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06-16-2015, 04:46 PM
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#61
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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: 26,888
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Quote:
Originally Posted by haha
ERD50, I appreciate your careful and polite statement. I understand what you are saying, and I understand that the SWR, as defined for example by Firecalc, is an historical (USA) worst case, for the span chosen. My issue is actually with the term, "Safe Withdrawal Rate". IMO it should be "SafeWithdrawalRate as defined by Firecalc", or whatever other thing is being used.
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You should have seen my first draft!
Agree about the terminology, that's why I like to use HSWR, but even that seems wordy and awkward.
Quote:
... I am not into SWR enough to be sure, but has there ever been a time within the years used by Firecalc when the going in PE10, or Tobin's Q, or US treasury rates have been as unfavorable as today? Has there ever been peacetime with today's level of level of government debt? This is just one example of how the US retiree is wading into a river that has not been waded before, at least not within the Firecalc database
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I don't know either, but once again, I think we are heading to a distinction w/o a difference. If one decides to do some % of portfolio plan or never touch principal or whatever, a downturn could affect them as well, divs may drop.
And the big question - when to cut-back? Do it too soon, and you make sacrifices that you may never make up again. Do it too late, and you may have some real hard times ahead.
I will be looking more into the 'matching strategy' that DLDS has been talking about, if you can amass a big enough portfolio, put it in inflation adjusted products and take and adjusted RMD style withdraw (paraphrasing).
-ERD50
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06-16-2015, 05:02 PM
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#62
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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 ERD50
You should have seen my first draft!
Agree about the terminology, that's why I like to use HSWR, but even that seems wordy and awkward.
I don't know either, but once again, I think we are heading to a distinction w/o a difference. If one decides to do some % of portfolio plan or never touch principal or whatever, a downturn could affect them as well, divs may drop.
And the big question - when to cut-back? Do it too soon, and you make sacrifices that you may never make up again. Do it too late, and you may have some real hard times ahead.
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I think that there are differences, ie. situations to be preferred other others. I also think we will see before long how much things can change quickly. I disagree about when to cut back. IMO, if one needs to push his luck to stay in the game, he doesn't belong in the game.
I started SS 3years ago, for 25 years prior I lived on investment earnings. My motto has always been "don't get too cute". I also raised 2 sons, and made a large divorce settlement, and I am still swimming along.
If it were not that most of my equities are held in a taxable account, I would cut back very close to all low-duration fixed, and now or as close to now as possible.
Writing this, I am reminded that I do have a loss position, I should likely dispose of it tomorrow. It represents poor judgment, so it is not fun to wind it up.
Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
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06-16-2015, 05:04 PM
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#63
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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Quote:
Originally Posted by ERD50
I will be looking more into the 'matching strategy' that DLDS has been talking about, if you can amass a big enough portfolio, put it in inflation adjusted products and take and adjusted RMD style withdraw (paraphrasing).
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I don't think the matching strategies necessarily require a large portfolio - just low overhead in relation to your portfolio / other retirement income.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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06-16-2015, 06:13 PM
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#64
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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: 26,888
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Quote:
Originally Posted by daylatedollarshort
I don't think the matching strategies necessarily require a large portfolio - just low overhead in relation to your portfolio / other retirement income.
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Relatively larger then, with respect to spending.
It's almost always relative - there are people on this forum who spend 10x what some others do. Unless they change their spending, a portfolio of TIPS will require a relatively larger portfolio for either case.
-ERD50
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06-16-2015, 07:29 PM
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#65
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Confused about dryer sheets
Join Date: Jan 2011
Location: St Louis
Posts: 1
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This program was the only one available which could consider disabled adult child or child-in-care benefits when determining the optimal strategy---it also factors in young children eligible for benefits---very comprehensive
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06-16-2015, 08:22 PM
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#66
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2004
Location: SW Ohio
Posts: 14,404
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Quote:
Originally Posted by dwkopff
This program was the only one available which could consider disabled adult child or child-in-care benefits when determining the optimal strategy---it also factors in young children eligible for benefits---very comprehensive
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Thanks much for the direct report on Kotlikoff's program. Sounds very detailed and useful.
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06-16-2015, 08:54 PM
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#67
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Recycles dryer sheets
Join Date: Jan 2015
Posts: 206
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I am thinking about paying for a SS maximizing service because my fiance is 17.5 years older than me, and I have no clue when the best time is for each of us to take our SS benefits. He may not even be alive when I can finally take SS. His full SS benefit will be quite a bit bigger than my full SS benefit since I won't work 35 years and he has. I am curious when other couples in similar situations plan to take their SS benefits.
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06-16-2015, 09:53 PM
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#68
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,363
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Quote:
Originally Posted by daylatedollarshort
A decision tree on when to take SS would take into account the probability of dying at different ages, the expected amounts of total SS benefits to be gained at each age, and possibly other factors - probability of benefit cuts or gain, increased / decreased taxes, etc. To have a complete analysis, a tree would show a non-zero probability of dying at the ages prior to cross over. Dying before 70 would result in zero benefits for ages 62 - 70. The probability of dying might be different for each of us based on unique factors - male or female, family history, prior history of disease, FoxO gene or not, risky hobbies, where we live, etc. ...
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More of an expected present value analysis which would take the cash flows associated with each alternative (say 62, FRA or 70) multiply the cash flows by the probability of survival and then present value the expected cash flows. Including taxes would be fairly easy with a couple assumptions.
The probabilities would be applied to all years, not just to prior to the cross over years. Discount rate is a key assumption, as it the COLA rate.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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06-16-2015, 10:06 PM
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#69
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,239
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Quote:
Originally Posted by Dreaming of Freedom
I am thinking about paying for a SS maximizing service because my fiance is 17.5 years older than me, and I have no clue when the best time is for each of us to take our SS benefits. He may not even be alive when I can finally take SS. His full SS benefit will be quite a bit bigger than my full SS benefit since I won't work 35 years and he has. I am curious when other couples in similar situations plan to take their SS benefits.
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First you need to convert him from a fiance to a husband... without that nothing else matters...
Now, after you get married.... it is really a no brainer in your situation... he takes SS the latest allowed... which is currently 70... that will maximize your survivor benefits....
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06-17-2015, 05:11 AM
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#70
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Thinks s/he gets paid by the post
Join Date: Sep 2007
Posts: 1,214
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Quote:
Originally Posted by pb4uski
According to immediateannuities.com, $74,036 of premium at age 70 (male) would buy a $467/month non-COLA lifetime benefit, so by delaying SS you get an extra $73 per month plus COLA on the whole $540/month.
So now the question becomes whether you would be willing to pay $74k for a $540 COLAed monthly annuity benefit. IMO if your health is good that's a good deal.
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To me the question is whether I'm willing to buy an annuity that takes 11.4 years to pay for itself.
Worse yet, if you can earn 4% above inflation, it takes 17 years to pay for itself.
To me, it is indeed a no-brainer. 11 years is too long a payback time, and 17 years is waaay too long.
Plus, I have to look at the utility of the money at the time I receive it. My Dad retired early and wanted to travel, but my Mom wanted to keep working a few more years to build up her retirement credits. By the time she retired, my Dad's health had deteriorated and they couldn't travel. Yes, they had extra money -- but it was worthless to them.
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06-17-2015, 07:01 AM
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#71
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2013
Location: Les Bois
Posts: 5,761
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Quote:
Originally Posted by pb4uski
More of an expected present value analysis which would take the cash flows associated with each alternative (say 62, FRA or 70) multiply the cash flows by the probability of survival and then present value the expected cash flows. Including taxes would be fairly easy with a couple assumptions.
The probabilities would be applied to all years, not just to prior to the cross over years. Discount rate is a key assumption, as it the COLA rate.
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agreed. this is the correct approach as the analysis has to take place at the same point in time.
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
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06-17-2015, 07:17 AM
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#72
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,363
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Quote:
Originally Posted by rayvt
To me the question is whether I'm willing to buy an annuity that takes 11.4 years to pay for itself.
Worse yet, if you can earn 4% above inflation, it takes 17 years to pay for itself.
To me, it is indeed a no-brainer. 11 years is too long a payback time, and 17 years is waaay too long.
Plus, I have to look at the utility of the money at the time I receive it. My Dad retired early and wanted to travel, but my Mom wanted to keep working a few more years to build up her retirement credits. By the time she retired, my Dad's health had deteriorated and they couldn't travel. Yes, they had extra money -- but it was worthless to them.
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Any annuity is essentially a mortality bet... that is why they are sometimes referred to as longevity insurance... if you live long you are covered if you die early then your peers in the mortality sweepstakes benefit. My main point is that delaying SS is quite attractive compared to annuities available in the marketplace if 1) you want an annuity and 2) you can afford the premium... especially since it is hard to find a COLAed annuity these days and SS offers them for sale every day. If you defy the mortality table and live long delaying SS is very attractive.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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06-17-2015, 07:57 AM
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#73
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Thinks s/he gets paid by the post
Join Date: May 2014
Location: Utrecht
Posts: 2,650
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Quote:
Originally Posted by pb4uski
If you defy the mortality table and live long delaying SS is very attractive.
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Isn't it also true that, if you don't care about the inheritance and you don't defy the mortality table delaying SS is also attractive?
This because you need to reserve much less of your own assets for the future and can spend the surplus today.
In addition, if health status before 70 changes dramatically you can always start claiming SS at any time.
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06-17-2015, 09:08 AM
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#74
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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Quote:
Originally Posted by pb4uski
More of an expected present value analysis which would take the cash flows associated with each alternative (say 62, FRA or 70) multiply the cash flows by the probability of survival and then present value the expected cash flows. Including taxes would be fairly easy with a couple assumptions.
The probabilities would be applied to all years, not just to prior to the cross over years. Discount rate is a key assumption, as it the COLA rate.
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What I posted was "A decision tree on when to take SS would take into account the probability of dying at different ages, the expected amounts of total SS benefits to be gained at each age, and possibly other factors."
My point was that the FA article calculations often omit the years prior to crossover in their analyses, which make the results seem more like a "no brainer" than they actually are because all possible outcomes aren't being considered.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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06-17-2015, 09:10 AM
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#75
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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Quote:
Originally Posted by rayvt
To me the question is whether I'm willing to buy an annuity that takes 11.4 years to pay for itself.
Worse yet, if you can earn 4% above inflation, it takes 17 years to pay for itself.
To me, it is indeed a no-brainer. 11 years is too long a payback time, and 17 years is waaay too long.
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The same reason from another thread many of us are not putting in solar panels. Plus the possibility of any benefit cuts along the way, even if they have cute names like "chained CPI", would have to be factored in. If I remember right from the news, chained CPI would impact everyone on SS, not just those claiming after a certain age cutoff.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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06-17-2015, 10:08 AM
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#76
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2004
Location: SW Ohio
Posts: 14,404
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Quote:
Originally Posted by daylatedollarshort
What I posted was "A decision tree on when to take SS would take into account the probability of dying at different ages, the expected amounts of total SS benefits to be gained at each age, and possibly other factors."
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Because of the interdependence of many of these factors, and the lack of binary yes/no answers to some issues, I think an analysis program (or "app", etc) would ultimately be required, rather than a tree. Which brings us back to the first post of this thread--Kotlikoff's program (or others with similar detail).
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06-17-2015, 11:00 AM
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#77
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Thinks s/he gets paid by the post
Join Date: Apr 2008
Posts: 1,251
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The following article discusses the predicted social security shortfall and several proposed fixes:
https://www.fidelity.com/viewpoints/...ecurity-future
__________________
"Don't you draw the queen of diamonds, boy, she'll beat you if she's able.
You know the queen of hearts is always your best bet" -- The Eagles, Desperado
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06-17-2015, 11:52 AM
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#78
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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Quote:
Originally Posted by samclem
Because of the interdependence of many of these factors, and the lack of binary yes/no answers to some issues, I think an analysis program (or "app", etc) would ultimately be required, rather than a tree. Which brings us back to the first post of this thread--Kotlikoff's program (or others with similar detail).
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A decision tree is the methodology, which could be coded into program. I am not aware of any existing program on the market that would use all the key factors I feel are important considerations, such as income diversification. YMMV.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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06-17-2015, 12:47 PM
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#79
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Thinks s/he gets paid by the post
Join Date: Aug 2009
Posts: 1,578
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Quote:
Originally Posted by Cut-Throat
Except that you're completely wrong! .... You actually get to spend more money at age 62, by delaying S.S. to age 70 .... Just do the math.
************************************************** *****
Forget trying to calculate how much 'You'll Get'...Focus on How much you get to spend.
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 stupid '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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By the way when I read this post on the iPad app a lot of it is left out, e.g., the entire explanation after "scenario age 70" is missing. It made no sense so I went to the web page to read it. It's perfect there, as it is when I quote it for this post.
Possibly why others didn't "get" it either.
Sent from my iPad using Early Retirement Forum
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06-17-2015, 01:29 PM
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#80
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Recycles dryer sheets
Join Date: Jan 2015
Posts: 206
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Quote:
Originally Posted by Texas Proud
First you need to convert him from a fiance to a husband... without that nothing else matters...
Now, after you get married.... it is really a no brainer in your situation... he takes SS the latest allowed... which is currently 70... that will maximize your survivor benefits....
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I won't partially retire until after we are married. For me to be able to receive the full survivor benefit, do I have to wait until FRA to take my SS benefit, or can I take SS early at age 62?
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