MOST middle class folks who plan to retire early need to take SS at 62

[dvalley]

Now I'm wondering what would he gain from making a statement like that on multiple websites. It's not like he's saying 'hey everyone go buy AMZN or KO or XYZ'?

 

[Major Tom]

Now I'm wondering what would he gain from making a statement like that on multiple websites.

The gratification such personalities derive from the attention their method of posting receives. They enjoy pushing buttons and watching the results. It doesn't exactly create a beneficial learning environment for forum members.

 

[pb4uski]

The OP is also long gone from here.

He's gone traveling (again).... hopefully long gone and never to be seen again.

 

[gerntz]

Statistically, "most" people DO start collecting social security before their full retirement age:

https://www.fool.com/retirement/gen...the-average-american-start-collecting-so.aspx


That said, I'm only estimating a 5% return on my IRA. If it performs better over the next six years we'll have a larger balance that may allow us to delay SS for a year or two. If not, we'll start SS at 62.

Call me conservative, but I think the bigger risk is that your return will be <5%.

 

[gerntz]

my theory is take it as soon as possible .ill never get back the $226,000 me and my employer paid in

Yes, but taking it at what age gets you the most back?

 

[brewer12345]

Now I'm wondering what would he gain from making a statement like that on multiple websites. It's not like he's saying 'hey everyone go buy AMZN or KO or XYZ'?

You have got me, but I suspect we have all seen stranger behavior both on line and in meatspace. For example, why on earth would the mall ninja have cooked up such a fanciful story:

http://lonelymachines.org/mall-ninjas/

 

[Aerides]

If he is the same troll as last year (linked above forcedtoretire... then wow lol. He created multiple troll threads, including dupes of threads he'd made on city-data or something like that, years prior. Roped in half the forum regulars with a real dilemma that was all fake. Then less than a week later had a rich relative die and was gleeful at his windfall? Crazy stuff.

 

[Fedup]

I wonder if he's also banned from city data.

 

[Car-Guy]

my theory is take it as soon as possible .ill never get back the $226,000 me and my employer paid in

Agree. I never figure out what I was "forced" to pay in but it was the max amount for the last 20 years of my working life. When I was ~50 I can remember saying to myself that I'd never see a dime from SS. So when I turned 62, I happily took it immediately. I sincerely hope they can save SS without reductions or means testing or something else to cut benefits we paid for but I don't know how long that will be possible.

 

[pb4uski]

What you paid in is disclosed on your annual SSA statement:

Estimated taxes paid for Social Security:
You paid: $xxx,xxx
Your employers paid: $xxx,xxx

Estimated taxes paid for Medicare:
You paid: $xx,xxx
Your employers paid: $xx,xxx

If I take the total that I and my employers paid in and divide it by my monthly benefit at my FRA, I get 102 months or ~8 1/2 years.

 

[travelover]

......... I never figure out what I was "forced" to pay in but it was the max amount for the last 20 years of my working life. .............

If you open an account at SS, you can see a line by line summary of every dime you earned, and every dime you and your employer contributed to Social Security.

 

[Ready]

I find it fascinating that we have people who believe the OP is the same person as "ForcedToRetire" based on the language style they were using. We must have some very smart investigative minds on this forum to be able to draw that conclusion.

 

[Fedup]

What you paid in is disclosed on your annual SSA statement:



If I take the total that I and my employers paid in and divide it by my monthly benefit at my FRA, I get 102 months or ~8 1/2 years.

You forgot the amount would be much larger if it was invested in the stock market.

 

[travelover]

You forgot the amount would be much larger if it was invested in the stock market.

......... or less if you invested poorly. Enron anyone?

 

[zinger1457]

If I take the total that I and my employers paid in and divide it by my monthly benefit at my FRA, I get 102 months or ~8 1/2 years.

Some time ago I ran the numbers on a spreadsheet to see what my (not including employer) yearly SS contributions would be worth if instead they went into an IRA account earning a conservative 6% average until 62. The total value at 62 would get me a fixed annuity with a month payment pretty close to what I'll get from SS at 62. Doesn't seem like such a bad deal until you include the employer contributions into the equation, in that case not so good.

 

[Fedup]

......... or less if you invested poorly. Enron anyone?

Enron is a straw man argument. Really, why not think about the garden variety index fund.

 

[pb4uski]

You forgot the amount would be much larger if it was invested in the stock market.

Given that I just stated some facts and intentionally didn't opine on whether it was good or bad, it is a bit presumptuous of you to suggest that I "forgot" something!

What you forgot, is that a portion of those contributions provide disability insurance and survivor insurance benefits in addition to retirement benefits... if you are going to insist on including market return then you likewise have to carve out of the contributions the value of disability and survivor insurance to get to just retirement benefit contributions. IIRC that is about a 20% carveout.

If I compute the value of a joint life SPIA with the same benefit as my SS at my FRA the value is about $540k... however, that is a fixed annuity and SS is a COLAed annuity... so increase that $540k by 50%... to $810k. 80% of my and my employers contributions is ~$210k... so the value of my retirement benefits is ~385% of what I contributed.

I don't think that is too bad. And the "return' would be even better for lower income people because their benefits as a percent of what they contribute is much higher.

Edited To Add: I was curious... if I take my annual contributions and my employers at 80% (assuming 20% relates to disability and survivor insurance) and compound it at 5.75%, I get ~$810k... not a bad return and as mentioned it would be even better for lower income people because of the way benefits are designed.

 

[Fedup]

Given that I just stated some facts and intentionally didn't opine on whether it was good or bad, it is a bit presumptuous of you to suggest that I "forgot" something!

What you forgot, is that a portion of those contributions provide disability insurance and survivor insurance benefits in addition to retirement benefits... if you are going to insist on including market return then you likewise have to carve out of the contributions the value of disability and survivor insurance to get to just retirement benefit contributions. IIRC that is about a 20% carveout.

If I compute the value of a joint life SPIA with the same benefit as my SS at my FRA the value is about $540k... however, that is a fixed annuity and SS is a COLAed annuity... so increase that $540k by 50%... to $810k. 80% of my and my employers contributions is ~$210k... so the value of my retirement benefits is ~385% of what I contributed.

I don't think that is too bad. And the "return' would be even better for lower income people because their benefits as a percent of what they contribute is much higher.

Edited To Add: I was curious... if I take my annual contributions and my employers at 80% (assuming 20% relates to disability and survivor insurance) and compound it at 5.75%, I get ~$810k... not a bad return and as mentioned it would be even better for lower income people because of the way benefits are designed.

You did forget to mention in your original post, intentionally or not, I don't know. But from reading that post it was not clear. While all of those survivor benefits and disability could still be there, but SS could still have individual account invest up to 50% in index fund. The rest could be a floor like the lower income floor. There are many ways to skin the cat. It's also preposterous of you to think there is only one way. I still think we would have come out ahead, had SS not invested all in bonds. Isn't that why we have some of our retirement money in stocks.

 

[pb4uski]

It was not any intention in my original post (#85) to compare SS to anything... just to explain a source of information to get your lifetime contributions and a reference to the breakeven point of benefits to contributions ignoring real interest.... you are the one who twisted it into something that I did not intend.

It's not that I am thinking of it one way... I am just looking at it as THE WAY IT IS since it seems very unlikely that it will ever become equity based either in whole or in part.

SS becoming equity based is less likely than single payer health care IMO... so why waste time on an unlikely possibility? While you object to SS investing only in bonds, the fact is that insurers who write pension products invest principally in bonds too (but also some amounts in stocks and real estate but far less than 50% and mortgage loans).

This is a periodic study that SS actuaries do on hypothetical return (note all returns are real returns, not nominal). What is interesting, but not unexpected at all, is that low income earners do much better... their real returns are pretty attractive. So for low and very low earners SS is a pretty good investment... for others, positive but less attractive.

Given that when I was in my 30s and 40s I thought it unlikely that I would ever get any return from my SS contributions, even return of principal, a posiitive return is good in my book ... especially after considering the other positive benefits for society as a whole... and I'm happy for us to agree to disagree.

https://www.ssa.gov/OACT/NOTES/ran5/an2016-5.pdf

 

[LRDave]

I find it fascinating that we have people who believe the OP is the same person as "ForcedToRetire" based on the language style they were using. We must have some very smart investigative minds on this forum to be able to draw that conclusion.

Overall, this is a fantastic on-line community and a well-moded board. I am sure we don't thank our mods enough for their hard work.

I am betting on the mods in this case. They've got more than post-parsing skills at their disposal to root out trolls and trolling.

 

[Shanky]

The slack variable (to use an old OR term) is the "middle class lifestyle"

I haven't heard that term since we used to do the Simplex Method by hand.

 

[Independent]

You did forget to mention in your original post, intentionally or not, I don't know. But from reading that post it was not clear. While all of those survivor benefits and disability could still be there, but SS could still have individual account invest up to 50% in index fund. The rest could be a floor like the lower income floor. There are many ways to skin the cat. It's also preposterous of you to think there is only one way. I still think we would have come out ahead, had SS not invested all in bonds. Isn't that why we have some of our retirement money in stocks.

Just to be clear, SS did not "invest all in bonds". The great majority of the payroll tax dollars paid into SS were also paid out in the same year they came in.

We can do the math as say "If I could have invested my payroll taxes at __% (or at actual equity index funds returns) I would have had ___ more or less than my SS benefit."

But, in fact, if SS had done that, it wouldn't have paid the benefits that my parents and grandparents got when I was working. I would have dug into my pocket to send them monthly checks, or (if my parents had been the unusual people who saved enough to cover all of their own retirement) inherited less.

The SS "Trust Fund" has never been close to big enough to look like the assets of a fully funded private pension plan.

You can see a complete historical list of taxes and benefits on page 158 here:
https://www.ssa.gov/OACT/TR/2016/tr2016.pdf

 

[unclemick]

Katrina and some unexpected 'early' deaths among those close to me severely altered my faith in my forward plan so I took early SS at 62. But I let Mr Market's up and down via index funds on full auto 2006 to now. Stayed the course but it was chewy. I throttled back my 4% withdrawal thru the worst of the downturn.

I've never gone back and gamed the what if's. Taking SS at 62, post Katrina bought a 20% down house(sold for a 25% loss 2006 -2016) and stayed full auto index target retirement fund since 2006.

I am sure other choices with hindsight could have been made But I stayed ER.

heh heh heh -

 

[Fedup]

Just to be clear, SS did not "invest all in bonds". The great majority of the payroll tax dollars paid into SS were also paid out in the same year they came in.

We can do the math as say "If I could have invested my payroll taxes at __% (or at actual equity index funds returns) I would have had ___ more or less than my SS benefit."

But, in fact, if SS had done that, it wouldn't have paid the benefits that my parents and grandparents got when I was working. I would have dug into my pocket to send them monthly checks, or (if my parents had been the unusual people who saved enough to cover all of their own retirement) inherited less.

The SS "Trust Fund" has never been close to big enough to look like the assets of a fully funded private pension plan.

You can see a complete historical list of taxes and benefits on page 158 here:
https://www.ssa.gov/OACT/TR/2016/tr2016.pdf

Policy Basics: Understanding the Social Security Trust Funds | Center on Budget and Policy Priorities
This said investing it invests the surplus in Treasure securities and Treasure bonds.
And according to this link, we had a surplus since 1984 to 2016. At least from what I can tell.
https://www.ssa.gov/policy/docs/ssb/v75n1/v75n1p1.html

 

[Car-Guy]

If you open an account at SS, you can see a line by line summary of every dime you earned, and every dime you and your employer contributed to Social Security.

I think you are correct, I've just never looked. Will check it out the next time I log on.