Interesting SS numbers from FIRECalc

[NanoSour]

Ran the following 2 scenarios and got some surprising results given the conventional wisdom of delaying SS as long as possible.

1) Ran FC with receiving SS at 62 with the numbers from ESPlanner. I believe these are the most accurate numbers given my complete salary history.

2) Ran FC with receiving SS at 70, again with numbers from ESP.

Via the FC Investigate tab, I selected Spending Level given a 99% chance of success. The result was that taking SS at 62 vs 70 led to over $5K additional annual spending. That is a significant difference!

My ER plan is to take SS it at 62. If I make it there.

 

[Rustward]

I believe these are the most accurate numbers given my complete salary history.

More accurate than the ones you get from the Social Security Administration?

It is impossible to have an opinion or comment unless you post the entire scenario. You can post the scenario with *absolute* precision using the "Link To This Set of Data" on the FireCalc results page. Then nobody has to guess about what parameters you entered.

 

[heeyy_joe]

Being that you are married you also need to take into account your survior benefit for DW before jumping on SS at 62. Just sayin'

 

[NanoSour]

More accurate than the ones you get from the Social Security Administration?

It is impossible to have an opinion or comment unless you post the entire scenario. You can post the scenario with *absolute* precision using the "Link To This Set of Data" on the FireCalc results page. Then nobody has to guess about what parameters you entered.

Didn't know you could do that.

FIRECalc: A different kind of retirement calculator

The age 70 SS is

37,675 (2035)
15,191 (2035)

 

[NanoSour]

Being that you are married you also need to take into account your survior benefit for DW before jumping on SS at 62. Just sayin'

DW survivor benefits are included in the calculation. That is one of the many excellent features of ESPlanner. It provides all those numbers for you.

 

[gauss]

Via the FC Investigate tab, I selected Spending Level given a 99% chance of success. The result was that taking SS at 62 vs 70 led to over $5K additional annual spending. That is a significant difference!

My ER plan is to take SS it at 62. If I make it there.

But what do you put in for how long to live? The age 70 recommendation really pays off if you live a long time. I currently plan for 102.

-gauss

 

[NanoSour]

More accurate than the ones you get from the Social Security Administration?

The SSA calculator is that same as ESP. However, most user leave the default setting of "No increase beyond 2011 average US wage" which is really ultra-conservative. As is the SS output number under this scenario.

A more realistic benefit would be to select the "2012 Trustee Report Alternative II" to get a more accurate prediction of your SS based on projected increases in average US wages.

 

[NanoSour]

But what do you put in for how long to live? The age 70 recommendation really pays off if you live a long time. I currently plan for 102.

-gauss

My FC plan was 41 years to age 90. Going longer won't change it as assets are on the upswing.

 

[gerrym51]

But what do you put in for how long to live? The age 70 recommendation really pays off if you live a long time. I currently plan for 102.

-gauss

i plan on having a good time until 90. after 90 i won't be able to do anything anyways

 

[Katsmeow]

The other day I was playing with FireCalc using a 30 year plan which would take us to 95 for DH and 89 for me. I used the example of DH and I both taking SS at about 62 1/2 (DH already did this). For spending we have variable levels of spending so I did the manual yearly spending. For FireCalc I am assuming that DH and I are both alive for the entire 30 years.

Then I ran the same plan but had me taking SS at 66 1/2. To my surprise, the success percentage went down about 3%.

I also ran the Fidelity retirement planner. I used similar numbers but Fidelity runs the plan to age 92 for DH and age 92 for me and I can put in for expenses how those expenses will vary with time and it assumes that DH dies at 92 so certain expenses don't continue after that. I put in that DH and I both start SS at 62. I then ran that plan and got the result (it actually shows me having a shortfall of about $70,000 at age 90 using the most conservative model).

I then ran the same Fidelity but changed my SS to start at 66. When I did that it showed that at 92 (the end of the plan) I still had about $75,000 left over.

So for Firecalc I did worse taking SS at 66 and for Fidelity I did better taking SS at 66.

 

[foxfirev5]

i plan on having a good time until 90. after 90 i won't be able to do anything anyways

I am not counting on doing much after 85 or so. I used to think that about age 55 but now that I'm past that age I've moved the bar.
Seriously though, I still plan on age 62 for SS since I'm a control freak who wants to keep my investments in my hands as long as possible. Can I do better than the built in increase in SS benefits by delaying? Maybe, maybe not, but I'll take my chances. The answer for each of us is not as easy as some would make it out to be.

 

[NanoSour]

I am not counting on doing much after 85 or so. I used to think that about age 55 but now that I'm past that age I've moved the bar.
Seriously though, I still plan on age 62 for SS since I'm a control freak who wants to keep my investments in my hands as long as possible. Can I do better than the built in increase in SS benefits by delaying? Maybe, maybe not, but I'll take my chances. The answer for each of us is not as easy as some would make it out to be.

Never thought of it as a "control" issue, but that a great way to look at it.

 

[gerrym51]

try this calculator


Retirement calculator: How much should I save for retirement? - MSN Money

 

[gerrym51]

I am not counting on doing much after 85 or so. I used to think that about age 55 but now that I'm past that age I've moved the bar.
Seriously though, I still plan on age 62 for SS since I'm a control freak who wants to keep my investments in my hands as long as possible. Can I do better than the built in increase in SS benefits by delaying? Maybe, maybe not, but I'll take my chances. The answer for each of us is not as easy as some would make it out to be.

i turned 62 in february and although i did not need to i took it anyway at 62

 

[NanoSour]

i turned 62 in february and although i did not need to i took it anyway at 62

From what I'm seeing sounds like a good choice.

Thanks for the calculator link. My primary retirement calculator is ESPlanner. I bought the full version, but there is a free version here.

Home | ESPlannerBasic

 

[gerrym51]

From what I'm seeing sounds like a good choice.

Thanks for the calculator link. My primary retirement calculator is ESPlanner. I bought the full version, but there is a free version here.

Home | ESPlannerBasic

i like this calculator(the msn one) because it always says i'm good until 95

 

[NanoSour]

Mirror, Mirror on the wall....

 

[SumDay]

gerrym51 said:

try this calculator

Yowsa, I wish those #'s were accurate. I'd love to leave that much to my kids! Very different results than FireCalc, Quicken's Lifetime Planner, and Fidelity results.

 

[ERD50]

From the OP:

Ran the following 2 scenarios and got some surprising results given the conventional wisdom of delaying SS as long as possible.

.....

Via the FC Investigate tab, I selected Spending Level given a 99% chance of success. The result was that taking SS at 62 vs 70 led to over $5K additional annual spending. That is a significant difference!

My ER plan is to take SS it at 62. If I make it there.

I think I can explain the 'surprise' versus 'conventional wisdom' of delaying SS as long as possible.

The typical FIRECALC failures are the scenarios where the portfolio takes a dive in the first few years of retirement. The withdraws compound this, and the shrunken portfolio never recovers. So taking SS early will lessen the withdraws, and temper the impact on the portfolio. The larger portfolio then participates in following recoveries.

However.... in real life versus static models, we can choose to take SS at any point along the way. So if one hits a downturn in the first few years of retirement, one can decide to take SS at that time to soften this. If things are going fairly well, one can delay, and will gain some valuable longevity insurance.

There are several examples of posters doing exactly this during the recent downturns, and it would appear to be the prudent thing to do.

So maybe we can rephrase this to say that the 'conventional wisdom' is to delay SS as long as possible - where 'as long as possible' means not having to dip into your portfolio too much w/o that SS income.

-ERD50

 

[gerrym51]

gerrym51 said:



Yowsa, I wish those #'s were accurate. I'd love to leave that much to my kids! Very different results than FireCalc, Quicken's Lifetime Planner, and Fidelity results.

i think they are accurate-assuming you use the correct amount of income you need and amount of inflation. i use 3 percent. i think its the needed income that causes problems.

it also puts all your income streams-except SS-in one big lump.you sort of have to figure what total percentage return you are getting

 

[Midpack]

We plan to make the decisions regarding when we file (& suspend) and collect Soc Sec independent of other calculators. For us the optimal approach with our assumptions appears to be 4 easy steps, but we have years to finalize. AARP and T Rowe Price have good Soc Sec for couples calculators, I am sure there are others. YMMV

 

[daylatedollarshort]

I am not counting on doing much after 85 or so. I used to think that about age 55 but now that I'm past that age I've moved the bar.
Seriously though, I still plan on age 62 for SS since I'm a control freak who wants to keep my investments in my hands as long as possible. Can I do better than the built in increase in SS benefits by delaying? Maybe, maybe not, but I'll take my chances. The answer for each of us is not as easy as some would make it out to be.

+1. I don't like seeing the net worth column in the retirement planning spreadsheet dip too low. We are taking the pensions early as well to help fund early semi-ER.

If we took SS at 70 we'd have more money at age 90 but I'm not sure what we would do with it at that age except leave it to the kids or watch it dwindle to pay nursing home bills as we spend down to Medicaid asset levels.

 

[Katsmeow]

The reason for one half of a couple to delay to FRA or 70 is for the benefit of the survivor who will then have only one SS income. dH took SS at 62 1/2 but I may take it at FRA or later. I am not quite 59 though so figure I don't have to decide now,

 

[haha]

I think all these calculator trips just put some stuff of unknowable reliability between you and reality.

Do you want some fixed income? Do you want some indexed fixed income? Do you want some longevity insurance? Do you want some insurance against errors, either your own or errors in the investing algorithms that you have accepted? Do you expect SS to be continued more or less intact?

Are you mortally ill?

If you can answer yes to all the first group, and no to the last, let your benefit ride. It is probably better than anything else you could do.

Ha

 

[rayvt]

So maybe we can rephrase this to say that the 'conventional wisdom' is to delay SS as long as possible - where 'as long as possible' means not having to dip into your portfolio too much w/o that SS income.
-ERD50

Don't forget that 'conventional wisdom' assumes people who [had to] work as long as possible, and then retired with small-ish assets. In that scenario, the extra money from delaying might be significant.

But for people who are F.I.R.E.'d the additional SS probably has little or no effect on their lifestyle.

The maximum possible age 66 benefit is $2513.
That's $1885 at 62 or $3317 at 70.
The incremental amount is $17,000/yr. After enduring 8 years of $0 SS benefit. Which implies that you have enough other income (pension, 401k, and investments) that you can easily get by with no SS.

So, maybe you've got "other" income of $50K - $60K or so. Remember in order to get the max benefit you had to earn enough to hit the SS cap every year - so this is not poor people we're talking about, and presumably they have built up a hefty portfolio.

An incremental $17,000 is not going to make a huge difference in their lifestyle -- certainly not a "life-changing" difference.

OTOH, if they have a $1,000,000 portfolio, a 5% return is $50,000. Compared to that number, $17,000 is almost a roundoff.