Another reason to claim Social Security at 62

I could have taken more $ from my savings to live on, while deferring SS to a later age. I started living on cash when I retired at 58 and I probably had enough in cash to last me without SS until I was 70. But here are my reasons that I started taking SS at 65.

1. Lots of threads here and elsewhere suggesting taking SS at 62 or taking at 70. I tried to figure out what age would be best for us, but never came to a solid conclusion. 65 was an age that was a balance between the 62 and 70.
Certainly worse approaches than standing the middle ground :)
 
Throughout my working life and personal life, I’ve found the middle ground usually the most advantageous. Works well in investing, when deciding your equity/fixed income %. Also works really well when deciding how fast to drive.
 
It's not a bad rule of thumb IMO, But it's also a major oversimplification. For ex. you will never find me with a 50/50 mix of stocks to bonds even in retirement. But that's me -
 
Oh I don't know, maybe because of seeing death and disease strike family and friends who were alive and healthy at 62.
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That doesn't sound "likely." It sounds more like even odds.

For example, if you flip a honest coin and call heads, is it "likely" you'll be right? No. The odds are even, by definition, that it could be heads or it could be tails. "Likely" implies there is a statistical advantage.

I'm just suggesting you edit out the word "likely" from your comments in post #437.
No, its fine the way it is. You're picking nits. It is as likely as not that you will live to 86 (50% chance that you will and 50% chance that you won't).
 
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It's not a bad rule of thumb IMO, But it's also a major oversimplification. For ex. you will never find me with a 50/50 mix of stocks to bonds even in retirement. But that's me -
So agree with this. Whole nother topic, but if you look at history having 50,40 % of AA in fixed income vs 100 % equity has left you with substantially less money over most 10,20, 30 year time frames.
 
... 3a. I put as much $ as I could in my 401k during my working years, and I'm having a hard time mentally getting to the point where I begin withdrawing. I don't want to see the balance go down.
... 3c. Plus I don't want my income taxes going up - withdrawing from IRAs would raise my income taxes.
I've done Roth conversions since I retired at 56. In most of those years the Roth conversion exceeds what I would receive in SS, even at age 70, by a wide margin and my tIRA balance is still more than when I retired as the annual growth exceeds the withdrawals.

I don't mind voluntarily paying 8-10% now to avoid paying 12% or 22% later.
 
No, its fine the way it is. You're picking nits. It is as likely as not that you will live to 86 (50% chance that you will and 50% chance that you won't).
Not a big deal but FYI it's not nitpicking and that's not what you said before. You said just "likely"....saying something is likely means it will probably happen, not a 50/50 chance. Saying something is AS likely as something else, that's 50/50.
 
That doesn't sound "likely." It sounds more like even odds.

For example, if you flip a honest coin and call heads, is it "likely" you'll be right? No. The odds are even, by definition, that it could be heads or it could be tails. "Likely" implies there is a statistical advantage.

I'm just suggesting you edit out the word "likely" from your comments in post #437.
No.
Flipping a coin is a binary operation.
Projected lifespan from birth is a rather smooth curve with thousands of possible outcomes from age 0 to age 115 or thereabouts.
The use of "likely" for the 50/50 age is correct...
 
The most important thing is for me to make an informed decision based on my values and my personal situation. We are all very unique. Unique goals and aspirations. Unique risk profiles, medical, family, financial, inheritance, psychological, physiological, hereditary, location, .... you name it we've all got lots to think about in this decision.

There is not, nor will there ever be a "right" answer on this for any of us. This is not an 8th grade algebra test question. I sure as heck have no idea what the best decision is for you. But I really appreciate the good, constructive non-judgmental dialog and information that people here volunteer. It's really nice.

I am collecting as much constructive knowledge and information as I can, and will make an informed decision in consultation with DW, and not look back. My own worst critic is myself, so I will look at my choice from as many sides as possible and play devil's advocate before filing. No second guessing or Monday morning quarterbacking allowed!

In an earlier post I thought I had come to a decision. But after more reading, more learning, more modeling, and talking with DW, I'm not so sure anymore! I'll keep noodling for a while and I'm sure the right answer for me will come. There is no great hurry as I'm nearing 59 years old.

No one on this site is impacted by the choices I make other than me and my family. I respect what others choose to do because that's their business.
 
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To do what more precisely?
What started this portfolio of i-bonds was to create a replacement or addition to SS. So now that i have i-bonds, SS and some TIPS, i would like to find a calculator that allow me to analyze whether taking SS earlier and perhaps adding more TIPS and i-bonds would change that break even. Right now the only number i can eyeball is the fix(i-bonds) and real rate(TIPS).
 
^^^ You can go back to post #385 which showed the real differential cash flows between 62 and 70 and the real IRR of the real differential cash flows.

Go down the IRR column until you get to the real return of your TIPS. Let's say that your i-bonds and TIPS are returning 2% real.... then your breakeven would be between 81 and 82.

Alternatively, let's say that you expect to live to be 85, then the money that you are using while delaying SS would need to earn 3.77% or more real return in order for taking SS at 62 to be financially preferable. IOW, if you live to 85, a 3.77% real return is the break-even point... if your investments earn less than 3.77% real then you are better off delaying SS but if they earn more than 3.77% real then you are better off taking SS early.
 
Not a big deal but FYI it's not nitpicking and that's not what you said before. You said just "likely"....saying something is likely means it will probably happen, not a 50/50 chance. Saying something is AS likely as something else, that's 50/50.
I'll concede... it's not nit picking... it is just plain wrong.

If you go back to that post, there is a 50% or higher probability of the 62 year old living to 86. Obviously a really high likelihood that they will live to be 63 followed by declining probabilities, but 50% probability that they would live another 24 years to 86.

According to Perplexity:
  • A probability of more than 50% (e.g., 51%, 75%, 90%) indicates that the event is more likely to occur than not. This is generally considered "likely" or "probable."
 
^^^ You can go back to post #385 which showed the real differential cash flows between 62 and 70 and the real IRR of the real differential cash flows.

Go down the IRR column until you get to the real return of your TIPS. Let's say that your i-bonds and TIPS are returning 2% real.... then your breakeven would be between 81 and 82.

Alternatively, let's say that you expect to live to be 85, then the money that you are using while delaying SS would need to earn 3.77% or more real return in order for taking SS at 62 to be financially preferable. IOW, if you live to 85, a 3.77% real return is the break-even point... if your investments earn less than 3.77% real then you are better off delaying SS but if they earn more than 3.77% real then you are better off taking SS early.
Ok I think i understand this table at the edges 62 or 70. Here is what i cannot wrap my head around. Before 2021 my i-bonds holdings had an average 1.6% fix, but as most people in 2021-2022 bought a bunch 0% ones which brought my average down to <1.5%. And since I have bought a bunch of TIPs in the 2% real. So my total portfolio has increase, but SS has stayed the same (only inflation adjusted). I want to be able to characterize additions and subtractions.
 
I just wanted to add one more piece of food for thought...

I use Pralana for financial planning. As with many people in my situation, it recommends delaying SS until 70. However, that's with a life expectancy of 85. So, just as a thought experiment, I changed it to 75 to see what it recommended. It still recommended 70. Why? I have a spouse who is four years younger than me. There is a pretty good chance one of us will make it to 90. Even if I die at 70, she gets the higher benefit starting at her age 66, for life.

This is why I say that one's personal circumstances play a big role in making the SS decision. One size does not fit all.
 
Life insurance is a hedge against dying early and deferred SS is a hedge against living long. Insurance is a bet and you're only playing the odds, not a specific outcome.

*That* is worth pinning! Cuts through a bunch of assumptions and number-crunching to get at the principles behind why the decision is made.
 
I just wanted to add one more piece of food for thought...

I use Pralana for financial planning. As with many people in my situation, it recommends delaying SS until 70. However, that's with a life expectancy of 85. So, just as a thought experiment, I changed it to 75 to see what it recommended. It still recommended 70. Why? I have a spouse who is four years younger than me. There is a pretty good chance one of us will make it to 90. Even if I die at 70, she gets the higher benefit starting at her age 66, for life.

This is why I say that one's personal circumstances play a big role in making the SS decision. One size does not fit all.
But just know, her higher benefit is only the PIA amount, not the additional for you waiting to 70.

Flieger
 
*That* is worth pinning! Cuts through a bunch of assumptions and number-crunching to get at the principles behind why the decision is made.
Keep in mind that doesn't apply to everyone. I have no life insurance because my burial/cremation costs are covered and I've no interest in leaving money to anyone.
 
Flieger, the SPOUSAL benefit is based on the spouse's PIA. The SURVIVOR benefit will included delayed retirement credits if the spouse delays until age 70.
Yes. If I wait until 70, and I'm getting, say, $50K/year benefit, that is what my spouse will get if I die.
 
Keep in mind that doesn't apply to everyone. I have no life insurance because my burial/cremation costs are covered and I've no interest in leaving money to anyone.

I think it still applies - you have no need to hedge against dying early, so no need for life insurance.
 
I just wanted to add one more piece of food for thought...

I use Pralana for financial planning. As with many people in my situation, it recommends delaying SS until 70. However, that's with a life expectancy of 85. So, just as a thought experiment, I changed it to 75 to see what it recommended. It still recommended 70. Why? I have a spouse who is four years younger than me. There is a pretty good chance one of us will make it to 90. Even if I die at 70, she gets the higher benefit starting at her age 66, for life.

This is why I say that one's personal circumstances play a big role in making the SS decision. One size does not fit all.
I struggle with how to think about the effect of the survivor benefit if I die early. If I die early, she can use everything to fund her life that was formerly intended to fund both our lives. Also, I doubt she's going to continue blowing the dough on the expensive things we presently do together, as she's more frugal by nature. I don't expect her to live a reclusive life of a grieving widow, but I believe she would scale back naturally. She might get along just fine when I'm gone on less than she could otherwise have had, which should still be plenty. In summary, I'm not sure how big a deal to make of the survivor benefit in our decision of whether I, the higher earning and older spouse, should delay to 70.
 
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