Suze Orman SS payments advice

[CardsFan]

I find these "when to take SS" humorous. There are folks with DATA that shows EVERYONE should take it at 62. And there are other folks with DATA that shows EVERYONE should take it at 70. And then there are a few folks like PB4USKI that present real comparisons, point you to other resources and say, make your own decision.

[pb4uski]

Quote:

Originally Posted by Time2 I don't get your attitude, he has no hiddden agenda, he clearly stated he ran the numbers and thinks 62 is better, but he came here, (because of all the smart people) To ask his question. He said, "I'm still looking for confirmation/repudiation of the outcome of my question and you guys might be just the people for the job." and "I'm not pushing my numbers on anyone or trying to recruit followers, I'm trying to see how the math holds up."

Yup, Time2... he has no hidden agenda.... just a bias based on flawed analysis. From his paper:

Quote:

The bottom line is that if one is comparing whether to file at 62 or to file at 70, if one files at 62 and invests the monthly payments, they will always be ahead compared to if they had filed at 70. In other words, waiting to file at 70 means you can never catch up to the person filing at 62, no matter how long you live.

OTOH, I think post 154 proves that he is wrong, especially if you live to 90.

Ok, so I'll withdraw the hidden agenda thing and just say that his math doesn't hold up. Happy?

[Perryinva]

@Time2: Well, his original article clearly says otherwise. He states that there is no reason for a typical person to delay filing because few people are considering investing their early SS vs spending it. Money is fungible. So whether one considers it or not, it is happening.

You don’t take early SS and invest that amount. First off, you don’t get that amount, but less due to taxes, which don’t ever seem to enter in. You live on after tax income, not gross amount in accounts. If doing Roth conversions, taking advantage of ACA, etc results in lower taxes paid, then that is a direct reduction to the “gains” earned by “investing the early SS”. Also ignored. He also mentions living on less until 70, which is a common “reason” oft cited to file early. “That extra income isn’t going to do me much good once I’m too old to spend it”.

Anyone with any financial sense doesn’t: A: Live with a smaller income during their younger years (62-70) and then live it up with their new found age 70 SS windfall. You KNOW that income is coming, so you are simply using that fact as a calculation point to set your income higher from day one. And this includes inflation adjusted increases to that income for life

& B: IF you live to a ripe old age, then you are almost certain to need that higher income and the unused income invested before that. If you don’t live to a ripe old age, then at least you lived with a higher income always.

& C: If you wait until 70 to file and drop dead at 72, you may have lost the “Didn’t get as much from SS” contest, but it doesn’t matter because, well you’re dead. But by living on a higher income from age 62 to 72 (based on knowing what you would be getting at 70) you actually did come out ahead for those 10 years you were alive. Only your heirs lose because there is less in the portfolio for them.

If it is more important to leave more to your heirs that for you to have a higher income to live on while alive, then there is a basic disconnect in your logic compared to mine.

& D: He is still equating the risks of investing for income to the payout of a guaranteed annuity. One can not simply say “look at the math” and then choose a higher investing number with an associated higher risk. Pb4uski consistently equalizes risk by choosing a lower more realistic investment return, yet that math seems to be ignored by the author, in favor of his own math.

There are a TON of valid reasons to file at 62, depending on circumstances and personal feelings. But investing the “early” amounts while living on less so you have more when you die is not one of them.

[finnski1]

"OTOH, I think post 154 proves that he is wrong, especially if you live to 90."


Yes and that assumes a positive return from age 62 to 70. Not necessarily guaranteed. He could run into a SORR right at 62 and be in a bear market to age 70. I think that would put him behind even sooner than age 83. May be more like 80,79 etc

[Time2]

Quote:

Originally Posted by Perryinva @Time2: Well, his original article clearly says otherwise. He states that there is no reason for a typical person to delay filing because few people are considering investing their early SS vs spending it. Money is fungible. So whether one considers it or not, it is happening. You don’t take early SS and invest that amount. First off, you don’t get that amount, but less due to taxes, which don’t ever seem to enter in. You live on after tax income, not gross amount in accounts. If doing Roth conversions, taking advantage of ACA, etc results in lower taxes paid, then that is a direct reduction to the “gains” earned by “investing the early SS”. Also ignored. He also mentions living on less until 70, which is a common “reason” oft cited to file early. “That extra income isn’t going to do me much good once I’m too old to spend it”.

I did make the point to him about the taxes and Roth problem.
I also think the increased SS of waiting until 70 for the surviving spouse can be important.

I suggested he add to the paper and run the numbers with taxes taken out. That get's complicated, by the different tax brackets, but spreadsheets handle such things easily, at least if you know how to use them. I'm poor at it.

Quote:

Anyone with any financial sense doesn’t: A: Live with a smaller income during their younger years (62-70) and then live it up with their new found age 70 SS windfall. You KNOW that income is coming, so you are simply using that fact as a calculation point to set your income higher from day one. And this includes inflation adjusted increases to that income for life & B: IF you live to a ripe old age, then you are almost certain to need that higher income and the unused income invested before that. If you don’t live to a ripe old age, then at least you lived with a higher income always. & C: If you wait until 70 to file and drop dead at 72, you may have lost the “Didn’t get as much from SS” contest, but it doesn’t matter because, well you’re dead. But by living on a higher income from age 62 to 72 (based on knowing what you would be getting at 70) you actually did come out ahead for those 10 years you were alive. Only your heirs lose because there is less in the portfolio for them. If it is more important to leave more to your heirs that for you to have a higher income to live on while alive, then there is a basic disconnect in your logic compared to mine. & D: He is still equating the risks of investing for income to the payout of a guaranteed annuity. One can not simply say “look at the math” and then choose a higher investing number with an associated higher risk. Pb4uski consistently equalizes risk by choosing a lower more realistic investment return, yet that math seems to be ignored by the author, in favor of his own math. There are a TON of valid reasons to file at 62, depending on circumstances and personal feelings. But investing the “early” amounts while living on less so you have more when you die is not one of them.

He ask to see the numbers, pb4uski posted several tables, I need to mull those over again, a quick glance for me, did not give understanding of what each tables stood for.

[pb4uski]

Quote:

Originally Posted by finnski1 "OTOH, I think post 154 proves that he is wrong, especially if you live to 90." Yes and that assumes a positive return from age 62 to 70. Not necessarily guaranteed. He could run into a SORR right at 62 and be in a bear market to age 70. I think that would put him behind even sooner than age 83. May be more like 80,79 etc

Nah... since the scenario is not a withdrawal phase the SORR is not as much of a factor as long as that 5% average annual return is achieved over the time horizon.

BTW, nothing is guaranteed, but the assets class that underlies the 5% used by the author is more stable than a blended portfolio so has less SORR. Also, the 5% was specified by the author, so it is consistent with his assumption.

[CRLLS]

Quote:

Originally Posted by Time2 I did make the point to him about the taxes and Roth problem. I also think the increased SS of waiting until 70 for the surviving spouse can be important. I suggested he add to the paper and run the numbers with taxes taken out. That get's complicated, by the different tax brackets, but spreadsheets handle such things easily, at least if you know how to use them. I'm poor at it. He ask to see the numbers, pb4uski posted several tables, I need to mull those over again, a quick glance for me, did not give understanding of what each tables stood for.

I think the surviving spouse is important too. Often, it not considered in the analysis. Even if it were, in the end it would come down to an emotional decision of financial comfort level rather than based on actual hard and fast data analysis.

I also think that if one is ready to ER at say 50, I would suspect that the majority of the situations, they really do not ever need SS. This makes a lot of the assumptions needed in an analysis, moot. As a result, one can assume any particular condition to support their decisions.

[pb4uski]

Spousal benefits is a big part of why I am leaning towards delaying until 70.... my PIA is more than 3 times DW's PIA. Plus we have good longevity in the family and can afford to delay... so to me it is simply buying an attractively priced COLA-adjusted annuity with 4 years of installment payments.

My longevity is 85, DW 88 but it is 50% likely that one or the other of us will live (and collect that higher SS benefit) to 93.

[finnski1]

Quote:

Originally Posted by pb4uski Nah... since the scenario is not a withdrawal phase the SORR is not as much of a factor as long as that 5% average annual return is achieved over the time horizon. BTW, nothing is guaranteed, but the assets class that underlies the 5% used by the author is more stable than a blended portfolio so has less SORR. Also, the 5% was specified by the author, so it is consistent with his assumption.

Maybe my SORR terminology is wrong
Not talking about a withdrawal phase.
Talking about the possibility of negative returns from age 62 to 70 then both scenarios attain positive returns forward from age 70.
Therefore his FV would be even less at age 70 when taking it at 62
So for example when OP turns 62 we enter a negative market (maybe only say -2% ave annually)but it lasts for 8 years..
Then when he turns 70 the returns revert back to positive 5% for the next 20 years to age 90


The new FV values would look like:

62	8323
63	16697
64	24976
65	33314
66	41663
67	50626
68	58408
69	66812
70	70152
71	73659
72	77342
73	81208
74	85268
75	89531
76	94007
77	98707
78	103642
79	108824
80	114265
81	119978
82	125976
83	132274
84	138887
85	145832
86	153123
87	160774
88	168817
89	177258
90	186120

Notice the new "breakeven" age is now a little over 79 compared to a little over 83 in your example. A full 4 years sooner or "worse" for the OP's case
He is now over $143,000 behind at age 90 as opposed to $85,000 in your example.
There is now even $58,000 less at age 90 and a full 4 years lost in the supposed advantage of investing at 62.

[pb4uski]

Nah....

Below is my example changed to have the first 8 years be negative 2% and then revert to 5% thereafter..... it actually makes the take at 62 and invest scenario worse because of the negative returns after having taken early.

But the next one, where the negative 2% returns start at age 70 and last for 8 years, still results in a lower balance at age 90 for taking at 62.

BTW, I think my numbers are a little different from yours because I am assuming that cashflows are received uniformly throughout the year so interest is an entire year interest on the beginning of year balance and a half year interest on the cash flow for the year.

-2% first 8 years, then 5%:

	Claim at 62	FV at		Claim at 62	Claim at 70	Excess of 70 over 62	FV at	I
62	8,400	8,316				0	0	-2.00%
63	8,568	16,631				0	0	-2.00%
64	8,739	24,950				0	0	-2.00%
65	8,914	33,276				0	0	-2.00%
66	9,092	41,611				0	0	-2.00%
67	9,274	49,960				0	0	-2.00%
68	9,460	58,325				0	0	-2.00%
69	9,649	66,711				0	0	-2.00%
70		70,046		9,842	17,434	7,592	7,780	5.00%
71		73,549		10,039	17,783	7,744	16,104	5.00%
72		77,226		10,240	18,139	7,899	25,004	5.00%
73		81,088		10,444	18,501	8,057	34,510	5.00%
74		85,142		10,653	18,871	8,218	44,657	5.00%
75		89,399		10,866	19,249	8,383	55,479	5.00%
76		93,869		11,084	19,634	8,550	67,014	5.00%
77		98,562		11,305	20,027	8,721	79,302	5.00%
78		103,491		11,531	20,427	8,896	92,382	5.00%
79		108,665		11,762	20,836	9,074	106,299	5.00%
80		114,098		11,997	21,252	9,255	121,097	5.00%
81		119,803		12,237	21,677	9,440	136,825	5.00%
82		125,793		12,482	22,111	9,629	153,533	5.00%
83		132,083		12,732	22,553	9,822	171,274	5.00%
84		138,687		12,986	23,004	10,018	190,103	5.00%
85		145,622		13,246	23,464	10,218	210,079	5.00%
86		152,903		13,511	23,934	10,423	231,263	5.00%
87		160,548		13,781	24,412	10,631	253,720	5.00%
88		168,575		14,057	24,900	10,844	277,517	5.00%
89		177,004		14,338	25,398	11,061	302,727	5.00%
90		185,854		14,625	25,906	11,282	329,424	5.00%

5% except for 8 years of -2% beginning at age 70:

	Claim at 62	FV at		Claim at 62	Claim at 70	Excess of 70 over 62	FV at	I
62	8,400	8,607				0	0	5.00%
63	8,568	17,817				0	0	5.00%
64	8,739	27,663				0	0	5.00%
65	8,914	38,181				0	0	5.00%
66	9,092	49,407				0	0	5.00%
67	9,274	61,381				0	0	5.00%
68	9,460	74,143				0	0	5.00%
69	9,649	87,737				0	0	5.00%
70		85,983		9,842	17,434	7,592	7,516	-2.00%
71		84,263		10,039	17,783	7,744	15,032	-2.00%
72		82,578		10,240	18,139	7,899	22,551	-2.00%
73		80,926		10,444	18,501	8,057	30,076	-2.00%
74		79,308		10,653	18,871	8,218	37,610	-2.00%
75		77,721		10,866	19,249	8,383	45,156	-2.00%
76		76,167		11,084	19,634	8,550	52,718	-2.00%
77		74,644		11,305	20,027	8,721	60,297	-2.00%
78		78,376		11,531	20,427	8,896	72,427	5.00%
79		82,295		11,762	20,836	9,074	85,346	5.00%
80		86,409		11,997	21,252	9,255	99,097	5.00%
81		90,730		12,237	21,677	9,440	113,725	5.00%
82		95,266		12,482	22,111	9,629	129,278	5.00%
83		100,030		12,732	22,553	9,822	145,806	5.00%
84		105,031		12,986	23,004	10,018	163,362	5.00%
85		110,283		13,246	23,464	10,218	182,000	5.00%
86		115,797		13,511	23,934	10,423	201,780	5.00%
87		121,587		13,781	24,412	10,631	222,763	5.00%
88		127,666		14,057	24,900	10,844	245,013	5.00%
89		134,049		14,338	25,398	11,061	268,597	5.00%
90		140,752		14,625	25,906	11,282	293,587	5.00%

[finnski1]

Quote:

Originally Posted by pb4uski Nah.... Below is my example changed to have the first 8 years be negative 2% and then revert to 5% thereafter..... it actually makes the take at 62 and invest scenario worse because of the negative returns after having taken early. But the next one, where the negative 2% returns start at age 70 and last for 8 years, still results in a lower balance at age 90 for taking at 62. BTW, I think my numbers are a little different from yours because I am assuming that cashflows are received uniformly throughout the year so interest is an entire year interest on the beginning of year balance and a half year interest on the cash flow for the year. -2% first 8 years, then 5%: Claim at 62 FV at Claim at 62 Claim at 70 Excess of 70 over 62 FV at I 62 8,400 8,316 0 0 -2.00% 63 8,568 16,631 0 0 -2.00% 64 8,739 24,950 0 0 -2.00% 65 8,914 33,276 0 0 -2.00% 66 9,092 41,611 0 0 -2.00% 67 9,274 49,960 0 0 -2.00% 68 9,460 58,325 0 0 -2.00% 69 9,649 66,711 0 0 -2.00% 70 70,046 9,842 17,434 7,592 7,780 5.00% 71 73,549 10,039 17,783 7,744 16,104 5.00% 72 77,226 10,240 18,139 7,899 25,004 5.00% 73 81,088 10,444 18,501 8,057 34,510 5.00% 74 85,142 10,653 18,871 8,218 44,657 5.00% 75 89,399 10,866 19,249 8,383 55,479 5.00% 76 93,869 11,084 19,634 8,550 67,014 5.00% 77 98,562 11,305 20,027 8,721 79,302 5.00% 78 103,491 11,531 20,427 8,896 92,382 5.00% 79 108,665 11,762 20,836 9,074 106,299 5.00% 80 114,098 11,997 21,252 9,255 121,097 5.00% 81 119,803 12,237 21,677 9,440 136,825 5.00% 82 125,793 12,482 22,111 9,629 153,533 5.00% 83 132,083 12,732 22,553 9,822 171,274 5.00% 84 138,687 12,986 23,004 10,018 190,103 5.00% 85 145,622 13,246 23,464 10,218 210,079 5.00% 86 152,903 13,511 23,934 10,423 231,263 5.00% 87 160,548 13,781 24,412 10,631 253,720 5.00% 88 168,575 14,057 24,900 10,844 277,517 5.00% 89 177,004 14,338 25,398 11,061 302,727 5.00% 90 185,854 14,625 25,906 11,282 329,424 5.00% 5% except for 8 years of -2% beginning at age 70: Claim at 62 FV at Claim at 62 Claim at 70 Excess of 70 over 62 FV at I 62 8,400 8,607 0 0 5.00% 63 8,568 17,817 0 0 5.00% 64 8,739 27,663 0 0 5.00% 65 8,914 38,181 0 0 5.00% 66 9,092 49,407 0 0 5.00% 67 9,274 61,381 0 0 5.00% 68 9,460 74,143 0 0 5.00% 69 9,649 87,737 0 0 5.00% 70 85,983 9,842 17,434 7,592 7,516 -2.00% 71 84,263 10,039 17,783 7,744 15,032 -2.00% 72 82,578 10,240 18,139 7,899 22,551 -2.00% 73 80,926 10,444 18,501 8,057 30,076 -2.00% 74 79,308 10,653 18,871 8,218 37,610 -2.00% 75 77,721 10,866 19,249 8,383 45,156 -2.00% 76 76,167 11,084 19,634 8,550 52,718 -2.00% 77 74,644 11,305 20,027 8,721 60,297 -2.00% 78 78,376 11,531 20,427 8,896 72,427 5.00% 79 82,295 11,762 20,836 9,074 85,346 5.00% 80 86,409 11,997 21,252 9,255 99,097 5.00% 81 90,730 12,237 21,677 9,440 113,725 5.00% 82 95,266 12,482 22,111 9,629 129,278 5.00% 83 100,030 12,732 22,553 9,822 145,806 5.00% 84 105,031 12,986 23,004 10,018 163,362 5.00% 85 110,283 13,246 23,464 10,218 182,000 5.00% 86 115,797 13,511 23,934 10,423 201,780 5.00% 87 121,587 13,781 24,412 10,631 222,763 5.00% 88 127,666 14,057 24,900 10,844 245,013 5.00% 89 134,049 14,338 25,398 11,061 268,597 5.00% 90 140,752 14,625 25,906 11,282 293,587 5.00%

You keep saying Nah but I think we are on the same page and saying the same thing. I completely agree with your original analysis and these latest ones. I was only pointing out that the OPs case is even weaker with my example and your numbers agree. He is now over $143,000 worse off by taking it at 62 and investing with the first 8 years (or second 8 years as you show) as he would be by waiting till 70. He also reaches the crossover(breakeven ) point even sooner (79 vs 83) rather than later as he originally posited. Just as you said


My numbers are simply from a time value of money app I have on my phone. Probably not as sophisticated as what you have.

[pb4uski]

Ah, I see. I thought that you were saying that the sequence of returns might change the conclusion, and it doesn't seem to, though I guess one could contrive some sequence of returns that make it favorable to claim at 62 and invest.

A lot of why the claim at 62 and invest fails is because he selected age 90 so you have a 28 year time horizon.... but as with almost all analyses that I have seen the breakeven is in the early to mid 80s depending on the discount rate used but average longevity is mid to late 80s for those of average health so on average people will live longer than the breakeven point.

While this analysis is useful, I still prefer opensocialsecurity.com because it incorporates mortality in addition to the time value of money. The recent enhancement to opensocialsecurity.com to add a color coded depection of alternative claiming strategies is particularly useful.

[finnski1]

Quote:

Originally Posted by pb4uski Ah, I see. I thought that you were saying that the sequence of returns might change the conclusion, and it doesn't seem to, though I guess one could contrive some sequence of returns that make it favorable to claim at 62 and invest. A lot of why the claim at 62 and invest fails is because he selected age 90 so you have a 28 year time horizon.... but as with almost all analyses that I have seen the breakeven is in the early to mid 80s depending on the discount rate used but average longevity is mid to late 80s for those of average health so on average people will live longer than the breakeven point. While this analysis is useful, I still prefer opensocialsecurity.com because it incorporates mortality in addition to the time value of money. The recent enhancement to opensocialsecurity.com to add a color coded depection of alternative claiming strategies is particularly useful.

No I was simply trying to reinforce your points.
Let's just say I had a much higher math SAT score than the verbal/english or whatever it was called.
Oh and i agree with opensocialsecurity. I use it all the time.

[Rianne]

Turns out Suze Orman is one of the best scammers out there. This video a bit long but takes you through Suze's history with an Emmy winning Sharon Janis who has a long history with Suze. Worth the time! Spoiler alert, how she's cheated her way to the top.



https://www.youtube.com/watch?time_c...ture=emb_title

[racy]

Quote:

Originally Posted by Rianne Turns out Suze Orman is one of the best scammers out there. This video a bit long but takes you through Suze's history with an Emmy winning Sharon Janis who has a long history with Suze. Worth the time! Spoiler alert, how she's cheated her way to the top. https://www.youtube.com/watch?time_c...ture=emb_title

+1 A must watch!

[Montecfo]

Yes that was in interesting for sure!

[LXEX55]

According to what I have read, if you live to the age that the government life expectancy charts predict, you will break even no matter when you take SS.

[Ready]

When gurus start pitching products their credibility falls apart. We saw the same thing when Dr. Phil started pitching diet products on his TV show. He went from a somewhat insightful psychologist to a TV pitchman for the latest fad products he could make a few bucks on. Now people just think he is a quack.

Suze provided some good advice to the financially uneducated audience that watched her show. But when she began to talk about more sophisticated topics her lack of credibility became obvious to anyone with a financial background. And her prepaid debit card was a total scam. I’m surprised she got away with it.

[jim584672]

She is so bad with money she needs at least 5 million to retire.

Opinion: Suze Orman says you need $5 million to retire — which is nonsense
https://www.marketwatch.com/story/su...nse-2019-01-15