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Old 05-16-2015, 09:07 PM   #141
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I worked both private and public and you have your slackers in both. As for "producing goods" - a city government produces the police, the fire department, the rec center, the library, the parks, your water...common good that your taxes help pay for. As a librarian I produced all kinds of community programs, events, put the right book in the right person's hand. I'm happy I worked to "produce" a good community. Now I'M DONE!
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Old 05-16-2015, 09:48 PM   #142
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Of curse you still need money, RunningBum. And with Diabetes you need a lot more of it!
Yep. That's why when people say they'll do more and spend more in their 60s than their 80s, I wonder if the spending part is true. You might need more money (and thus perhaps want to delay SS for a larger payment) just to live comfortably with whatever condition you have in old age.
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Old 05-16-2015, 09:59 PM   #143
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Yep. That's why when people say they'll do more and spend more in their 60s than their 80s, I wonder if the spending part is true. You might need more money (and thus perhaps want to delay SS for a larger payment) just to live comfortably with whatever condition you have in old age.
That's what I keep coming back to. Especially since we are funding long term care. And I'd like to be able to pay for nice quality long term care if we need it.
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Old 05-17-2015, 09:51 AM   #144
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Some additional thoughts on when to take Social Security:

1. Much analysis indicates taking it at 62 versus 70 will keep you ahead financially until around 80 years of age (more or less depending on your investment assumptions AND factoring income tax implications and tax brackets). So, for the first 18 Years or so, you are ahead financially --> Do you think you really have another 18 years to offset the number of years you were ahead OR are you weighing those later years as much more in importance? Statistically, more than half of us will expire around our mid eighties.

2. Recent studies indicate that our spend rate actually goes down as we approach the later years of retirement - no more mortgage, no kids, no college costs, not as many 'toys' desired to purchase, not as much travelling, live in downsized homes, less utilities,... yes, large medical bills are looming for some of us.

3. Longevity tables may start showing, in a few years, that our predicted lifetimes will be decreasing somewhat. They have yet to fully factor in the current and next generation folks who have significantly jacked up the obesity percentages, lived sedentary lifestyles (many sitting 8 hours a day at work and spent hours sitting in front of a TV or PC), exercised minimally, ate processed foods with lots of 'chemical additives' with some that have been later removed, exposed to much more toxins in our water, air and food supplies than the people from earlier generations, continual exposure to low levels of RF radiation, possible effects from a lifetime of dental/fracture X-rays, airport scans and various other imaging technologies... Yes, the medical industry has made great strides in addressing many ills to help extend our lives, I'm just not convinced yet that it can undo everything that recent generations have been exposed to.

4. Waiting until 70 will give you the max payout, but will often also result in the max tax hit. Combine it with RMDs at that time, in addition to pension, dividends,... and the percent of taxable social security income could be significant versus taking it earlier.

5. Many are looking at the strategy of waiting until 70 as a guarantee 8% or so a year gain on their retirement assets. Is it an asset? If you have children, grandchildren, great grandchildren, a charity organization, church, cancer research, university... that you would like to leave a legacy to, your social security paycheck won't be going to either upon your death (OTOH, your surviving spouse who is dependent on your SS will benefit). The money you used while delaying your social security check could have been left to your beneficiaries. That money could have grown during the years you took early social security and you could have left the beneficiaries with a larger chunk of funds. Social security is more like an insurance based income stream that ends when you end.

There are tons of arguments for taking social security earlier and tons for taking it later. As been stated before, the best time is when it is right for your personal situation. Obviuosly, there are different considerations for the single individual versus the married.
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Old 05-17-2015, 12:48 PM   #145
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What if the person who claimed at 62 didn't spend the money but instead put the money into their asset allocation to save? Wouldn't that make the break even point much later? Of course this assumes positive market returns but it just seems like this would argue for taking it earlier in many cases.
Maybe that analysis has already been done but I don't recall seeing it.
It has indeed been done. I posted my somewhat comprehensive spreadsheet here: https://www.dropbox.com/s/gebanzrbr3...0calc.xls?dl=0

If you earn 0%, the (62 vs. 70) breakeven is about age 80. If you earn 3% above inflation, age 85. If you earn 6% above inflation, age 98.

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Spending the social security money and allowing you to take less out of your portfolio is the same as saving the social security right?
Yes. As someone pointed out elsewhere in this thread, money is fungible.
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Old 05-17-2015, 01:05 PM   #146
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I will delay it to at minimum age 65 unless doctor tells me I have 2-3 years left to live.
Now all you need is getting him to tell you 2-3 years before a drunk driver runs you over.


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Why? Because there is no guaranteed investment which astronomical returns that delaying SS provides so why would I miss this return....... It is all about discipline and plan

Taking SS at 62 tells me lack of planning which results in missing high returns.
I don't mean to be snarky here, but this topic has been studied quite intensively, and if you think that you have discovered something -- like "astronomical returns that delaying SS provides" -- that everybody else has overlooked .... well, it's more likely that you are missing or misunderstanding something.

The so-called 8% return appears to be the case only because people forget to account for the 8 years of $0 benefits.
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Old 05-17-2015, 01:44 PM   #147
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Now all you need is getting him to tell you 2-3 years before a drunk driver runs you over.




I don't mean to be snarky here, but this topic has been studied quite intensively, and if you think that you have discovered something -- like "astronomical returns that delaying SS provides" -- that everybody else has overlooked .... well, it's more likely that you are missing or misunderstanding something.

The so-called 8% return appears to be the case only because people forget to account for the 8 years of $0 benefits.
We are taking it early at 62, because you can never get more time. Time lost in this case equals money.

As an aside how much money would I have if I would have invested my SS payments along with the employer match in index equities by now? I would say well over a couple of million bucks. I looked at our combined contributions to SS and its in excess of 500k. And that money could be handed down to future generations.
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Old 05-17-2015, 01:54 PM   #148
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From reading and following this thread it still proves,to me anyways, there are many right options to take on age of withdrawal. Or at least worst, collectively as a group, a loss of pennies on the dollar. The only wrong decision is the choice many take in the real world. That being taking it at 62 with little saving and retirement money and doing it just because they do not want to work anymore.


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Old 05-17-2015, 02:56 PM   #149
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I don't mean to be snarky here, but this topic has been studied quite intensively, and if you think that you have discovered something -- like "astronomical returns that delaying SS provides" -- that everybody else has overlooked .... well, it's more likely that you are missing or misunderstanding something.

The so-called 8% return appears to be the case only because people forget to account for the 8 years of $0 benefits.
It is somewhere around 7-8% more by delaying it 12 months not 8 years.....

That looks to me like superb increase. If New Your Life was selling COLA Fixed Immediate Annuity and offered 7-8% higher monthly payment if I wait for 12 months that would look to me like investment of lifetime that I should not miss.

I know I did not discover anything new. Same as there is nothing new that if you buy S&P 500 and just hold indefinitely you will historically get about 9% return yet.....people don't seem to be able to do it.

Now the fact that I will not take SS at 62 does not mean I will not retire at age 55. I just want to maximize my income after I retire and delaying SS is one of the things that will do it for me.
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Old 05-17-2015, 03:04 PM   #150
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Everyone should put it off as long as possible.
So it will still be there in 8 years when I turn 62.
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Old 05-17-2015, 03:11 PM   #151
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Everyone should put it off as long as possible.
So it will still be there in 8 years when I turn 62.
You must expect to live no more then 77-78 years.......breakeven age after which guy who took at 66 will start coming ahead of you.

My computation tells me for majority of people 66-67 is best age to take SS. Most of us will live to 80-85....Now my Grandmas who died at 94 and 98 would benefit from taking it at 70 .

http://www.schwab.com/public/schwab/...ocial-Security
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Old 05-17-2015, 03:46 PM   #152
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It has indeed been done. I posted my somewhat comprehensive spreadsheet here: https://www.dropbox.com/s/gebanzrbr3...0calc.xls?dl=0

If you earn 0%, the (62 vs. 70) breakeven is about age 80. If you earn 3% above inflation, age 85. If you earn 6% above inflation, age 98.


Yes. As someone pointed out elsewhere in this thread, money is fungible.
If you were correct then smart companies like New York Life would be happily offering Cola Fixed Immediate annuities to 62 year old people offering them 8% higher payment if they wait for 12 months before starting annuity.

You must be on to some great financial secret that is not yet known to Insurance Industry
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Old 05-17-2015, 04:00 PM   #153
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I look at it this way, if we take it at 62 and bank it until 70 we will have an almost guaranteed extra $250k in the bank that I can pass down / and a reduced benefit from 70 on. We do not plan on banking or investing it. But to me its about the same thing as not withdrawing funds from the IRA.
I just don't see the advantage in waiting as I can not predict the future. And if I get $250k out of it, at least I will have gotten 1/2 of my money back. And taking a smaller amount early, will make it easier to stay in the 15% tax bracket. Its probably flawed math on my part but that's my plan.
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Old 05-17-2015, 04:07 PM   #154
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I look at it this way, if we take it at 62 and bank it until 70 we will have an almost guaranteed extra $250k in the bank that I can pass down / and a reduced benefit from 70 on. We do not plan on banking or investing it. But to me its about the same thing as not withdrawing funds from the IRA.
I just don't see the advantage in waiting as I can not predict the future. And if I get $250k out of it, at least I will have gotten 1/2 of my money back. And taking a smaller amount early, will make it easier to stay in the 15% tax bracket. Its probably flawed math on my part but that's my plan.
This computations can be made precisely ONLY if you know date when you die.

I must believe to statistics. You can look them up on your own....
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Old 05-17-2015, 05:11 PM   #155
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That's the thing, I have no idea when I will kick the bucket.
FIRECalc comes out 100% if I take it at 62 or 70. So.....
I plan to take it early. Everyone's situation is different.
That's why they give us options. The scary thing is how they are trying to convince me its like some type of welfare. And we could expect a reduced benefit. After they treated it like some type of Gov. slush fund. Rather that what it was designed and funded for.
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Old 05-17-2015, 06:23 PM   #156
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Delaying SS is the cheapest inflation-adjusted annuity that you could ever buy .
Yes. But there are some big caveats.

It's not just like any regular annuity. There is no flexibility. The terms -- timings and monthly annuity amount -- are set by the SSA and you have no ability to change them. Your only real choice is to take it or not.

For example, consider an (above average) FRA amount of $1,900/mo. Early at 62 is $1,350 and delayed at 70 is $2,376.

By delaying, you'd get an extra $1,026/mo. But it cost $129,600 (8 * 12 * $1350) to get that. So you are buying an annuity paying $1,026/mo for $129,600.
(The up-side is that you aren't paying the $129K as a lump sum, but as $1350 a month. The down-side is that if you die before 70, none of that is returned to your estate.)

$1,350/mo for 8 years gets you $1,026/mo for the rest of your life.

In the first 126 months (129,600 / 1026) after you hit 70, you are just getting your own money back. You don't see any net benefit until after you are 80.

To make a comparison, pull up a commercial quote for an SPIA for a 70 year old with a purchase price of $129,600. I got these quotes from Fidelity:
With no COLA increase:
$114,400 buys $1,026/mo
$129,600 buys $1,162/mo

With 2% annual increase:
$141,500 buys $1,026/mo
$129,600 buys $940/mo.

To compare like-to-like:
The (delayed) SS annuity $1,026/mo vs. $940/mo, for the same cost of $129,600.
An SPIA that pays initially $1,026/mo costs $141,500 vs. $129,600.

The annuity from SS pays you $86 more a month. To buy the same monthly payout costs $11,900 less.

So, yeah, the (delayed) SS annuity is cheaper than a commercial annuity. But not a whole lot cheaper, just a little bit.

If $1,026/mo isn't what you want, if you want $2,000? Tough, you can't get that. If your FRA benefit isn't $1,900/mo but is only $1,500/mo? Too bad, you can't get $1,026 you get $855. Have a nice day.

But what if we did it another way. What if instead of deferrring the SS we collect it at 62 and put it into a savings account (or bonds, or whatever) where it earns 2% after taxes. In 8 years it will grow to $140,400. Which is almost exactly enough to buy an SPIA that pays $1,026/mo.

Delaying SS as longevity insurance. fine. But you're not really getting much better than you could get with an SPIA. Plus a commercial SPIA won't cut your monthly payment when/if the SS trust fund runs dry.
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Old 05-17-2015, 06:48 PM   #157
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It is somewhere around 7-8% more by delaying it 12 months not 8 years.....

That looks to me like superb increase. If New Your Life was selling COLA Fixed Immediate Annuity and offered 7-8% higher monthly payment if I wait for 12 months that would look to me like investment of lifetime that I should not miss.
You are counting the increased benefit but ignoring what you had to forego in order to get it. You can't do that -- unless you're an insurance agent trying to convince somebody to buy a Whole LIfe policy.

It's similar to the decision of paying points on a mortgage to get a lower interest rate. Yes, interest payment will be lower, but that wasn't free, you had to pay a large chunk of money up front. Nobody ignores the money you pay in points when figuring whether to do it or not.

For an FRA benefit of $1000, if you delay for 12 months you get $1080. But you have to give up $12,000. In order to get an additional $80/mo for the rest of your life you have to forego receiving $1,000/mo for 12 months right now.

That $12,000 is gone forever, just like the points on a mortgage. You get the benefit back $80 at a time, monthly. It will take you 150 months ($12,000 / 80) -- 12.5 years -- until you've collected enough to break-even. Essentially, for the first 12.5 years they are just giving you your own money back, a little bit every month. Just like every other SPIA.
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Old 05-17-2015, 07:15 PM   #158
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You are counting the increased benefit but ignoring what you had to forego in order to get it. You can't do that -- unless you're an insurance agent trying to convince somebody to buy a Whole LIfe policy.

It's similar to the decision of paying points on a mortgage to get a lower interest rate. Yes, interest payment will be lower, but that wasn't free, you had to pay a large chunk of money up front. Nobody ignores the money you pay in points when figuring whether to do it or not.

For an FRA benefit of $1000, if you delay for 12 months you get $1080. But you have to give up $12,000. In order to get an additional $80/mo for the rest of your life you have to forego receiving $1,000/mo for 12 months right now.

That $12,000 is gone forever, just like the points on a mortgage. You get the benefit back $80 at a time, monthly. It will take you 150 months ($12,000 / 80) -- 12.5 years -- until you've collected enough to break-even. Essentially, for the first 12.5 years they are just giving you your own money back, a little bit every month. Just like every other SPIA.
But you will not get a deal like this from any Insurance Company.

If this delay was bad for a customer and it was such great deal for insurance companies they would offer it to make money. Would not you agree?

And BTW you can buy COLA Immediate Fixed Annuity which starts making payments to you in 12 months and compare it to annuity that starts making payments immediately.... That is pretty much equivalent to SS.

Now they may sell it to with such difference if you are 90 and they expect you to go belly up any minute but not at 62
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Old 05-17-2015, 07:21 PM   #159
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To make a comparison, pull up a commercial quote for an SPIA for a 70 year old with a purchase price of $129,600. I got these quotes from Fidelity:
With no COLA increase:
$114,400 buys $1,026/mo
$129,600 buys $1,162/mo
That looks very attractive to me. I couldn't get the Fidelity site to work (browser maybe?) so I used incomesolutions which I can access through Vanguard.

I asked for a straight life, level annuity on a male who was born on 5/15/1945 with a $100,000 premium.

The best monthly benefit it had was $646.83, which converts to $740.00 for a premium of $114,400.

This was for Principal Mutual. They also showed Integrity, Mutual of Omaha, and AIG with lower payouts. Did you notice what company you were getting through Fidelity?
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Old 05-17-2015, 07:25 PM   #160
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That's the thing, I have no idea when I will kick the bucket.
FIRECalc comes out 100% if I take it at 62 or 70. So.....
I plan to take it early. Everyone's situation is different.
.
If firecalc says you are 100% at 62, I agree with your decision.
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