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Old 12-22-2016, 10:31 AM   #61
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No, I am not that lucky, so do not expect to find myself in that 20% lucky group. The glass is 1/2 full, but I will not be the one to empty it.

If anything, I think I will be in the lower 1/2, which means those who do not live beyond 77 years, about the life expectancy for males. It's higher than 81 for females.

Hence, I want laws to cut SS of true geezers to give to me to make up for my poor fortune.
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Old 12-22-2016, 10:37 AM   #62
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....If (on average) it doesn't matter when you take SS, then you might as well take it at 62. Or 70. Because it doesn't matter.
For the "average" single I agree it "doesn't matter " other than a nit that current payouts don't factor in mortality improvements since the current discount/bonus rates were put in place which was some time ago and would tilt the decision slightly in favor of delaying.

Plus, as others have pointed out, there is a small "play" because SS is based on average and is uni-sex. A single person who is healthy and has good family longevity would likely be better off deferring. Someone with health issues or poor family longevity would generally be better off taking it early. So it should be a pretty easy decision for someone who is single given their gender, health and family longevity.

For married people with disparate earnings history, it "does matter" a lot because of joint mortality and survivor benefits.
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Old 12-22-2016, 10:39 AM   #63
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Seriously, the joint longevity of a couple is much better than that of a single person.

The odds are stronger that one of them will make it to an older age, and the joint longevity is about 95.
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Old 12-22-2016, 10:46 AM   #64
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So many of my friends seemed so healthy, lived a good lifestyle and were college educated professionals, and I was completely shocked when they died suddenly in their 60s and 70s. (Many of them died before getting much or any money from Social Security because they took the experts advice and waited until they were 70 to collect.

Now their children did not get much of of an inheritance because their parent spent down a lot of their assets and investments from age 62-70 because they were not working and waited until they were 70 to collect the larger Social Security Check.
Since when are children entitled to inheritances?

20/20 hindsight is easy... while many of us know of people who died early we also know of people who have lived long.

If they defer and live long then their children will get more of an inheritance than if they take at 62. In fact, if the person uses their deferral period to do low-tax cost Roth conversions their children may end up with more because Roths are tax-free.

Deferring also reduces the risk of someone running out of money and becoming a financial burden on their children.

My point is that it is a double edged sword and you take your chances.
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Old 12-22-2016, 10:57 AM   #65
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By the way, the chance of making it to 90 is better than 21% for the people reading this forum. How so?

Look at the number that Sheesh1 posted above. Out of 100,000 people, 83,251 make it to 65, and then 20,898 make it to 90.

So, if you are already about 65, then the odds that you will live till 90 is 20,898/83,251 = 25%.

I still do not think I am among those 1-out-of-4.

The statistics show that 12% did not make it to 60. I was almost among those poor guys due to an unexpected grave illness! Not even SS at 62, let alone 70.
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Present value
Old 12-22-2016, 11:57 AM   #66
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Present value

I have not seen any discussions about the present value theory of money. A dollar at age 62 or 65 is worth more than one at age 70.
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Old 12-22-2016, 12:02 PM   #67
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Since SS benefits are adjusted for increases in the cost-of-living, in theory the spending power of benefits received at age 62 or 65 is the same as the spending power of benefits received at age 70 or later.
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Old 12-22-2016, 12:14 PM   #68
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However, the break-even point calculation does not consider the rate of return if one invests the money received at 62 instead of spending it.

If one just keeps up with inflation with that early SS money at 62, then the break even point is about 81. If the market is bullish, the guy who delays SS will take even longer to be ahead of the guy who takes it early to invest. Conversely, if the market crashes, the 70 SS guy gets ahead sooner.

The calculator by Bedrock to which I provided a link addresses that.
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Old 12-22-2016, 02:02 PM   #69
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I'm 59 and plan on taking SS at 62. Depending on ROI, my breakeven point is somewhere around early to mid 80s. If the government changes the rules, the chances are the breakeven point gets pushed out even further. That's good enough for me.

For some reason the government treats SS as their money and not mine. This is a reason to take it early and spend other peoples money instead of my own.
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Old 12-22-2016, 02:05 PM   #70
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Since SS benefits are adjusted for increases in the cost-of-living, in theory the spending power of benefits received at age 62 or 65 is the same as the spending power of benefits received at age 70 or later.
Having SS COLA keep up with the cost-of-living is definitely in the Theory category and not Reality category.
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Old 12-22-2016, 02:52 PM   #71
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I'm 59 and plan on taking SS at 62. Depending on ROI, my breakeven point is somewhere around early to mid 80s. If the government changes the rules, the chances are the breakeven point gets pushed out even further. That's good enough for me.

For some reason the government treats SS as their money and not mine. This is a reason to take it early and spend other peoples money instead of my own.
Well, it isn't your money, just like a defined benefit pension is not your money. If you think it is your money then you lack an elementary understanding of the program. The official name is the Old-Age, Survivors and Disability Insurance Program.

You and your employers have paid a percentage of your earnings as premiums over the years and as a result your are entitled to certain benefits, just like other forms of insurance. If you live then you will receive retirement benefits.. if you die, then your survivors will get benefits.... when your survivors die then it's over whether you and your survivors have received what you paid in or more than what you paid in.

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Having SS COLA keep up with the cost-of-living is definitely in the Theory category and not Reality category.
Actually for us in retirement inflation has been pretty unnoticeable... if it were noticeable then I would have expected to increase my withdrawals and I have not seen any need to do so in 5 years. YMMV.
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Old 12-22-2016, 04:48 PM   #72
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Deferring also reduces the risk of someone running out of money and becoming a financial burden on their children.
Yes, there are circumstances where that would be the case. OTOH, I believe I have reduced the possibility of becoming a burden to my children by taking SS at 62 (started in 2009). Investment returns on that money, DCA'd into the TSM, have been excellent and a 4.5% WR from the accumulated pot makes up for the additional I would have collected by deferring to 70. Plus it provides additional protection for DW since she is prohibited by law from collecting my SS if I predecease her.

But it's different for everyone. I like to invest and DIY and the markets were very favorable. If it hadn't worked out as favorably, my FIRE position is conservative and I'd still have been OK. I wouldn't recommend the approach for everyone.

For singles, or marrieds whose spouse is impacted by GPO, it's the investment returns on the early money that really spell out the success of the strategy. But you have to be comfortable investing and DIY finances and be able to survive if the markets are poor.
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Old 12-22-2016, 05:08 PM   #73
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Not that it needs saying, but just to point out another viewpoint:

I didn't need SS to maintain my lifestyle, so I elected to wait until 70.

Of course if I had taken it earlier and invested it I would be quite a bit ahead now. And it will take me a number of years before I hit the breakeven point, assuming I'm lucky enough to do so.

But the pleasure of seeing that larger check come in every month and knowing that future COLA increases will be based on that larger amount gives me a feeling of freedom that is kind of a reward in its own right.

Disclaimer: My situation is unusual in that my pension and SS cover all our essential expenses. DW's smaller pension and her spousal SS cover much of our discretionary expenses. When she switches to her own SS in two years, most of our discretionary expenses will be covered. So our WR is only for the really fun travels.
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Old 12-22-2016, 05:17 PM   #74
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With no pension, my expenses will have to be covered by WR from my stash.

I am 95% certain that we will draw my wife's SS at 62, for the reasons detailed in my earlier post. I am not that sure about what to do with mine though. I still have 2 years till 62. A lot will depend on how the market behaves. If it soars, I will delay. If it tanks, I will draw early, even though we have plenty to last till 70.

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...I didn't need SS to maintain my lifestyle, so I elected to wait until 70...

... the pleasure of seeing that larger check come in every month and knowing that future COLA increases will be based on that larger amount gives me a feeling of freedom that is kind of a reward in its own right...
I also do not need SS to survive. However, the pleasure of seeing my stash grow, or at least not diminish rapidly, should not be underestimated either.
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Old 12-23-2016, 07:16 AM   #75
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I took SS at 62. Going with the KISS formulae. Money in my pocket now is worth more than J dollars in the future.
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Old 12-23-2016, 07:36 AM   #76
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"Money in my pocket now is worth more than J dollars in the future. "


I know many people feel this way but this comment is incorrect. I agree that at an emotional level is does make one feel better for now. At 8% growth a dollar tomorrow is worth more than a dollar today.
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Old 12-23-2016, 07:49 AM   #77
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I took SS at 62. Going with the KISS formulae. Money in my pocket now is worth more than J dollars in the future.
I understand. I filed last Saturday and had my follow up phone call yesterday. Will receive my first deposit on the 4th Wed of February. I debated this back and forth and finally decided to go for it. Being single with a family longevity history all over the map, it just seemed like the way to go. But I do understand the logic of waiting..... particularly for married couples.
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Old 12-23-2016, 07:50 AM   #78
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However, the break-even point calculation does not consider the rate of return if one invests the money received at 62 instead of spending it.
Yes. The spreadsheet link I posted will calculate that effect.

If you can invest and get 5% above inflation, the break-even age is 91.
At 5.5%, the BE is 94.
At 6.0%, the BE is 98.

FWIW: Have you seen that Jerry Lewis video interview that went around a few days ago? Jerry is still alive and is 90 years old.

Googling around, it appears that the accepted number for after-inflation long-term return for stocks is 7%

If you get 7% above inflation, the BE is somewhere after age 108.
At 6.5%, the BE is 105.

Frankly, to me it's merely academic. The money is much more useful to you at 62 than at 72 or 81. At 62, most people can climb Machu Pichu. At 82, not so much. Climbing the stairs in your house would be about it.
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Old 12-23-2016, 08:01 AM   #79
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Most people won't go 100% stocks in retirement.


My parents just increased their spending in their early 80s, by moving into a place where all meals are provided. It's more of a luxury than a necessity right now but it is heading towards necessity. They are finding money just as useful in their 80s as before, maybe even more so to stay comfortable and safe when they are less able to take care of themselves. Travel isn't the only way to spend money.
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Old 12-23-2016, 08:07 AM   #80
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Most people won't go 100% stocks in retirement.


My parents just increased their spending in their early 80s, by moving into a place where all meals are provided. It's more of a luxury than a necessity right now but it is heading towards necessity. They are finding money just as useful in their 80s as before, maybe even more so to stay comfortable and safe when they are less able to take care of themselves. Travel isn't the only way to spend money.
My thinking, too. Right now we do a lot for ourselves that we will pay for as we age. And, of course, at the very end, the costs can go through the roof. I sleep better knowing that one of us won't be eating cat food to keep the other in long term care.
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