Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Old 02-04-2020, 05:11 PM   #61
Thinks s/he gets paid by the post
 
Join Date: May 2019
Posts: 2,727
Quote:
Originally Posted by Dtail View Post
Both sides of the coin in the post, but understand.

Many folks on this forum do include SS as part of their retirement plan, whether full payment or the ~25% discount.
We are budgeting for SS to provide around 50% of our spending in current dollars.
Anyone with heavy ACA tax subsidies almost automatically delay at least until 65 y.o. and then potential Roth conversions come into play.

Same here. At age 70, SS should provide about 50% of my yearly spending if I delay until 70. It would actually be far more than enough on its own to cover my expected base expenses by itself at that age. And I absolutely won't take SS until at least 65 based on the effect on MAGI for ACA, if the ACA is still around when I'm in my 60's. And MAGI for ACA includes both the taxable and non-taxable portions of SS. It's still over a decade off for me, so I don't put too much thought into it, yet.
GenXguy is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-04-2020, 07:15 PM   #62
Thinks s/he gets paid by the post
Out of Steam's Avatar
 
Join Date: Mar 2017
Posts: 1,638
I've decided to not take SS before 65, then see where we are financially and health-wise.

To me, the key to the SS decision is to minimize the risk of having to eat Ramen noodles at 90, not to collect the largest net present value calculated at 60 or 62.
Out of Steam is offline   Reply With Quote
Old 02-04-2020, 08:26 PM   #63
Recycles dryer sheets
 
Join Date: Nov 2009
Posts: 64
I took SS at 63, to avoid drawing down tax-advantaged accounts.

Last year, at 70 I ran the numbers based on real returns (CAGR of 9.3%).

Because of lower balance, my RMD at age 70 would have decreased by ~$8K annually.

My SS would have increased by ~$14k...
jasg is offline   Reply With Quote
Old 02-07-2020, 05:08 PM   #64
Confused about dryer sheets
 
Join Date: Apr 2010
Location: Lower Peninsula
Posts: 8
The best online calculator that I found and highly recommend is opensocialsecurity.com. Your question is a very difficult question to answer with the limited data you provided. I will say typically the results of this open source calculator is for the lowest income person to either start at 62 or FRA, and the higher earner to start at 70, what this does is maximize the total amount you and/or your spouse will receive.

My personal recommendation is aligned to the output of this calculator, the higher income person delay until 70 to maximize total monthly benefit and to maximize the COLA. This is of course based on both persons being fairly healthy with minimal family health concerns.

Essentially SS will pay the same total distribution for both of you if you both live to the expected age of death. Where it will differ is if you can claim spousal benefits or a death benefit.

Think long term not short term, once you start to draw you can’t* change your mind. Use tax deferred accounts to supplement income between when you think you need to draw and the farthest you can defer.
LuckyRugger is offline   Reply With Quote
Old 02-07-2020, 05:22 PM   #65
Dryer sheet wannabe
 
Join Date: Jun 2014
Location: New Orleans
Posts: 10
I've run my numbers with no pension and it is clear I will take social security on the very first day I can get it. My reasoning is the same as your though. Just because I take it doesn't mean I have to spend it. So I take it at 62 and save it until I reach full retirement and I win everytime. I would do it at a 4% return but I expect more than that.

The fallacy of most analysis is that if you take the money it doesn't earn any return (i.e. you spend it). Of course spending money versus saving (which is what delaying social security does) will lose. But if you save and invest the social security you win with any decent amount of return.
FireProoof is offline   Reply With Quote
Old 02-07-2020, 05:57 PM   #66
Recycles dryer sheets
2retireearly's Avatar
 
Join Date: Jul 2011
Location: Richmond, VA
Posts: 161
[QUOTE=Ronstar;2364312]Social Security break even has been batted around on this board to the nth degree.

But I needed to make my own spreadsheet to digest my latest thought. DW is taking SS this July at FRA. My initial plan was to take mine at FRA next October. But why should I wait longer than DW to take ss? I decided that I want to start taking it at 65 instead of at 66 yrs 2 mo.

My thought is this - I don't have a pension. I'm living off investment income. Taking SS will decrease my portfolio withdrawal, so in theory an amount equal to SS in my portfolio will be allowed to stay in the portfolio and grow as opposed to being withdrawn.

So I ran the numbers based on various scenarios depending on estimated future rate of return on my portfolio. Based on the estimated rate of return and estimated spending, I was able to compare the monthly difference in estimated future portfolio value based on taking SS at 65 and at 66 yrs 2 mo.

And this provided the break even point at which taking at 66/2 starts yielding a larger portfolio value than the taking at 65 option.

At a 2% return, the break even point is in 12 yrs, 1 mo at age 76 - 8 mos
At a 3% return, the break even point is in 12 yrs, 10 mo at age 77 - 4 mos
At a 4% return, the break even point is in 13 yrs, 8 mo at age 78 - 2 mos
At a 5% return, the break even point is in 14 yrs, 9 mo at age 79 - 3 mos
At a 6% return, the break even point is in 16 yrs, 1 mo at age 80 - 7 mos

I compounded the rate of return monthly in my spreadsheet. I did not take tax implications into my model.

I don't know how the online calculators calculate break even, but the ability to reduce portfolio withdrawals creates more of an incentive to take ss earlier than what I expected. And it seems like there would be more of an incentive to take ss early for non-pension people than for those who live off pensions.

And of course there are a lot more variables that can go into this depending on each person's situation. But I'm comfortable enough with my break even findings to take SS 1 yr 2mos earlier than FRA.[/QUOTE

Just realize, in your calculations, that Soc Sec is taxed differently than IRA. It is generally 50% of soc sec is taxable, up to a certain income amount. ira, except for ROTH, is 100% taxable.Don't forget this important feature in your calcs!
2retireearly is offline   Reply With Quote
Old 02-07-2020, 06:40 PM   #67
Thinks s/he gets paid by the post
 
Join Date: Oct 2019
Posts: 3,657
Just be sure to figure any taxes due on the SS in you calculations.
So, I'll admit most of my info is the usual crossover point is around 81, if you live longer 70 is better if you die earlier 62 is better.
That said, I'm not sure, if the reduced spending of my portfolio would grow faster than the 7% to 8% growth of the SS check. Historic rates would say yes, you might do better, but we could have a bad 10 years.
I'm delaying because I want to do as much in Roth conversions as I can between 65 and 70, and if I take SS early that extra income would push me into a higher tax bracket. My concern is RMDs when I hit 72. I did get a little reprieve with the 72 year old RMD start age.
Time2 is offline   Reply With Quote
Old 02-07-2020, 11:01 PM   #68
Full time employment: Posting here.
 
Join Date: Aug 2015
Posts: 987
There is no “take the SS money and invest it” and “do” better scenario. Money is fungible. That is a very simplistic view. There is absolutely no difference between withdrawing an amount to live and saving your SS, vs leaving it there and spending the SS.

Anyone that can actually consider delaying filing has the funds invested, so saying if you don’t have to spend it but can save it is plain silly. If you HAVE to spend it to live, then you can’t afford to delay, financially.

It is as silly as using break even as a reason to file early, unless one’s objective is to die with the most money unspent.

My objective is to have the highest secure income while FINALLY spending & enjoying the money I’ve saved and invested my whole career, which includes some principal reduction. The obsession to preserve/increase the portfolio size at all costs totally escapes me. Maybe because no one ever left anyone I’ve known a huge fortune, and I don’t care to leave one for any heirs either.

As long as I have plenty of income to do whatever I want, in my lifestyle, then my concerns are geared toward the lower risk scenario, which means delaying for the larger COLA annuity. The portfolio reduction is of no significanct impact.

If I can’t comfortably live on a low taxed $12k a month then I have a problem. I lived for many many years on less than that while socking away 25-30% and paying FICA & Med deductions. Time to blow that dough.
Perryinva is offline   Reply With Quote
Old 02-08-2020, 12:15 AM   #69
Recycles dryer sheets
 
Join Date: May 2009
Location: Balatonfured
Posts: 394
Personally, I retired fully at age 56 and took SS at age 62. My feeling at the time was to take it when you can as they can always stop it at some point. Our current politicians keep referring to SS as some kind of gift from the government and that some people (like us) already have too much money so don't deserve it. I can envision a means test soon and that has been mentioned as recently as last week by our President.

The second thing that entered into my calculations is that no male member of my family on both sides has ever lived past age 76. Not that I expect to die by then but it is a serious consideration. My brother who has just turned 74 has this in mind a lot but he is in great shape and looks like he might set a new record. On the other hand the women on my mother's side generally live into their 90's and my mother is 95 and going strong. I take after my mother so have some hope. So, genetics is another factor and a big one when trying to predict the future.

The Roth conversions only factor if you are still working which we weren't so not part of the calculation. RMD laws changed again this year which has befuddled us a bit. So, I can't forecast what Congress might do in the future. However, having spent 40 years working for the military I know that promises mean nothing (even written ones) and don't hold up in court. Basically, the government can and will do whatever they want and there isn't much you can do about it. To me this means SS is not a guaranteed benefit and subject to the whims of our government.

The strangest thing for us is because our pensions add up to a bit under $100k we haven't touched our investments at all and we still are running a surplus. This is because we retired to Hungary where life is cheaper and medical runs less than our mandatory Part B (which we refused) required to keep the "free" military health care plus a $600 annual fee and $2,000 deductible to get 60% reimbursement. We spend roughly $100 a month all told for medical expenses averaged out a monthly rate. We ran the calculations yesterday. I have spent less than $500 total for over 10 years now on myself including dental.My wife has had some serious problems none of which cost more than $1,000.

To me the decision for anyone is to try and forecast the risks versus the benefits based on your own situation and general advice is basically useless. It will be different for each individual and can and should include health concerns and genetics.
Old Microbiologist is offline   Reply With Quote
Old 02-08-2020, 08:43 AM   #70
Thinks s/he gets paid by the post
 
Join Date: May 2019
Posts: 2,727
Quote:
Originally Posted by Perryinva View Post
It is as silly as using break even as a reason to file early, unless one’s objective is to die with the most money unspent.
That depends how long you live. If you file early, live a lot longer, then you might die with LESS money unspent, not more. Neither is my goal. Since people don't know their individual lifespans, delaying SS would provide some insurance of higher income for living longer when your stash might be running low.

Quote:
Originally Posted by Old Microbiologist View Post
To me this means SS is not a guaranteed benefit and subject to the whims of our government.
It's possible. Some UBI plans (not Yang's) eliminate SS altogether and replace it with a single monthly UBI payment, and it doesn't matter how much your SS benefit was or might have been. Hopefully we will never see that happen.

Quote:
The strangest thing for us is because our pensions add up to a bit under $100k
My pension is $0. I can't imagine having any SS worries if I had an extra $100K/yr. So you might as well take it whenever you feel like it.
GenXguy is offline   Reply With Quote
Old 02-08-2020, 09:42 AM   #71
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Sunset's Avatar
 
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 17,012
Quote:
Originally Posted by Old Microbiologist View Post
Personally, I retired fully at age 56 and took SS at age 62. .....

The Roth conversions only factor if you are still working which we weren't so not part of the calculation. RMD laws changed again this year which has befuddled us a bit. So, I can't forecast what Congress might do in the future. .....
Roth conversions have nothing to do with working, you can convert IRA money to a ROTH anytime. Working or not, it does not matter.

Perhaps you were thinking of Roth contributions ?, for those you need to have some earned income.
__________________
Fortune favors the prepared mind. ... Louis Pasteur
Sunset is offline   Reply With Quote
Old 02-08-2020, 11:31 AM   #72
Full time employment: Posting here.
 
Join Date: Apr 2011
Location: Castro Valley
Posts: 788
Quote:
Originally Posted by Old Microbiologist View Post
Personally, I retired fully at age 56 and took SS at age 62. My feeling at the time was to take it when you can as they can always stop it at some point. Our current politicians keep referring to SS as some kind of gift from the government and that some people (like us) already have too much money so don't deserve it. I can envision a means test soon and that has been mentioned as recently as last week by our President.

The second thing that entered into my calculations is that no male member of my family on both sides has ever lived past age 76. Not that I expect to die by then but it is a serious consideration. My brother who has just turned 74 has this in mind a lot but he is in great shape and looks like he might set a new record. On the other hand the women on my mother's side generally live into their 90's and my mother is 95 and going strong. I take after my mother so have some hope. So, genetics is another factor and a big one when trying to predict the future.

The Roth conversions only factor if you are still working which we weren't so not part of the calculation. RMD laws changed again this year which has befuddled us a bit. So, I can't forecast what Congress might do in the future. However, having spent 40 years working for the military I know that promises mean nothing (even written ones) and don't hold up in court. Basically, the government can and will do whatever they want and there isn't much you can do about it. To me this means SS is not a guaranteed benefit and subject to the whims of our government.

The strangest thing for us is because our pensions add up to a bit under $100k we haven't touched our investments at all and we still are running a surplus. This is because we retired to Hungary where life is cheaper and medical runs less than our mandatory Part B (which we refused) required to keep the "free" military health care plus a $600 annual fee and $2,000 deductible to get 60% reimbursement. We spend roughly $100 a month all told for medical expenses averaged out a monthly rate. We ran the calculations yesterday. I have spent less than $500 total for over 10 years now on myself including dental.My wife has had some serious problems none of which cost more than $1,000.

To me the decision for anyone is to try and forecast the risks versus the benefits based on your own situation and general advice is basically useless. It will be different for each individual and can and should include health concerns and genetics.
I believe most people gloss over Legislation Risk when automatically choosing to delay SS for the higher checks.

Simplified Fake Example:

Person A takes his $25K per year SS at age 62 and invests it for 8 years, yielding $250K at age 70. Person B waits those 8 years expecting that bigger check at age 70. When they both turn 70 the government implements means testing and decides that both person A and B have enough money and reduces their benefits to ZERO. Person A wins having $250K.
jkern is offline   Reply With Quote
Old 02-08-2020, 11:48 AM   #73
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2003
Location: Florida's First Coast
Posts: 7,667
Quote:
Originally Posted by jkern View Post
I believe most people gloss over Legislation Risk when automatically choosing to delay SS for the higher checks.

Simplified Fake Example:

Person A takes his $25K per year SS at age 62 and invests it for 8 years, yielding $250K at age 70. Person B waits those 8 years expecting that bigger check at age 70. When they both turn 70 the government implements means testing and decides that both person A and B have enough money and reduces their benefits to ZERO. Person A wins having $250K.
Not sure that is a viable example, it would be if SS was not initially paid into by those receiving it (Like Insurance Annuities). At the very least one would have to be returned the payments plus a suitable interest.
__________________
"Never Argue With a Fool, Onlookers May Not Be Able To Tell the Difference." - Mark Twain
ShokWaveRider is offline   Reply With Quote
Old 02-08-2020, 11:54 AM   #74
Full time employment: Posting here.
 
Join Date: Apr 2011
Location: Castro Valley
Posts: 788
Quote:
Originally Posted by ShokWaveRider View Post
Not sure that is a viable example, it would be if SS was not initially paid into by those receiving it (Like Insurance Annuities). At the very least one would have to be returned the payments plus a suitable interest.
It's a totally fake example that has little to no change of happening. My point is that Legislation Risk can drastically change the future value of your benefits. Many people use the word "guaranteed" when describing their future bigger SS benefit for delaying their start date. It is far from guaranteed.
jkern is offline   Reply With Quote
Old 02-08-2020, 11:58 AM   #75
Recycles dryer sheets
Navigator's Avatar
 
Join Date: Feb 2014
Location: Austin
Posts: 246
Quote:
Originally Posted by Old Microbiologist View Post
So, genetics is another factor and a big one when trying to predict the future.
This is a common misperception. Genetics plays only a very small role in predicting how long you will live. Lifestyle is actually the biggest predictor of lifespan.
Navigator is offline   Reply With Quote
Old 02-08-2020, 12:04 PM   #76
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 13,203
Quote:
Originally Posted by jkern View Post
It's a totally fake example that has little to no change of happening. My point is that Legislation Risk can drastically change the future value of your benefits. Many people use the work "guaranteed" when describing their future bigger SS benefit for delaying their start date. It is far from guaranteed.
I'm not going to plan for cases which have little or no chance of happening.

In my analysis, I ran a version where SS gets cut the expected 25% across the board at the worst possible time for me, right when I'm about to turn 70 and start taking it. I think this is a reasonably likely case, with a possibility of happening at that time. It moves my breakeven age out to 94 with the assumptions I made. If I know for sure this would happen, I'd take at 62. But I can live with it if it does happen. It would still give me longevity insurance, though not as attractive as it would be with no changes.
RunningBum is offline   Reply With Quote
Old 02-08-2020, 12:12 PM   #77
Thinks s/he gets paid by the post
 
Join Date: Aug 2014
Location: Chicago West Burbs
Posts: 2,998
And yet those who take SS early, based on them not being able to predict the government's possibility of reducing or eliminating SS benefits, are doing just that. They are predicting that the government WILL reduce the benefits.

You can't have it both ways guys.
CRLLS is offline   Reply With Quote
Old 02-08-2020, 12:15 PM   #78
Full time employment: Posting here.
 
Join Date: Apr 2011
Location: Castro Valley
Posts: 788
Quote:
Originally Posted by Navigator View Post
This is a common misperception. Genetics plays only a very small role in predicting how long you will live. Lifestyle is actually the biggest predictor of lifespan.
Sometimes is just a roll of the dice. Someone close to me was just diagnosed with Cancer at age 62. Doesn't drink, doesn't smoke, good diet, regular exercise, no family history of cancer; it's one of those things that you will never really know.
jkern is offline   Reply With Quote
Old 02-08-2020, 12:18 PM   #79
Thinks s/he gets paid by the post
 
Join Date: Apr 2005
Location: Midwest
Posts: 2,963
Quote:
Originally Posted by Navigator View Post
This is a common misperception. Genetics plays only a very small role in predicting how long you will live. Lifestyle is actually the biggest predictor of lifespan.

Only in large populations. Cannot be applied to individual specimens. To think genetics , which are KNOWN factors in ones bag of predictive tools, matter less rather than more is anti-statistics. Genetics must be considered, especially when one knows their own lifestyle is not among those to be of any particular risk.
razztazz is online now   Reply With Quote
Old 02-08-2020, 10:24 PM   #80
Full time employment: Posting here.
 
Join Date: Aug 2015
Posts: 987
Again, because of all these cited examples, it makes no sense to ever base the decision on total collected lifetime. (Assuming you don’t need the SS to actually live on, but to compliment your income). Like any insurance, it is for “what if”. In this case, “what if I live very long” and for married couples where you are the high earner “what if I die first”. I can live exactly the same way, whether I file early or late. I will be 77 in 2035 when (if ever, which personally I think will never happen) the cuts are scheduled to earliest occur. By then it is beyond even any imaginable possibility that that SS would be eliminated. If its cut a percentage then I’d rather have a percentage of a much larger number. But I think thats never going to occur. And the likelihood of an economic meltdown or loss of investments from cyber theft or loss due to a bad market decision are way more likely. In the meantime, I base my income on assuming that amount is coming, and using my funds in the meantime, which is only for 7 years, max, in my case.
Perryinva is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Started Social Social Security at age 62 but my break even date is well into my 80s Retired and Restless FIRE and Money 96 12-24-2016 11:49 AM
Calculating SS break even point Lsbcal FIRE and Money 96 10-12-2011 08:28 AM
The hopeless optimist's break-even game! Grep FIRE and Money 23 03-28-2009 09:13 PM
Does your vegetable plot break even? Caroline FIRE and Money 28 04-12-2008 11:53 AM

» Quick Links

 
All times are GMT -6. The time now is 08:28 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.