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10-24-2017, 08:35 AM
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#21
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Recycles dryer sheets
Join Date: Sep 2014
Location: Miami
Posts: 337
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Quote:
Originally Posted by LRDave
An intangible benefit to the OP's strategy is that the risk of a future haircut is diminished. (This assumes current retirees will be somewhat less likely to get reduced benefits at the time of the haircut as opposed to future retirees.....not sure if that's true, but it will be a hard sell to not grandfather in everyone already in the game IMO.)
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Sooo many people are missing your point. I have brought this up in the best to deafening silence.
__________________
FIRE July 2015
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10-24-2017, 08:51 AM
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#22
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Thinks s/he gets paid by the post
Join Date: Nov 2006
Posts: 1,639
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Quote:
Originally Posted by Blueskies123
Sooo many people are missing your point. I have brought this up in the best to deafening silence.
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My guess if you're 65 and haven't taken SS, you'd be in the same boat (grandfathered) as someone that's 65 and has already started taking SS. The raising of the SS age from 65 to 67 didn't affect anyone close to SS age at the time. Besides, I imagine there would be at least a little bit of time before any change became effective that you'd could always start collecting early.
Of course, I could be wrong.
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10-24-2017, 09:09 AM
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#23
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Thinks s/he gets paid by the post
Join Date: Nov 2015
Posts: 2,691
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Quote:
Originally Posted by Which Roger
From Jan 1 2000 to Jan 1 2009, Dow dropped 24%.
Hindsight is 20/20.
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That's not a 5 year period. I had asked about a drop in a 5 year period in response to this:
Quote:
Originally Posted by ChiliPepr
This is true since your portfolio when up about 45% in the last 5 years... but what would have happened if your portfolio was down 25%?
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Within 2000-2009 the market actually increased and then experienced a double dip.
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10-24-2017, 09:23 AM
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#24
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Thinks s/he gets paid by the post
Join Date: Jul 2011
Location: Bernalillo, NM
Posts: 2,717
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Everyone has a different situation. I have to consider spousal survivor benefits
__________________
"We live the lives we lead because of the thoughts we think" ...Michael O’Neill
"We can cannot compel others to do our will" ....Norman Goldman
"There never is shortage of the gullible to accept the illogical"...Anonymous
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10-24-2017, 09:32 AM
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#25
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2006
Location: Washington, DC
Posts: 11,318
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Quote:
Originally Posted by ERD50
The "break-even point" of ~ 80 YO, while it may be a reasonable mathematical calculation based on reasonable assumptions, isn't really the relevant calculation. It has been discussed many times, treat the delay of SS as "longevity insurance". We don't really think in terms of car or fire insurance as "break even", it is there in case we need it, and we know that on average we will pay for that insurance. So one can choose to delay SS to gain some insurance in case they live a long time.
And if you have a spouse, survivor benefits play into it. The odds of one of two living to a ripe old age are greater than any one living that long. Check out the longevity calculator at Vanguard for that.
I think it was member "Cut-Throat" who said it this way: "You can withdraw more now, knowing you will be withdrawing less later".
-ERD50
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+1 Break even points are one thing longevity insurance is another. A lot of people are more worried about a future black swan wiping out their portfolio when then are 79 than getting the last possible dollar out before 80. COLA'd virtually risk free annuities are powerful products.
__________________
Idleness is fatal only to the mediocre -- Albert Camus
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10-24-2017, 09:45 AM
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#26
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Full time employment: Posting here.
Join Date: Sep 2007
Location: Portland
Posts: 584
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My FRA is 67 - I am still 5 years away from 62. It is a difficult decision whether I should take SS at 62 or 67.
I am currently thinking about meeting at the middle 64 or 65 (it means if I am wrong, the effect would not be too much)
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10-24-2017, 09:52 AM
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#27
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 17,171
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There is also a another case for a dwindling group who are/were married for 10 years and who reached 62 by 2015. They can collect on their spouse's benefit at 66 (1/2 of their benefit) while their benefit inceases at 8% a year until they hit 70. This must move the breakeven point to an earlier age, all other things being equal.
Some people sleep better at night knowing the check is coming every month. Others sleep better knowing that in N more years a bigger check with bigger COLA's will be coming every month. Others figure they can delay SS but, if their finances or the political situation starts to go down hill, they can turn it on at any time now that they are 62.
I am happy that this has worked out well for the OP. It is good that we have such flexibility with the SS system. That is one of its best benefits, IMHO.
The big truth is that this is a very individual decision.
As an aside: I must admit I am getting a bit tired of people tossing their numbers and their assumptions at me and then telling me this is proof that I should follow their example.
__________________
Comparison is the thief of joy
The worst decisions are usually made in times of anger and impatience.
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10-24-2017, 09:55 AM
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#28
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
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Quote:
Originally Posted by Glad to be retired
I
Yes, this all shows that unless you live well into your late 80s, it is better to collect your SS benefits at age 62 if you are not working.
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You done good! You have definitely shown that given very good luck, the stock market during this period beat waiting on a higher SS. Next maybe show that this was a certain outcome.
Bravo!
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
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10-24-2017, 10:15 AM
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#29
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Full time employment: Posting here.
Join Date: May 2017
Posts: 797
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Quote:
Originally Posted by ChiliPepr
This is true since your portfolio when up about 45% in the last 5 years... but what would have happened if your portfolio was down 25%?
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+1
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10-24-2017, 10:28 AM
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#30
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Thinks s/he gets paid by the post
Join Date: Dec 2010
Location: Midwest
Posts: 1,789
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I have always said that the real benefit to drawing at 62 is if you die earlier than the break even point. Sure don't want to prove it, though.....
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10-24-2017, 10:34 AM
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#31
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
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Quote:
Originally Posted by Blueskies123
Sooo many people are missing your point. I have brought this up in the best to deafening silence.
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If you are going to consider a SS haircut, you must also consider what inflation will have on your returns. Inflation is MUCH more likely. If you put your SS checks in bonds, you will get hammered. Additional taxes may also wreck havoc.
Another aspect is that living expenses could increase dramatically, especially after you have more money in your pocket. A VAT tax or similar could increase prices, and take away spending power, but would not affect the amount of SS check. And extra $5 a gallon gas tax would also take money away from your budget, and knowing that you can collect more SS to help is reassuring. Even an asteroid could hit.
There are a lot of what ifs, I tend to go with what is currently known, with a knowledge that an additional financial buffer could be the best insurance against all unknowns.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
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10-24-2017, 10:36 AM
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#32
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Thinks s/he gets paid by the post
Join Date: Jul 2007
Posts: 3,222
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Not everyone is in a situation where they have to choose to collect SS at 62 or draw down from one of their savings (IRA, 401K, etc.) accounts. What happens to the decision of when to start collecting SS when you have a pension that covers expenses during the early years of retirement?
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10-24-2017, 10:38 AM
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#33
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,821
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Quote:
Originally Posted by brucethebroker
I have always said that the real benefit to drawing at 62 is if you die earlier than the break even point. Sure don't want to prove it, though.....
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Only your heirs benefit. You could have been spending from the portfolio now, since you would be spending less later with the higher SS amount. You wouldn't be aware of any difference.
-ERD50
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10-24-2017, 10:49 AM
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#34
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Location: Southern California
Posts: 3,995
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I wasn't clear from the post whether the OP was suggesting that this was the best decision for them personally, or for everybody regardless. I would agree after reading the post that it was logically thought out and seems like a very solid decision for the OP.
If the suggestion was that it applies to everybody, I think this is the wrong forum to have that discussion in. Given that this is an early retirement forum, many of the retired members here have saved up enough money to live on such that even if SS went away completely they would be perfectly fine.
I believe that one of the main reasons people take SS at 62 is because they have not saved a sufficient nest egg to live on without SS. In this case, people often have no choice but to take it early.
I do not plan on taking SS until 70 because I don't need the money, and I'd rather use it as longevity insurance. And my calculations suggest I will come out ahead if I live past about 82 years old, which is a bet I'm willing to take.
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10-24-2017, 10:52 AM
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#35
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Full time employment: Posting here.
Join Date: Mar 2017
Posts: 629
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Quote:
Originally Posted by zinger1457
Not everyone is in a situation where they have to choose to collect SS at 62 or draw down from one of their savings (IRA, 401K, etc.) accounts. What happens to the decision of when to start collecting SS when you have a pension that covers expenses during the early years of retirement?
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That is my situation.
I don't have a pension, but my income is more that what I need to live on and I am delaying taking my SS until I am 70. If for some reason I needed earlier, I would take it. But that's not likely to happen.
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10-24-2017, 11:08 AM
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#36
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Thinks s/he gets paid by the post
Join Date: Aug 2014
Location: Red Rock Country
Posts: 1,915
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Quote:
Originally Posted by Chuckanut
There is also a another case for a dwindling group who are/were married for 10 years and who reached 62 by 2015. They can collect on their spouse's benefit at 66 (1/2 of their benefit) while their benefit inceases at 8% a year until they hit 70. This must move the breakeven point to an earlier age, all other things being equal.
Some people sleep better at night knowing the check is coming every month. Others sleep better knowing that in N more years a bigger check with bigger COLA's will be coming every month. Others figure they can delay SS but, if their finances or the political situation starts to go down hill, they can turn it on at any time now that they are 62.
I am happy that this has worked out well for the OP. It is good that we have such flexibility with the SS system. That is one of its best benefits, IMHO.
The big truth is that this is a very individual decision.
As an aside: I must admit I am getting a bit tired of people tossing their numbers and their assumptions at me and then telling me this is proof that I should follow their example.
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+1
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10-24-2017, 11:12 AM
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#37
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Recycles dryer sheets
Join Date: Jul 2013
Posts: 271
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Quote:
Originally Posted by Which Roger
From Jan 1 2000 to Jan 1 2009, Dow dropped 24%.
Hindsight is 20/20.
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I think you forgot divdends.
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10-24-2017, 11:12 AM
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#38
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2009
Posts: 9,343
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Quote:
Originally Posted by brucethebroker
I have always said that the real benefit to drawing at 62 is if you die earlier than the break even point. Sure don't want to prove it, though.....
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That is why I am taking my projected $115 a month when I turn 62. Hmm, that wont even cover my medicare payment...So will I get a check and then send them a check, or will they deduct that and I cover the rest with a check?
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10-24-2017, 11:30 AM
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#39
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Thinks s/he gets paid by the post
Join Date: Aug 2010
Location: Back woods of Fennario
Posts: 1,170
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Quote:
Originally Posted by Senator
If you are going to consider a SS haircut, you must also consider what inflation will have on your returns. Inflation is MUCH more likely. If you put your SS checks in bonds, you will get hammered. Additional taxes may also wreck havoc.
Another aspect is that living expenses could increase dramatically, especially after you have more money in your pocket. A VAT tax or similar could increase prices, and take away spending power, but would not affect the amount of SS check. And extra $5 a gallon gas tax would also take money away from your budget, and knowing that you can collect more SS to help is reassuring. Even an asteroid could hit.
There are a lot of what ifs, I tend to go with what is currently known, with a knowledge that an additional financial buffer could be the best insurance against all unknowns.
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While risks like a bond-heavy portfolio getting hammered by inflation are real risks and probably more likely, these are risks in which I feel that I have a few levers to pull to offset. The SS haircut risk is out of my control.
__________________
"Time wounds all heels...." - Groucho Marx
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10-24-2017, 11:46 AM
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#40
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,821
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Here's a link to the post I mentioned earlier:
http://www.early-retirement.org/foru...ml#post1604411
Quote:
Here is a pretty simple calculation for those that wish to spend more money in retirement and do not care about leaving an estate. For those that have a Big enough Portfolio and can afford to wait until 70 to take SS, you'll have more to spend every year of retirement.
Let's Say you retire this year at age 62 with the $1 Million Portfolio and decide to take a 4% SWR. You get Social Security of $19,476 per year at age 62 and delaying to age 70 would get you $34,092 per year. Let's assume no inflation for ease of calculations.
Scenario age 62. Your SWR is $40K per year and Social Security of $19,476 gets you a Spending total of $59,476 for each year of your retirement period.
Scenario age 70. You stash 8 years of $34,092 from your portfolio into a savings account for a total of $272,736. Your portfolio is now down to $727,264. Your 4% SWR is now $29,090 per year and you remove $34,092 from your savings account giving you a total of $63,182 to spend each year for the rest of your 30 year retirement period.
The Delay to age 70 gives you $3,706 more every year starting at age 62 with no more increased risk.
No need for any ... 'break even analysis'.
If your WR is more conservative, such as a majority of the people here and myself, the results are even more compelling. At a 3% WR plus SS at age 62 scenario is a total of $49,476 and the age 70 scenario is $55,910. The delay of SS to age 70 now increases your annual spending by $6,434.
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-ERD50
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