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Old 03-03-2013, 12:38 PM   #121
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I just took mine at 62 even though i did not need to.

I also concede i would have a higher benefit if i waited until 70 an lived long enough.

who knows?

its a personal issue.

but as i just conceded on paper waiting is better
Waiting might be "better" or it might not. Depends on your individual retirement circumstances, how long you live and how well you do investing your SS dollars over the next 8 yrs.

The most likely scenario is that it won't make much difference one way or the other. Unless your investment results are unusually high or low, or you live an unusually long time, the accumulated pot of money from collecting and investing SS for 8 years will likely cover the difference between the age 62 and age 70 SS amounts until the end.
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Old 03-03-2013, 01:28 PM   #122
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Originally Posted by youbet View Post
Waiting might be "better" or it might not. Depends on your individual retirement circumstances, how long you live and how well you do investing your SS dollars over the next 8 yrs.

The most likely scenario is that it won't make much difference one way or the other. Unless your investment results are unusually high or low, or you live an unusually long time, the accumulated pot of money from collecting and investing SS for 8 years will likely cover the difference between the age 62 and age 70 SS amounts until the end.

i will not be investing my ss. i just will not be pulling money out of my retirement accounts
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Old 03-03-2013, 02:29 PM   #123
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State Pension

So I'm considering a J*b change to ease into ER by working at State U. Looking at the pension plan it seems I need to contribute 6% on my pay for 10 years minimum and then collect 18.2% of my final 3 year average pay as a pension. Or I could do a 401K type and get back what I put in. Opinions?
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Old 03-03-2013, 02:40 PM   #124
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i will not be investing my ss. i just will not be pulling money out of my retirement accounts
Not sure if you're joking or?

There is absolutely zero difference between "investing your SS" and "not pulling money out of your retirement accounts." Exactly the same thing. And that's how I'm doing it.

The most likely outcome, assuming guys like us live to see 70 yo, is that there will be little difference to our overall financial well being due to starting SS at 62, 66, or 70, or anywhere inbetween. At 70, folks who waited will begin to get a significantly higher SS payment. We'll have our continuing lower SS payment plus a signifcant chunk of extra money in our FIRE portfolios. Whether that chunk of extra money is enough to make up for the difference in SS amounts over the following years will depend on investment returns and how long we live. Only time will tell.
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Old 03-03-2013, 02:54 PM   #125
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"Taking Social Security early vs. not" The day before you die will be the correct answer to this question.

As for us I imagine that we will split the difference, me early, wife late to satisfy both arguments of good genes (her) and current income (me).
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Old 03-03-2013, 03:07 PM   #126
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Not sure if you're joking or?

There is absolutely zero difference between "investing your SS" and "not pulling money out of your retirement accounts." Exactly the same thing. And that's how I'm doing it.

The most likely outcome, assuming guys like us live to see 70 yo, is that there will be little difference to our overall financial well being due to starting SS at 62, 66, or 70, or anywhere inbetween. At 70, folks who waited will begin to get a significantly higher SS payment. We'll have our continuing lower SS payment plus a signifcant chunk of extra money in our FIRE portfolios. Whether that chunk of extra money is enough to make up for the difference in SS amounts over the following years will depend on investment returns and how long we live. Only time will tell.
actually i'm not kidding. i already invest to my best. Not pulling money out of tax deferred funds because i'm taking ss is one thing. taking ss and investing in taxable investments is another.

using ss saves on taxes.
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Old 03-03-2013, 03:11 PM   #127
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So I'm considering a J*b change to ease into ER by working at State U. Looking at the pension plan it seems I need to contribute 6% on my pay for 10 years minimum and then collect 18.2% of my final 3 year average pay as a pension. Or I could do a 401K type and get back what I put in. Opinions?
I made a similar change, working 25 years in industry and then went back to school for a terminal degree to qualify for working at State U. which I'm now doing. The numbers are different, but I chose the pension for 2 reasons. One, it added a different leg to the retirement stool since I already had 401k money and SS. Whether or not it would be a better choice, I would have more diversity in my $$$. Second, the student years I spent as a grad assistant counted for time at low earnings, so if I would stay long enough to get "real" salary FAS it would be a good choice. Had to make the choice without knowing whether it would even be possible.

Depending on the specifics, you should see how the withdrawal works if you leave early. In my case, I could get back the contribution plus some interest (varied), plus a portion of employer contributions if I stayed long enough. While not in market, it wasn't like I was throwing the money away.

Bottom line - limited downside with possible upside to going the pension route in my situation.

Look at all the what ifs for your situation.
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Old 03-03-2013, 03:21 PM   #128
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actually i'm not kidding. i already invest to my best. Not pulling money out of tax deferred funds because i'm taking ss is one thing. taking ss and investing in taxable investments is another.

using ss saves on taxes.
For purposes of how I look at taking SS early, NOT taking $20k out of investments because you have the SS money arriving monthly amounts to the same think as investing the $20k of SS money.

The fact that we can leave money in IRA's, 401k's, etc., because of the arrival of the monthly SS dole is helpful in making the strategy more likely to pay off. This is especially true if you're leaving a Roth account undisturbed and compounding tax free. But even if you're leaving money in non-deferred retirement accounts, it's money that continues to be invested. (I won't be withdrawing money from IRA's until RMD time with or without SS.)

Perhaps we're just debating semantics. When I don't have to pull $20k from my investments because I use the SS $20k to cover some expenses, I think of that as being equivalent to investing the SS dollars. You call that same process not investing the SS.

I get what you're doing and now I understand how you express it.
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Old 03-03-2013, 03:39 PM   #129
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g. The numbers are different, but I chose the pension for 2 reasons. One, it added a different leg to the retirement stool since I already had 401k money and SS. Whether or not it would be a better choice, I would have more diversity in my $$$.
+1

Diversifying sources of income is a big plus considering the financial future is uncertain, IMHO.
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Old 03-03-2013, 03:44 PM   #130
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For purposes of how I look at taking SS early, NOT taking $20k out of investments because you have the SS money arriving monthly amounts to the same think as investing the $20k of SS money.

The fact that we can leave money in IRA's, 401k's, etc., because of the arrival of the monthly SS dole is helpful in making the strategy more likely to pay off. This is especially true if you're leaving a Roth account undisturbed and compounding tax free. But even if you're leaving money in non-deferred retirement accounts, it's money that continues to be invested. (I won't be withdrawing money from IRA's until RMD time with or without SS.)

Perhaps we're just debating semantics. When I don't have to pull $20k from my investments because I use the SS $20k to cover some expenses, I think of that as being equivalent to investing the SS dollars. You call that same process not investing the SS.

I get what you're doing and now I understand how you express it.
all i can say is this. having the ability to avoid having to take money out of tax deferred investments is a reason to take ss early. it is not necessarily a great reason in and of itself. if you take ss at 70 you do have a higher ss benefit(obviously). howeveri ira/401k withdrwals are also mandated. depending on how much you have in retirement accounts versus taxes(perhaps) on higher ss benefits makes taking at 62 an option that is not cut and dried. my wife turns 70 in 4 years and me in 8 years. i will have flexibility in withdrawals versus income until 8 years from now
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Old 03-03-2013, 03:55 PM   #131
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all i can say is this. having the ability to avoid having to take money out of tax deferred investments is a reason to take ss early. it is not necessarily a great reason in and of itself. if you take ss at 70 you do have a higher ss benefit(obviously). howeveri ira/401k withdrwals are also mandated. depending on how much you have in retirement accounts versus taxes(perhaps) on higher ss benefits makes taking at 62 an option that is not cut and dried. my wife turns 70 in 4 years and me in 8 years. i will have flexibility in withdrawals versus income until 8 years from now

OK. Understood and good points.

I didn't focus on SS enabling me to not withdraw from deferred accounts because, as things have worked out, I don't need to withdraw from my deferred accounts until RMD time with or without SS. The retirement accounts that SS enables me to not withdraw from are my non-deferred FIRE investment accounts.

My primary motivation to start SS at 62 was to provide financial protection for DW. Because of GPO, she cannot collect survivors benefits. Therefore, by starting my SS early (and not withdrawing that amount from my non-deferred retirement savings) I'll be leaving her with a larger portfolio if I predecease her.

In any case, I'm optimistic that my retirement savings will be enough larger at 70 yo due to reduced non-deferred retirement investment account withdrawals to make up for the reduced SS payments I'm collecting. Based on results so far, I'm optimistic. Only time will tell.
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Old 03-03-2013, 04:20 PM   #132
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OK. Understood and good points.

I didn't focus on SS enabling me to not withdraw from deferred accounts because, as things have worked out, I don't need to withdraw from my deferred accounts until RMD time with or without SS. The retirement accounts that SS enables to not withdraw from are my non-deferred FIRE investment accounts.

My primary motivation to start SS at 62 was to provide financial protection for DW. Because of GPO, she cannot collect survivors benefits. Therefore, by starting my SS early (and not withdrawing that amount from my non-deferred retirement savings) I'll be leaving her with a larger portfolio if I predecease her.

In any case, I'm optimistic that my retirement savings will be enough larger at 70 yo due to reduced non-deferred retirement investment account withdrawals to make up for the smaller SS payments I'll be getting than if I had waited until 70. Based on results so far, I'm optimistic. Only time will tell.

one other thing. the irs formula for taxable ss is NOT inflation adjusted. like the alternative minimum tax that just got fixed last year as time goes by more and more taxpayers and ss recipients will be hit by higher taxable ss amounts
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Old 03-03-2013, 07:33 PM   #133
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I made a spreadsheet and made one of the columns (all inflation adjusted) net worth divided by annual living expenses.

In this case taking SS for both of us at 62 smoothed this multiple out the most over the years. Otherwise dipping into the nest egg while deferring SS made this multiple go low in the years prior to SS and larger as we got older.
That's because you fail to account for the accrued benefits of SS that you are earning by delaying. If you did and if you assumed a median life expectancy there would be no difference at all.
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Old 03-04-2013, 07:56 AM   #134
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That's because you fail to account for the accrued benefits of SS that you are earning by delaying. If you did and if you assumed a median life expectancy there would be no difference at all.
Yes. And that's what makes these discussions meaningless. And rather sad, actually.

The SSA says right up front that taking SS anywhere from age 62 to age 70 is actuarially identical. Yet people keep piling into these discussions and getting all excited & emotional about it, as if there was a difference.

If you watch closely, you can see many common financial fallacies come into the discussion.
* Treating different viewpoints of the same thing as if they were difference things. ("investing your SS" vs. "not pulling money out of your retirement accounts.")
* Mental accounting
* Prospect theory
* Ignoring the time value of money. (Treating $1 today as being identical to $1 in eight years).
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Old 03-04-2013, 08:15 AM   #135
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there is another issue.

the formula for deciding how much ss is taxable and the minimum triggers for a couple 32000/50percent 44/85 percent are not inflation adjusted.

a higher future ss is good and not taxable IF you have little money in retirement accounts but if you have substantial amounts-

at 70 you take ss and have a larger amount than taking at 62 BUT you also have to begin removing money from your retirement accounts.

i just used a taxable ss calculator and more than doubled my taxable ss based on greater ss payouts

i will post more when i actually figure a future post 70 return( using 2012 form )
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Old 03-04-2013, 09:01 AM   #136
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I've looked at the govt site and spread sheeted it and I still confess I don't know what I will do. We have an income stream from an asset sale that continues until I'm 69, actually 69 and 3 months. It is almost enought to live on in retirement, if we're very careful. I assume we won't be that careful and will draw some money out of cash or retirement accounts. Either way, it doesn't matter; we are in great shape until I turn 69. My wife is 5 years younger, so delaying would make sense.

On the other hand, my SS is maxed out. Getting free money in the range of $2,500 a month or more when I'm 66 or so is going to be very hard to turn down. I mean, it's free! I won't have to deal with the angst of taking money out of retirement accounts and all that. It's free money! Who doesn't like free money?

But then, what if my 5 year younger wife lives until she's 100? Or what if I do? Then waiting as long as possible is a good thing. But then again, we're talking about free money!

Don't know what I'll do.
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Old 03-04-2013, 09:56 AM   #137
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67walkon, is your wife eligible for benefits on her own? If so, why can't she take hers at 62 and you wait until 70 to take yours so that you increase her survivor benefits? That is what we plan on doing.

I am 9.5 years younger than my DH, and his SS is a little higher. I just ran the numbers through Quicken Lifetime Planner and it makes a huge difference in our portfolio value assuming I live to age 95 and he dies before I do. I encourage you to run the numbers.
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Old 03-04-2013, 11:51 AM   #138
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there is another issue.

the formula for deciding how much ss is taxable and the minimum triggers for a couple 32000/50percent 44/85 percent are not inflation adjusted.

a higher future ss is good and not taxable IF you have little money in retirement accounts but if you have substantial amounts-

at 70 you take ss and have a larger amount than taking at 62 BUT you also have to begin removing money from your retirement accounts.

i just used a taxable ss calculator and more than doubled my taxable ss based on greater ss payouts

i will post more when i actually figure a future post 70 return( using 2012 form )

tax implications for us approx 1700 a year extra in taxes starting at 70. but every year after unless its adjusted for inflation will be worse and worse
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Old 03-04-2013, 12:52 PM   #139
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I am single, and will be 65 in June. I think I finally made up my mind when to take SS.

What I plan to do is to take it at 70, unless something comes up to persuade me to take it earlier. This could be something like a 2008 style market crash, or even just more of a need/desire for the money than I presently have.

If I take the larger monthly amount at 70, then it will be a sort of like an annuity that will cover my basic expenses (so I will not have to take out an SPIA, or at least as big of an SPIA, for that purpose when I get to my 80's).

70 doesn't seem that far away from where I sit. Pretty scary.
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Old 03-04-2013, 01:17 PM   #140
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You realize that an annuity payout is more for an older person and less for a younger person, right?
For example, I just pulled up a SPIA quote from BRK, based on a $100K premium, with different birth dates. This is the EXACT SAME annuity. Payout per month depending on age:
Age 65: $530
Age 70: $614
These are the same value. The person who waited until 70 isn't getting a better deal, even though a simplistic look at $530 vs. $614 might seem that he is.

You can't ignore the $31,800 (5*12*$530) that you could collect while waiting.

Just doing simplistic math and ignoring interest, $31800 / (614 - 530) is 378 months until break-even. That's 31 years. You have to live to 96 in order to get a net benefit of waiting until 70.

Granted, the SS numbers are slightly different -- but you can do the same math.
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