When to take Social Security - Page 2

Bikerdude · 05-12-2007, 11:00 PM

Every FC I run says take SS at 62. I'm single and the additional WD to age 70 depletes my principal to the point where it's more vulnerable to failure. In addition, with my desired income, I'm taxed less when I take SS early. So when I add it all up for MY situation it makes sense to go early. Your results may vary.

baldeagle · 05-13-2007, 12:36 AM

Interesting perspective here:

http://www.nysscpa.org/printversions...06/606/p42.htm

**bssc** · 05-13-2007, 01:07 AM

I can see the arguments either way for people retiring this year but since I have a few years to go, I can see that the government can fiddle with the calculations, especially since I will have 401(k) and pension income.

chinaco · 05-13-2007, 04:57 AM

Quote:

Originally Posted by baldeagle

Interesting perspective here:

http://www.nysscpa.org/printversions...06/606/p42.htm

Great article! Thanks BE.

I cannot find an article that I found awhile back. It gave some decision rules.

Part of the decision depends on how you view SS. I look at it as an income stream that helps to create a floor (minimal base income). Do I want it? Heck yeah! Do I want to maximize the money I get back from the government after paying it in all those years? Heck yeah? But what I want more is to not be destitute at 80, 85, or 90 if I live that long (and/or DW).

There are several factors in the mix that are variables that make the decision difficult.

1) future legislation on SS (taxes or caps)... how will it be affected. It seems that the later in the Boomer retirement era, more stress will be on the system.
2) How large is your nest egg at the age of 62 - 66.x (this will affect the decision)
3) your and DW mortality.
4) earning on portfolio (cpj article) and volatility risk depending on assets.
There are probably more

On one hand, I want to take it as early as possible. But in my tax situation, I am not sure that delaying is not the best approach. Plus if everything (investments) went to h3ll in a hand basket (a means test would not affect us).

I am inclined to do as I stated in my earlier post on this topic. But I need to run some what if scenarios and projections. I want to spend more in the early years. That will put us in a higher tax bracket. That might mean that having more SS as part of the floor income component is a good thing.

The other issue about SS is that I am not sure many people will actually retire @ 62 unless they are disabled. I am not sure they will be able to afford to do so.

Plus, I expect to see large immigration law changes in the next few years. This will fix a number of problems. One big problem it will fix is the shortage in worker in the USA (when boomers retire). More legal immigrants put more people paying into the system. I am not against immigration at all... I think it is part of our way out of this problem. But I do not want another general amnesty. It encourages more of the illegal behavior. Plus, we need to figure out how to keep the criminal element out.

I wish there would be a change in the laws such that one can be a quasi-citizen (probationary period) for about 10 years before being able to become a citizen. With a law that demands deportation if a certain class felony is committed/conviction. And the road to citizenship revoked so jail time does not help meet the time requirement. Most criminals will get caught in that period of time.

Cut-Throat · 05-13-2007, 07:44 AM

Quote:

Originally Posted by Spanky

According to my calculation (numbers from SS and assumed rate of inflation at 3%), the break even point of taking SS at 66 (vs. 62) is age 76. The break even point for taking SS at age 70 (vs 66) is age 80.

I think I take mine at 62 while I still have a good chance of being healthy to enjoy it.

P.S. The average life expectancy is only 77.

That's OK. When you die your nest egg will be bigger if you took Social Security early and your heirs will be able to enjoy your nest egg while they are healthy

Texas Proud · 05-13-2007, 07:46 AM

from the article.....

"Actuarially speaking, a person who lives exactly as predicted should receive substantially the same cumulative amount of benefits regardless of the choice. Regardless of the statistics, a retiree’s expectations of his own longevity will drive the decision."

From what I can tell on this....

If you are single, and do not have much of a cushion.... take it..

If you are single and have a good cushion... well... from this article take it..

If you are married... ahhh, the rub... does your spouse qualify for his or hear own SS... how many years between the two of you... if she is a few years younger and does not have a lot of earnings (low SS).. then it can be better to hold off until 70 KNOWING that you will more than likely die prior to break even, but also knowing that your wife will continue to get this higher rate during HER lifetime..

so, are you willing to give something up today for your wife when you pass on

mathjak107 · 05-13-2007, 07:48 AM

Quote:

Originally Posted by Cut-Throat

That's OK. When you die your nest egg will be bigger if you took Social Security early and your heirs will be able to enjoy your nest egg while they are healthy

when i ran the numbers as long as either my wife or i made it to 81 taking it later gave us the biggest pile at the end.

Cut-Throat · 05-13-2007, 08:22 AM

Quote:

Originally Posted by mathjak107

when i ran the numbers as long as either my wife or i made it to 81 taking it later gave us the biggest pile at the end.

Having the biggest pile does not interest me. Delaying to age 70 will allow me to spend more in my 60's than taking the SS at age 62.

chinaco · 05-13-2007, 08:45 AM

Quote:

Originally Posted by Cut-Throat

Having the biggest pile does not interest me. Delaying to age 70 will allow me to spend more in my 60's than taking the SS at age 62.

My sentiment (hope) exactly. Although... I am still analyzing. Your personal tax situation may make a difference also. Taking SS earlier may just push you into a higher tax bracket... or at least... that is what I am trying to figure out.

Bikerdude · 05-13-2007, 08:52 AM

Retirement at 62: Is Receiving Social Security Early Worth It?

"It is more likely, however, that many individuals will optimistically estimate their own life expectancy as somewhat greater than the statistical averages."

I think there is a lot of this going on in the SS calculation made by many of us.

chinaco · 05-13-2007, 08:59 AM

Quote:

Originally Posted by Bikerdude

Retirement at 62: Is Receiving Social Security Early Worth It?

"It is more likely, however, that many individuals will optimistically estimate their own life expectancy as somewhat greater than the statistical averages."

I think there is a lot of this going on in the SS calculation made by many of us.

Me too. The best one can attempt to judge Mortality (for self) is using parents/siblings as models plus ones current state of health. From there a range should be used for realistic best and worst case plus a mid. When I say worst case (I mean the longest life expectancy not that we want to die

).

When working with fuzzy concepts using a simple range and basic judgment is very helpful. Complex probabilities models might help some but are not likely to be much more accurate.

And all of that means nothing if you get killed in an accident.

In the end there is a bit of a leap of faith.

REWahoo · 05-13-2007, 09:37 AM

Quote:

Originally Posted by chinaco

The best one can attempt to judge Mortality (for self) is using parents/siblings as models plus ones current state of health. From there a range should be used for realistic best and worst case plus a mid.

Easier said than done.

Example:

Parents - lived to age 90 & 92

Siblings - One was recently diagnosed with lung cancer at 75 and maybe has another year
- The second died at age 71 in an auto accident (suspected cause: stroke)
- The third was recently diagnosed with kidney disease at age 70 and faces a very uncertain future

As the youngest sibling (age 60) in relatively good health, just how the heck do I use that information to judge life expectancy?

Guess I'll stick with the only reliable method I'm aware of: "so far, so good".

chinaco · 05-13-2007, 09:40 AM

Quote:

Originally Posted by REWahoo!

Easier said than done.

...

True enough. But thinking through a few what if scenarios never hurts. If often yield insight that may help you adjust the final decision.

mathjak107 · 05-13-2007, 10:41 AM

Quote:

Originally Posted by Cut-Throat

Having the biggest pile does not interest me. Delaying to age 70 will allow me to spend more in my 60's than taking the SS at age 62.

im with you, im in favor of taking it later and enjoying more each month while i can, the heck with the bigger pile... the above was only an fyi that no matter how i ran the numbers for taking it early if at least 1 of us made it to 81 then the bigger pile went along with taking it later too if you dont increase the monthly withdrawl..

Spanky · 05-13-2007, 11:23 AM

Quote:

Originally Posted by Cut-Throat

Having the biggest pile does not interest me. Delaying to age 70 will allow me to spend more in my 60's than taking the SS at age 62.

Can you clarify this? Delaying to age 70 means that you you have less to spend before age 70.

chinaco · 05-13-2007, 11:29 AM

Quote:

Originally Posted by Spanky

Can you clarify this? Delaying to age 70 means that you you have less to spend before age 70.

I think he means spend more portfolio earlier and rely on the extra SS later (Larger COLA Annuity)... provides till you die.

There are multiple variables to consider... part of it is how much money you have (nest egg), your specific tax liability, and expected life span.

Mwsinron · 05-13-2007, 11:48 AM

So by going that route someone would be putting their faith in the gov that they would not reduce SS by then or come up with some other way to screw you. I guess its all about what you believe will happen

mathjak107 · 05-13-2007, 11:49 AM

you will be spending more of your portfolio early on when your younger and healthier because your payments later on will be 30% higher and will re-fill the extra bucks you depleted from 62 to 70 .

kind of an out of the box way of looking at taking ss later. most think only in terms of breaking even or dying early , but another way is to think about it as an annuity that will kick in at 70 bolstering your income by 30% plus colas . if you just pay for it with some of your nest egg at 62.

aenlighten · 05-13-2007, 11:52 AM

There are many facets to this, but I focus on three. If you are working, you should delay it until normal retirement. If you are not working, there are two relevant discount rates. Early retirement uses a 4% real discount rate and late retirement a 2% real discount rate. If you can do better than 4% real, you should take it early. If you can't but can do better than 2% real, take a normal retirement. If you can't manage that, you are in worse shape than you image. Finally, there is life expectancy which at 65 is 85 and increases by one month each year. If you don't expect to live until then, you should definitely take it earlier. If you expect to live to then, you should be indifferent to the choice. If you expect to live much longer, you may want to delay it, but I am skeptical most people over 85 will be in a position to enjoy it. When you hear about breakevens in the 70s or early 80s, they are making the assumption they continue to work until they start to collect it, or they are not properly discounting the cash flows.

youbet · 05-13-2007, 11:53 AM

Quote:

Originally Posted by Texas Proud

From what I can tell on this....

If you are single, and do not have much of a cushion.... take it..

If you are single and have a good cushion... well... from this article take it..

If you are married... ahhh, the rub... does your spouse qualify for his or hear own SS... how many years between the two of you... if she is a few years younger and does not have a lot of earnings (low SS).. then it can be better to hold off until 70 KNOWING that you will more than likely die prior to break even, but also knowing that your wife will continue to get this higher rate during HER lifetime..

so, are you willing to give something up today for your wife when you pass on

05-12-2007, 11:00 PM	#21
Bikerdude Full time employment: Posting here. Join Date: Jul 2006 Posts: 521	Re: When to take SS Every FC I run says take SS at 62. I'm single and the additional WD to age 70 depletes my principal to the point where it's more vulnerable to failure. In addition, with my desired income, I'm taxed less when I take SS early. So when I add it all up for MY situation it makes sense to go early. Your results may vary. __________________ “I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan

05-13-2007, 12:36 AM	#22
baldeagle Dryer sheet aficionado Join Date: Aug 2006 Posts: 35	Re: When to take SS Interesting perspective here: http://www.nysscpa.org/printversions...06/606/p42.htm

05-13-2007, 01:07 AM	#23
bssc Moderator Join Date: Dec 2005 Posts: 2,625	Re: When to take SS I can see the arguments either way for people retiring this year but since I have a few years to go, I can see that the government can fiddle with the calculations, especially since I will have 401(k) and pension income. __________________ Angels danced on the day that you were born.

05-13-2007, 07:46 AM	#26
Texas Proud Thinks s/he gets paid by the post Join Date: May 2005 Posts: 3,050	Re: When to take SS from the article..... "Actuarially speaking, a person who lives exactly as predicted should receive substantially the same cumulative amount of benefits regardless of the choice. Regardless of the statistics, a retiree’s expectations of his own longevity will drive the decision." From what I can tell on this.... If you are single, and do not have much of a cushion.... take it.. If you are single and have a good cushion... well... from this article take it.. If you are married... ahhh, the rub... does your spouse qualify for his or hear own SS... how many years between the two of you... if she is a few years younger and does not have a lot of earnings (low SS).. then it can be better to hold off until 70 KNOWING that you will more than likely die prior to break even, but also knowing that your wife will continue to get this higher rate during HER lifetime.. so, are you willing to give something up today for your wife when you pass on

05-13-2007, 08:52 AM	#30
Bikerdude Full time employment: Posting here. Join Date: Jul 2006 Posts: 521	Re: When to take SS Retirement at 62: Is Receiving Social Security Early Worth It? "It is more likely, however, that many individuals will optimistically estimate their own life expectancy as somewhat greater than the statistical averages." I think there is a lot of this going on in the SS calculation made by many of us. __________________ “I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan

05-13-2007, 11:48 AM	#37
Mwsinron Full time employment: Posting here. Join Date: Jun 2006 Posts: 718	Re: When to take SS So by going that route someone would be putting their faith in the gov that they would not reduce SS by then or come up with some other way to screw you. I guess its all about what you believe will happen

05-13-2007, 11:49 AM	#38
mathjak107 Thinks s/he gets paid by the post Join Date: Jul 2005 Posts: 2,429	Re: When to take SS you will be spending more of your portfolio early on when your younger and healthier because your payments later on will be 30% higher and will re-fill the extra bucks you depleted from 62 to 70 . kind of an out of the box way of looking at taking ss later. most think only in terms of breaking even or dying early , but another way is to think about it as an annuity that will kick in at 70 bolstering your income by 30% plus colas . if you just pay for it with some of your nest egg at 62.

05-13-2007, 11:52 AM	#39
aenlighten Recycles dryer sheets Join Date: Apr 2007 Posts: 268	Re: When to take SS There are many facets to this, but I focus on three. If you are working, you should delay it until normal retirement. If you are not working, there are two relevant discount rates. Early retirement uses a 4% real discount rate and late retirement a 2% real discount rate. If you can do better than 4% real, you should take it early. If you can't but can do better than 2% real, take a normal retirement. If you can't manage that, you are in worse shape than you image. Finally, there is life expectancy which at 65 is 85 and increases by one month each year. If you don't expect to live until then, you should definitely take it earlier. If you expect to live to then, you should be indifferent to the choice. If you expect to live much longer, you may want to delay it, but I am skeptical most people over 85 will be in a position to enjoy it. When you hear about breakevens in the 70s or early 80s, they are making the assumption they continue to work until they start to collect it, or they are not properly discounting the cash flows.