Consideration for taking SS early

[Phroig]

Just pointing out that the return for deferring isn't 8%. For a crude calculation, assume one gives up $70 (30% penalty for claiming early) for years 1-8 to receive an extra $54 ($124-70) in years 9-30. The IRR is 5.5%, still pretty decent. Of course, the investment isn't risk-free given the uncertainty over the system's health.

[Montecfo]

Quote:

Originally Posted by Phroig Of course, the investment isn't risk-free given the uncertainty over the system's health.

And the detail that you have to be living to claim it.

[Winemaker]

Quote:

Originally Posted by latexman I've never mentioned this before, but I am qualified for the maximum SS payment. More than 35 years earning over the cap. I think there is a little part of me that wants that biggest SS paycheck at/after 70 y.o. Kinda of a personal achievement thing, I guess. Has anyone ever seen the % of SS recipients that get the maximum paycheck? My Google-fu was not strong enough to find this.

And you will be maximizing the 15% amount that is nontaxable.

[madatrub]

Quote:

Originally Posted by pb4uski I guess you need to elaborate because as I read the life expectancy data it clearly indicate that it is optimal to wait until 70 even if you are of average health and especially if you expect to live long. According to the SOA/AAA Longevity Calculator, someone who is currently 62, doesn't smoke and is in average health could expect to live to 86 (male) or 88 (female) and for a couple one or the other will likely live to be 92. Given that the crossover point is 84 with a 3% real rate of return, if one is an averages player then the best bet is to defer. Remaining years for 62 yo, non-smoker in average health per Society of Actuaries and American Academy of Actuaries Longevity Illustrator. Probability Him Her Either Both 90% 8 11 20 5 75% 16 19 25 12 50% 24 26 30 19 25% 30 32 34 25 10% 34 37 39 29 https://www.longevityillustrator.org

Just looking at average life expectancy, as I have no idea who smokes and who doesnt on this forum, or who is otherwise healthy.

[Chuckanut]

I think this discussion is going around in circles. But, it is fun to watch. And I am sure the newbees learn from it, so it has value.



Do what helps you sleep well at night. There is more to life than squeezing the last possible dollar from the SS trust fund. If it exists.

[statsman]

Quote:

Originally Posted by Winemaker And you will be maximizing the 15% amount that is nontaxable.

Well, at least with the current tax laws. It's possible if they means test in the future, those with higher incomes and/or higher SS payments might see all of their SS taxed.

[latexman]

Quote:

Originally Posted by Winemaker And you will be maximizing the 15% amount that is nontaxable.

[RunningBum]

Quote:

Originally Posted by madatrub Just looking at average life expectancy, as I have no idea who smokes and who doesnt on this forum, or who is otherwise healthy.

From birth? You should look at life expectancy from age 62. You don't average in all the people who died before age 62, because you've already passed that.

[youbet]

^^^^^

And bear in mind that “average” life expectancy isn’t all that useful. You need to consider the distribution of time-to-death years around the average.

[Sunset]

Quote:

Originally Posted by RunningBum From birth? You should look at life expectancy from age 62. You don't average in all the people who died before age 62, because you've already passed that.

+ 1
I was amazed, when I looked up the life expectancy of a 92 yr old male, it's pretty high considering they are far past average.
It makes sense though, whatever got them to 92, probably helps them go longer.

[street]

Quote:

Originally Posted by Sunset + 1 I was amazed, when I looked up the life expectancy of a 92 yr old male, it's pretty high considering they are far past average. It makes sense though, whatever got them to 92, probably helps them go longer.

I know quite a few old timers that smoked hard, and no filter smokes and they lived into their 90's.

A classmate's dad just passed away last week he was 92 and smoked almost all his life and did his share from the bottle too.

[pb4uski]

Quote:

Originally Posted by RunningBum Here's what bothers me about thinking you can spend more by taking at 62 because you'll likely get good returns. Do you also have a greater than 4% WR? If you really assume you'll get good returns, don't you have opportunity risk by limiting yourself to a SWR that survives almost any sequence of return?

I think you have that risk of underspending whether you take at 62 or 70 or in-between. The popular 4% WR is often too conservative because it is based on the worst 30 years in history and often will result in significant balances if one slavishly adheres to 4%.

It's not assuming that you will get good returns.

The scheme that we outlined to take/spend more by deferring arguably is better because while it is still safe it results in higher spending and higher withdrawals earlier.

I think it might be optimal to combine that approach with the retire-yet-again approach in terms of minimizing underspending.

[pb4uski]

Quote:

Originally Posted by statsman Well, at least with the current tax laws. It's possible if they means test in the future, those with higher incomes and/or higher SS payments might see all of their SS taxed.

Its possible that we will get his by an asteroid too. I think it better to deal with what we know rather than paranoia on what might possibly happen.

[pb4uski]

Quote:

Originally Posted by madatrub Just looking at average life expectancy, as I have no idea who smokes and who doesnt on this forum, or who is otherwise healthy.

True, but that is why any member of the forum can get on that website and assess their remaining live expectancy and use that in their decisionmaking.

Since a minority of people smoke today and average is average, why would you object to assuming non-smoker, average health mortality?

I've already conceded that if you are in poor health that it is a horse of a different color in assessing a claiming strategy, but you can factor that in on opensociallsecurity.com by selecting a different mortality table... like 2017 Smoker Residual Standard if you smaoked and are in below average health rather than 2017 Nonsmoker Preferred.

[camfused]

Quote:

Originally Posted by street I know quite a few old timers that smoked hard, and no filter smokes and they lived into their 90's.

This is precisely why I don’t understand it when folks say their relatives die young in their family (therefore, they are going to take SS asap).

These smokers are still around because of current medical abilities. Just because all your relatives died when they hit 65, does not mean that you, a beneficiary of *current* medical miracles, will also croak when you hit 65 too.

[GenXguy]

Quote:

Originally Posted by camfused This is precisely why I don’t understand it when folks say their relatives die young in their family (therefore, they are going to take SS asap). These smokers are still around because of current medical abilities. Just because all your relatives died when they hit 65, does not mean that you, a beneficiary of *current* medical miracles, will also croak when you hit 65 too.

Did someone say they expected to croak at 65? That seems unusual for an expectation.

[LakeRat1]

Both my wife and I retired a bit over 8 years ago, she was 59.5, I was 52....... She starting drawing SS at 62, she just turned 69..... I will begin drawing SS a 62, next March ..... We will reduce pulling money from our tax deferred IRAs, for the amount that SS begins kicking in ...... No regrets, made this decision almost 9 years ago and we have no regrets ....... Tomorrow is not promised .....

[RetiredAt49]

Knowing my luck… I’d wait until 70 to take SS and croak the day before I receive my first check…. Would I be upset as hell? Yep, I would. Thus, even though I’m only 51, I will be taking my SS check at 62 and most likely investing every penny of it in my 100% stock portfolio[emoji2].

Talking about luck (or in my case unluck)… I shorted NVDA today (only 5 shares) and their stock is up 29% after their earnings call today [emoji33]

[camfused]

Quote:

Originally Posted by GenXguy Did someone say they expected to croak at 65? That seems unusual for an expectation.

Ignore the number 65, and consider my point.

[cyber888]

Quote:

Originally Posted by threeonesix Another thing to consider ... do robots pay taxes? The threat to American jobs at all levels of employment from artificial intelligence is very real. No job means no paying SS / Medicare taxes. That could be true for millions of Americans in the next few decades. The Egyptian Empire lasted 3,000 years. The Roman's made it to almost 1,000. I'd be shocked if America makes it to the year 2100. Of course, I won't be around to see it unless it's just my head in a jar of formaldehyde.

There's an easy answer to that. Tax the Robot workers, and let them pay SS. At some point in year 2100, if 50% of robots take over, the government will start giving universal basic income (UBI) and people will stop working 40 hours a week.