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Old 02-13-2021, 06:29 AM   #41
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DGF is already taking SS in SSDI form at 59 y.o.
I will wait until at least 66 - 70 y.o. due to ACA management of income plus small lump sum pension at 65 y.o.
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Old 02-13-2021, 07:38 AM   #42
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Originally Posted by Boston_Bulldog View Post
I am currently 55 and DW is 57. We are a couple years away from a happy retirement. I just ran some Social Security retirement estimates for both of us and then ran a few simple models of taking the Social Security benefit at ages 62, 63, 64, 65, 66, 67 or 70. The short summary of my findings was that it is either better to take the benefit at age 62 or age 70...but nothing in between. I have often heard "wait until you reach 67", but my calculations do not support this. I have posted the model in a PDF here:

https://pdfhost.io/v/zv9u7qjc6_Socia...odelerxlsx.pdf

Assumptions and Findings

As you know, based on your age, there is a "full benefit" age. For me, my full benefit comes at age 67. If I take the benefit early, e.g., age 62, there is a reduction schedule. Alternatively, if I take the benefit at 70, there is a relatively large increase of 8% a year for every year above full retirement age. The reduction schedule for those born 1960 or after is:

Age Percent of Full Benefit Monthly Benefit
62- 70.00%
63- 75.00%
64- 80.00%
65- 86.67%
66- 93.33%
67- 100.00%
70- 124.00%

The attached PDF shows an assumed full retirement benefit of $2,000 a month. I then show the cumulative earnings for every year, if you take it at 62, 63, 64, etc. I run this through age 100. I added a modest assumed rate of return of 3% on the money (impact of rate of return will be explained later).

My findings are you are better off taking the benefit at age 62 if you are going to live through age 76. If you live to age 77 or higher, you are better off taking the benefit beginning at age 70. THERE IS NO SCENARIO WHERE YOU ARE BETTER OFF TAKING THE BENEFIT AT AGE 63, 64, 65, 66 OR 67. Well here's one example. If you die before age 85.5 but after age 82 it would make taking it at 67 look good...

If you increase the assumed rate of return/interest rate (on SS income received) to a higher rate of return, it makes the age 62 distribution more advantageous into the later years. For instance, if you make the assumed rate of return 7% (vs. 3%), you are better off taking benefit at age 62 vs. 70 until age 82. Again, there is never a scenario that you are better off taking the benefit at age 63, 64, 65, 67.

This also doesn't factor in an early death, which would almost always make the age 62 benefit a better option.

I am sure there have been other discussions on this topic and I am sure I might be missing something in my thinking. If I am wrong in my assumptions, I would appreciate some feedback.

Please review the model and provide feedback.

Thanks!

Well I understand your logic but by my calculations at your 3% return the point at which age to switch to 70 would be 83.36 not 77 as you have stated. There is a flaw in your spreadsheet. You show numbers in your age 70 column accumulating starting at age 68 in your left column. Your age 70 column should shift down 2 years. This extra 2 years plus the extra compounding @3% pushes the switch over age to 83.36 and not 77.
See my enclosed spreadsheet. Even at 0% return the switch over point is still 80.37. The reason I had asked about 0% was that I had run that on my own spreadsheet and wanted to see f you got the same answer. That led me to discover the flaw in your spreadsheet.

This would make your argument for taking it at 62 and invest it at 3% even better. But if we entered a bear market and your returns were negative 3% or worse the opposite would be true and you might be better off to wait to take ss. OK I just ran it assuming a -3% return for the years from 62 to 70 and then from 70 on put your positive 3% return in. It still looked like you would be good to age 79 (instead of the 83.36)if you took it at 62 before the age 70 total takes over. No too bad. This is the gamble one takes by taking it early. If someone took it at 62 say 8 years ago and invested it all in an index fund they would be looking pretty good right now but no guarantees going forward.

Back to assuming the positive 3% as your example spreadsheet: The age 70 total doesn't catch the age 67 total until you reach 85.5.
It's also interesting to see that if you did wait to 67 you probably would be better to take it at 68 or 69 because the age 70 never catches the total of either of these until well past 100.
Now having said all that all these totals assume that you never spend any of this money and the totals keep growing at 3%, This is fine if you want to pass the money along to heirs. In my situation we have no heirs so would be spending most or all of each years checks. This would change the "break even" numbers but wouldn't matter to me at that point.


Sorry for the long winded post and I could have missed something myself. Check my work and see if I missed something or misunderstood yours.
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File Type: pdf ss at age 67 comaprison.pdf (168.1 KB, 31 views)
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Old 02-13-2021, 07:57 AM   #43
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Originally Posted by Dtail View Post
DGF is already taking SS in SSDI form at 59 y.o.
I will wait until at least 66 - 70 y.o. due to ACA management of income plus small lump sum pension at 65 y.o.

Yes ACA management and pensions and roth conversions all can effect when you might take ss.
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Old 02-13-2021, 08:03 AM   #44
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It may sound simplistic but I think any "extra" money a person can have coming in at age 62 allows a person to do and enjoy more things/activities in life while they have the physical ability to do them. The value of those extra dollars at a younger age goes beyond the investment calculations. There is a good chance many us will have slowed down physically and possibly mentally between 62 and 70.

Maybe so but look at post #20 to see how you could actually spend more while younger not less by waiting to 70 to take it.
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Old 02-13-2021, 08:04 AM   #45
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Originally Posted by shotgunner View Post
It may sound simplistic but I think any "extra" money a person can have coming in at age 62 allows a person to do and enjoy more things/activities in life while they have the physical ability to do them. The value of those extra dollars at a younger age goes beyond the investment calculations. There is a good chance many us will have slowed down physically and possibly mentally between 62 and 70.
It's simplistic, and incorrect.

Knowing that I've got more money coming at 70, I can safely spend more from my investments from 62-70, giving me just as much spending money.
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Old 02-13-2021, 08:11 AM   #46
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It's simplistic, and incorrect.

Knowing that I've got more money coming at 70, I can safely spend more from my investments from 62-70, giving me just as much spending money.
You are certain you will be alive at 70 as well? I had one friend 66 and the owner of a motorcycle repair shop I use, 71. Both slim and in good shape die from Hemorrhagic strokes in the last 10 months.
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Old 02-13-2021, 08:33 AM   #47
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You are certain you will be alive at 70 as well? I had one friend 66 and the owner of a motorcycle repair shop I use, 71. Both slim and in good shape die from Hemorrhagic strokes in the last 10 months.
You shouldn't plan around dying early. You need to go on the presumption that you will have a long lifetime because you don't want to run out of money, so you can plan accordingly to make it last.
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Old 02-13-2021, 08:35 AM   #48
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You shouldn't plan around dying early. You need to go on the presumption that you will have a long lifetime because you don't want to run out of money, so you can plan accordingly to make it last.

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Old 02-13-2021, 08:36 AM   #49
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You are certain you will be alive at 70 as well? I had one friend 66 and the owner of a motorcycle repair shop I use, 71. Both slim and in good shape die from Hemorrhagic strokes in the last 10 months.

Well I don't want to answer for runningbum but. Neither of those examples changes what he said. If you look at the example in post 20 that I mentioned you will see why you can spend more at 62-70 by waiting to 70. He didn't say wait to 70 and not spend anything.
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Old 02-13-2021, 08:40 AM   #50
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You are certain you will be alive at 70 as well? I had one friend 66 and the owner of a motorcycle repair shop I use, 71. Both slim and in good shape die from Hemorrhagic strokes in the last 10 months.
That has absolutely nothing to do with the point you made. Not knowing when I would die, I would be spending the same total amount whether I took SS at 62 or took it at 70.

I also don't make decisions based on a couple of individual cases. If I did, maybe I'd base it on the case of the 88 year old guy I skied with last week.

And no, I'm not certain of anything. I'm not deciding when to take SS based on certainty, I'm probably going to delay to 70 in case I live to a very old age. Why do so many people fail to grasp that concept? That's the most likely case that I would run short on money. If I die at 66 there's virtually no chance I run out of money. So I'm optimizing for the "worst case" financially, of living to a very old age.
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Old 02-13-2021, 08:48 AM   #51
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You are certain you will be alive at 70 as well? I had one friend 66 and the owner of a motorcycle repair shop I use, 71. Both slim and in good shape die from Hemorrhagic strokes in the last 10 months.

It痴 not a game to see how much you can gain from SS before we die. My goal, at least, is to be financially secure through my wife痴 and my lives, no matter how long they are. A secondary goal is to leave a nest egg for our kids. We don稚 need SS now and taking it would cost us more in taxes as we do Roth conversions. By delaying we can convert more and get higher monthly SS checks beginning at 70 to help us as we age to whatever age that may be. I think some people are so emotionally focused on getting the most out of SS no matter what, and fail to look at the big picture.
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Old 02-13-2021, 09:13 AM   #52
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Well I understand your logic but by my calculations at your 3% return the point at which age to switch to 70 would be 83.36 not 77 as you have stated. There is a flaw in your spreadsheet. You show numbers in your age 70 column accumulating starting at age 68 in your left column. Your age 70 column should shift down 2 years. This extra 2 years plus the extra compounding @3% pushes the switch over age to 83.36 and not 77.
See my enclosed spreadsheet. Even at 0% return the switch over point is still 80.37. The reason I had asked about 0% was that I had run that on my own spreadsheet and wanted to see f you got the same answer. That led me to discover the flaw in your spreadsheet.

This would make your argument for taking it at 62 and invest it at 3% even better. But if we entered a bear market and your returns were negative 3% or worse the opposite would be true and you might be better off to wait to take ss. OK I just ran it assuming a -3% return for the years from 62 to 70 and then from 70 on put your positive 3% return in. It still looked like you would be good to age 79 (instead of the 83.36)if you took it at 62 before the age 70 total takes over. No too bad. This is the gamble one takes by taking it early. If someone took it at 62 say 8 years ago and invested it all in an index fund they would be looking pretty good right now but no guarantees going forward.

Back to assuming the positive 3% as your example spreadsheet: The age 70 total doesn't catch the age 67 total until you reach 85.5.
It's also interesting to see that if you did wait to 67 you probably would be better to take it at 68 or 69 because the age 70 never catches the total of either of these until well past 100.
Now having said all that all these totals assume that you never spend any of this money and the totals keep growing at 3%, This is fine if you want to pass the money along to heirs. In my situation we have no heirs so would be spending most or all of each years checks. This would change the "break even" numbers but wouldn't matter to me at that point.

Sorry for the long winded post and I could have missed something myself. Check my work and see if I missed something or misunderstood yours.
I noticed another flaw related to Boston Bulldog's chart's "Assumed Interest Rate - 3%". From one year to the next, in the chart, there's no COLA or inflation adjustment in the SS benefits received. However, the interest rate is listed as 3%, and the full 3% is added on in the chart. So, as the chart is now, the 3% interest rate would actually be a a "real" return, so that would mean an actual interest rate that is 3% ABOVE inflation. That is unlikely - for example, it would mean about a 5% interest rate today, when actual interest rates are less than 1%. So, to get a "real" return of 3%, you would need to invest the money at greater risk (e.g. stock funds), and that's not exactly apples to apples when comparing to guaranteed SS benefits.

Boston Bulldog added:
Quote:
if you make the assumed rate of return 7% (vs. 3%)
And if you assumed a rate of return of 7%, note that is a "real" return based on how this chart calculated returns, meaning 7% ABOVE the inflation rate, so that's about an actual 9% absolute return today.

Quote:
9% return = age 91
That's a real return of 9%, so that's an actual 11% absolute return today.

Quote:
10% return = age 100+
That's a real return of 10%, so that's an actual 12% absolute return today.
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Old 02-13-2021, 09:15 AM   #53
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I知 55. I知 going to wait to decide based on what my life and finances turn out to be at 62, 63, 64....70.
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Old 02-13-2021, 09:26 AM   #54
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DGF is already taking SS in SSDI form at 59 y.o.
I will wait until at least 66 - 70 y.o. due to ACA management of income plus small lump sum pension at 65 y.o.
Same here. Waiting until Medicare age because the SS income prior to that would be a hit on my ACA subsidies... if they are still around by the time I'm 62.

Ag 62 is a non-starter!
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Old 02-13-2021, 09:58 AM   #55
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I知 55. I知 going to wait to decide based on what my life and finances turn out to be at 62, 63, 64....70.
I知 60 and I知 going to model the comment made earlier that it makes most sense to go at 62 or 70 but no mathematical logic to go at any of the in between years. I知 focused on waiting until 70, but I could be convinced to go at 62. I have a few years to consider it.
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Old 02-13-2021, 10:07 AM   #56
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I知 60 and I知 going to model the comment made earlier that it makes most sense to go at 62 or 70 but no mathematical logic to go at any of the in between years. I知 focused on waiting until 70, but I could be convinced to go at 62. I have a few years to consider it.

Well as I pointed out there is a flaw in his spreadsheet at least according to me and I included one that shows there are scenarios which show "mathematical logic" to go in between 62 and 70.
I included a spreadsheet of my own. You might be interested in my post and response to his analysis and see if my logic makes any sense before you go thru modeling that
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Old 02-13-2021, 10:13 AM   #57
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There are multiple reasons why I started SS at 62. The first is that with modest to average returns my break even point is in my early to mid 80's. The second, I would rather spend other people's money instead of my own. It use to be my money, but the second the government taxed me it became their money. The third is legislation risk. The government can change the rules at any given time and maybe say I have have enough money and not give me anymore.
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Old 02-13-2021, 10:36 AM   #58
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There are multiple reasons why I started SS at 62. The first is that with modest to average returns my break even point is in my early to mid 80's. The second, I would rather spend other people's money instead of my own. It use to be my money, but the second the government taxed me it became their money. The third is legislation risk. The government can change the rules at any given time and maybe say I have have enough money and not give me anymore.
The above plus the potential impact if spouse or I die early are why we plan to take at 62 as well.
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Old 02-13-2021, 10:52 AM   #59
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Here's a break-even chart. This would be based on absolute returns equaling the inflation rate, NOT "real" returns of 3% as in the chart previously posted. This isn't my own chart nor did I calculate it.
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Old 02-13-2021, 11:03 AM   #60
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Here's a break-even chart. This would be based on absolute returns equaling the inflation rate, NOT "real" returns of 3% as in the chart previously posted. This isn't my own chart nor did I calculate it.
I don稚 understand the chart. Can you give an example of how it works? For example, if I take SS at 64, what is my break even. Also, break even compared to what? Taking it at FRA? Or break even compared to waiting until 70?
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