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Old 03-06-2017, 08:14 PM   #61
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But that is one that you'll be able to see far ahead and respond to as necessary.
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Old 03-06-2017, 08:43 PM   #62
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But that is one that you'll be able to see far ahead and respond to as necessary.
Was that in response to me? I'm not so sure. If the markets stay steady and I'm the road to deferring to 70, and at 68 I get strong wind that they are going to give a major haircut to everyone (but no extra reduction for those my age who had been collecting from 62 to 68), I doubt I'd ever make up the difference. I'm not very reliant on SS, but it would be nice to get the most out of it.
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Old 03-06-2017, 08:57 PM   #63
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Sort of in response to you. My point is that if they are going to make changes that we'll see it coming in legislation and can respond accordingly if the new legislation is detrimental.
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Old 03-06-2017, 09:13 PM   #64
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Originally Posted by Ronstar View Post
Thought I'd calculate whether it would make more sense to take ss at 62 or 70.

According to SS,
my mo ss pmts at 62 yo = $2010
my mo ss pmts at 70 yo = $3522

For comparison, I thought I'd compare by taking ss at 62, saving the proceeds for the 8 years difference between the 2 options. Then calc a mo annuity pmt from the savings after 8 years. Then compare the sum of the 62yo ss + monthly return from the savings to the 70yo ss.

Given 8 years between 62 and 70, if I invest the $2010 pmts(less 15% for taxes) at 4% for 8 years, I get a value of $192,921.32 at age 70.

Calc’d in excel =2010*.85*(((1+0.0033)^96)-1)/.0033
where .0033 is the monthly interest rate (.04/12)

I then calc’d the monthly payments I would receive from the $192,921.32 lump sum, adjusting the number of payments in the formula so that the calc’d payment equaled the difference between the 62yo and 70yo monthly payments ($1512)

In excel = PMT(rate,periods,PV,FV)
So = PMT(.0033,167,192921.32,0) yields 167 payments of $1508.31.

167 months = 13 years, 11 months.

So, unless my math is wrong, I would have to live to 84 yo before the take ss at 70 option makes more monthly $ than taking it at 62 and saving it until 70?

Does this make sense?
That's correct. All worked out in detail here, and you can plug in all sorts of different assumptions to examine what-if scenarios.

My SS early-or-late spreadsheet
https://www.dropbox.com/s/gebanzrbr3...0calc.xls?dl=0
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Old 03-06-2017, 09:21 PM   #65
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Note the hold harmess provision only came into play because of low inflation rates. If inflation beats 2% then it may be less of an issue. (note if you are on IRMAA i.e means tested part b, the hold harmless does not apply either)
The thing about not being protected by the hold-harmless is that your medicare premium ratchets up but never down. You will be paying that higher premium forever.
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Old 03-07-2017, 07:34 AM   #66
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we don't really care about break even . we care about being as little dependent as we can be on markets , rates and sequence risk .

for those who want to cut back those risks the 69% bigger check at 70 than 62 cuts dependency a lot . ss has no sequence risk and no inflation risk either .
I get that you like the annuity features. So do I. But you also risk losing all of your "investment" in SS while you wait.

Not saying I disagree with your strategy. There really is no one answer. But mortality is always the risk on the other side.

For my part, I have a few years. But I am thinking DW draws early, and I draw late, as it maximizes longevity insurance for both or either of us. But especially for her, since I am the money manager.
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Old 03-07-2017, 08:16 AM   #67
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i highly doubt that anything done to ss will not be grandfathered to those eligible already . that risk i consider minuscule .


if they cut or means test , odds are everyone will have it happen across the board not just those who delayed filing.

basically we have a choice with mortality risk or market,interest rate and inflation risk .\

being a healthy couple mortality risk is likely the better choice with two horses in the race with one bet .
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Old 03-07-2017, 10:37 AM   #68
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My feelings exactly.
It would be much easier to decide if you knew you were going to die before the break even point or not.....
You can force that choice to die earlier, but it seems extreme just to be right about taking SS early.
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Old 03-07-2017, 10:56 AM   #69
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The thing about not being protected by the hold-harmless is that your medicare premium ratchets up but never down. You will be paying that higher premium forever.
This is the one thing that really makes me concerned about waiting to 70, that is 5 years of medicare premiums that cut into the 8% per year increase, possibly reducing the SS increase to 7% effectively.

I'm assuming one only gets medicare at age 65 (I'm too young), so taking SS before age 65 probably does not help hold back the medicare premium until one actually gets medicare ??
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Old 03-07-2017, 11:08 AM   #70
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What you need to do is jointly strategize so that you maximize your benefits as a couple. No need to milk the system.
+1

In the same way that many distribute their savings into an AA, they are trying to maximize the utility of their portfolio. That is a different objective than concentrating on maximizing the dollar amount of it.

If the most important goal of your SS strategy is to squeeze the greatest number of dollars from the govt, then prepare to miss the goal unless you know in advance when you will die.

But if the most important goal is to make SS the most useful to you as a combination annuity/insurance asset, from what I read a couple is likely to find it best to take the lower earner's early and the higher earner's later.
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Old 03-07-2017, 07:39 PM   #71
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+1

In the same way that many distribute their savings into an AA, they are trying to maximize the utility of their portfolio. That is a different objective than concentrating on maximizing the dollar amount of it.

If the most important goal of your SS strategy is to squeeze the greatest number of dollars from the govt, then prepare to miss the goal unless you know in advance when you will die.

But if the most important goal is to make SS the most useful to you as a combination annuity/insurance asset, from what I read a couple is likely to find it best to take the lower earner's early and the higher earner's later.
Frankly I don't have a clue what you are saying here. But to me maximized benefits as a couple is the same as milking the system. I know I have a way with words.
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Old 03-07-2017, 10:00 PM   #72
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Originally Posted by Ronstar View Post
Thought I'd calculate whether it would make more sense to take ss at 62 or 70.

According to SS,
my mo ss pmts at 62 yo = $2010
my mo ss pmts at 70 yo = $3522

For comparison, I thought I'd compare by taking ss at 62, saving the proceeds for the 8 years difference between the 2 options. Then calc a mo annuity pmt from the savings after 8 years. Then compare the sum of the 62yo ss + monthly return from the savings to the 70yo ss.

Given 8 years between 62 and 70, if I invest the $2010 pmts(less 15% for taxes) at 4% for 8 years, I get a value of $192,921.32 at age 70.

Calc’d in excel =2010*.85*(((1+0.0033)^96)-1)/.0033
where .0033 is the monthly interest rate (.04/12)

I then calc’d the monthly payments I would receive from the $192,921.32 lump sum, adjusting the number of payments in the formula so that the calc’d payment equaled the difference between the 62yo and 70yo monthly payments ($1512)

In excel = PMT(rate,periods,PV,FV)
So = PMT(.0033,167,192921.32,0) yields 167 payments of $1508.31.

167 months = 13 years, 11 months.

So, unless my math is wrong, I would have to live to 84 yo before the take ss at 70 option makes more monthly $ than taking it at 62 and saving it until 70?

Does this make sense?
It makes sense.

BUT please remember that once you step out of straight employment, your ability to max out your 401(K)/Roth 401K also ceases unless you have your own business and are able to fund your own. (To be sure, as a business owner, your contribution limits can be MUCH higher if you can afford to carve out the max limits).

I'm terminally frugal and have a benign job. For me, it makes sense to hang around beyond FRA (66) to get the Roth 401(K) access. Not to mention, megacorp healthcare is less expensive than Medicare. The icing on cake - I've been a biz owner and would not touch those hours again with a ten foot pole at this stage of life. I'm getting into the "smell the roses" stage. I face it like a deer in the headlights, lol, which tells me I am way out of practice.

I am sure your mileage will vary. It just seems to me that there is more to the equation than the SS cash flow.
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Old 03-08-2017, 01:04 AM   #73
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i highly doubt that anything done to ss will not be grandfathered to those eligible already . that risk i consider minuscule .


if they cut or means test , odds are everyone will have it happen across the board not just those who delayed filing.

basically we have a choice with mortality risk or market,interest rate and inflation risk .\

being a healthy couple mortality risk is likely the better choice with two horses in the race with one bet .
Wasn't the last major change to SS about 30 years ago? If I remember correctly, everyone that was affected by it was under the age of 40 or 45. I highly doubt any new changes will affect anyone above the age of 50. I also think it's more likely that the maximum tax amount will keep rising.

Having said that, I plan on taking SS at age 70 unless things get real bad after I turn 62 with the market and my portfolio takes a huge hit. So my plan is to wait as long as it's feasible for me to wait.
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Old 03-08-2017, 05:35 AM   #74
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+1

If the most important goal of your SS strategy is to squeeze the greatest number of dollars from the govt, then prepare to miss the goal unless you know in advance when you will die.

But if the most important goal is to make SS the most useful to you as a combination annuity/insurance asset....
This may be the crux of all the discussions on this subject.

There are those who want to get the highest payout from SS regardless of how long it lasts for them.

Then there are those who view SS as a piece of their portfolio and want to maximize the life and/or value of the portfolio.

I'm in the latter camp. I view SS as an opportunity to reduce my own withdrawals and taxes and thus improve my portfolio's value over my lifetime.
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Old 03-08-2017, 07:21 AM   #75
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Originally Posted by mathjak107 View Post
i highly doubt that anything done to ss will not be grandfathered to those eligible already . that risk i consider minuscule .


if they cut or means test , odds are everyone will have it happen across the board not just those who delayed filing.

basically we have a choice with mortality risk or market,interest rate and inflation risk .\

being a healthy couple mortality risk is likely the better choice with two horses in the race with one bet .
That's pretty much the way I see it. That plus avoiding the higher ordinary income taxes for several years.

Well, our SS is not that much since we retired very early. Currently our income is mostly cap gains income, so we get a nice break of 0% tax on a chunk of it below the 15% tax bracket. SS would remove some of that tax break.
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Old 03-08-2017, 07:26 AM   #76
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Wasn't the last major change to SS about 30 years ago? If I remember correctly, everyone that was affected by it was under the age of 40 or 45. I highly doubt any new changes will affect anyone above the age of 50. I also think it's more likely that the maximum tax amount will keep rising.

Having said that, I plan on taking SS at age 70 unless things get real bad after I turn 62 with the market and my portfolio takes a huge hit. So my plan is to wait as long as it's feasible for me to wait.
I'm 100% ok with lifting the SS Tax cap, (and only marginally increasing the max payout) to keep SS solvent, as long as we look at what we need to change benefit wise on SS and Medicare. My 90 year old in-laws (deceased in the last year) did not need birth control, etc...
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Old 03-08-2017, 10:58 AM   #77
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I seem to recall about a year and half ago, we were mostly surprised by the passing of the file and suspend/restriced application elimination. It wasn't heavily advertised before it happenned and it didn't grandfather most of the population. Some people considered it a big change/loss.
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Old 03-08-2017, 12:52 PM   #78
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......... My 90 year old in-laws (deceased in the last year) did not need birth control........
Yea, if followed closely, the rhythm method works.
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Old 03-09-2017, 04:15 AM   #79
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Frankly I don't have a clue what you are saying here. But to me maximized benefits as a couple is the same as milking the system. I know I have a way with words.
optimizing social security benefits by using the tools and laws left in place to be used is no more milking the system than using the tools and laws in place so your fair share of taxes is the lowest amount you can legally figure out you should pay .
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