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Old 10-27-2017, 03:07 AM   #161
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I started contributing to SS at the tender age of 14.

I sure wish I would have had my hands on the money that I contributed over a total of 44 years. The government just lost money on it all those years.
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Old 10-27-2017, 03:17 AM   #162
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Originally Posted by teejayevans View Post
Then split the difference, take it at 65, at least then you get the added benefit of the hold harmless provision.
that is what i did . we did it for a few reasons .

i was working a day a week and made to much pre fra to file ,but in the year coming up i will be fra .different rules apply so i can earn up to 45k .

my wife did not get a 4k spousal adder until i filed so delaying would have cost us not only invested assets we are spending down , checks i gave up but a 4k spousal to for each year more we delayed .
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Old 10-27-2017, 03:20 AM   #163
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You do not “Make” or “earn” 7 percent by deferring Social Security, you increase payments in a future time by an average of about 6.8% compounded annually. What percentage you make on deferring SS to age 70 and how much you make and whether 62/70 is better is totally unknowable as to how long you live and portfolio performance between 62 and 70.

Actually if the stock market made 7 percent over inflation annually from age 62 to age 70 and you only earn the inflation rate thereafter, by age 95 SS would have returned 1.5% on your deferred spending - - after inflation. And if you die before age 87 you would lose money on deferring SS based on relative size of your remaining portfolio’s. At a 3.5 percent return on the extra funds that earned 7 percent from taking SS at age 62 you would be over 100 before SS would overtake the age 62 claiming of SS. It really does not take much for age 62 claiming to work out better.

However there is a comfort to be had in protecting minds that are more susceptible to scams by relying more on SS in my opinion that makes it worthwhile, but I think on a strict financial basis actual results are too hard to estimate for anything to be accurate
people get roi and the ss increases confused all the time .

actually if you live to 90 roi is pretty good delaying . after inflation you can clear about 5% which is just about what a balanced fund would return only this is from what amounts to a gov't bond .


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Old 10-27-2017, 03:25 AM   #164
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I rather doubt I have anything else to add to this thread, but it is an area of interest to me (and obviously to a lot of people here) -- so I do want to share my own perceptions.

I'm still working, age 57 (sort of caught in the one more year loop unfortunately), and request my social security statement every year in late spring when -- hopefully -- the previous year's contributions are finally showing up.

I have my own excel spreadsheet set up, and I've reviewed the scenarios multiple times -- most recently a few minutes ago -- to see if I'm missing something. My conclusion is always the same. In comparison to starting to take payments at age 62, my breakeven year from starting at age 67 (my FRA) would be age 79. At age 70, breakeven becomes age 81. Given that the social security estimates presume employment until starting to take payments makes these breakeven points all the more interesting to me -- that is working longer does not seem to improve the math a lot. I would have thought -- or hoped -- that working until age 70 would make breakeven with a starting payments at age 62 scenario occur much more quickly.

So anyway, I find myself more in the camp of the OP -- especially since longevity does not seem to be a strong point of men in my family. Speaking of, I know that many here seem to view social security as a type of longevity insurance, without a lot of concern that they might not ever receive as much as they've contributed over the years. I don't know that I could ever reach the point of that way of thinking. I would have to have significantly more assets that I do now, and my blue collar family roots pretty much instilled the idea of social security being a promise of some retirement income.

Good thoughts and good discussion here.
if we figure checks given up and spending down a balanced fund to delay ,break even can run 22 years .

that is about 84

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Old 10-27-2017, 04:07 AM   #165
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people get roi and the ss increases confused all the time .

actually if you live to 90 roi is pretty good delaying . after inflation you can clear about 5% which is just about what a balanced fund would return only this is from what amounts to a gov't bond .


michael kitces

I need some explanation of this graph. What is "IRR", and what exactly is plotted on the x and y axes?
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Old 10-27-2017, 04:10 AM   #166
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internal rate of return on ss based on years

vertical scale is the after inflation adjusted return and the horizontal , the number of years to get there .

so a 5% real return will take 28 years which is roughly age 90. zero roi takes almost 19 years so that is about age 82 or so not counting any spousal adders .

but this does not include spending down invested assets while delaying which pushes things out to about 22 years .

the other chart reflects that case .
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Old 10-27-2017, 04:22 AM   #167
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internal rate of return on ss based on years

vertical scale is the after inflation adjusted return and the horizontal , the number of years to get there .

so a 5% real return will take 28 years which is roughly age 90. zero roi takes almost 19 years so that is about age 82 or so not counting any spousal adders .

but this does not include spending down invested assets while delaying which pushes things out to about 22 years .

the other chart reflects that case .
So, is the vertical axis the after inflation adjusted return of the money you are spending (not investing) because you are denying yourself the SS benefit?
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Old 10-27-2017, 04:26 AM   #168
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not in that chart you referenced . the other chart accounts for spending down invested assets because you are not getting checks . i posted that chart again below .

that assumes no checks coming in and you need money to live on .
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Old 10-27-2017, 04:27 AM   #169
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this accounts for spending down invested assets to live on while delaying .

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Old 10-27-2017, 04:35 AM   #170
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Going back to the first graph, the "vertical scale is the after inflation adjusted return ".

Of what?
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Old 10-27-2017, 04:40 AM   #171
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Calculating The Benefit Of Delaying Social Security
To value the trade-off of delaying Social Security – no benefits paid now, in exchange for incrementally higher benefits in the future – we must calculate the economic value of the exchange. Accordingly, the chart below shows the impact over time of not receiving $750/month (increasing annually for inflation) from age 62 to 70, which then begins to be offset by the higher (inflation-adjusted) payment stream that begins at age 70 itself. Since benefits not paid from age 62 to 70 represents a foregone investment opportunity (either the money could have been invested if it wasn’t needed, or it could have been consumed and thereby allowed other assets to remain invested), we must account for not only the $750/month (at age 62) versus $1,320/month (at age 70) benefits, but also for inflation itself (assumed here to be 3%) and this time-value-of-money factor (projected at 6%, a “balanced” portfolio rate of return that could have been earned on the money invested or not-consumed).


it is easier to just let you read the link

https://www.kitces.com/blog/how-dela...money-can-buy/
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Old 10-27-2017, 04:44 AM   #172
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Thanks mathjak. Unfortunately, you now have a small taste of what my father went through when he was my Calculus tutor.
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Old 10-27-2017, 04:48 AM   #173
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that is okay , questions help us all learn
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Old 10-27-2017, 06:37 AM   #174
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True, but when the Dr. gives you bad news, you better sign up quick...
Unless you wanted to preserve higher benefits for surviving spouse.
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Old 10-27-2017, 06:52 AM   #175
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I was thinking this also....

Remember when we got 2% off our SS payments a few years back? I wonder if that reduction was to the SS fund or if the general fund 'paid' the SS fund for that credit?
I think this hurt the SS fund?
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Old 10-27-2017, 07:44 AM   #176
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Historically, the worst 20 year period of a 60/40 portfolio was 6.3% annual return.
Plug that into a SS comparison spreadsheet, using 2.5% annual COLA, and compare the total SS payments for the 62 and the 70 start.

The break-even age is 86.7 years.

Consider a person with an above average FRA (at 66) benefit of $2000/mo.
Let's be very generous and say they live to 95. At 95 the total SS benefit for the 62 start is $2,652,909. For the 72 start is $2,954,143.

You have to look real close to see the differenece, don't you?
Just under three million dollars, either way.

In raw numbers, the age 70 collects $300,000 more over their lifetime.
But both are 2 3/4 million plus/minus a few percent.

Living to 95 is rare. More likely is living to 90. At 90 the total SS benefits are $1,776,157 and $1,873,433. Not really much of a difference.

And note that this is using the returns of the _worst_ 20 year period for a 60/40 investment. The median return was 9.1% and the breakeven is age 107.

To paraphrase Humphrey Bogart, "the difference doesn't amount to a hill of beans in this crazy world."
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Old 10-27-2017, 08:00 AM   #177
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+1 You can sort of test it out using SSAnalyze with various scenarios and various discount rates (opportunity cost of using your nestegg while you are delaying).

If one is married and SS benefits are not similar, the analysis becomes more complicated and that is where SSAnalyze comes in real handy in looking at various scenarios.

For us, if I use a reasonable discount rate, the difference in scenarios are not very extreme... PVs are within 10% of each other. At this point, we plan to delay to FRA or possibly even age 70 for me but SS is a nice relief value that we can invoke at any time from here on out if investment returns lag or the market gets wacky.

I used SSAnalyze and looked at rayvt's scenario of a single person who gets $2k per month at their FRA of 66 and 2 months (my FRA) and a 2.5% COLA. If they live to 95 and the opportunity cost is 6.5% then the PV of benefits for 62, FRA and 70 are $309k, $331k and $344k, respectively. If they live to 85 and the opportunity cost is 6.5% then the PV of benefits for 62, FRA and 70 are $252k, $254k and $244k, respectively. So for singles, when to claim is generally much ado about nothing.
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Old 10-27-2017, 08:05 AM   #178
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I think this hurt the SS fund?
Hi All,

New member on the site, following for a while, and getting a lot of good info. I have been thinking a bit about the SS conundrum, as many here have, and I would like to throw in my 2 cents for feedback. A few things about me, age range 50-55, salary mid 100s, will likely have pension, mid 600-750 401k, real estate investments, and retirement goal is 60-62.

There are many good ideas floated here, but as many said, ultimately your individual circumstances dictate the age at which you take SS, and no calculstor in the world can predict your life events between 62-70. My father passed age 67 from his 3rd heart attack. My mom is going on 86, generally healthy, but no spring chicken.

Given it takes till about age 84 to catch up on the 8 year delay, and the general quality of life for a person aged 84, it presents a strong case to take SS early.

I am leaning towards taking early, and hopefully doing Roth conversions to help me later on.

As far as ways to "fix"the SS system, my perspective is one of progressive corrections so as to minimize impacts to those affected, and obviously no retroactive regressive policies. With that here are my ideas:
1. Means testing COLA, based on you PIA/35 yr record.
2. Means testing benefits after age 67 or whatever FRA is at the time policy is implemented. The idea being that you max your benefit at age 67, no addtl benefit for waiting. This would be directed at folks with higher earners based on 35 yr average record.
3. Increasing $$ income threshold before losing $$. Currently ~$16,000. Increase to 25-30k for folks taking SS at age 62. Decrease threshold based on year you take SS, and means test the income threshold.
4. The obvious one, slide the SS range one year to the right 63-71.
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Old 10-27-2017, 08:12 AM   #179
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You can sort of test it out using SSAnalyze with various scenarios and various discount rates (opportunity cost of using your nestegg while you are delaying).
I don't really understand what Discount Rate is on SSAnalyze. Should I just use zero when looking at different scenarios or am I missing some important piece of analysis by not using it?
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Old 10-27-2017, 08:20 AM   #180
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I started contributing to SS at the tender age of 14.

I sure wish I would have had my hands on the money that I contributed over a total of 44 years. The government just lost money on it all those years.
Well, they did not lose money on it since it was never invested (back then)... it was spent.... the newer money, which they did invest a small part of, was in US bonds and they made money....
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