When to take Social Security

[Mwsinron]

Originally Posted by mathjak107

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.

It seems to me you keep assuming SS will be kept at its present rate. What happens if they do means testing? We already know SS cannot keep going at its present rate and changes will have to happen.

[aenlighten]

Kash did a really nice summary of SS projections, in his April 23rd posting (you have to scroll down), http://streetlightblog.blogspot.com/...1_archive.html SS does 3 projections, a worst, expected, and best case. If you examine for yourself their assumptions, you will quickly come to the conclusion the worst case is unbelievable, the expected case is quite pessimistic, and the best case there is no problem at all. A more realistic estimate is we are somewhere between a problem and no problem and it is too early to be worrying about one. SS a problem? Maybe, maybe not.

[mathjak107]

id rather plan based on what is and what the trend has been then to try to come up with a " what if plan" and speculate about things that may or may not ever come to pass.

my tax planning follows the same strategy. for 20 years taxes have been dropping. the income brackets move higher by 3% every year. within a few years 100k will be in the 15% bracket. i wouldnt figure higher taxes in the future in my plans. could taxes rise? sure they could but i have no reason to assume that in my planning

[Mwsinron]

Guess its just the pessimist in me . Its nice to get a read on how others view the situation.

[Alex]

Personally, I will take a look at the numbers when the time comes. I am age 44 now, and that means I am at least 18 years away from making any decisions about SS benefits. In my experience, 18 years is a long time and things have a way of changing, sometimes dramatically. We'll see......

[mathjak107]

since 80 million voting retiring baby boomers carry a huge political clout i feel the baby boomers are safe from any drastic changes. at 44 all bets are off for you my friend! ha ha ha

[haha]

Originally Posted by Mwsinron

It seems to me you keep assuming SS will be kept at its present rate. What happens if they do means testing? We already know SS cannot keep going at its present rate and changes will have to happen.

People tend to think about SS and Medicare from the view point of an accountant given a fixed structure of revenues and outflows. An economist would realize that there is no reason other than historical why these two are supported solely by payroll taxes. Continuing to think in this artificially constrained way pushes us toward desperate and dumb decisions, like increasing low quality immigration just to get more bodies hopefully paying payroll tax. Of course what comes in with taxes goes out and then some in increased hospital, school, police and correctional spending. And the population winds up poorer on a per capita basis, and were all costs in, possibly on an absolute basis too.

The power to pay for SS and Medicare can come from the entire economy. The tax base has been shifted many times; it can be shifted again. These programs should like many other social programs be funded by general tax revenues, not just payroll taxes. And general tax revenues depend on the tax regime and the performance of the economy. This would also allow us to capture some of the payroll tax being lost by outsourcing.

In a modern economy bodies are not worth a heck of a lot. We need to tax the real revenue generator- the entire economy.

Ha

[mathjak107]

never forget all these programs are brought to you by the same people who control the printing presses.

[Spanky]

Originally Posted by mathjak107

never forget all these programs are brought to you by the same people who control the printing presses.

Therefore, we should thrust or have complete confidence in them to do the right thing.

[chinaco]

Originally Posted by HaHa

.... Continuing to think in this artificially constrained way pushes us toward desperate and dumb decisions, like increasing low quality immigration just to get more bodies hopefully paying payroll tax. Of course what comes in with taxes goes out and then some in increased hospital, school, police and correctional spending. And the population winds up poorer on a per capita basis, and were all costs in, possibly on an absolute basis too.

...

In a modern economy bodies are not worth a heck of a lot. We need to tax the real revenue generator- the entire economy.

In a country that has transformed from primarily manufacturing dependent and more of a dependence on service... what would you think the critical ingredient to be?

When boomers are retired, there will be a gap at all levels for workers. The highly paid professional to the the ditch digger.

You are correct... health care is expensive. And there needs to be reform. Plus some of those changes need to be a system that encourages consumerism (wise consumer decision regarding health care rather than treating it like water.. a bit of an exaggeration).

Health care can be turned into a non-issue if the majority of the immigrants are younger/healthier people. It will be the boomers that are creating the major health care expenses. Not to mention that in the health care industry low wage people will be needed to do the grunt work. Some immigrant is likely to be changing your diaper in the nursing home!!! and improving their life in the process.

We need a workforce to continue to have a vibrant and growing economy... at all levels of the economic food chain. One thing that is often considered as a threat in the US is the importation of educated labor. We need to continue to import smart minds (because we do not graduate enough Americans to meet the need). We also need backs to do the lifiting (low level labor). Mostly immigrants have a good work ethic. Their children (next generation) will strive to improve themselves just as previous generations have done.

[haha]

Originally Posted by chinaco

In a country that has transformed from primarily manufacturing dependent and more of a dependence on service... what would you think the critical ingredient to be?

Try reading my post. Failing that try reading some economics. Long time ago I learned not to debate if I have nothing to gain, so think whatever you want to think, unmolested by data.

Ha

[chinaco]

Originally Posted by HaHa

Try reading my post. Failing that try reading some economics. Long time ago I learned not to debate if I have nothing to gain, so think whatever you want to think, unmolested by data.

Ha

I reread your post! Just to make sure I did not misinterpret. I got it. I just do not agree. You are welcome to your opinion. Immigration made this nation what it was yesterday and what it is today. Our openness is our strength.

Sorry about the diaper comment if that is what raised your hackles. It probably sounded a bit more derisive than intended... It was not intended directly at you, rather at all of us boomers since a number of us will wind up in a NH. The point is: we have (and will increasingly have) a shortage of low skilled (and therefore low paid) health care workers (as one example).

I am not an economist, and I may not be the brightest bulb in the pack... but I do have an MBA. I studied and understand most of the established (accepted) economic theories and the rationale behind them.

Immigration just needs to be done is a sane and controlled way (legally). My only gripe about the current run at increasing immigration is the proposal to grant amnesty to illegals. I prefer opening the process to people who enter the US in a legal way and to crack down on people/businesses that hire illegal immigrants.

[Bikerdude]

Originally Posted by mathjak107

since 80 million voting retiring baby boomers carry a huge political clout i feel the baby boomers are safe from any drastic changes. at 44 all bets are off for you my friend! ha ha ha

Boomers, 1946-1964. Age 44 is the tail end. That doesn't mean he's safe though.

[New Thinking]

Here is a summary of my recent paper on the subject presented at the Pension Research Council http://www.pensionresearchcouncil.org/pdf/news/49.pdf

[bssc]

Originally Posted by New Thinking

Here is a summary of my recent paper on the subject presented at the Pension Research Council http://www.pensionresearchcouncil.org/pdf/news/49.pdf

Interesting paper. While I hadn't heard it called the tax torpedo, the current rules for IRA/401(k) made me lean towards deferral.

[cute fuzzy bunny]

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.

Except we already proved that the math behind this fallacious assumption is incorrect.

To be fair, I'd have to fall into the water and a fish would have to become trapped in my pants for me to 'catch it'.

We all have our particular strengths and weaknesses.

Basically if you know when you're going to die, it becomes a far simpler equation.

Aside from that, introducing the smaller income stream earlier in your planning cycle means a reduced withdrawal load on your portfolio, which means a higher withdrawal rate, a higher survival rate, and the ability to retire earlier with less money.

How much is left when I die doesnt matter much to me. Financial independence for my kid, or maybe i'll blow it in my 80's on Anna Nicole Smiths granddaughter.

Last aside, if your retirement planning is so sparse that your wife has to depend on social security after you die, you need to revise your plan until it doesnt suck.

If you dont need the money, invest it. You'll be well into your 80's before you'd get a break even by taking it 'later'. I'll bet that money's a lot more fun to spend in your 60's than in your 80's.

If you really want a no-brainer, take the money, put it into 7 year cd's, give the principal back to the government when you're 70 and keep the interest, while getting the new revised higher 'late' rate.

Or, you can use some funny math to allow you to blow your dough now because its what you wanna do, leave your widow wondering what the #$$@% happened to all the money, secure in the knowledge that she has big social security bucks to spend. Except that its 30 years from now and social security just aint payin' anymore...

Looking at the whole financial picture, just using the SS income at 62 to offset withdrawals from my Roth, allowing that to grow tax deferred and tax free...is worth WAY more than a few extra chump bucks at 70.

[Martha]

Originally Posted by Cute Fuzzy Bunny

Last aside, if your retirement planning is so sparse that your wife has to depend on social security after you die, you need to revise your plan until it doesnt suck.

Unfortunately, a lot of people are in that position. The idea that the older and higher earner can sign up and then defer SS so the lower earner can start collecting on the higher earner's record is a neat trick that I didn't know about until NewThinking brought it up some time ago.

Me, I'm not going to look at the issue until Greg (the older of the two of us) turns 62.

[JPatrick]

Quite a number of posts here relate to putting off SS so as to provide the surviving spouse a higher benefit. While it is true that anything after full retirement age (mine 66) flows to her bottom line, it is not true that taking benefits prior to full retirement (me 66) reduces her benefit. In other words, if you retire at 62, go tits up die at 63, my spouse will receive my full age 66 benefit, not my age 62 benefit, provided she waits until HER full retirement age .
This is one of the key reasons it would take a team of wild horses on steroids to keep me from applying prior to age 66.

[73ss454]

JP, I'm 58 and DW is 56. Let's say I take SS at 62 and die at 64 1/2, if DW took her's at 62 would she still get my higher benefit? Would she have to give back the money and wait till full benefit time.