Taking Social Security early vs. not

[Animorph]

Quote:

Originally Posted by Richard8655 Since the break-even point is 81, it still makes more sense statistically and financially to start at 62.

The age 81 breakeven assumes a rate of return. Very often it is assumed to be 0%, ignored completely (though mostly to support later SS). Don't just pull these numbers out of articles uncritically. My personal longevity measured at one website using my family and personal health history is 92. That would lean towards taking SS at 70.

[ERD50]

Quote:

Originally Posted by Richard8655 Oh my gosh. Apologies for not realizing you're so smart and have all the facts! IMHO, it's your view that could use some fresh information and reevaluation. You say your facts are correct. I say mine are. Let's let everyone judge on their own based on the information from our posts and others. They can double check anything stated here independently.

So just which of my statements specifically do you disagree with, and why? That would be more illuminating than this "is too, is not" response.

And please re-visit my post # 216, regarding break-even versus 'longevity insurance':

http://www.early-retirement.org/foru...ml#post1294574

-ERD50

[gerrym51]

Quote:

Originally Posted by ERD50 So just which of my statements specifically do you disagree with, and why? That would be more illuminating than this "is too, is not" response. And please re-visit my post # 216, regarding break-even versus 'longevity insurance': http://www.early-retirement.org/foru...ml#post1294574 -ERD50

take late for longevity but don't buy ltc insurance to protect longevity- buying later will be astronomical

[gerntz]

Quote:

Originally Posted by Badger My wife took SS early at 64. She is now 66 and has been collecting $1000/month. I am presently 64 and will reach full retirement age at 66 in 2 years. When I reach FRA the idea is to delay taking my SS until I reach 70 when it will be a greater monthly amount than what it would have been at age 66. I would instead (at age 66) apply to recieve 1/2 of the amount of what my wife recieves. This would then make the total amount we recieve from SS to be $1500/month for the next 4 years. Once I reach 70 I would stop taking the $500/month based on my wife's SS and start taking my own SS which would be $2000/month. We would then be recieving her SS of $1000 and my SS of $2000 for a total of $3000/month.

This is correct imo presuming you know that your wife's spousal benefit on your record is less than 1/2 your record's FRA spousal benefit adjusted down for her taking her SS benefit at 64. Sounds like her spousal benefit on your record would be <$750 & thus her $1000K is higher.

In our similar but slightly different case, her spousal benefit on my record for my FRA is slightly higher than her own record's benefit. So she will switch to a spousal benefit when I turn 70.

[Brett_Cameron]

Quote:

Originally Posted by homestead I called SSA today they confirmed if I retired at age 62 and my wife retired at FRA (66) there would be no reduction in her spousal benefit. At 66 she would have the choice of going with her own benefit or 50% of my FRA benefit.

Thanks for the info! Good to know. And that matches was the Handbook says.

[ERD50]

Quote:

Originally Posted by gerrym51 take late for longevity but don't buy ltc insurance to protect longevity- buying later will be astronomical

LTC is an important consideration, and I'm interested in learning about it. But this thread is about SS early/delay. I realize they can both be forms of 'longevity insurance', but they are separate topics. And LTC is complex, it don't think it will be well served by mixing it into this thread.

There is an interesting one going on now, the OP may be facing a 90% increase in premiums - maybe move this discussion there?


http://www.early-retirement.org/foru...ml#post1294956

-ERD50

[gerrym51]

Quote:

Originally Posted by ERD50 LTC is an important consideration, and I'm interested in learning about it. But this thread is about SS early/delay. I realize they can both be forms of 'longevity insurance', but they are separate topics. And LTC is complex, it don't think it will be well served by mixing it into this thread. There is an interesting one going on now, the OP may be facing a 90% increase in premiums - maybe move this discussion there? http://www.early-retirement.org/foru...ml#post1294956 -ERD50

my point again is that reasons for taking ss early can be contrasted with reasons not to buy ltc ins

[youbet]

Quote:

Originally Posted by ERD50 I suggest that you study a bit. You are mis-applying 'life expectancy'. First, that is an average number, so by definition, half live longer.

As a retired factory worker living on early SS, I don't know much about dealing with numbers, especially these fancy statistics you folks keep throwing around. So, help me here.

Say 10 people are born and live their lives. 9 die at 1 year old and 1 dies at 10 years old. 19/10 = 1.9 average age at death. In this case, half did not live longer than average age at death. Only 1 did. This doesn't seem to follow the definition you gave that says half live longer than average. What am I doing wrong?

Would this have anything to do with the difference between "average" and "median?"

Thanks for your help in understanding this.

[gerrym51]

Quote:

Originally Posted by youbet As a retired factory worker living on early SS, I don't know much about dealing with numbers, especially these fancy statistics you folks keep throwing around. So, help me here. Say 10 people are born and live their lives. 9 die at 1 year old and 1 dies at 10 years old. 19/10 = 1.9 average age at death. In this case, half did not live longer than average age at death. Only 1 did. This doesn't seem to follow the definition you gave that says half live longer than average. What am I doing wrong? Would this have anything to do with the difference between "average" and "median?" Thanks for your help in understanding this.

as far as i know is median is at the half were the average is ages all added up and divided by number of people

[ERD50]

Quote:

Originally Posted by gerrym51 my point again is that reasons for taking ss early can be contrasted with reasons not to buy ltc ins

Then I'm not following your point, sorry. Can you elaborate?

Quote:

Originally Posted by youbet Would this have anything to do with the difference between "average" and "median?" Thanks for your help in understanding this.

Nope, you got me. Average LE isn't the same as median LE (though it might be close?), and I interchanged them there. I think that my thinking got skewed (to keep in the statistical lingo ) as I was just looking at that Vanguard calculator.

The Vanguard calculator looks at it differently from just an average LE. You can plug in numbers until it tells you that a person of age X has a 50% chance of reaching age Y. So then you can say that half the people reach that age (or whatever %/years you are looking at).

Sorry if I confused things with that statement.

-ERD50

[rayvt]

Learn the difference between arithmetic average and median. People use sloppy terminology all the time, saying "average" when they are actually talking about "median".

Averaging is meaningless, as you pointed out.
The median age is what is used in talking about mortality statistics.

This: Actuarial Life Table is what should be looked at when we are discussing mortality & longevity.

Look at the rows for age 66 and age 82. For every 78,351 males that are 66, only 41,683 will still be alive at 82. IOW, 53% will make it to 82 and 47% won't. That's about 50/50. On the age 66 row, we see the Life Epectancy of a 62 year old male is a little over 16 years. 66 + 16 = 82.

Life expectancy at age X is defined as the number of years it takes for the number of people who are still alive to be half the original number.

So... a 62 YO male has a 50/50 chance to make it to 81.
A 70 YO has a 50/50 chance to make it to 84.
An 80 YO has a 50/50 chance to make it to 88.

Now, we are worried that me might be one of the unlucky (?) 53% and live past 82 and don't want to risk running out of money.
So we could define an "optimistic life expectancy" as 25% chance of still being alive.
Age 62 = 83,217 50% of that is 41608. Closest row to that is 82 with 41,683 survivors. This is the normal 50/50 L.E.

Age 62 = 83,217 25% of that is 20804. Closest row to that is 88 with 21,785 survivors. This is the optimistic 25/75 L.E.

Marine Corps method. "Look at the man on your left, look at the man on your right. When it's all done, only one you will still be here."

Age 62 = 83,217 33% of that is 27739. Closest row to that is 86 with 28,341 survivors. This is the "marine" 33/67 L.E.

Let's go crazy. What's the stats for 62 year olds making it to 90?
Age 62 = 83,217 Age 90 = 15,722. That's 19%.

For your poker table club of 5 guys of 62 years old, only 1 will make it to 90. The other 4 will be gone.

[youbet]

Quote:

Originally Posted by ERD50 Sorry if I confused things with that statement. -ERD50

Oh, no problem. I was just trying to understand what you folks were doing with all that high powered calculating........

But...... Ehhhh...... One other thing.....

In all this arm wrestling over when to start SS, the case for waiting until 70 yo is frequently given as the choice "to provide longevity insurance." I go along with that. And, apriori, before you know how things work out for you, your life span and your investments over time, waiting until 70 would be my choice (if I had a DW who qualified for spousal benefits).

But looking back later it may turn out that starting at 62 would have done better in terms of giving you or your survivor more money in old age.

1. If your investments did very well over the 8 years you were collecting between 62 and 70, you might have enough to more than offset the higher SS that waiting until 70 brings. Say you used your early SS bux to buy AAPL every month for 8 years while AAPL it was moving up to $700+.

2. If the person you're interested in providing the longevity insurance for isn't yourself or your spouse, you might be better off starting SS early and investing the money. This person might be a friend, child, sibling, life partner, faithful poodle, spouse impacted by GPO, etc. If you predecease them, they wouldn't qualify for spousal benefits but your portfolio would be larger by the amount of early SS you collected and the associated earnings.

#1 above sounds a bit far-fetched. But I started dollar cost averaging early SS into VTI in 2010 and so far, so good!

[GolfingDuo]

Remeber only one person got out of here alive and that is still under contention.

[RetiringAt55]

Quote:

Originally Posted by rayvt For your poker table club of 5 guys of 62 years old, only 1 will make it to 90. The other 4 will be gone.

What about the wives of the men sitting around at that poker table? This is the key thing everyone keeps forgetting in their calculations. When calculating the benefit of delaying SS, you have to remember the survivor benefit. If you add in their possible wives, you would have two or three people still drawing SS. This is why you have to think about this decision more seriously if you are married, especially with a younger wife whose benefit may be lower.

[gerrym51]

Quote:

Originally Posted by RetiringAt55 What about the wives of the men sitting around at that poker table? This is the key thing everyone keeps forgetting in their calculations. When calculating the benefit of delaying SS, you have to remember the survivor benefit. If you add in their possible wives, you would have two or three people still drawing SS. This is why you have to think about this decision more seriously if you are married, especially with a younger wife whose benefit may be lower.

my wifes 5 years older than me

[RetiringAt55]

Quote:

Originally Posted by gerrym51 my wifes 5 years older than me

Well she will still probably outlive you.

[Stanley]

Quote:

Originally Posted by youbet Say 10 people are born and live their lives. 9 die at 1 year old and 1 dies at 10 years old. 19/10 = 1.9 average age at death. In this case, half did not live longer than average age at death. Only 1 did. This doesn't seem to follow the definition you gave that says half live longer than average. What am I doing wrong?

First, the half-way point is marked by the median not the mean (average).

Think of it this way. Nine regular guys are in a bar, Bill Gates walks in and joins them in a beer. The average net-worth of the guys at the bar is three BILLION dollars.

[gerrym51]

Quote:

Originally Posted by Stanley First, the half-way point is marked by the median not the mean (average). Think of it this way. Nine regular guys are in a bar, Bill Gates walks in and joins them in a beer. The average net-worth of the guys at the bar is three BILLION dollars.

i wish i thought of that analogy

[Stanley]

Quote:

Originally Posted by RetiringAt55 What about the wives of the men sitting around at that poker table? This is the key thing everyone keeps forgetting in their calculations.

Hmm... Not everyone. About 25% of men in the 65-74 age range are single. Women? About 44% in the same age range are single.

At 75 and above about 56% of men are still married but only 38% of the women are still married. So your point that the ladies need to me accounted for is a good one.

Ladies, if you have a good man, hang on to him and keep him healthy.

[youbet]

Quote:

Originally Posted by Stanley First, the half-way point is marked by the median not the mean (average). Think of it this way. Nine regular guys are in a bar, Bill Gates walks in and joins them in a beer. The average net-worth of the guys at the bar is three BILLION dollars.

I'm disappointed you didn't pick up on the sarcasm intended in my post. The intended recipient, ERD50, did as we have been posting back and forth for years and are more sensitive to the nuiances of different ways of saying things to each other.

Anyway, congrats on your knowledge and understanding of the measures of central tendency.

And the Bill Gates analogy is excellent!