Life of Social Security Fund ??

^^^ Except the return is not guaranteed and you have to live to a certain age in order for the return to be positive. BEP with a 2% real rate of return is about age 82 and just gets better after that.... it is likely that either DW or I will live to our early 90s so we will be collecting that higher benefit for many years after age 70 and it will be worthwhile for us. Now OTOH if we get run over by an 18-wheeler while traveling in our 70s then it will be a poor decision. You takes your chances.

Below assumes a $1,000/month PIA at age 67 and 2% real return.

Claim at 62Claim at 70DifferenceFV atIRRs
2.00%
628,400-8,4008,484N/A
638,400-8,40017,137N/A
648,400-8,40025,963N/A
658,400-8,40034,966N/A
668,400-8,40044,149N/A
678,400-8,40053,515N/A
688,400-8,40063,069N/A
698,400-8,40072,814N/A
708,40014,8806,48067,726N/A
718,40014,8806,48062,536N/A
728,40014,8806,48057,242N/A
738,40014,8806,48051,843N/A
748,40014,8806,48046,335N/A
758,40014,8806,48040,717N/A
768,40014,8806,48034,987N/A
778,40014,8806,48029,143-3.19%
788,40014,8806,48023,181-1.65%
798,40014,8806,48017,100-0.40%
808,40014,8806,48010,8980.62%
818,40014,8806,4804,5711.48%
828,40014,8806,480(1,882)2.20%
838,40014,8806,480(8,464)2.81%
848,40014,8806,480(15,178)3.33%
858,40014,8806,480(22,026)3.77%
868,40014,8806,480(29,011)4.16%
878,40014,8806,480(36,136)4.50%
888,40014,8806,480(43,403)4.80%
898,40014,8806,480(50,815)5.06%
908,40014,8806,480(58,376)5.29%
918,40014,8806,480(66,088)5.49%
928,40014,8806,480(73,954)5.67%
938,40014,8806,480(81,978)5.83%
948,40014,8806,480(90,162)5.97%
958,40014,8806,480(98,510)6.10%
968,40014,8806,480(107,024)6.22%
978,40014,8806,480(115,709)6.32%
988,40014,8806,480(124,568)6.41%
998,40014,8806,480(133,604)6.50%
1008,40014,8806,480(142,820)6.57%
 
Last edited:
pb4uski said:
^^^ Except the return is not guaranteed and you have to live to a certain age in order for the return to be positive. BEP with a 2% real rate of return is about age 82 and just gets better after that.... it is likely that either DW or I will live to our early 90s so we will be collecting that higher benefit for many years after age 70 and it will be worthwhile for us. Now OTOH if we get run over by an 18-wheeler while traveling in our 70s then it will be a poor decision. You takes your chances.

Below assumes a $1,000/month PIA at age 67 and 2% real return.

Claim at 62Claim at 70DifferenceFV atIRRs
2.00%
628,400-8,4008,484N/A
638,400-8,40017,137N/A
648,400-8,40025,963N/A
658,400-8,40034,966N/A
668,400-8,40044,149N/A
678,400-8,40053,515N/A
688,400-8,40063,069N/A
698,400-8,40072,814N/A
708,40014,8806,48067,726N/A
718,40014,8806,48062,536N/A
728,40014,8806,48057,242N/A
738,40014,8806,48051,843N/A
748,40014,8806,48046,335N/A
758,40014,8806,48040,717N/A
768,40014,8806,48034,987N/A
778,40014,8806,48029,143-3.19%
788,40014,8806,48023,181-1.65%
798,40014,8806,48017,100-0.40%
808,40014,8806,48010,8980.62%
818,40014,8806,4804,5711.48%
828,40014,8806,480(1,882)2.20%
838,40014,8806,480(8,464)2.81%
848,40014,8806,480(15,178)3.33%
858,40014,8806,480(22,026)3.77%
868,40014,8806,480(29,011)4.16%
878,40014,8806,480(36,136)4.50%
888,40014,8806,480(43,403)4.80%
898,40014,8806,480(50,815)5.06%
908,40014,8806,480(58,376)5.29%
918,40014,8806,480(66,088)5.49%
928,40014,8806,480(73,954)5.67%
938,40014,8806,480(81,978)5.83%
948,40014,8806,480(90,162)5.97%
958,40014,8806,480(98,510)6.10%
968,40014,8806,480(107,024)6.22%
978,40014,8806,480(115,709)6.32%
988,40014,8806,480(124,568)6.41%
998,40014,8806,480(133,604)6.50%
1008,40014,8806,480(142,820)6.57%
Click to expand...

Thanks for this. IMO, the $140k or so difference in claiming at 62 vs. 70 just isn't significant enough to make a big difference in the lives of most members on this board.

It would be interesting to see how much SS income makes up the % of projected or actual retirement income for folks on this board. I suspect that for the most of us, it's not a significant %, and that most of us rely on other sources of income to fund the majority of our retirement expenses. For those who fall in this category, a case can be made that it is better to claim SS at 62 because if means testing is adopted, a lot of us would be impacted. So, it would better to claim it as soon as possible, so that we can get something out of it while we are still eligible. Hence my plan to claim SS at 62.
 
Last edited:
luckydude said:
Thanks for this. IMO, the $140k or so difference in claiming at 62 vs. 70 just isn't significant enough to make a big difference in the lives of most members on this board.

It would be interesting to see how much SS income makes up the % of projected or actual retirement income for folks on this board. I suspect that for the most of us, it's not a significant %, and that most of us rely on other sources of income to fund the majority of our retirement expenses. For those who fall in this category, a case can be made that it is better to claim SS at 62 because if means testing is adopted, a lot of us would be impacted. So, it would better to claim it as soon as possible, so that we can get something out of it while we are still eligible. Hence my plan to claim SS at 62.
Click to expand...

Good poinfs. Also there's a certain advantage in reducing one's portfolio withdrawals for the 8 years before age 70.

YMMV
 
While you never know what will happen, I think any additional means testing would effectively convert SS to just yet another welfare program and significantly undermine the program's high popularity. There is already an aspect of means testing with the design of the bend points in the benefit calculation and how SS is taxed so let's not make it any worse.
 
I claimed at 62. It was helpful early on, as I paid off mortgages. Been giving a lot back recently in the clawback. By the time this likely reduction happens, my properties and other income sources will dwarf the pittance that will be left of SS.
 
Montecfo said:
/snip/


Salesman: well it would be that plus your foregone COLAs. But this will "guarantee" you a 6-8% return every year.


/snip/
Click to expand...




Except that you do not lose the COLAs... your retirement check will be higher by the COLA when you take the money at 70...
 
Montecfo said:
But you lost the ones for ages 63-69. They were not in the $288k.
Click to expand...


No, all COLAs are calculated when you start your SS payments... My calculated amount when I turn 70 has increased since I retired... and I have not yet looked but I bet it went up the 7% or so that happened just recently...


Now, I am basing this on what I see... not on any written rule for SS...
 
Texas Proud said:
No, all COLAs are calculated when you start your SS payments... My calculated amount when I turn 70 has increased since I retired... and I have not yet looked but I bet it went up the 7% or so that happened just recently...


Now, I am basing this on what I see... not on any written rule for SS...
Click to expand...
I think you are missing what I am saying. But it is a minor part of the discussion.

Think of it this way. If you do not take SS at 62, do they still send you your COLA each year? No, they do not.

So you lose your SS and you lose the COLAs thereon.

Your payment at 70 is not part of this point and will be what it is either way.
 
rkser said:
I have read that no matter when you claim your SS benefits, the SS system is designed to be economically neutral for you, meaning you do about the same if you claim at 62, 67 or at age 70.

Then I read the benefits will increase by waiting till age 70, apart from the increase in the survivor SS benefits for the survivor.

Please help me in resolving my understanding .

I am 66 & my present plan is to wait till 70 to claim SS.
Click to expand...

pb4uski said:
In theory, if you start anytime between 62 and 70, your lifetime benefits will be about the same for a single unisex plan participant.
Click to expand...

I think it is important to note that all of the above may or may not apply to "you", or "me" - it applies to the averages. Since few of us know our DOD, it's just a data point to consider, we don't know if our own lifetime benefits will be the same (they likely won't).

I know, this seems obvious and is just how we talk about it - but I thought it was worth pointing out, just to keep the mindset in the right place.

-ERD50
 
Texas Proud said:
And even if they do nothing and it drops to a lower level it will not affect me that much as I have enough already... so again would not claim before 70 even it was more likely than not it would reduce benefits...
Click to expand...


If SS benefits are cut it will only affect our kids inheritance, and their retirement benefits.;-/
 
If our benefits are cut 27%, I expect they will sweeten the deal with free postage for the rest of our lives.
:D
 
I like the responses "glad I am already taking SS, or glad I am 70+).

Not me.

I would rather be 50 years from taking SS.
 
rkser said:
I have read that no matter when you claim your SS benefits, the SS system is designed to be economically neutral for you, meaning you do about the same if you claim at 62, 67 or at age 70
Click to expand...

Technicality on wording. It is actuarial neutral, which applies to the total group of recipients. Your breakeven depends on your expiration date and when you start to claim SS benefit payout. Note there are two variables in this: your age that you start receiving benefits, and the age you die. If you live past the actuarial neutral age, you can come out ahead for lifetime benefits received by claiming later. If you die sooner, then you come ahead if you claim earlier. If you die right at the same actuarial age, it doesn't matter when you start claiming as the total amount received is equal; the crossover point is at the same age as you die.

See below which says basically this same thing.

ERD50 said:
I think it is important to note that all of the above may or may not apply to "you", or "me" - it applies to the averages. Since few of us know our DOD, it's just a data point to consider, we don't know if our own lifetime benefits will be the same (they likely won't).

I know, this seems obvious and is just how we talk about it - but I thought it was worth pointing out, just to keep the mindset in the right place.

-ERD50
Click to expand...
 
^^^^ WADR, you and ERD50 are really picking nits. Only the almightly knows when your expiration date is so it is silly to even frame it that way. I don't see why it isn't as obvious as the nose on Jimmy Durante's face that the payouts are designed based on mortality assumptions.
 
pb4uski said:
No, they mean 2023 and 2023 is correct. In the past SS taxes and interest routinely exceeded benefit payments and the annual surplus was invested in special issue US government bonds. The surplus accumulated to about $2.9 trillion.

Recently, due to demographic shifts, the reverse is occurring with annual outlays for benefits exceeding income from taxes starting in 2022 and utilizing some of that built up surplus each year.

Around 2033 the surplus will be all used up so if nothing is done they will have to reduce benefit payouts. By law, SS can't be paid from any sources other than SS taxes, interest on surplus, etc.
Click to expand...

Thanks for the correction.
 
.
 

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... for claiming strategy, think "last to pass"

while a bit of the earlier thread mentions actuarial neutral, claiming strategy should consider the "last to pass" (the surviving spouse, whichever that may be) such that whoever has the higher PIA delays to 70, which enables the surviving spouse to have the potentially highest SS (while the lower payment stops).

How they claim the lower PIA, especially since the "file and suspend" and "deemed filing" rules have changed the earlier options, is then a matter of how it fits in their total financial picture. While most might plan for the lower PIA to file at the earliest time (62), if the PIA is very low then it might be reasonable to delay until FRA to get the full 50% of the higher PIA (if they can file already at 70, i.e. max). They might also delay the earlier SS to do significant Roth conversions, but would need funds for any tax considerations and for other living expenses. (We've delayed mine (to FRA), as it's slightly lower PIA and I'm older, and have been doing Roth conversions prior to SS start.)

For us, the difference between FRA and 70 for me isn't that significant... especially considering the potentially huge variations from the portfolio; remember that while you only slowly approach your breakeven in payments that you also only slowly diverge from whatever you claim versus the supposed "optimal" at 70. For me, I really only consider those differences from that breakeven and they are dwarfed by the income from the fairly large portfolio... and my continued pension (with 50% survivor).

one consideration not mentioned is the "hold harmless" provision with respect to Medicare premiums: it's only in effect if you are drawing SS. I have concerns that Medicare premiums will be increasing at faster rates due to the current demographics; now having started SS I might be slightly insulated from too large increases (but because my benefits are still substantial I still might find that they still get most of the costs; with a low enough benefit some individuals might find that their premiums actually don't increase (at least until the COLA's outpace the Medicare premiums and the "shortages" get slowly caught up)

As to the last aspect, the potential for reduced benefits... I did include that in analysis as to claiming decision, as it does change the breakeven to a period where there is less likelihood of my surviving. I use an age of 92 (roughly two std dev above the mean)...and as I mentioned above, the difference between FRA claiming and age 70 claiming for unchanged and for reduced benefits isn't really all that much. I also considered that the higher COLA's that might be needed in the current inflationary environment would hasten any depletion of the trust fund (which according to the most recent report it has)... further indicating that the more years of "full unreduced" benefit before any shortfall would push out breakeven (prior to FRA one also needs to consider those reductions (~5.5-6 %/ yr, depending upon when you start before FRA).

{yes, I'd already looked at opensocialsecurity and others and our strategy was only ~3% different; as I mentioned, the variation in outcomes for our portfolio and the amount we could therefore draw dwarfs that difference. Those programs often recommend that the lowest PIA claim at 62, but often don't consider Roth conversions nor affects of pension (with or without survivor benefits)... and seem to always suggest the male claim latest (bias towards the assumption that they are higher wage?... for us, that was the case earlier but certainly not in the end, but I have pension and spouse doesn't).}
 
I'm a good number of years from SS, 10 or so. My thinking this decision is more of a year by year thing with how many variables are tossed at you during your life time. Market takes a dump when your 65, maybe then it makes some sense to get on the SS wagon, etc. Life just seems to happen!
 
Montecfo said:
I think you are missing what I am saying. But it is a minor part of the discussion.

Think of it this way. If you do not take SS at 62, do they still send you your COLA each year? No, they do not.

So you lose your SS and you lose the COLAs thereon.

Your payment at 70 is not part of this point and will be what it is either way.
Click to expand...


No, I get what you are saying... I do not think you are getting what I am saying... if I get SS at 62 and COLA goes up 5% then I get 5% more... but if I did not take it my payment when I turn 70 goes up 5%... plus the higher amount waiting to take SS... so BOTH current and future payments went up the 5%.. not losing the COLA...


And to be clear, this happens each year... so my payment at 70 increases due to delaying payment PLUS each and every COLA that someone received taking SS at 62...
 
I never really thought about this before but 2 grandparents and one of my parents all died before reaching 62 so they got zero.

I know a lot of friends at my w*rk have passed in their 50s and many were really struggling at w*rk before that happened and this was an office job. I don't think raising the age makes much sense.

I was just let go at 55 and unlikely to work another job but if I do I'm sure it will pay considerably less and might well be physically more demanding which could limit how long I could do it if I wanted.
 
Texas Proud said:
No, I get what you are saying... I do not think you are getting what I am saying... if I get SS at 62 and COLA goes up 5% then I get 5% more... but if I did not take it my payment when I turn 70 goes up 5%... plus the higher amount waiting to take SS... so BOTH current and future payments went up the 5%.. not losing the COLA...


And to be clear, this happens each year... so my payment at 70 increases due to delaying payment PLUS each and every COLA that someone received taking SS at 62...
Click to expand...
I agree with everything you said. And everything I said.

But the issue I thought was interesting was not this. It was the idea that when you defer you are buying "longevity insurance" but you do not know what it will cost.

Which would make the sales pitch for doing so, well, interesting.
 
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