aja8888
Moderator Emeritus
I took mine at my FRA. It's working fine.
I finally got around to completing the "I'm dead" portion of my finance spreadsheet to account for loss of pension and SS benefits. I use that to see if my wife will be a pauper when I die..................................
Am I correct in my interpretation of this?
These social security threads solidify my faith in mankind. None of us need ever be bored or lonesome, we can always come to ER.org and find an active argument about when to take SS.
Ha
Conversely you could defer your SS until 70.We don't need SS to meet our spending goals while I am alive. Now that I have completed my "I'm dead" spreadsheet, my wife doesn't need SS to maintain the same standard of living after I am dead. Seems like a good situation to take SS at the earliest possible opportunity and use the money to contribute to the blow that dough thread.
The problem with that calculator is it's leaving out a bunch of what happens in the real world. Yes, it's a very simple calculator, but in it's simplicity, there's basic things that it ignores.Why don't you use this very simple Calculator put together by a 'Real' Social Security Expert and see what it says.... You only need a few pieces of info like your FRA and it will do the rest.
https://opensocialsecurity.com/
And what he doesn't put in that list, but it's certainly not accounting for is the presumed real rate of growth in investments if SS is taken early. In other words, your investment accounts will be larger, and will grow more if you're spending SS dollars instead of pulling money out of your investments, waiting for age 70 to roll around....does not currently account for:
- Child benefits (or spousal benefits for people younger than age 62 with a child in care),
- Disability benefits, or
- Tax planning reasons
But doesn't spell-out the discount rate used in the calculation, which is a big factor. He also says absolutely nothing about what he presumes happens to the money that you've presumably got invested that you're NOT spending if you take SS early. That's critical. The possible default (and completely wrong) assumptions include that the money shrinks with inflation or keeps even with inflation. But if you have that money invested, you'll do better than both of those [if you believe that investments in the next decades will do similarly to what they've done in previous decades (a good bet, in my book)].The claiming age that had the highest present value is then suggested to the user, and the present value associated with such claiming age is provided as well.
Some people believe that due to the fact that my dad passed at age 97, my mom is still alive at 96, and three of my four grandparents lived till their 90's, I have "good genetics". I personally don't believe this one bit. If a truck runs me over, it is not going to do a genetic scan. I would be dead no matter what. Anyway, a financial advisor told me that with my heredity, I should claim SS early. Can someone explain the logic to that? I guess my "great genetics" did not carry over to understanding finances very well. Thanks for your time and expertise.
Perhaps you missed it.But doesn't spell-out the discount rate used in the calculation, which is a big factor.
Self-proclaimed? Perhaps you forgot The Wall Street Journal, AARP, Kiplinger's, etc? Not to mention many of us here...This calculator is by a self-proclaimed "Real" SS Expert who would rather have the situation seem more complex than it is so that he'll sell more books.
Yep, I missed that. But I'd cry out loud if I thought that all I'd earn is 0.79% real. Having the rate based on a super conservative thing means the analysis is tilted towards taking SS late. Over the very long run, the stock market has had an inflation-adjusted annualized return rate of between six and seven percent.Perhaps you missed it.
Check the Advanced Options checkbox.
Then scroll down until you see the Real Discount Rate edit box (default is 0.79%).
Rather have the situation seem more complex? On the contrary, Mike's strength is making the complex Social Security rules simple.
Bottom line: any calculator that doesn't expressly spell-out what happens to funds that remain invested while you're pulling early SS can not possibly be telling you the full picture.
I know starting SS at the beginning of a great bull run (and investing every dollar) plus having a DW who cannot collect on your SS would not be a common thing. But situations like mine do justify understanding all the ramifications of your personal situation and not just blindly following the "it's better to take it at 7" bandwagon. And it's important to consider the growth opportunity from receiving the money early as opposed to only considering the break even point (in age) of dollars received.
Bottom line: any calculator that doesn't expressly spell-out what happens to funds that remain invested while you're pulling early SS can not possibly be telling you the full picture.
Some calculators are up-front their rated assumptions, and give the user the opportunity to tune the rates based on their beliefs about what the future may bring. Or they show many possibilities (like FIRECalc). That's all I was trying to say.Well that pretty much eliminates any financial Calculator ever developed.... Lets throw them all away as they cannot predict the future.
The problem with that calculator is it's leaving out a bunch of what happens in the real world. Yes, it's a very simple calculator, but in it's simplicity, there's basic things that it ignores.
And what he doesn't put in that list, but it's certainly not accounting for is the presumed real rate of growth in investments if SS is taken early. In other words, your investment accounts will be larger, and will grow more if you're spending SS dollars instead of pulling money out of your investments, waiting for age 70 to roll around.
In the description of how it works, he says But doesn't spell-out the discount rate used in the calculation, which is a big factor. He also says absolutely nothing about what he presumes happens to the money that you've presumably got invested that you're NOT spending if you take SS early. That's critical. The possible default (and completely wrong) assumptions include that the money shrinks with inflation or keeps even with inflation. But if you have that money invested, you'll do better than both of those [if you believe that investments in the next decades will do similarly to what they've done in previous decades (a good bet, in my book)].
Bottom line: any calculator that doesn't expressly spell-out what happens to funds that remain invested while you're pulling early SS can not possibly be telling you the full picture.
This calculator is by a self-proclaimed "Real" SS Expert who would rather have the situation seem more complex than it is so that he'll sell more books.
Well, I'm not TOTALLY wrong, since we agree on the choice of discount rate.He does provide for you to issue a real discount rate of your choice. Like you, I also think the rate that he uses is ridiculously low but he does explain why, even if his reasoning is flawed IMO.
I agree with the bold. Does that mean a SWR from my assets would be six or seven percent?Yep, I missed that. But I'd cry out loud if I thought that all I'd earn is 0.79% real. Having the rate based on a super conservative thing means the analysis is tilted towards taking SS late. Over the very long run, the stock market has had an inflation-adjusted annualized return rate of between six and seven percent.
So put in whatever number will prevent you from crying.But I'd cry out loud if I thought that all I'd earn is 0.79% real.
Right. We cannot predict the future. But we still need to make plans and take action.But you still have to make assumptions that are generally unpredictable, the biggest of which is the return on the dollars invested while you're collecting early.
The tool specifically accounts for the time value of money.I'm always amazed when people give little consideration to the time value of money.
It was not predictable that you started at the beginning of a great bull run. Yet you took action you believed would be best for you. If the market had gone on a great bear run instead, your outcome may have been different. You took on a lot of risk. Fortunately it worked out in your specific case.For example, I started SS in 2009. I invested all received dollars in a broad market domestic index fund. The kitty generated covers the difference between my early SS and that which I would have received if I had waited until 70 (at a reasonable WR). And it provides an insurance component to my DW who cannot collect based on my SS (and gets none of her own). This way she will get whatever is left of the kitty should I predecease her.
I know starting SS at the beginning of a great bull run (and investing every dollar) plus having a DW who cannot collect on your SS would not be a common thing.
I agree. Nobody should blindly follow "it's better to take it at 62" or "at 70". That's where tools, models, advisers, and careful thought about your specific situation come in.But situations like mine do justify understanding all the ramifications of your personal situation and not just blindly following the "it's better to take it at 70" bandwagon.
It's certainly possible to consider growth opportunity along with break even if you choose. (Although many would argue that "break even" considerations are inferior to "longevity insurance" considerations.)And it's important to consider the growth opportunity from receiving the money early as opposed to only considering the break even point (in age) of dollars received.
Try this I do not know how accurate it is but it is another source...check the assumptions....
https://opensocialsecurity.com
I had a FA tell me to take it at 62 because "why use your own money to live off of take the SS first as you paid into it and save your investments..... there is no right/wrong answer"?
Most people like to take their SS early. Many people (certainly not anyone on this forum, but elsewhere) don't really care if the math says they are better off delaying. They want the money now. If you have done the math, and you see that it's better for someone to take SS late [