SS Redux

[mickeyd]

Of all the subject matter that comes up here, I dare say that this topic has been analyzed more than most. So, why bring it up again? Heck, I don't know. I just liked the way that this article was written, I guess.

Now you can see why there is confusion with regard to Social Security. There are no hard and steadfast rules when dealing with Social Security. Each individual or couple should do an analysis of their current retirement situation and see what makes sense. Each person’s scenario will probably lead to a different answer but the analysis has to be thorough because Social Security can be a very big piece of the retirement puzzle. With the advance of modern medicine and increase in longevity for the average American delaying Social Security could be an optimal way to maximize your retirement benefits.

INVESTOR SOLUTIONS - THE STRATEGIC ADVANTAGE

 

[Sam]

I love each and every article that tries to influence people to delay SS. I don't care what the reasons are!

 

[cute fuzzy bunny]

I have a newly packaged investment product for sale.

Give me your money and I'll invest it for you. An an individual, you'll have approximately a 5-10% chance of making any money, but I wont pay you the profits until after you're 85. As a couple, your odds rise to about 25% but the profit payments wont start until you're 90.

I'll send you a statement once a year, but on the statement I'll print a warning that I might not pay you back at all, and even if I do, it may only be 70c on the dollar.

Also, be advised that I've cut payments in the past by changing some formulas for payout and may do so again. I may also decide that if you have a lot of money that you have to pay me a percentage back or that you may be just too rich to need the money.

Any takers?

 

[mickeyd]

Any takers?

Of course not! But if you have the capacity to force us all to invest in your product, that would change all of the rules.

 

[cute fuzzy bunny]

Well now, I do have an alternative.

I can offer you an investment that you have a 90% chance of making a profit on, I'll pay you right away, and odds are that you'll get back most or all of your principal and be able to enjoy the extra money while you're a lot younger than 90.

Plus, since this investment pays you dividends earlier, you can defer withdrawals on your other investments, allowing those to grow, perhaps tax deferred.

You'll be between 85 and 90 before you'd get a benefit of the previously mentioned investment vs this one. And you're most likely to be dead, in which case I'll keep all of the extra money.

Worst case downside is that you live past 90 and might have to forego a couple of bucks between then and your demise.

So what'll it be?

 

[TromboneAl]

I'll wait until I'm 61 years old, then I'll spend a full year reading all the "Delay SS?" threads on this forum.

 

[Nords]

I'll wait until I'm 61 years old, then I'll spend a full year reading all the "Delay SS?" threads on this forum.

IIRC SS wants you to file three months before your birth month.

Only having nine months to analyze all the threads that'll accumulate here by your 62nd birthday will be cutting it pretty close!

 

[W2R]

IIRC SS wants you to file three months before your birth month.

Only having nine months to analyze all the threads that'll accumulate here by your 62nd birthday will be cutting it pretty close!

Gee, I'm 59 already so I'd better start! I am pretty sure that I know what I will do, but every now and then I am not so sure.

 

[martyb]

I know what I'm doin' and I'm only 49. I'll be taking my $$ at 62, who knows if I'll see 63?

 

[FinanceDude]

I know what I'm doin' and I'm only 49. I'll be taking my $$ at 62, who knows if I'll see 63?

If you have enough to FIRE, why not take it at 62? You might be dead at 67, 70,or whatever magic number the SS folks dig up.

Waiting to get more money if you don't die (but knowing mortality says otherwise) is a pretty wild risk...........

 

[mickeyd]

Waiting to get more money if you don't die (but knowing mortality says otherwise) is a pretty wild risk

I guess that I do not see it that way FD. Otherwise I would not try to spread out my retirement stash using 4%SWR or simular formula. I could spend 10% in year one and forget about risk and hope that I got 20% returns in the future.

It's a good thing that SS is flexible so we can all screw it up our own way.

 

[FinanceDude]

It's a good thing that SS is flexible so we can all screw it up our own way.

However, the SS folks might screw it up for us. I for one think those of us under 50 are going to get screwed one way or another.

My dad started taking SS at age 65. On his 73rd birthday, he thanked all of us kids by announcing: Congratulations, I have NOW started taking out MORE than I EVER paid in.........

 

[teejayevans]

If you have enough to FIRE, why not take it at 62? You might be dead at 67, 70,or whatever magic number the SS folks dig up.

Waiting to get more money if you don't die (but knowing mortality says otherwise) is a pretty wild risk...........

I disagree...look at this way (assuming you don't need the money).
If you wait and die early, you don't care
If you wait and die late, you have more money and you stuck it to the Govt
The worst that can happen is you don't care!!
TJ

 

[FinanceDude]

I disagree...look at this way (assuming you don't need the money).
If you wait and die early, you don't care
If you wait and die late, you have more money and you stuck it to the Govt
The worst that can happen is you don't care!!
TJ

I look at SS as a pension, because that's what it is........

All things being equal, would you like your pension NOW or "maybe" later??

 

[FinanceGeek]

The way to analyze "when to take social security" would be the same as analyzing any other investment - namely to compute the net present value of the discounted cash flows associated with taking it at "some age" until "you die". The tricky parts are knowing one specific input this equation, namely when you depart this mortal coil.

That of course assumes that there is no discontinuity due to failure of the program to meet its obligations. For those near their 60s now I don't worry about this, but personally I believe that anybody under 45 or so will find that Social Security and medicare will both be "means tested" by the time their alleged eligibility age arrives. And, as I say to my DW (and believe me anybody with a FIRE mindset on savings and investment should agree), "with any luck, we won't qualify".

 

[OAG]

The both are already is "means tested". All that has to be done now is adjust the thresholds (lower or raise them) where the benefit is reduced or the premium increased. For an example crank SS to 100% vs 85% taxable and crank the Medicare premiums upwards.

 

[Nords]

The both are already is "means tested". All that has to be done now is adjust the thresholds (lower or raise them) where the benefit is reduced or the premium increased. For an example crank SS to 100% vs 85% taxable and crank the Medicare premiums upwards.

Yup. Essentially Social Security will be a club whose membership you hope to avoid, or at least have the after-tax SS receipts pay for the Medicare premiums.

The earlier one ERs, the more zeroes in one's earnings record, the less meaningful this debate becomes.