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Old 08-10-2012, 08:58 PM   #101
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Very true that everyone's situation is a bit or a lot different.

I am thinking not of where things are going on a macroeconomic scale, but one's personal balance sheet. For instance, one has a nice plan that is working quite well and then a market like 2008-2009 comes along and your balance sheet changes a lot. Maybe then you take stock (mild pun), size up the options, then make a change in 2012. It's not generally necessary to pull the trigger right away on the SS decision. You can make the decision at age 62, 64, 66, ...
Fair enough. For myself, as I'm 62 this year I've applied for SS. Interestingly, according to Firecalc I'm at 100% regardless of which option I take (62 or 70) given my level of expenditures so probably not such a momentous decision after all for my own situation...
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Old 08-12-2012, 07:19 AM   #102
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Don't miss the big picture, look how much fun I am having between 62 and 66, worth more than any amount of money in the world, and not in the coffin.
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Old 08-12-2012, 09:18 AM   #103
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Don't miss the big picture, look how much fun I am having between 62 and 66, worth more than any amount of money in the world, and not in the coffin.
I think you missed the big picture. One of the primary reasons to delay S.S. to age 70, is that you get to spend even more between 62-70. The reason for this, is that because you have a larger amount coming in age 70, it frees up more assets in your portfolio.

If you start looking at delaying SS as "Old age insurance" instead of meaningless break-even analyses, it will make sense to you. Because it's not how much $$$ you pile up, it's how much you get to actually spend. It's like a Super good deal on an annuity.

Go over to Bogleheads, and search their forum for complete explanation. There are a lot of smart people over there, who have done extensive research on this topic. Bill Berstein, who wrote "The Four Pillars of Investing" posts over there. He is a Major Proponent of delaying SS to age 70. Especially in these times of Historic Low Interest rates.
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Old 08-12-2012, 09:46 AM   #104
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If you start looking at delaying SS as "Old age insurance" instead of meaningless break-even analyses, it will make sense to you. Because it's not how much $$$ you pile up, it's how much you get to actually spend. It's like a Super good deal on an annuity.
+1
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Old 08-12-2012, 10:14 AM   #105
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Yes, situations and circumstances do matter and the answer varies depending.........

I've posted at some length about the consequences of WEP and GPO on retired couples where one will collect significant SS and the other will receive little or no SS on their own earnings due to WEP and no spousal benefit due to GPO. In those cases, and that's the situation with DW and I, maximum longevity protection for the non-SS spouse is acheived by the SS spouse beginning SS at 62. Therefore, I began SS at 62.
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Old 08-12-2012, 10:23 AM   #106
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I think you missed the big picture. One of the primary reasons to delay S.S. to age 70, is that you get to spend even more between 62-70. The reason for this, is that because you have a larger amount coming in age 70, it frees up more assets in your portfolio.

If you start looking at delaying SS as "Old age insurance" instead of meaningless break-even analyses, it will make sense to you. Because it's not how much $$$ you pile up, it's how much you get to actually spend. It's like a Super good deal on an annuity.

Go over to Bogleheads, and search their forum for complete explanation. There are a lot of smart people over there, who have done extensive research on this topic. Bill Berstein, who wrote "The Four Pillars of Investing" posts over there. He is a Major Proponent of delaying SS to age 70. Especially in these times of Historic Low Interest rates.

I disagree, this is not a simple issue of just wait. Your circumstances, need for income, taxes, RMD's at 70.5, desire to leave an inheritance, health, family longevity, beneficiaries or dependencies that would benefit based upon your choice and probably many more reasons may influence your choice.

The BH folks have opinions just like the rest of us. Some people think paying off a mortgage is best and others think carrying one is best and again it depends upon your circumstances. I wouldn't say follow the BH crowd because....

My choice to start at 62 while I don't need the income is based upon my factors. I'll risk living to the breakeven age and take the money now because for me it makes sense. If I live beyond the breakeven age then I made the wrong choice but I'll be ok with that.
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Old 08-12-2012, 10:47 AM   #107
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I just did some back of the envelope quick calculations. If I wait until 70 to take SS I would receive $1300 a month more than taking SS at 62. But, I give up $165,000 in income from SS. If I take SS at 62 I could buy an $1300 a month annuity for about $200,00 at age 70 to make up the difference.

Two things come to mind. I must take into account the money I could earn if I invested the SS money from ages 62 to 70. And the annuity would not be COLA'd whereas SS is fully COLA'd.

Perhaps the simplest way to look at it is that delaying SS until 70 allows me to spend an additional $200,000 over those years and still break even.

Yes, I am ignoring inflation (except for the COLA comparison) and taxes.

It comes down to an individual decision that let's one sleep at night.
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Old 08-12-2012, 01:10 PM   #108
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I disagree, this is not a simple issue of just wait. Your circumstances, need for income, taxes, RMD's at 70.5, desire to leave an inheritance, health, family longevity, beneficiaries or dependencies that would benefit based upon your choice and probably many more reasons may influence your choice.

The BH folks have opinions just like the rest of us. Some people think paying off a mortgage is best and others think carrying one is best and again it depends upon your circumstances. I wouldn't say follow the BH crowd because....

My choice to start at 62 while I don't need the income is based upon my factors. I'll risk living to the breakeven age and take the money now because for me it makes sense. If I live beyond the breakeven age then I made the wrong choice but I'll be ok with that.
+1 plus personal psychology has a lot to do with it. The thread on the extreme savers also made me think of the other reason I decided to take SS at 62. The SS payment in my checking account I'll spend. I won't be able to bring myself to spend the "extra" money (62 to 70) out of my investments to make the gambit of spend more now, collect more SS at 70 work for me. I would always be questioning my spending more because SS could run out of money, politics being what they are promises mean nothing etc etc.
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Old 08-12-2012, 02:57 PM   #109
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Originally Posted by Cut-Throat View Post
...(snip)...
Go over to Bogleheads, and search their forum for complete explanation. There are a lot of smart people over there, who have done extensive research on this topic. Bill Berstein, who wrote "The Four Pillars of Investing" posts over there. He is a Major Proponent of delaying SS to age 70. Especially in these times of Historic Low Interest rates.
There was a Bogleheads thread on SS recently where Bill Bernstein and I traded a few back and forth:
Bill (part of his speel):
Quote:
In fact, I'd go one step further than that: if you're planning to buy an SPIA, and if either you or your spouse has anywhere near a normal life expectancy, then it's beyond foolish for the main wage earner to not start SS at age 70. Once you do that, you either don't need the SPIA, or will need a lot less of it, obviously.
Lsbcal (me):
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Perhaps I do not fully understand your reasoning but we do fall into the "don't need the SPIA" group, I think. We can nicely fund our 60's and 70's, the 80's maybe we should reduce our living expenses a bit, and in the 90's -- I'm not even worrying about that.

I just think that a lot of the conservativeness boiling to the surface by knowledgeable investors and advisors has to do with the terrible 2008-2009 decline. As a retiree I can say it was very scary and that fear lingers. However, it would be a mistake to take too much from our age 60's to fund our 80's and 90's. That is just my opinion. So if I am asked to pick from either (1) take SS at 70, or (2) fund an annuity -- I'd pick neither for myself.
and Bill's reply:
Quote:
Again, note the conditionals . . . "if you want longevity insurance," and/or "if you are planning to buy an SPIA."

Those are both huge "Ifs."

I suspect a lot of DH's don't meet either of those "ifs." I.e., either they have so much assets (say, > 25x residual retirement needs after SS and pensions), or they've decided, for whatever reason, they don't want an SPIA/longevity insurance and are willing to take that risk when they're "old old" if they don't have sufficient assets so that they can consume more when they're "young old."

All that I'm saying is that *if* you want/need longevity insurance, the very first place to go is SS at 70.
So Bill Bernstein was not saying that the only way to go is to wait until 70 to take SS.
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Old 08-12-2012, 03:22 PM   #110
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I certainly will take SS at 62 as will my DW. Regardless of how much money we have in 401's, IRA's, Roth IRA's etc. the mental challenge of spending it down more quickly in our 60's is much too great. SS will cover most of our basic needs and we should be able to live on the income produced by our investments. That's good enough for me. We went through similar calculations regading paying off our mortgage several years ago. No regrets and no looking back.
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Old 08-12-2012, 06:42 PM   #111
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Well, I have a young wife and kids ( I am 59). I plan to file and suspend at age 62, so my kids will get my FRA and then take mine at 70, so my wife gets the higher survivor benefit.
I was under the impression that you have to be at 66 (FRA) to file and suspend. Am I wrong?
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Old 08-12-2012, 07:12 PM   #112
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I was under the impression that you have to be at 66 (FRA) to file and suspend. Am I wrong?
IIRC, you are correct.
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Old 08-13-2012, 08:01 AM   #113
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I think you missed the big picture. One of the primary reasons to delay S.S. to age 70, is that you get to spend even more between 62-70. The reason for this, is that because you have a larger amount coming in age 70, it frees up more assets in your portfolio.

If you start looking at delaying SS as "Old age insurance" instead of meaningless break-even analyses, it will make sense to you. Because it's not how much $$$ you pile up, it's how much you get to actually spend. It's like a Super good deal on an annuity.

Go over to Bogleheads, and search their forum for complete explanation. There are a lot of smart people over there, who have done extensive research on this topic. Bill Berstein, who wrote "The Four Pillars of Investing" posts over there. He is a Major Proponent of delaying SS to age 70. Especially in these times of Historic Low Interest rates.
I get the big pitcute alright, my retirement and 2 SS checks is equal to what I made after taxes, so I have just as much money to spend. Everyone has to make up there own mind based on there financial situation whats right for them. For me (me ) the time was right to retire. We usually can decide how much income we need, but we cannot control the grim reapor. So making long range plans has an element of risk. I wasn't willing to take the risk. Besides I did the math on SS and I did this analagy a long time ago but comparing pulling the plug at 62 or 66 I think I had to live to 76 to break even. So there is an element of chance, I am not much of a gambler, so I took the sure bet.
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Old 08-13-2012, 08:07 AM   #114
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(snip)... and 2 SS checks....


I'll assume you meant a check for you and your spouse (if I'm wrong, please give more info).

IOW, you did not consider your spouse's future (without you, and your SS income) in your decision?

Just wondering...
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Old 08-13-2012, 08:25 AM   #115
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........... The thread on the extreme savers also made me think of the other reason I decided to take SS at 62. The SS payment in my checking account I'll spend. I won't be able to bring myself to spend the "extra" money (62 to 70) out of my investments to make the gambit of spend more now, collect more SS at 70 work for me.......
While I understand your point, you could "easily" accomplish the same thing by putting your withdrawals on autopilot like many of us put saving/investing on autopilot during the accumulation phase.

This is part of the reason I like the two bucket approach (a cash bucket with a year or so of spending in cash equivalents and the rest of the nestegg in stocks/bonds) in that the cash bucket gets refilled periodically when I rebalance my stocks/bonds and I have arranged an automatic transfer from the cash bucket to my checking account (which I consider to be freely available for spending).

BTW, I plan to wait to 70 to claim SS as an attractively priced form of longevity insurance in lieu of a joint-life SPIA (and it protects DW if I die prematurely) and have the comfort of knowing that if things get uncomfortable anytime between 62 and 70 that I can exercise the option for SS payments at anytime but I recognize that approach may not fit all or be comfortable to all.
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Old 08-13-2012, 07:45 PM   #116
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BTW, I plan to wait to 70 to claim SS as an attractively priced form of longevity insurance in lieu of a joint-life SPIA (and it protects DW if I die prematurely) and have the comfort of knowing that if things get uncomfortable anytime between 62 and 70 that I can exercise the option for SS payments at anytime but I recognize that approach may not fit all or be comfortable to all.
I understand your viewpoint and mathematically it makes sense under current law. But do you understand that the trustees of the SS system have indicated that there will be a 25% reduction in SS payments as the trust fund runs out in 2033 -21 years from now? Do you understand that the 2033 date could very well be moved forward if the US economy continues to stagnate (a la Japan case) or be moved way forward if God forbid the US goes into a deeper depression? In fact the trustees have been moving that date forward for a while now. Think about it. The trustees estimate what the economy will do over the next 75 years and report accordingly. Maybe they have divine guidance whispering in their ears. I doubt it. You trust the current system to provide well into the future. The anticipated reduction in 2033 occurs when I turn 83 (If I make it). What if that's a best case scenario? Are you going to send my a check for that missing 25%?
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Old 08-13-2012, 08:49 PM   #117
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...........Are you going to send my a check for that missing 25%?
No. Hopefully you are wisely saving to protect yourself from such an event. If not, I hope you enjoy cat food.

Seriously though, there are relatively palatable solutions to the SS funding problem that will spread pain across current and future recipients if Washington ever gets the courage to debate them.
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Old 08-13-2012, 09:31 PM   #118
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No. Hopefully you are wisely saving to protect yourself from such an event. If not, I hope you enjoy cat food.

Seriously though, there are relatively palatable solutions to the SS funding problem that will spread pain across current and future recipients if Washington ever gets the courage to debate them.
I am indeed wisely saving to protect myself. That's exactly why I'm relying on my own resources instead of SS promises. And you are right - I do not enjoy cat food. By George I'm thinking we are starting to think on the same page! As to counting on Washington well, I haven't found much encouragment for the last few (fill in the blank months, years, decades?)
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Old 08-13-2012, 10:43 PM   #119
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The solution for SS is spelled out by the Simpson-Bowles plan found here:

Fairly Understanding the Simpson-Bowles Social Security Proposal | e21 - Economic Policies for the 21st Century
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Old 08-13-2012, 11:29 PM   #120
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The solution for SS is spelled out by the Simpson-Bowles plan found here:

Fairly Understanding the Simpson-Bowles Social Security Proposal | e21 - Economic Policies for the 21st Century
Of course our problems are solvable and SS is probably the most solvable of all (certainly far more so than medical costs) but for a long time now we as a nation have not shown the ability to to agree on much of anything and I'm afraid that we won't until things are so broken that all of the kings horses....
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