Trying to understand the SS age 70 wait

[RunningBum]

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Originally Posted by daylatedollarshort I probably get more extra value from a few seat filler subscriptions, sometimes $1K a month or more in free / discounted event tickets (nonpandemic times), than the potential difference from SS claiming ages for us.

One thing has nothing to do with the other.

[daylatedollarshort]

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Originally Posted by Montecfo From time to time folks discussing this topic have referred to getting a "return" by delaying social security. Though oft repeated by what I think are misguided financial journalists, you don't actually get a "return", at least not one that is surely positive, by delaying SS. Instead you receive the promise of a higher payment. The calculated "return" (if you insist on that term) could be positive if you live long enough, but it could be minus 100 percent, if you pass before claiming. Just to be clear...

+1. What the articles often miss is a probability tree type analysis - Probability Tree Diagrams (mathsisfun.com). With probability analysis, if you multiply the expected benefit by the probability you will be alive (less than 100% for anytime in the future and lower the further out you go in time). Plus add in the probability of future benefit changes, like potential SS cuts.

Like at age 70 you are going to get $30K, but there is only an 80% chance you will be alive, that makes the expected benefit $24K. If you think benefits might be cut for you in the future, then add in another 10% or whatever your best guess is, that makes the expected amount $21.6K.

The $30K is only guaranteed as much as you are guaranteed to be alive and your expected benefits are guaranteed to be unchanged.

[daylatedollarshort]

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Originally Posted by RunningBum One thing has nothing to do with the other.

It does in terms of our relative budget impact, which is what other posters in this thread have also pointed out.

[teej1985]

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Originally Posted by daylatedollarshort It does in terms of our relative budget impact, which is what other posters in this thread have also pointed out.

How do you get seat filler subscriptions? What types of events?

[Romer]

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Originally Posted by rodi I have *no idea* when I will take SS. (I turn 60 next week.) It will depend on the market/economy. Goal is to wait till 70 . . . . . . But if the market crashes ala 2008... I might pull the trigger sooner just to give us a bigger floor so I don't have to sell into a bad market. Flexibility is how I'm approaching it.

Happy pre Birthday. I am thinking along the same lines, looking towards 70, but depends on the market. 70 provides the greatest benefit to my wife if I pass early, but she would be OK even if I took it earlier by my calculations.

[RetireAge50]

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Originally Posted by daylatedollarshort +1. What the articles often miss is a probability tree type analysis - Probability Tree Diagrams (mathsisfun.com). With probability analysis, if you multiple the expected benefit by the probability you will be alive (less than 100% for anytime in the future and lower the further out you go in time). Plus add in the probability of future benefit changes, like potential SS cuts. Like at age 70 you are going to get $30K, but there is only an 80% chance you will be alive, that makes the expected benefit $24K. If you think benefits might be cut for you in the future, then add in another 10% or whatever your best guess is, that makes the expected amount $21.6K. The $30K is only guaranteed as much as you are guaranteed to be alive and your expected benefits are guaranteed to be unchanged.

Excellent point and something few people quite grasp.

[RunningBum]

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Originally Posted by daylatedollarshort It does in terms of our relative budget impact, which is what other posters in this thread have also pointed out.

What I mean is that doing one doesn't affect your ability to do the other. We spend a lot of time debating the SS question, but really an individual could probably decide with a half hour of thought which factors for them personally have the most influence on taking it now or later.

[daylatedollarshort]

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Originally Posted by teej1985 How do you get seat filler subscriptions? What types of events?

They kind of ebb and flow over time, and most are local programs. The main one right now that is national and actually active is Vet Tix. You have to be a veteran to join. Other programs include OTL (major cities), Rushtix (I think that one is local to the Bay Area and only online events for now) and in California, Discover and Go through the public library system. We've had tickets for all sorts of events from wine tasting weekends to comedy shows to New Year's Eve parties. Vet Tix lately has had all sorts of major league sports tickets, golf championships, and concert tickets (Trevor Noah, Jonas Brother's, Weezer, Bush) but it really depends on what city you live in or can travel to for events.

[daylatedollarshort]

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Originally Posted by RunningBum What I mean is that doing one doesn't affect your ability to do the other. We spend a lot of time debating the SS question, but really an individual could probably decide with a half hour of thought which factors for them personally have the most influence on taking it now or later.

That was exactly my point, in the context of my previous posts.

[chassis]

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Originally Posted by rodi SS is designed to be actuarially neutral... Except when it isn't. Examples of things that throw that off: - Minor age children get some SS till age 18. (This triggered my husband to retire at 62 and take SS then.... It was, mathematically, a no brainer.) - One spouse has lower SS earnings (or none) on their own record - by the larger earner delaying, they are providing a better survivor benefit for the lower earner. - Divorced and qualify for a fraction of ex's benefit from FRA till age 70... That has been phased out - but can still factor in for some of our older members. - SS reductions due to WEP or (forgetting the other acronym)... Some government pensions reduce, permanently the SS benefit. - Age difference between spouses can factor in - if the age difference is more than 5 years then several of the 'rule of thumb' maximize the end benefit get thrown out the window and you'll need to calculate your personal scenario. So... When to take SS is actuarially neutral if you are single, don't have kids or ex's, aren't effected by SS reductions/restrictions... But in real life - you have to look at your situation and pick what's best for you. As I mentioned above - DH started at 62. He is 9.5 years older than me. He had lower SS earnings. I have *no idea* when I will take SS. (I turn 60 next week.) It will depend on the market/economy. Goal is to wait till 70 so DH will get a bigger payout if I die first (which given our family history, despite our age difference, could happen.) But if the market crashes ala 2008... I might pull the trigger sooner just to give us a bigger floor so I don't have to sell into a bad market. Flexibility is how I'm approaching it.

Excellent. The impression I get from these threads is that some posters seem to be seeking a way to game or beat the system. Do the math. 2% net worth improvement for a single survivor at age 90+ is not beating the system. It's a wash; actuarially neutral.

Quote:

Originally Posted by daylatedollarshort +1. What the articles often miss is a probability tree type analysis - Probability Tree Diagrams (mathsisfun.com). With probability analysis, if you multiply the expected benefit by the probability you will be alive (less than 100% for anytime in the future and lower the further out you go in time). Plus add in the probability of future benefit changes, like potential SS cuts. Like at age 70 you are going to get $30K, but there is only an 80% chance you will be alive, that makes the expected benefit $24K. If you think benefits might be cut for you in the future, then add in another 10% or whatever your best guess is, that makes the expected amount $21.6K. The $30K is only guaranteed as much as you are guaranteed to be alive and your expected benefits are guaranteed to be unchanged.

Excellent. Too many variables that will indeed come into play, to get excited about SS claiming date/age.

[Romer]

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Originally Posted by chassis Excellent. The impression I get from these threads is that some posters seem to be seeking a way to game or beat the system. Do the math. 2% net worth improvement for a single survivor at age 90+ is not beating the system. It's a wash; actuarially neutral.

I don't see how you can make that statement. Everyone's situation is different and yes they should do the math. My Networth difference at 91 is 12% higher with taking it at 70 vs 62. To understand how much the survivor benefit was impacted you would have to know when one spouse will pass. I can see 2% if I were to pass today and 9% if I were to pass at 80. That is my own situation with MY level of spending, MY pension and everyone's situation is different

[chassis]

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Originally Posted by Romer I don't see how you can make that statement. Everyone's situation is different and yes they should do the math. My Networth difference at 91 is 12% higher with taking it at 70 vs 62. To understand how much the survivor benefit was impacted you would have to know when one spouse will pass. I can see 2% if I were to pass today and 9% if I were to pass at 80. That is my own situation with MY level of spending, MY pension and everyone's situation is different

@Romer indeed the arithmetic may indicate as you say. If you claim at 70, you are "behind" compared to claiming at 62. Thus a breakeven point needs to be addressed.

If your NW is 12% higher at age 91 and you started claiming at age 70, your breakeven is likely post-age 80. On your 81st birthday you are ahead of the game by a very small amount of money. This is actuarially neutral in my view.

[Romer]

The break point shifts based on ROI for my overall Portfolio to compare against withdrawls.

I didnt say I was behind compared to claiming at 62

You are entitled to your view that it is neutral. Others are also entitled to disagree with that. Every situation is different and I think a broad statement that taking it at any time is Neutral is misleading because that wont be true for everyone based on their situation.

In mine there isnt that much difference with us both alive and her taking the spousal support. If I pass first, then she would have the same Networth as we did the day I pass with $22K less income a year (SS@62), which would be significant and not Neutral. I know you will come back with a post about that not being significant for Net Worth

[qwerty3656]

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Originally Posted by daylatedollarshort +1. What the articles often miss is a probability tree type analysis - Probability Tree Diagrams (mathsisfun.com). With probability analysis, if you multiply the expected benefit by the probability you will be alive (less than 100% for anytime in the future and lower the further out you go in time). Plus add in the probability of future benefit changes, like potential SS cuts. Like at age 70 you are going to get $30K, but there is only an 80% chance you will be alive, that makes the expected benefit $24K. If you think benefits might be cut for you in the future, then add in another 10% or whatever your best guess is, that makes the expected amount $21.6K. The $30K is only guaranteed as much as you are guaranteed to be alive and your expected benefits are guaranteed to be unchanged.

It's not return people are focused on its insurance. What is the "return" on your home owners insurance if your house doesn't burn down?

[daylatedollarshort]

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Originally Posted by qwerty3656 It's not return people are focused on its insurance. What is the "return" on your home owners insurance if your house doesn't burn down?

It depends how much you need fire or longevity insurance. If you have a net worth of $5M and a $200K house, do you really need hazard insurance? Is it worth the cost to you? Or if you are worth $5M and SS nets you an extra $30K by delaying, if you live that long, is it that important of a decision?

Katsmeow covered this earlier in the thread - "People who even without SS have more than enough existing money to cover their spending between 62 and 70 without having to deplete the portfolio. For those people, they should do whatever they want to do. Waiting to 70 is much less risky because they can make it without SS. If you are in that situation then there is no real dilemma, just personal preference.

People who would have to severely curtail their living standard to make it to 70 without SS or who would have to entirely deplete their portfolio to do so. Most of those people really can't afford to wait to 70 and taking SS early is the rational choice.

People in the middle. People who could make to 70 without taking SS but they would have to eat into their portfolio to do it. It wouldn't deplete the portfolio but they would notice what they had to spend. This is the group of people where waiting is the most risky. Different people will make different choices for their situation. This is the group where the choice really could go either way."

[harllee]

I guess my net worth is lower than other people on this Forum (my net worth is definitely less than $5 million) and my SS payout is higher than most other people (combined SS payment of DH and I is around $60,000 per year) but when I run the numbers it appears to me that delaying SS to age 70 will be very beneficial to me and my husband. I am female and come from a long lived family so I factor that in also. To me that $60,000 per year SS payment is a major factor in my retirement plan.

[Andre1969]

I've run the numbers through FireCalc every once in awhile, and no matter when I project to take SS, it actually has very little bearing on my chances of success. So, because of that, I just don't worry about it.

Although, one thing I just thought of...the only thing I look for is chance of success. I don't look at how much the potential portfolio value ends up being. So I guess there's the chance that while all of my scenarios, from 62-70 are successful, some are "more" successful than others.

[daylatedollarshort]

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Originally Posted by harllee I guess my net worth is lower than other people on this Forum (my net worth is definitely less than $5 million) and my SS payout is higher than most other people (combined SS payment of DH and I is around $60,000 per year) but when I run the numbers it appears to me that delaying SS to age 70 will be very beneficial to me and my husband. I am female and come from a long lived family so I factor that in also. To me that $60,000 per year SS payment is a major factor in my retirement plan.

I just threw out those numbers as an example to make it more obvious there is a continuum of ranges where the decision becomes not so important.

[ShokWaveRider]

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Originally Posted by Montecfo From time to time folks discussing this topic have referred to getting a "return" by delaying social security. Though oft repeated by what I think are misguided financial journalists, you don't actually get a "return", at least not one that is surely positive, by delaying SS. Instead you receive the promise of a higher payment. The calculated "return" (if you insist on that term) could be positive if you live long enough, but it could be minus 100 percent, if you pass before claiming. Just to be clear...

Not only that, you miss out on the reduced SS payments. In the case one takes SS at 62 at say $1,000 pm. That is $12,000 per year. If full retirement age is 67 that is 5 x $12,000 = $60,000. OK you get more at 67 but miss out on that $60k in the interim. $96k if you wait till 70.

[teejayevans]

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Originally Posted by ShokWaveRider Not only that, you miss out on the reduced SS payments. In the case one takes SS at 62 at say $1,000 pm. That is $12,000 per year. If full retirement age is 67 that is 5 x $12,000 = $60,000. OK you get more at 67 but miss out on that $60k in the interim. $96k if you wait till 70.

But then there’s taxes, if income is $50k and it’s broken down IRA/SS: 15/35, taxes are ~$250, if reversed 35/15 it’s ~$3350. So you might want to spend down IRA to have an extra money to keep to yourself.