Is SS more than you expected?

[CardsFan]

All during the accumulation phase we discounted SS, assuming it would not be there (yeah, we were conservative).

Now that we are getting close to collecting, I am realizing that SS will cover more than 60% of our projected expenses. FIRE'd 3 years ago at 60. Expect to take at FRA, but that could change, it just depends.

I am sure part of it is that we lived well below our means, so our spend is less than others in the former income level. We have always spent on a few luxuries (vacations, new cars every 5-7 years) and do not feel deprived by any means, just don't have any ultra expensive desires.

I just never expected SS to cover that level of our expenses, not that I am complaining.

And you?

 

[SecondCor521]

I am almost 50, assume a 50% haircut, and currently plan to take SS at 70.

Based on those parameters, it looks like SS will cover just about 50% of my current level of spending.

 

[dtbach]

I always tracked how much me and DW would be getting so not really surprised. Quite happy with the amounts we will be getting. Between hers, mine and a military pension it should cover probably 75% of our needs.

 

[Retch The Grate]

Since I tend to assume $0 from SS for my retirement planning, I'm guessing it will be more than expected. I'm hoping to retire early enough that it will come far enough out that it won't have much impact compared to portfolio returns.

 

[footenote]

Can remember saying SS would be "grocery money."

Boy, was I wrong. If my health holds up and I delay taking until FRA, my SS + spouses' SS will be a bit more than our current expenses. (Including "extras.")

(Unused portfolio will pay for extras and possible late-in-life healthcare expenses.)

 

[RobbieB]

My SS survivor is good for about 10%. When I claim it will be close to 20%

 

[Independent]

Sometime around age 50 I was looking at the possibility of being downsized.
I started number crunching retirement income and was surprised how much we might get from SS.

It looked like if I worked to age 60, then deferred to age 70, SS would cover 100% of our non-entertainment spending.

Like you, we always lived below our means. I read these stories about people starving on SS, and the size of the benefit didn't sink in until I started doing math.

Now we are 71/70. Our combined SS really does cover 100% of our non-entertainment spending. If one of us died, that would still be true about the survivor.

 

[ckelly78z]

At 53, I did some number crunching about FIRE at 62, and collecting SS at 62, also, and came up with 40-50%. I may crunch the numbers to see what collecting at 70 will get me. I will have a 28 year pension also.

 

[Dtail]

Currently, SS is expected to cover ~60% of our expenses if I can hold off until 70.

 

[RunningBum]

I'm 57, I include an annuitized value of 75% of SS in my investable net worth, that I multiple by my WR to give me my target for the year. So it's a lot like my Roth and tIRA, it's there and used to determine my WR, but I'm not tapping from it right now. Once I get SS, I'll withdraw a lot less from my other accounts. So I just don't think of it as a bonus or extra money then, but it has occurred to me that my withdrawals from other accounts will be a lot smaller at 70 or whenever I take it. Maybe cut in half, or close to it, especially if my spending stays under target.

Once I start taking SS and my pension I'll probably do that accounting differently and that might be a bit of an eye opener.

 

[audreyh1]

Since we retired very early we never counted SS in our plans.

Now that DH is in his early 60s, we realize that it is a substantial amount if we each wait until 70. However, SS will likely push us into one of the higher IRMAA brackets, plus be taxed at a higher ordinary income tax bracket, so most of the check will be going to Medicare premiums and taxes!

Whatever - I suppose as long as it covers most of our Medicare Part B and Part D premiums we can't complain.....

 

[freetodream]

Started collecting at 63 and haven't looked back (much!) No regrets - covers about 50% expenses so far.

 

[CRLLS]

Our combined SS will cover all of our non-entertainment expenses when I claim on my benefits at 70. Right now, with DW receiving on her benefit and me claiming spousal, SS covers close to 50% of our full budget.

It is not more than expected as I planned for our eventual retirement budget for 15 years or so prior to filing.

 

[Sunset]

I found out about WEP to my disappointment, so no, it will be less than I had hoped.

I started getting $300/mo. (USD) pension, and when I start SS, they will take away $150 minimum of it from the SS.
So it will be quite a bit less than the avg 2018 SS.
"The average monthly Social Security payment .... is $1,404."

 

[Calico]

I am not retired yet.


I plan to collect at 70, and it will cover 116% of my expenses.

 

[calmloki]

I was an underachiever on earned income and the gal thought she would be rewarded in her work without asking. Then we got all carried away with rental investment and it's "unearned income" income. Result is that when we both took SS at 62 I was astounded to have pretty much free health care, ditto the gal. That was huge, as we had been covering our own health care for several years. Now, since we make too darn much money with the rentals and loans our health care premiums have ratcheted up. I still get $215/month after medicare health and drug and she gets $618. Amazing. Wouldn't want to live on it, but amazing.

 

[big-papa]

Not retired yet, but we plan to take it at age 70. We expect it will cover roughly 80% of our expenses. I have created a TIPs ladder that I will use to supplement SS from age 70 to 85. The two together should cover just about 100% of our regular expenses and any extra spending will come from our portfolio. At age 85, if either of us are still kickin' and our portfolio has done well enough, we'll consider adding a SPIA to take us to the end. We're in our late 50's so between whatever date we retire and age 70, we'll live off of our portfolio.

 

[Beer-man]

I'm 57, I include an annuitized value of 75% of SS in my investable net worth, that I multiple by my WR to give me my target for the year. So it's a lot like my Roth and tIRA, it's there and used to determine my WR, but I'm not tapping from it right now. Once I get SS, I'll withdraw a lot less from my other accounts. So I just don't think of it as a bonus or extra money then, but it has occurred to me that my withdrawals from other accounts will be a lot smaller at 70 or whenever I take it. Maybe cut in half, or close to it, especially if my spending stays under target.

Once I start taking SS and my pension I'll probably do that accounting differently and that might be a bit of an eye opener.

Can you expound on this for me? I’m a younger guy and newer to this stuff? Could you break it down with fake numbers?
I’m interested cause it sounds like it could allow you to withdraw more in an early retirement scenario cause the portfolio would be supplemented later with SS.

 

[big-papa]

Can you expound on this for me? I’m a younger guy and newer to this stuff? Could you break it down with fake numbers?
I’m interested cause it sounds like it could allow you to withdraw more in an early retirement scenario cause the portfolio would be supplemented later with SS.

If I understand correctly, that's what he's doing. He's discounted it by 25% to be conservative. Another method is to take the expected SS income stream (discounted if you wish to be conservative) and do an NPV calculation on the future SS Stream with a life expectancy assumption. Add this amount to your current portfolio value and calculate the withdraw% on this sum. Recalculate the NPV each year with 1 less year of life expectancy and do the sum again. Once SS starts, only the portfolio value is used for the withdrawal % calculation. This was also discussed on a recent bogleheads thread.

 

[davismills]

Our SS will cover 100 percent of our expenses, once I apply at age 70. Future anticipation of travel and fun would be above and beyond, however.

 

[kitesurfer2]

thankfully, I started to draw ss at 62, for a few reasons. a reduced ss at 62 give me extra money to spend while I am healthy and young enough to travel and do some things. if I waited until 70, that $1500 a month would be missed until age 70. at 70, I would have gotten a much bigger check but probably not had the physical or mental capabilities to enjoy it. it take less money to live at 80 than it does at my current age of 66.

 

[RunningBum]

Can you expound on this for me? I’m a younger guy and newer to this stuff? Could you break it down with fake numbers?
I’m interested cause it sounds like it could allow you to withdraw more in an early retirement scenario cause the portfolio would be supplemented later with SS.

If I understand correctly, that's what he's doing. He's discounted it by 25% to be conservative. Another method is to take the expected SS income stream (discounted if you wish to be conservative) and do an NPV calculation on the future SS Stream with a life expectancy assumption. Add this amount to your current portfolio value and calculate the withdraw% on this sum. Recalculate the NPV each year with 1 less year of life expectancy and do the sum again. Once SS starts, only the portfolio value is used for the withdrawal % calculation. This was also discussed on a recent bogleheads thread.

Yes, that's basically it, though what I actually do is go to https://www.immediateannuities.com/annuity-calculators/ to see what $100,000 in that calculator would give me in income, and take my monthly benefit/that calculated number * 100,000 to give the number it would cost to buy that annuity to replace SS. I multiply that by 0.75 in case of a 25% cutback in benefits.

You could also plug in your expected SS benefit and get the number directly rather than doing the math with $100,000 but I wasn't sure how it handled inflation.

So if I plug in age 57, not taking benefits until 70, and $100,000 investment, I get about $1100 monthly payment. If my expected SS benefit is $2500, 2500/1100*100,000 = $227,272. *0.75 = 170,454. That's the number I add to my investments. If I use a 3.5 WR, that gives me an extra ~$6000 to spend now. I can safely take that out of taxable now, because I know at age 70 I'm getting that $2500/month.

So if I have $1M in other assets and a 3.5% WR would give me $35K/yr to spend, I add that $227K on to give me $41K/yr.

Actually I further reduce it by another 15% for taxes, because I use expected post tax numbers rather than treat taxes on CGs and IRA distributions as expenses, but that's another discussion.

Some people may fear SS will go away and not want to include it at all, and some would rather just keep it as a buffer, and that's fine. It's just not what I do. I hear people talk about not doing OMY and freeing themselves from work as soon as possible, so why not take into account this very likely income.

I feel like it also helps with the SS at 62 or 70 or when decision. I can plug in age 62 and the smaller benefit into that tool and get about the same number, so this negates the argument that some give that they want to take SS early when they are healthy enough to enjoy spending the money travel, etc. Since I factor in SS now and am not viewing SS as a bonus increase to my spending ability when I take it, I can take SS anytime with no change to my spending. What I've actual done is treat it like I'm taking SS now, with an even further reduced benefit for taking at 57. Does that make sense?

 

[RunningBum]

thankfully, I started to draw ss at 62, for a few reasons. a reduced ss at 62 give me extra money to spend while I am healthy and young enough to travel and do some things. if I waited until 70, that $1500 a month would be missed until age 70. at 70, I would have gotten a much bigger check but probably not had the physical or mental capabilities to enjoy it. it take less money to live at 80 than it does at my current age of 66.

Too late for you now since you've already started to draw, but I suggest others with this mindset to read my previous post to see how you can "spend" your SS without actually taking it early.

btw my parents spend more now in their 80s because they've moved into a place where they get all their meals. And someday they might need assisted living which is even more expensive.

 

[HadEnuff]

Well, yeah, exactly...I'm 65 now, and I started taking my SS the first January after my 62nd birthday.

Since I planned on "zero" from SS, until about 5 years before I retired, it is indeed more than I planned on. DW's is going to be about 54% of mine, and she'll turn 62 in October. We are still deciding if we want to start hers in January '20, or wait.

We have been living on after-tax assets, for ACA reasons, so our income is so low that the Feds aren't taxing us much on my SS, and my state doesn't tax SS at all. Those are two things I didn't really realize ahead of time, so as it turned out, SS has covered a much higher percentage of our expenses than I envisioned. Also, for us, because of the tax advantages compared to drawing from IRAs, taking it early has worked out well.

 

[footenote]

To those calculating present-value of future SS (I understand the logic of this):

Every retirement calculator I've used (including FIRE) appears to do something similar since first-year 100% safe spending level is 30% higher than DH's current SS + 4% of portfolio. It must be making similar assumptions since my SS doesn't start for either 2 or 5 years.

(Speaking of the difference between early and FRA: tweaking the age I take SS makes surprisingly little difference.)