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Old 04-17-2018, 09:11 AM   #61
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What does FIRECalc say?
FIRECalc would say I should, but in part because for FIRECalc I assume that we will live to age 100 (40 years). Like any life annuity if I die early then in retrospect it was not a wise investment, but if Iive long then it is a wise decision.
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Old 04-17-2018, 09:45 AM   #62
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I always get a kick out of these discussions. SS is designed to be actuarially neutral so there is no wrong answer for most folks. Given that, it comes down to personal situation, both financial and psychological.

For me, I hope to be able to delay until 70. I'm lucky enough to have a pension and savings, so I hope to not "need" SS to get by anytime soon.

Both my parents are alive and well in their late 80's. 3 of 4 Grandparents lived to mid-90's. With advances in medical science, it seems entirely possible I could see triple digits. (So hard to imagine).
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Old 04-17-2018, 09:51 AM   #63
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Any other thoughts? Good deal or not? Should I continue making premium payments or stop?
Make the payments. The math shows that you can spend more every year if you take the annuity at 8 years. No need to worry about withdrawal rates, how long you live, etc. etc. etc. This assumes you can afford the $750 a month payment and you don't care what you leave your heirs.

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Old 04-17-2018, 10:08 AM   #64
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I believe DashMan has the right attitude.

While I am well past 62, (75) and have been taking SS since 67. If at 62 you need the cash to continue you lifestyle and sleep at night take it at 62, if all seems to be going peachy and you don't need it wait.

The surviving spouse's SS payment should enter into your decission.
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Old 04-17-2018, 10:11 AM   #65
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One consideration in deciding when to take SS is what are your end goals? What are the most important factors to you? Is it to squeeze every dollar out of the SS system? Longevity insurance? Or something else?

There is the math part of when to take SS, and there is also a happiness factor. After a certain point, for some the diminishing marginal utility of wealth / losses hurt more than gains factors may come into play. The book Against the Gods: The Remarkable Story of Risk has nothing specifically to do with Social Security, but it did play a role in our decisions. By taking SS at 62, combined with our pension income, we can preserve our portfolio in inflation adjusted dollars and invest it mainly in low volatility asset classes. We're perhaps giving up the chance for more money in the long term by not investing more in stocks and delaying SS until 70, but we're also avoiding the chance of big losses. And we don't have to ever worry about any big stock market drops impacting our spending or net worth. YMMV.
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Old 04-17-2018, 10:54 AM   #66
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I've run a variety of numbers through Firecalc, and in my case at least, it doesn't seem to make much difference in success whether I take SS at 62, 70, or any year in between. I'd have to do it again to make sure nothing's changed, but I don't remember the success rate changing more than maybe 1%, at the most, from best to worst.

Now, I'm also single...maybe it would be different for a married couple? Also, while it's nothing to dismiss, SS isn't that big of a chunk of my anticipated retirement earnings.

I just pulled up my most recent statement, and it says if I take it at age 62, it would be about $1663/month, and if I wait until 70, it would be around $2998/month. So, waiting eight years gets me an additional $1335/month, but then I've had 8 years of having to spend more out of the portfolio, to make up for it.

Doesn't SS go up something like 7% for each year you delay, after age 62, until your full retirement age? And then, for every year you delay after FTR through 70, it's 8%? Well, "they" also say the stock market averages around 7-8% per year. So maybe that's why it's mostly a wash for me?

Anyway, at this point in life, I'm thinking about claiming at 62. But, I'm going to re-assess that as I get closer. I just turned 48 a couple weeks ago, so I still have 14 years to make up my mind
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Old 04-17-2018, 12:06 PM   #67
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I thought SS was taxable BY FEDS in all states? At least with Interest income of $60k and IRA Withdrawals of $35k it is.
Only above a certain amount, that may change. If we can keep our SS below, I think $32K a year and make up the rest with tax free cash, no income taxes. What little we make in bond W/D should be offset by expenses.
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Old 04-17-2018, 12:12 PM   #68
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Only above a certain amount, that may change. If we can keep our SS below, I think $32K a year and make up the rest with tax free cash, no income taxes. What little we make in bond W/D should be offset by expenses.
What about the return on your Tax Free Cash?
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Old 04-17-2018, 12:49 PM   #69
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What about the return on your Tax Free Cash?
That is actually a loss. So we squirreled away cash over the years and decided it offsets income nicely. So we didn't invest it.
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Old 04-17-2018, 12:51 PM   #70
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FIRECalc would say I should, but in part because for FIRECalc I assume that we will live to age 100 (40 years). Like any life annuity if I die early then in retrospect it was not a wise investment, but if Iive long then it is a wise decision.
I think FIRECalc can tell you something different. It will let you model alternate scenarios and contrast how your risk changes. How does the annuity impact your portfolio survivability, and how does that filter through to the surviving spouse? If there is no change or impact, the decision to continue with the annuity is simple finance - which option has the better return. If the annuity improves the risk profile for you or your surviving spouse, however, it might make sense.
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Old 04-17-2018, 01:02 PM   #71
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I just pulled up my most recent statement, and it says if I take it at age 62, it would be about $1663/month, and if I wait until 70, it would be around $2998/month. So, waiting eight years gets me an additional $1335/month, but then I've had 8 years of having to spend more out of the portfolio, to make up for it.
I think all of the social security provided "estimates" assume you continue working at the same salary until the age you claim. So that 2998 might be if you work til 70?
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Old 04-17-2018, 01:11 PM   #72
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That is actually a loss. So we squirreled away cash over the years and decided it offsets income nicely. So we didn't invest it.
We get nearly $50k a year return from our CASH CD's
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Old 04-17-2018, 03:58 PM   #73
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Our goal is to keep our taxable income low.

...

I believe taxes have to go up in time, especially if we are moving towards a single payer HC plan. I also believe SS is going to be compromised in some way over the next 8 years. That's my case for taking SS at 62.
Yes, taking SS sooner lowers your FIT in the early years. However, it can raise FIT in the later years.

I'm not saying that people always gain or always lose on taxes by deferring or by starting sooner. But, when I did the math for our situation, it turned out that, over time, the total taxes paid were about the same.

I assumed consistent tax rates. If I believed that tax rates will go up, I think I'd rather take my taxable income (i.e. IRA withdrawals) sooner rather than later.

(In our case, our long term investments were in traditional IRAs.
For us, it made sense to increase our taxable income in the early years by doing traditional => Roth IRA conversion.)
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Old 04-18-2018, 02:14 AM   #74
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Any other thoughts? Good deal or not? Should I continue making premium payments or stop?
I see what you did there

Continue making them until you get that SS check at 70
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Old 04-18-2018, 05:57 AM   #75
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For those who don't understand what bmcgonig is referring to above ^^^^, the question that I outlined in post 44 is the same as delaying SS from age 62 to age 66 or 70 since assuming a FRA of 66 the amounts that one could collect per month are ~$750, $1,000 or $1,320, represpectively.

I was being coy.
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Old 04-18-2018, 06:02 AM   #76
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I think all of the social security provided "estimates" assume you continue working at the same salary until the age you claim. So that 2998 might be if you work til 70?
If you use the Social Security Retirement Estimator, you can plug in zeros for your estimated income earnings until taking the SS and you will have an accurate estimate at each year from 62 to 70 if you wish.
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Old 04-18-2018, 06:04 AM   #77
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My only question is do I take at 65 or FRA (66) 70 for me is not even in the cards.
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Old 04-18-2018, 06:40 AM   #78
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The difference between 65 and FRA/66 is probably about 6.67% or so.... so if FRA benefit is $1,000 a month then a year earlier is probably $933.... so by giving up a year's worth of payments at $11,196 you'll get $804/year of COLAed benefits for the rest of your life.
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Old 04-18-2018, 06:53 AM   #79
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The difference between 65 and FRA/66 is probably about 6.67% or so.... so if FRA benefit is $1,000 a month then a year earlier is probably $933.... so by giving up a year's worth of payments at $11,196 you'll get $804/year of COLAed benefits for the rest of your life.
The Actual Numbers are: FRA = $2,304pm, 65 = $2,150 the difference is $154pm = $1848pa. So my Break even rate is 14 years. So I will be 79 (if I am lucky) by the time I break even.
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Old 04-18-2018, 08:54 AM   #80
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I didn't read all the responses, but I punched the numbers and have consider taking at 62 no matter if I need it or not. The difference between taking at 62 and 70 is a extra 14k if I live to 82. SS can not be inherited once you died it's over. So why not take at 62 bank or invest the money which will offset the 14K. The money then can be inherited or given to charity. Why let the government keep what you and your employers have paid? There's no guarantee how long one will live.
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