... I guess the overall point I was trying to make is that having a large lump of [-]cash[/-] liquid assets gives you more options. What I had in mind was the people who have said to spend down your portfolio pre-70 and then SS rides to the rescue at 70 just as your portfolio runs out. ...
Well that is a long way from the general statements you've made supporting taking SS early. Maybe I missed it (or just ignored it as irrelevant to any reasonable discussion), but I don't
ever recall
anyone saying to
'spend down your portfolio pre-70 and then SS rides to the rescue at 70 just as your portfolio runs out.' Got some links to refresh my memory?
Look back at your posts #188, and Independent's reply in post # 197, and my spreadsheet to illustrate the scenario. Those seem like pretty reasonable starting points, not the condition where you run the portfolio to zero.
At any rate, I (and I think few in support of delaying SS) would recommend delaying SS if it meant drawing the portfolio to near zero.
SS is not a lump sum, it's a monthly payment stream. That was all that I was getting at.
Right, and delaying SS provides a larger monthly payment stream in later life, to both you and your spouse (if applicable), when the portfolio could be dwindling.
You cannot make a large, one-time lump sum purchase from a payment stream, vendors (cruise line, roofer, etc.) want their money up front.
'course, you can do what many young people do, pay for the cruise on a credit card and then pay that off at 18% interest for the next few years.
Or do as I showed in the spreadsheet - pull money from the portfolio for the cruise, and there is no future issue, because your later years are covered by that larger income stream. The numbers don't lie (unless someone can point out a flaw in my calculations).
You have more options if you have liquidity than if you don't.
Yes, but 'enough liquidity' is 'enough'. And in that spreadsheet, they had enough liquidity to pay cash for a cruise w/o current SS, and they did well.
I think this concept got internalized for me some 20+ years ago from an occurrence in the family. One uncle was retired and owned some land outside of Atlanta that was easily worth $3M. But their income was only SS and pension.
... Well they had a large net worth -- but little cash and little monthly income. Oddly, banks aren't particularly eager to lend you money (even secured by land) when you are in a hospital bed surrounded my machines and full of tubes. ...
The whole extended family had to scramble to cover his immediate cash needs.
As many of us keep saying, there is no one correct solution, it depends on the circumstances. If you
need to take it early, there is no debate, you take it early.
In the example you provide, the problem is the $3M is not liquid -
that is the problem. You said they had very little cash, not enough to pay their medical bills even though it sounds like they were taking SS early (or at least at FRA). So this has no bearing on anything, it sounds like they were stuck either way. A few years of early SS would not have added up to a big $ amount, relative to a staggering medical bill.
My approach to this would be to try hard to gain some liquidity, regardless of SS. I think we agree that practically ever retiree (and non-retiree for that matter) benefits from having some liquidity at their disposal.
I'll guess that rayvt is expecting more than 0%.
Indeed.
If you can make 5% above inflation, ...
It seems every time we answer your scenarios, rather than addressing the answer, you throw out a different scenario. It sounds to me you just want validation, not an actual discussion of pros/cons or decision points.
I gave the reason I chose 0% real for the spreadsheet, simplicity, and it makes a 'bad-case' scenario for drawing down the portfolio of the person delaying SS. A rising market would have kept more cushion with the draw down, and they would have had more money for the cruise. So I was trying to make it a tough case for delaying, or I might have been criticized for cherry-picking.
And we've already discussed the 'break-even' analysis versus the 'longevity insurance' aspect (especially if spousal benefits apply). I guess you are not listening.
I think I've learned all I'm gonna learn on this, if all you are going to do is divert the responses to something else rather than address them, I'll bow out.
-ERD50