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Old 01-05-2013, 11:20 AM   #41
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Originally Posted by fh2000 View Post
I may have missed this particular reason to delay SS in this long thread: I will have to wait to collection SS until I have converted some (or most) of my 401K/IRA to Roth. Therefore, I have not decided to collect at 66 or 70. But, not at 62 for sure.

i investigated this . ss only uses actual EARNED income on this test. money from retirement accounts does not apply to the 14,500 max.

don't believe me. go to ss and read it . I don't know how to do links
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Old 01-05-2013, 11:40 AM   #42
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Is there something here I'm not considering?
If anyone wants to review these 2 articles, seems like it is possible to access the archives of the Journal of Financial Planning. The info contained is also addressed in the author's new book (see link below). It is pertinent to the OP's original question. See Fig. 1 in each.

fpanet.org/journal/SocialSecurityWhentoStartBenefits

fpanet.org/journal/HowtheSSClaimingDecisionAffectsPortfolioLongevity/

Social Security Strategies
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Old 01-05-2013, 11:47 AM   #43
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I suspect that most of us realize we can get more total money from ss if we wait and take it later assuming we live long enough.

However even if you have enough money to get you to that later ss start
human nature dictates "take it as soon as possible".

In my case logic says take it later- i can afford to take it at 70-but i will take it at 65 when I start medicare.

Logic loses to emotion every time.
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Old 01-05-2013, 11:52 AM   #44
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I doubt if any reform or means testing will benefit those who take SS at 62 versus those who take it in later years. Those who took SS at 62 would probably see some type of freeze on the yearly increase or some actuarial adjustment to payments that would equalize the affects. SS seems pretty good at using actuarial tables and such to make things fair for the overall group.

I think it is far more likely we will see another increase in the retirement age and a bigger increase in the reduction for retiring before that age.

I also think high income people have more to fear from increased taxation of SS benefits than an actual reduction in them due to means testing. The 'means testing' will result in higher taxes on the benefits, not reduced benefits. Just my 2 cents.
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Old 01-05-2013, 12:28 PM   #45
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I doubt if any reform or means testing will benefit those who take SS at 62 versus those who take it in later years. Those who took SS at 62 would probably see some type of freeze on the yearly increase or some actuarial adjustment to payments that would equalize the affects. SS seems pretty good at using actuarial tables and such to make things fair for the overall group.

I Agree 100%.
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Old 01-05-2013, 04:27 PM   #46
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Originally Posted by fh2000 View Post
I may have missed this particular reason to delay SS in this long thread: I will have to wait to collection SS until I have converted some (or most) of my 401K/IRA to Roth. Therefore, I have not decided to collect at 66 or 70. But, not at 62 for sure.
Why do you have to wait until you've converted to Roth?
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Old 01-05-2013, 04:37 PM   #47
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Why do you have to wait until you've converted to Roth?
Not to answer for fh2000, but folks sometimes delay SS or pensions until Roth conversions are done to avoid higher tax rates.
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John Greaney on SS
Old 01-05-2013, 05:57 PM   #48
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John Greaney on SS

Many here are familiar with John Greaney, one of the 'fathers' of retiring early. John RE'd in 1994 at age 38.

He just posted an article on his website called "Social Security, a Better Deal than I Thought?" where he discusses SS benefits based on different earning records:

Social Security a better deal than I thought?

omni
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Old 01-05-2013, 07:07 PM   #49
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Not to answer for fh2000, but folks sometimes delay SS or pensions until Roth conversions are done to avoid higher tax rates.
My thoughts also. As income increases the tax on SS income increases. And Roth conversions count as income.
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Old 01-05-2013, 07:25 PM   #50
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My thoughts also. As income increases the tax on SS income increases. And Roth conversions count as income.
+1. My SS Disabiity is 85% taxable.
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Old 01-05-2013, 07:33 PM   #51
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Originally Posted by omni550 View Post
Many here are familiar with John Greaney, one of the 'fathers' of retiring early. John RE'd in 1994 at age 38.

He just posted an article on his website called "Social Security, a Better Deal than I Thought?" where he discusses SS benefits based on different earning records:

Social Security a better deal than I thought?

omni
I hope that nothing in this article surprises anyone here. The system is progressive on both ends. First the bend points, as he explains. Then taxation when benefits are recieved. One can pay income tax on anywhere between 0% and 85 % of the benefit received.

Also, the difference between a private annuity and SS is magnified under today's low interest rate conditions.

Ha
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Old 01-05-2013, 08:02 PM   #52
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Yup. If nothing else... MAD money.

Get it whild you can.
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I will take benefits as soon as I can. Bird in the hand kind of guy. I retired as early as I could also.
Same thoughts here. I have 7 years 8 months until I turn 62. I have very little confidence that SS benefits then will look anything like SS benefits (per my SS statement) now. I am single, and most likely shall remain so, so I have no spousal considerations to think about. I have no benefits from my late husband (govt), so there is no dilemma on whose to draw on and when.

I will either use it as mad money , and/or plunk it into an existing TE muni bond fund to generate even more usable (if needed) monthly income.
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Old 01-05-2013, 08:42 PM   #53
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I'm looking at that decision now since I'll be 63 next Spring and didn't apply at 62 since I'm working. Conditions at work are scheduled to deteriorate effective May 1st so I'll almost certainly quit unless a large ship turns a sharp corner.

After that, I may choose to live especially frugally for one year, drawing on savings as needed and then apply at 64, or go for it at 63+ a couple of months. DW and I will review the numbers and make a decision then. Or we may hang in there for a couple of years afterwards. Right now I don't know.

Family history is a crap shoot. I might live to be 95 or get The Big Ache next week. So it comes down to "How lucky do you feel, Punk?"

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Old 01-06-2013, 08:47 AM   #54
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Forget trying to calculate how much 'You'll Get'...Focus on How much you get to spend.

Here is a pretty simple calculation for those that wish to spend more money in retirement and do not care about leaving an estate. For those that have a Big enough Portfolio and can afford to wait until 70 to take SS, you'll have more to spend every year of retirement.

Let's Say you retire this year at age 62 with the $1 Million Portfolio and decide to take a 4% SWR. You get Social Security of $19,476 per year at age 62 and delaying to age 70 would get you $34,092 per year. Let's assume no inflation for ease of calculations.

Scenario age 62. Your SWR is $40K per year and Social Security of $19,476 gets you a Spending total of $59,476 for each year of your retirement period.

Scenario age 70.
You stash 8 years of $34,092 from your portfolio into a savings account for a total of $272,736. Your portfolio is now down to $727,264. Your 4% SWR is now $29,090 per year and you remove $34,092 from your savings account giving you a total of $63,182 to spend each year for the rest of your 30 year retirement period.

The Delay to age 70 gives you $3,706 more every year starting at age 62 with no more increased risk.

No need for any stupid 'break even analysis'.

If your WR is more conservative, such as a majority of the people here and myself, the results are even more compelling. At a 3% WR plus SS at age 62 scenario is a total of $49,476 and the age 70 scenario is $55,910. The delay of SS to age 70 now increases your annual spending by $6,434.
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Old 01-06-2013, 08:54 AM   #55
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I like the simplicity of Cut-Throat's analysis.
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Old 01-06-2013, 09:20 AM   #56
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Would like to get opinion on this.

I am of the age that I can get "full" Social Security benefits at age 67. Being that I post here, it should be clear that I do not want to work until that age. I've invested my money and plan to be completely debt free by the time I retire (sometime between age 55-60, but probably closer to 60). Unless my wife continues to work then (she hasn't decided yet), we will need to take money from our investments on which to live. BUT, when I turn 62 and then my wife does also not too long after, we can start taking early, diminished Social Security disbursements.

I've seen often that people recommend putting off taking that money as long as possible so that the amount is increased. Sounds fine, but then while I wait for that, I decrease my own investment pile.

I didn't invest my money so that I could leave money to my children, but given a chance, I wouldn't mind being able to leave them something. Wouldn't it then be better to take Social Security as soon as possible to minimize my own draw from my own money so that not only will it grow, but it's money I can pass down?

Is there something here I'm not considering?

Thanks!
If you defer SS, you will draw down less in the early years, but more in the later years. There's a cross-over point that depends on your investment returns (lower returns move the cross-over to a lower age).

If you've got enough money that you have no concerns about running out before you die, it's just math based on some unpredictable variables (investment returns and date of death). I like Cut-Throat's approach.

If there's a real concern about running out of money if you live to an unusually high age, then you should consider longevity insurance, and deferring SS is currently a much better buy than a private SPIA.

I'm 65 and my wife is 64. We haven't started yet. That's a combination of low expected investment yields, an unusually risk-averse personality, and pure inertia.
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Old 01-06-2013, 09:23 AM   #57
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I like the simplicity of Cut-Throat's analysis.
So will I, until someone posts a simple rebuttal.
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Old 01-06-2013, 09:54 AM   #58
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So will I, until someone posts a simple rebuttal.
If the finances of the organization paying the annuity (AKA the US Government) were in order I would agree with the premise. Since they are not by a long mile, I would argue that depleting one's assets betting that 30 years of future payments from a financially crippled organization I have no control over are assured is too risky.
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Old 01-06-2013, 10:26 AM   #59
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SIGH! this is getting old. it's an emotional issue more than a practical one.

no one knows FOR SURE when your going to DIE!(at least mostly no one).

taking it early and getting it now means it does not matter if equations show you get more while waiting.

if taking it early lets you enjoy your earlier retirement years more than your later to old to do anything years than so be it.

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Old 01-06-2013, 10:29 AM   #60
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We're about 3 years away from early SS. When we approach the decision I plan to run the different scenarios on Firecalc, Fidelity RIP, Quicken lifetime planner, I-ORP and ESP planner and make a decision based on results.

We plan to leave a legacy to our kids so the portfolio size at the end of the plan is as important to us as the spending levels.
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