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Old 06-05-2013, 09:50 AM   #261
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Here is an article by Dr. Pfau on taking SS at 62 and 70. He assumes a person has one million dollars in assets and spends $60,000 a year inflation adjusted. The person who takes SS at 62 supplements his social security dollars from his assets. The person who takes SS at age 70, also buys an 8 year SPIA (about $173,000 cost) to fill the gap caused by not taking SS. At age 70 the SPIA ends and SS takes over.

Retirement Researcher Blog: Claiming Social Security at 62 or 70

He concludes that the age 70 SS + SPIA provides more security and less chance of depleting assets early. It may also affect the size of an estate one leaves, but this seems less clear to me.
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Old 06-05-2013, 11:27 AM   #262
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He concludes that the age 70 SS + SPIA provides more security and less chance of depleting assets early. It also provides more of an estate for one's heirs if one dies at a ripe old age.
Would it leave less of an estate if you died at 62 or 69?

Also he didn't consider taxes, health care subsidies, other income sources or changes to Social Security, which seems likely. In the real world these can make more of a difference than break even points.
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Old 06-05-2013, 11:32 AM   #263
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Would it leave less of an estate if you died at 69?
Upon rereading the article I am not certain my first interpretation was correct. It is unclear to me how these two plans may affect any bequest to ones heirs.
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Old 06-05-2013, 03:01 PM   #264
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Taking early was good for heirs if you died early. Taking late was better for heirs if you died later.

Notice that the annuity had a 1% rate of return? One of the comments suggested you could just save the cash instead of buy the annuity.
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Old 06-05-2013, 03:53 PM   #265
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I know from my spreadsheets if we both delay SS and die before we collect it that minimizes what is left for our heirs. I would also think dying right after buying an annuity would not work our to great for maximizing inheritances either. Plus annuities have more risk than an alternative investment like just putting the money in TIPS or CDs. TIPS would be inflation adjusted while the annuity would not be.
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Old 06-05-2013, 04:13 PM   #266
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If you judge each option solely by its worst cases, without regard to the probabilities of each of the cases and their respective rewards and costs, then you'll sub-optimize your situation.
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Old 06-05-2013, 04:40 PM   #267
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If you judge each option solely by its worst cases, without regard to the probabilities of each of the cases and their respective rewards and costs, then you'll sub-optimize your situation.
+1 on this....


When you make any financial decision, you have to weigh the various cases and then make it... once made, it is not that productive to second guess yourself as the deed has been done...

The only reason I would buy a SPIA is that my DW is not at all financial astute... having a regular check is something that I think would be important.... for me, I think I can always do better on my own....
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Old 06-05-2013, 09:08 PM   #268
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Well, it's now too late for us to take SS early.
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Old 06-05-2013, 10:17 PM   #269
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The only reason I would buy a SPIA is that my DW is not at all financial astute... having a regular check is something that I think would be important.... for me, I think I can always do better on my own....
Good idea, IMO. I have a problem with SPIAs except in this case.
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