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Old 01-16-2018, 07:58 AM   #241
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This is one of my top 3 reasons on why I took SS at 62.
As a 'wealthy retiree', "take the money and run" is my mantra on this issue.

(Yes, I understand the current means testing of taxation on SS; no need to go there)
Thanks and well said. I want the money in my younger age not when I'm older. I still feel I can do just as good taking the money early then waiting. For each their own. We all got to where we are at by not being or doing everything the same.
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Old 01-16-2018, 08:10 AM   #242
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Behavioral Economics tells us that it is far easier to spend "their" money, rather than "my" money.

I have to believe that influences some (many?) to claim social security early and thus avoid having to spend from their retirement portfolio.
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Old 01-16-2018, 08:12 AM   #243
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This is an interesting thought. Is there any chart out there that shows at what ages people die?

e.g.
60-65 4%
66-70 8%
71-75 11%
76-80 22%
81-85 25%
86+
You can try this link and read it.

Kitces Life Expectancy

It is from Kitces. Ages for the 10% survivors are: Males ~95 years, Females ~96 years. For married couples the remaining survivor at 10% is ~97. Even the likely hood for one survivor of a married couple reaching 95 yrs is 18%!

FWIW, I run my plan out to 100 yrs. I don't expect to live that long but want to be prepared to.
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Old 01-16-2018, 08:34 AM   #244
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With respect to SS, I think that spending “their” money may be wise. One may expect his spouse to significantly outlive him - and that spouse may have considerable SS benefits based on her own earned income. In that case - which I believe is fairly common - the rationale for taking SS early could be that IRAs are inheritable and SS benefits are not.
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Old 01-16-2018, 08:42 AM   #245
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Behavioral Economics tells us that it is far easier to spend "their" money, rather than "my" money.

I have to believe that influences some (many?) to claim social security early and thus avoid having to spend from their retirement portfolio.
But..... but..... but..... I thought money was fungible?
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Old 01-16-2018, 09:20 AM   #246
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Behavioral Economics tells us that it is far easier to spend "their" money, rather than "my" money.

I have to believe that influences some (many?) to claim social security early and thus avoid having to spend from their retirement portfolio.
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But..... but..... but..... I thought money was fungible?
I'm using the bucket strategy. Tapping into the government's bucket first.
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Old 01-16-2018, 09:23 AM   #247
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But..... but..... but..... I thought money was fungible?
That was my point.

Money is fungible. Classic economics tells us that actors will maximize their long term benefits by delaying whenever it is mathematically beneficial to do so. Behavioral economics tells us that actors don't always act in their best financial interest.

There was a classic experiment showing how we tend to value what we own more than we value what we don't yet own. Participants first given a Swiss chocolate bar were generally unwilling to trade it for a coffee mug, whereas participants first given the coffee mug were generally unwilling to trade it for the chocolate bar. The cash value of the chocolate and the mug was the same.

Other experiments show that we tend to endow owned objects with about twice the value of an unowned object.

Thus we value our retirement portfolio ("our stuff") more than we value the social security benefit ("their stuff) - even to our financial detriment. It's just human nature. And it's not hard to construct a mental map showing why our choice is wise, even if the math says otherwise.

That's why I say it's hard to find someone who made a choice to start collecting social security benefits at any age who isn't pleased with the choice actually made.
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Old 01-16-2018, 09:24 AM   #248
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Behavioral Economics tells us that it is far easier to spend "their" money, rather than "my" money.

I have to believe that influences some (many?) to claim social security early and thus avoid having to spend from their retirement portfolio.
I'm sure that's part of it.

"I've spent a lifetime accumulating this nest egg. I just can't bear to spend it down any faster than I have to."
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Old 01-16-2018, 09:31 AM   #249
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That was my point.
Not sure I understand your point. IRAs can be passed on to heirs. SS cannot. Further, in many cases, widows may not receive any of a spouseís benefit after he dies. But both taxable and non-taxable retirement savings are generally 100% available to the surviving spouse.
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Old 01-16-2018, 09:33 AM   #250
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When to start early retirement does not depend entirely on oneís financial situation. Of course oneís assessment of his personal longevity is important. But also important is oneís assessment of his chances of being means tested for a partial or total reduction in SS benefits.

Further, if a wealthy retiree believes that his income will cause him to be means tested, there is also the matter of when such means testing will begin. Because the SS cash flow shortfall is now ten years old and accelerating - and the SS cash flow shortfall is already increasing the federal debt held by the public - some may believe that means testing will start before 2034.
Yes.
And, how would that hypothetical means testing work? Would it be based on private assets and income only? Or, would it include SS? And, where would the cut-off, or grade-off begin?

I can construct a "plausible" means testing where it's best to defer SS, spend down assets, and have lower private "means" at the time.

I won't speculate on whether that's the most likely political result.
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Old 01-16-2018, 09:45 AM   #251
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Yes.
And, how would that hypothetical means testing work? Would it be based on private assets and income only? Or, would it include SS? And, where would the cut-off, or grade-off begin?

I can construct a "plausible" means testing where it's best to defer SS, spend down assets, and have lower private "means" at the time.

I won't speculate on whether that's the most likely political result.
There are many ways means testing could work. I can construct a "plausible" means testing where it's best to take SS early and not spend down assets.

IMO, wealthy retirees - especially those with nest eggs of $2 million or more - have a much greater risk of receiving less than full retirement benefits than those with small or moderate savings. I have read this argument from economists, politicians, and CFAs.And Iíve read it from both sides of the political spectrum.
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Old 01-16-2018, 09:52 AM   #252
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Originally Posted by DEC-1982 View Post
This is an interesting thought. Is there any chart out there that shows at what ages people die?

e.g.
60-65 4%
66-70 8%
71-75 11%
76-80 22%
81-85 25%
86+
You've had two responses so far, and they are both good. If you're married, the Kitces piece is relevant.

Note that any such table is based on the experience of some group of people. I would like to pick a group that is "mostly like me".

The Social Security or national population data isn't the best because it includes too many people who aren't like me.

I have a discussion here: http://www.early-retirement.org/foru...ity-77386.html

Fortunately, table differences are noticeable, but not overwhelming.
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Old 01-16-2018, 09:58 AM   #253
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There are many ways means testing could work. I can construct a "plausible" means testing where it's best to take SS early and not spend down assets.

IMO, wealthy retirees - especially those with nest eggs of $2 million or more - have a much greater risk of receiving less than full retirement benefits than those with small or moderate savings. I have read this argument from economists, politicians, and CFAs.And Iíve read it from both sides of the political spectrum.
Yes, I can also construct plausible means testing rules where it's best to take SS early.

My point is that it's not clear which set Congress will pick (if any).
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Old 01-16-2018, 10:15 AM   #254
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Note that any such table is based on the experience of some group of people. I would like to pick a group that is "mostly like me".
For kicks I did an analysis of my 20 cousins on my father's side (mother was only child).
1 died in 30's, 1 in 40's, 1 in 60's, 3 in 70's, and 3 in 80's (84 average for these three).

Twelve survive, 2 in 70's, 7 in 80's (86 average current age for these), and 3 in 90's (94 average, oldest is 98). Two of the surviving are living in assisted living, one has dementia. The other ten are living independently, in some cases with outside aid.

Anyway, interesting for me. Maybe not so much for others.
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Old 01-16-2018, 10:30 AM   #255
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Yes, I can also construct plausible means testing rules where it's best to take SS early.

My point is that it's not clear which set Congress will pick (if any).
It is clear to me that wealthy retirees have a much higher chance than non-wealthy retirees of losing some of their SS benefits once Congress does act. Politicians from both parties have already suggested that possibility. IMO, wealthy retirees should consider that chance when making a decision about when to take SS.

Most of the advocates promoting delayed SS benefits have assumed full SS benefit availability in their analyses. I do not believe that is a prudent assumption.

Please understand that it is not your thinking I am trying to change, but rather that of others who may not have considered the difficult choices that Congress may very soon have to make. SS is already cash flow negative, and the largest segment of baby boomers are just now turning 62.
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Old 01-16-2018, 11:36 AM   #256
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I delayed until 70 (DW took at 62) and had a number of friends that took at 62 citing many of the reasons posted here. We are quite comfortable living with the larger amount we've been getting for the last 18 months. I completely agree that everyone should make the decision that is best for them but we were with some of those friends over the weekend and they were complaining about their paltry SS checks. Well, duh? IMO taking early is fine, just don't complain to me later about it.
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Old 01-16-2018, 11:48 AM   #257
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I delayed until 70 (DW took at 62) and had a number of friends that took at 62 citing many of the reasons posted here. We are quite comfortable living with the larger amount we've been getting for the last 18 months. I completely agree that everyone should make the decision that is best for them but we were with some of those friends over the weekend and they were complaining about their paltry SS checks. Well, duh? IMO taking early is fine, just don't complain to me later about it.
I'm concerned that means testing might be a cap, not across the board or a sliding scale. Mostly because friends like you described will throw your fat check under the bus to save their own paltry check and make that point to their representatives who write the laws. It's an argument I'm sure will be considered when that time comes. I see it with how government pensions are attacked. No one goes after the smaller checks, just the fat ones. Regardless of the merit that earned the pension.

****EDIT****
That got me to thinking; an early SS draw may keep the size of payment under the radar, so to speak. Another possible reason to take SS earlier rather than later. Like taxes, the first $1,000 a month is exempt and then a scale of percentage as the amount goes higher.
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Old 01-16-2018, 12:53 PM   #258
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I'm concerned that means testing might be a cap, not across the board or a sliding scale. Mostly because friends like you described will throw your fat check under the bus to save their own paltry check and make that point to their representatives who write the laws. It's an argument I'm sure will be considered when that time comes.
I think that high income SS beneficiaries are likely to be screwed the most. But Iím not sure eliminating 100% of their benefits will be enough to make up the shortfall.


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That got me to thinking; an early SS draw may keep the size of payment under the radar, so to speak. Another possible reason to take SS earlier rather than later. Like taxes, the first $1,000 a month is exempt and then a scale of percentage as the amount goes higher.
If, by cap, you mean a cap on benefits, then I agree that has a chance. But consider those who saved nothing but are counting on $2,000 to $3,000 monthly in SS benefits. I think they are also going to be writing Congress to argue that their benefits shouldnít be capped in order to save something for millionaires.

IMO, means testing to elminate benefits for top 10% of retirees has a better political chance than suffering shared by all.
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Old 01-16-2018, 01:07 PM   #259
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Past performance does not guarantee future results

I won't speculate on what Congress will do, but a lot of SS policy developments over the past 70 years revolved around it applying equally to everyone.

They called it "the contract between the generations" on purpose. There had been a reluctance to turn it into just another welfare program lest support for it erode.
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Old 01-16-2018, 01:26 PM   #260
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There are many ways means testing could work. I can construct a "plausible" means testing where it's best to take SS early and not spend down assets.

IMO, wealthy retirees - especially those with nest eggs of $2 million or more - have a much greater risk of receiving less than full retirement benefits than those with small or moderate savings. I have read this argument from economists, politicians, and CFAs.And Iíve read it from both sides of the political spectrum.
How would they know?

I've seen it pointed out on another website (bogleheads?) that the government really only has verifiable data on income, not assets, so means testing would necessarily be based on income.

So I can see another situation (similar to ACA subsidies) where retirees minimize their non-SS income to ensure they get their full SS retirement check, even with 7 figures in assets.
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