ward View Post
If I'm not spending SS dollars from the ages of 62 to 70, then I'm spending my own. And if I'm spending my own, those are dollars that are no longer invested. I'm not exactly sure what sort of amortized return I could expect on those invested dollars over the 8 year period but it does factor into the equation.
Yes this is our point..my own money upon my death can be given to our adult children but SS cannot..so why not spend that down and save your own until you have to take distribution?
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Old 05-26-2016, 01:34 PM   #22
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Originally Posted by Senator View Post
Now, refactor at age 84 max. That is the average lifespan.

Then, factor in someone that needs the money to fulfill their life's dreams at 62, rather than 70. Or the average lifespan of someone that has already had a by-pass, stent or heart attack. Or diabetes. Or a heavy smoker. Or a couch potato.

I am waiting until 70, unless I decide different. If I was in one of the above groups, I would start at 62, or even sooner.
so our plan to split it--one wait until 70 and the other take at 62 is good..right. my DH will get 55% of my pension for life if i upon my death. so taking the higher SS should help with the gap.
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Old 05-26-2016, 03:25 PM   #23
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Yes this is our point..my own money upon my death can be given to our adult children but SS cannot..so why not spend that down and save your own until you have to take distribution?
Because if you're going to live longer, you can leave your kids more by deferring SS and getting more out of your system (unless you're a really good investor). If you're going to die early, save your own money and take SS now so that you leave more of yours behind.

Bottom line, there is no right or wrong answer, unless you know when you will die. Your probably also need to know your future market returns. In other words, there is no right or wrong answer. The best someone can do is take an educated guess based on their health and family history, and maybe do a bit of market timing--if the market tanks, that may be a good time to take SS and leave more money in the market to recover, and if it seems due for a fall, defer SS so that you'll take more off the table to live on while it's high. Married couples should also consider the high/low income strategies, which don't apply to me so I don't even know what those are.
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Old 05-26-2016, 03:40 PM   #24
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If one of a dual-income married couple is likely to live to 84 or beyond, highest earner should delay.
Wouldn't it make the most sense for the person most likely to live the longest to delay, which I think would normally be the female spouse if both are healthy or the healthiest of the two otherwise?
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Old 05-26-2016, 04:03 PM   #25
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My thought is that the highest earner in a couple should wait longer to collect. That way, if one of them dies, the remaining spouse will collect the higher of the two SS checks.
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Old 05-26-2016, 06:27 PM   #26
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Yes. The point about return that could be generated by taking the $ earlier is a good point

Another good point is quality of life - money at 63 often can be enjoyed a lot more than money at 70 and beyond.

The state (and tax payers) are indeed wise to suggest taking money later from their own self preservation perspective -- For those that take money earlier and then fall really short, will require incremental demands on the social safety net (Medicaid etc) and the government (taxpayer) will likely need to kick in more money to cover the gaps. Tax payers will ultimately pay for that.
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Old 05-26-2016, 06:42 PM   #27
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Originally Posted by aknowhow78 View Post

if one take SS at 70:
90 -70 = 20 yrs of total collection; 1320/mth(132% value) x12 mths= 15840/yr. 15840/yr X 20 yrs=316,800.

A common error; if your full retirement age is 67, waiting until 70 only gets you 124% versus 132%. It grows at 8% per year; actually 2/3% per month.

Also, spousal benefit is max 50% of FRA so your max for both would be 174%. When this was pointed out to me, I had to lower my expected payment from 132+66 = 198 to 128 (my FRA is 66 and 6 mos) + 50 = 178. Quite a big difference.

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Old 05-26-2016, 08:51 PM   #28
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Y
Another good point is quality of life - money at 63 often can be enjoyed a lot more than money at 70 and beyond.
If a person has some retirement savings, isn't your point an argument for waiting to take SS? Waiting to start SS (until FRA or age 70) provides a higher monthly check when SS is begun, and that's a check that will be inflation adjusted and can't be outlived. For many, this would enable them to significantly reduce the size of the nestegg required to provide spending money in their later years--they don't know how long they'll live, so they have to plan for a long life= a conservative withdrawal rate. Also, because they need this money for spending, volatility is a problem, so they will be invested conservatively (= lower expected returns). With the higher SS check they'll get by waiting, they can spend more of their nestegg when they are young and can enjoy it. There's no inflation-adjusted annuity that can be purchased cheaper than the benefit increase obtained simply by delaying SS.
In concrete terms: If a couple's combined SS benefit increases by $500/mo by waiting until 67 to take it (which would not be very unusual), that couple could get by with a nest egg $109K smaller when they finally do start SS (Assumption: they'll use a 5.5% WR). That $109K could buy some nice vacations when they might still be young enough to get around. As a bonus, they can spend the dough right up front, no need to "save up" SS checks. This $109K is more than the value of the SS checks the same couple would have gotten between age 63 and 67.

Now, this assumes that we trust all the promises made by the government/SSA, but that's another subject.
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Old 05-26-2016, 09:53 PM   #29
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This subject has come up every so often.

When I ran FIRECalc with my savings and SS, I found that what I can spend varies less than 1%, whether I take SS at 62, FRA, or 70. This is for a 30-year run. YMMV.
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Old 05-26-2016, 11:30 PM   #30
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Well, if I invest the money I took from 62 - 67 and made that grow, that would negate the difference between $276K and $252K.

And if I took the money from 62 - 70 and invested it, that would probably grown bigger than a straight calculation.


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Originally Posted by aknowhow78 View Post
Hi everyone,
I attended a retirement seminar this week and they had person from the Social Security Administration present. Here is the fact that she stated:
if you take your SS at 62, you will get 75% of you entitlement, FRA=100%, at 70 yrs 132%. if this fact I decided to work the #.

let say a person will get 1000.00 at FRA (67yrs of age) and will live until 90 years of age.
if one take SS at 62:
(90yrs-62 yrs= 28yrs of total collection; 750/month(this is the 75% value) X 12 months =9000/yr. 9000/yr X 28yrs of collection=252,0000

if one take SS at FRA (67 for now)
90 -67= 23 yrs of total collection; 1000/mth(100% value) x12 mths= 12000/yr. 12000/yr X 23 yrs=276,0000

if one take SS at 70:
90 -70 = 20 yrs of total collection; 1320/mth(132% value) x12 mths= 15840/yr. 15840/yr X 20 yrs=316,800.

As one can see waiting is not only beneficial in terms of per month payout also overall payout amount. DH and I have discussed this and to make sure that our investment last and leave some for the kids, maybe one of use taking it at 62 and the other waiting until 70.Here is our plans and please we welcome your input:
I am currently 47 and DH will be 49 this year with 2 kids (3 and 13yrs old). I am Active duty and plant to retire 2021 (52 yrs with 30yrs of service) I will have pension payment (COLA) starting upon my retirement at 52 (75% + disability=apprx 7800/month 94k/yr +full medical carriage via Tricare).

Current expense with kids 10k/mth and will remain so as we have young kids. DH will continue to work until at 59 1/2 (current salary is 110K/year). We currently have everything max out (max contribution to 401k, TSP, Roth IRA (backdoor), and we able to put 36k/yr in after tax accts (emergency, kids college funds, etc..). the 36k will drop in 2021 to 20k/yr until DH retires in 2026.

Upon his retirement at 59 1/2 we plan to withdrawal from his 401k for 3 yrs until he turns 62, take his SS and stop distribution from 401k (and let it grow 8 more yrs). Restart at 70 + my SS at 70 + TSP distribution + pension. Firecal reports 100%. Any input or other consideration we have missed?
much obliged
Nana
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Old 05-26-2016, 11:50 PM   #31
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Regarding what you said about promises by the government ....
The government disappoints and have broken their promise on SS. I can no longer file and suspend, they just eliminated that. So, the US government can change SS rules anytime and there's nothing that could be done once they decide to change it.


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Originally Posted by samclem View Post
If a person has some retirement savings, isn't your point an argument for waiting to take SS? Waiting to start SS (until FRA or age 70) provides a higher monthly check when SS is begun, and that's a check that will be inflation adjusted and can't be outlived. For many, this would enable them to significantly reduce the size of the nestegg required to provide spending money in their later years--they don't know how long they'll live, so they have to plan for a long life= a conservative withdrawal rate. Also, because they need this money for spending, volatility is a problem, so they will be invested conservatively (= lower expected returns). With the higher SS check they'll get by waiting, they can spend more of their nestegg when they are young and can enjoy it. There's no inflation-adjusted annuity that can be purchased cheaper than the benefit increase obtained simply by delaying SS.
In concrete terms: If a couple's combined SS benefit increases by $500/mo by waiting until 67 to take it (which would not be very unusual), that couple could get by with a nest egg $109K smaller when they finally do start SS (Assumption: they'll use a 5.5% WR). That $109K could buy some nice vacations when they might still be young enough to get around. As a bonus, they can spend the dough right up front, no need to "save up" SS checks. This $109K is more than the value of the SS checks the same couple would have gotten between age 63 and 67.

Now, this assumes that we trust all the promises made by the government/SSA, but that's another subject.
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Old 05-27-2016, 12:42 AM   #32
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If

Now, this assumes that we trust all the promises made by the government/SSA, but that's another subject.
I'm not sure it is. Note, I am not at all suggesting that the government/SSA are lying to anyone. But, stuff changes. As mentioned file and suspend happened. I had been toying with the idea of taking spousal at 66 (DH is 68 and already on SS) and then letting mine (the larger by a small amount) grow until 70. But, I was 61 when that change was made so I can't do it.

So, that is OK. I knew about that before I turned 62 so that is fine. But, I can just imagine deciding to not take because of all these reasons to wait until FRA or even age 70 and then suddenly see benefits cut (or changed) just as I got ready to take them.

Note I am not at all saying that having already taken the benefits would protect me from the changes. But many people decide not to take benefits at less than FRA because of the amounts they expect to get at FRA or age 70.

A big factor for as to why I will probably take them before FRA (I recently turned 62) is because I figure that I can't believe that those benefits at FRA or 70 are necessarily what they are proposed to be. So, I tend to take the benefits that I can take now (I actually will probably wait until the first of the year) and then at least I am getting now what I am expecting to get. That may change in the future but it won't change what I already got.
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Old 05-27-2016, 02:25 AM   #33
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The reality is that the only thing we know for sure now about the future of SS benefits is that without program changes, per the SSA web site, "Currently, the Social Security Board of Trustees projects program cost to rise by 2035 so that taxes will be enough to pay for only 75 percent of scheduled benefits."

This may change, it may not, maybe SS benefits will even be made higher, but the possibility that future benefits will be cut is not only nonzero, it is the status quo. That is a nontrivial consideration some of the "when to take SS" financial articles address and some do not.
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Old 05-27-2016, 05:44 AM   #34
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Now, refactor at age 84 max. That is the average lifespan.

Then, factor in someone that needs the money to fulfill their life's dreams at 62, rather than 70. Or the average lifespan of someone that has already had a by-pass, stent or heart attack. Or diabetes. Or a heavy smoker. Or a couch potato.

I am waiting until 70, unless I decide different. If I was in one of the above groups, I would start at 62, or even sooner.
Exactly. No offense to the OP, but who cares what the total amount you wring out of SS? What if you spend your last 5 years in a nursing home and all that extra money goes there? What if you're fine but you lose your significant other and have no one to share that money with?
Take your SS when it will do the most to help you enjoy the years you have left, total amount be damned. I'm not sure what that will be for me, but leaning towards taking it early.
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Old 05-27-2016, 05:51 AM   #35
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Regarding what you said about promises by the government ....
The government disappoints and have broken their promise on SS. I can no longer file and suspend, they just eliminated that. So, the US government can change SS rules anytime and there's nothing that could be done once they decide to change it.
I'm glad they got rid of "file and suspend". I don't think people should be gaming the system. Make no mistake, if it was still legal, I'd do it too but I'm glad they got rid of it.
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Old 05-27-2016, 06:46 AM   #36
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Exactly. No offense to the OP, but who cares what the total amount you wring out of SS? What if you spend your last 5 years in a nursing home and all that extra money goes there? What if you're fine but you lose your significant other and have no one to share that money with?
Take your SS when it will do the most to help you enjoy the years you have left, total amount be damned. I'm not sure what that will be for me, but leaning towards taking it early.
+1 +1

After all the miles of comments on "when to take SS" I think this is the most clear and profound analysis.

Disclaimer: I took SS at 62; didn't need to but did.
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Old 05-27-2016, 07:56 AM   #37
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Exactly. No offense to the OP, but who cares what the total amount you wring out of SS? What if you spend your last 5 years in a nursing home and all that extra money goes there? What if you're fine but you lose your significant other and have no one to share that money with?
Take your SS when it will do the most to help you enjoy the years you have left, total amount be damned. I'm not sure what that will be for me, but leaning towards taking it early.
Money is money. If you want more money early, taking SS early is not the only way. You can take more out of your retirement account, knowing that you have a larger SS check coming.
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Old 05-27-2016, 08:03 AM   #38
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SS for (healthy) lbym types should be used and viewed as market insurance, delay until the portfolio takes a hit, then use the SS to minimize portfolio draw. It's the best long term outcome.


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Old 05-27-2016, 08:23 AM   #39
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As mentioned file and suspend happened. I had been toying with the idea of taking spousal at 66 (DH is 68 and already on SS) and then letting mine (the larger by a small amount) grow until 70. But, I was 61 when that change was made so I can't do it.
Why do you think you can't file at 66 (your FRA) for 1/2 of your DH's who is older and already receiving SS, and then claim your own at 70. Unless I had a brain dump which is entirely possible, that option is still available.
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Old 05-27-2016, 08:25 AM   #40
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Are you saying that NH's have a preference for SS dollars over FIRE portfolio generated dollars?

No.


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