Impending retirement.... probably

[Koolau]

^^^^^^^

Agree. Unless you need the money - and you can start anytime after 62. So, for us, I waited until 70. So far, (maybe) a good idea. Heh, heh, ask me in 4 years!

 

[pook]

Welcome to the forum! We're in a similar situation where we are FI and I've left the full-time, but my better-half plans to continue in her career for several more years.

We were living on a budget based on her salary, and saving well over 50% of our combined income for nearly 7 years before getting to the point where I could walk away from my career.

It seems like we both stumbled on the same or similar strategies. Smartest thing we did when I retired from my first career was deciding that we would not touch that pension money to fund our lifestyles. Second smartest was deciding to not use my salary to fund our lifestyles either.

 

[pook]

Hi pook...some comments:

--Your FA saying 100% you can retire is 100% right. An engineer would say...BY INSPECTION of the numbers no need to even run a calculation. You can retire now.

--I retired with three kids at Penn State. It is doable. simply allocate the expenses for this.

--Your "emergency cash" holding is way too high. My, how did the old timers retire w/o any such "emergency designation"? Easy. You simply withdraw any cash needed from one of your several portfolios. And with your pensions exceeding expenses, what are these "emergencies?" Bet you cannot name one of over $3000 immediate costs.

--Suggest don't delay taking SS...Take at age 62. Invest all of it. A return exceeding 4% means a break even point into the age eighties. If you delay let's say to age 70, and you died at age 70, your family would rightly say: What were you thinking leaving all this money on the table with the gvt., as you would have received nothing.

-Lastly, you wrote: combined our pensions will be $13K monthly minimum, so below our planned monthly budget. I think you meant to say ABOVE (or EXCEEDING) our planned monthly budget.

---------------------
Best wishes in retirement..

R48

Thanks R48,

And agree that we need to figure out our savings account balances. With our intent originally to hopefully purchase a retirement home outright, we want to avoid the volatility of the stock market, with some changes (DW working for 3+ more years, etc, it does make sense to put it to work in the market..

Good catch on the typo. Yes, we expect our combined pensions being ABOVE our expenses. Even if one of us unexpectedly passes, and their pension goes away, I feel like there is enough to ensure the surviving spouse has a comfortable safe retirement.

 

[pook]

My suggestion would be to use some of the "emergency cash to pay the taxes on Roth conversions. Lots of discussions here about the reasons. Of course, YMMV.

Thanks Koolau, that is something we had not though of…will discuss with DW when I get back from this work trip

 

[pook]

I think this is poor advice.

The table below shows the IRR of delaying from 62 to 70. Since the SS cash flows increase with inflation, the IRRs are real returns (after inflation). So if nominal return hurdle was 4% and inflation was 2%, the real return hurdle rate would be 2%, so the breakeven point would be 82.

Below the table is a screenshot from the American Academy of Actuaries and Society of Actuaries Longevity Calculator that suggests that a 62 year old male non-smoker of average health will likely live to be 86, 4 years beyond the age 82 breakeven point.

So assuming a 4% nominal return hurdle rate and 2% inflation if the OP his healthy he would be better delaying SS until 70.

​	SS at 62​	SS at 70​	Difference​	Real IRR​
62​	70​	​	-70​	​
63​	70​	​	-70​	​
64​	70​	​	-70​	​
65​	70​	​	-70​	​
66​	70​	​	-70​	​
67​	70​	​	-70​	​
68​	70​	​	-70​	​
69​	70​	​	-70​	​
70​	70​	124​	54​	​
71​	70​	124​	54​	​
72​	70​	124​	54​	​
73​	70​	124​	54​	​
74​	70​	124​	54​	​
75​	70​	124​	54​	​
76​	70​	124​	54​	​
77​	70​	124​	54​	​
78​	70​	124​	54​	​
79​	70​	124​	54​	-0.40%​
80​	70​	124​	54​	0.62%​
81​	70​	124​	54​	1.48%​
82​	70​	124​	54​	2.20%​
83​	70​	124​	54​	2.81%​
84​	70​	124​	54​	3.33%​
85​	70​	124​	54​	3.77%​
86​	70​	124​	54​	4.16%​
87​	70​	124​	54​	4.50%​
88​	70​	124​	54​	4.80%​
89​	70​	124​	54​	5.06%​
90​	70​	124​	54​	5.29%​
91​	70​	124​	54​	5.49%​
92​	70​	124​	54​	5.67%​
93​	70​	124​	54​	5.83%​
94​	70​	124​	54​	5.97%​
95​	70​	124​	54​	6.10%​
96​	70​	124​	54​	6.22%​
97​	70​	124​	54​	6.32%​
98​	70​	124​	54​	6.41%​
99​	70​	124​	54​	6.50%​
100​	70​	124​	54​	6.57%​

View attachment 55914

Thanks for the chart, and we are thinking a similar thought process. We are both pretty healthy, exercise a lot, keep our weight down, etc. Her side of the family tends to live into their 90’s. My side not so much, but they all smoked, lived on fried food, never worked out, overweight, etc. I’m hoping to buck the odds by doing the opposite lol

 

[retired at 48]

Hi @pb4uski .

--I assume from your post you used a 4% return rate of investment. I posted breakeven point into "mid eighties." You have age 82. So the discussion for each to have with themselves is: Do you want to be behind for two decades, breaking even at age 82, for a small gain when living after that date?? A time when typical elderly spending for themselves is reduced except for ADL.

--I consider 4% is a rock bottom investment return. View most Mutual funds/ETFs over two or more decades and one gets total returns exceeding 4%. One can get stock funds with 4% dividend returns and the growth in twenty years, even if just capturing inflation, added in. If one simply assumes an investment return of the historical stock market less two percent annually, break even is into the age hundreds.

--Growing ones SS income by waiting to age 70 is a mirage; one cannot game the system; any excess SS monies grow at a reinvestment rate through use of interagency bonds of about 2% annual returns.

--SS money is in taxable accounts. We now have investment vehicles, especially the Exchange Traded Funds, whereby one pays de minimis capital gain taxes annually. Long story why but IRS does not require ETFs to declare cap gains on their daily portfolio readjustments. This means one can invest the monies in a small cap growth ETF, with minimal annual dividend income, and you have untaxed growth until you sell. Hold till you die and you get a "stepped up" tax basis. Your kids will love that you did this! OTOH you could die in your seventies and leave all that money on the table.

Good to discuss...

R48

 

[pb4uski]

WADR, you are short sighted.

Here is another way of looking at it. Let's say that your FRA is 67 and your PIA is 100. If you take at 62, you get 70 or if you take at 70 you get 124.

So if you delay to 70, you forgo receiving 70 for 8 years or a total of 560 in exchange for an additional 54 annually for life. 54 in relation to 560 is a 9.64% payout rate.

According to immediateannuities.com a fixed benefit life SPIA for a 70 year-old male has a 8.86% payout rate.

So if you delay SS, not only do you get a higher payout rate than what is commercially available the benefit is also COLA adjusted.

So essentially, delaying SS to 70 is like buying a COLA adjusted life annuity from the US government. You can't buy COLA adjusted annuities anywhere else... insurers don't issue them. At best you might be able to find a life annuity with a fixed percentage increase in the benefits, but if we have periods of high inflation that fixed percentage increase doesn't cover the decrease in spending power.

In short, delaying SS is a screaming deal for inflation adjusted benefit payments for those who want diversification of retirement funding sources.

The reason that most people claim earlier than 70 is because they can't afford to delay. Many, many of our forum members who can afford to delay have (though some have not, in some cases for good reasons). But I guess that you think that you know better. Good luck to you.

 

[pb4uski]

... --Growing ones SS income by waiting to age 70 is a mirage; one cannot game the system; any excess SS monies grow at a reinvestment rate through use of interagency bonds of about 2% annual returns. ...

This is a false narrative. The FACT is that if you claim at 62 you get 70% of your PIA and if you claim at 70 you get 124% of your PIA. What happens within the SS Trust Fund... if they get a 2% yield or a 10% yield... doesn't change what you get at all.

 

[pb4uski]

... --I assume from your post you used a 4% return rate of investment. ...

No, I did not use any specific investment rate of return. Do you understand what IRR is?

IRR is the discount rate that makes the cash flows equal. So the cash flows in the SS at 62 column discounted at the IRR would equal the cash flows in the SS at 70 column discounted at the IRR... IOW the cash flows are economically equivalent at the IRR.

In this case since both the age 62 benefits and the age 70 benefits both increase with inflation the IRRs are real rates of return, not nominal. A 2.2% real rate of return is generally competitive with similiar duration TIPS.

 

[Koolau]

The reasons I chose age 70 were: 1) We didn't need the money sooner. 2) It gave us time to do more Roth conversions and keep taxes lower) 3) It gave DW a higher survivor benefit when I pass (a strategic decision because we had opted for a lower survivor benefit in my pension in order to increase the early payouts).

IMHO "THE" reason to take SS early is because you need the money. YMMV

 

[retired at 48]

The reasons I chose age 70 were: 1) We didn't need the money sooner. 2) It gave us time to do more Roth conversions and keep taxes lower) 3) It gave DW a higher survivor benefit when I pass (a strategic decision because we had opted for a lower survivor benefit in my pension in order to increase the early payouts).

IMHO "THE" reason to take SS early is because you need the money. YMMV

@Koolau ...I will attempt to show you and others that, yes, if you need the SS to live on, you take it early. But also, IF YOU DO NOT NEED THE MONEY (pook's case) , YOU SHOULD ALSO TAKE IT EARLY. I will explain in following posts this weekend.

R48

 

[retired at 48]

@pb4uski ...who posted:

WADR, you are short sighted.

R48 replies in bold: I am unsure what WADR stands for?

Here is another way of looking at it. Let's say that your FRA is 67 and your PIA is 100. If you take at 62, you get 70 or if you take at 70 you get 124. So if you delay to 70, you forgo receiving 70 for 8 years or a total of 560 in exchange for an additional 54 annually for life. 54 in relation to 560 is a 9.64% payout rate.

R48 reply. My reading of this is you appear to have the same "flaw" some current retirement guru's who are promoting taking SS at age 70. That is, you stated: "...So if you delay to 70, you forgo receiving 70 for 8 years or a total of 560 in exchange for an additional 54 annually for life." NO. YOU ALSO MUST INCLUDE THE GROWTH ON THE MONIES TAKEN EARLY, UP TO AGE 70. Your straight math of 8 times 70 = 560 has no growth in the assets. Adding in this growth extends break-even dates out further. As a minimum include the CD or Money Market Fund growth rate. PIMCO's varied asset bond fund, medium duration PIMIX, has a current yield of 6+%.

Here is a similar reply made to an article by a well known retirement guru:

The article completely ignores that one taking SS early, can invest this money and have it grow, as opposed to those waiting to age 70. Here's an explanation:

One is generally in one of these camps...They retire at age 62, and NEED to take SS to live on; OR, they retire early age 62 and DO NOT NEED to take SS early. Here is how each fares:

NEED SS at age 62 (retired). If you assume one will wait to age 70 for higher payouts, you must take the assets needed to live on in retirement, from somewhere else! Like an IRA or 401.K...or other taxable account assets. Thus you need to SUBTRACT these annual withdrawals (and growth) from your total return outlook for the delay-to-70 person. And, such deferrals in taking from IRAs etc permit conversions to ROTH iras to occur at more favorable rates.

Or:

DO NOT NEED to take SS at age 62. Then by all means, the only comparison for apples-to-apples is to assume the amount taken at age 62, and each year thereafter to age 70, is saved and invested.

The article does neither.

Breakevens are still into the age eighties...or more, depending on a persons success in investing monies saved early. Of course also realize that if one dies early, like in their age seventies, a huge loss occurs. No one argues that if one dies at age 70, those who delayed, left on the table with the gvt, the full sum of early withdrawals at age 62 and on.

Disclosure: I retired early; 12 years later at age 62 I took early Social Security. This annual income enabled me to WITHDRAW THE EXACT AMOUNT LESS from my Trad IRA. This larger trad IRA then kept growing into very large amounts. I also made conversions to, and now have a substantial ROTH IRA (did not have ROTHs when I worked).

R48

 

[retired at 48]

@pb4uski who posted:

According to immediateannuities.com a fixed benefit life SPIA for a 70 year-old male has a 8.86% payout rate. So if you delay SS, not only do you get a higher payout rate than what is commercially available the benefit is also COLA adjusted.

So essentially, delaying SS to 70 is like buying a COLA adjusted life annuity from the US government. You can't buy COLA adjusted annuities anywhere else... insurers don't issue them. At best you might be able to find a life annuity with a fixed percentage increase in the benefits, but if we have periods of high inflation that fixed percentage increase doesn't cover the decrease in spending power.

R48 reply in bold: Using the same 8.86% annuity type rate applies to the lower age 62 withdrawals as well.

However, this rate is dwarfed by what is available via LONGEVITY INSURANCE...discussed in a post I made on another forum site, as follows:

Gee, when I retired three decades ago at age 48, I planned to age 88, because I was potentially running out of money, then. Our fallback was to call the kids and tell them to come and get us!

So, what about living to age 100?

Don't fret...there is a way to cover this contingency!

The solution: INSURE THE BACKSIDE RISK VIA LOW COST LONGEVITY INSURANCE.

That is, you can buy annuities for very low cost that kick in if you live past, let's say, age 85. They pay income for life. So if you live to be 105, no concern.

The Wall Street journal had an article, 9 April, on how to do this...called How to Create a Pension (With a few catches).

For instance, a 65 year old man buying a regular annuity can get a payout for life of $6950 per $100,000 annuity. However, if you buy now, the same amount policy, that begins at age 85 payouts, you get $63,900 per year. Hey, now we're talking.

So if you are concerned your wife will live to be 105, get a longevity annuity for her...or both of you.

Yes, you give up some principal, but then you may only have to plan for your portfolio to last 20 years, (instead of 30)at which point the annuity payments kick in. Currently, you can tailor-make these to fit your needs, with 45 years out being the longest start time.

And remember States have annuities insured to varied limits, usually $100,000 or slightly more, so a default by the company is not disaster to you.
Disclaimer...I didn't have a need to be concerned about age 85 and on, thus do not own such longevity insurance. But for certain investors, this seems a good way to cover this dreaded age 85 and on time period.
Thus, AN OPTION IS TO take your early Soc Security annual payment FOR A COUPLE YEARS, and buy backside longevity insurance. All can do this if the need exists.

For OP @pook , I view he has way more assets than needed and DOES NOT need to buy such insurance. But I also feel he can earn modest investment returns and taking SS early is the way to go. This will grow to huge sums when his spouse may need any of it.

Best wishes...

R48

 

[pb4uski]

Please, cut the crap with the bolded text... there is no need to shout. I agree that the time value of money should be considered in the decision. That is why I provided the IRRs earlier.

Actually, there is a great tool for assessing potential claiming strategies at opensocialsecurity.com that considers not only the time value of money but also mortality (the probability that one will be alive to receive the SS benefit in any given year. The tool calculates the expected present value of each possible month that one could claim (from the later of age 62 or your current age to she 70). The claiming strategy that has the highest expected present value is the optimal strategy. Many people here have used it and unless one has a very high discount rate the optimal EPV would never be 62.

As others have mentioned one of the benefits to delaying SS is that you have more headroom to to more low tax cost Roth conversions, which you seem to like and with which I agree. By taking at 62 you end up with more in tax deferred, larger RMDs and higher tax brackets. Another benefit of delaying is that when you die your surviving spouse gets a larger benefit for life. For us it is likely that one or the other of us will live to our early to mid 90s.

I'm obviously not going to convince you and vice versa, but I stand by my post that your recommendation to take SS at 62 is poor advice.

PS. I was chief accounting officer of a life insurance company during my career and for a few years was the chief financial person for the company's annuity line of business so no need to lecture me on how annuities work.

Since you seem to think you know a lot about annuities, can you steer me to where I can buy a life annuity, either immediate or deferred, where the annuity benefit increases each year for inflation?

 

[pb4uski]

@Koolau ...I will attempt to show you and others that, yes, if you need the SS to live on, you take it early. But also, IF YOU DO NOT NEED THE MONEY (pook's case) , YOU SHOULD ALSO TAKE IT EARLY. I will explain in following posts this weekend.

R48

Koolau,

I guess that he showed you, eh?

 

[pb4uski]

... Disclosure: I retired early; 12 years later at age 62 I took early Social Security. This annual income enabled me to WITHDRAW THE EXACT AMOUNT LESS from my Trad IRA. This larger trad IRA then kept growing into very large amounts. I also made conversions to, and now have a substantial ROTH IRA (did not have ROTHs when I worked).

R48

Have you ever figured ou how much more in low tax cost Roth conversions you could have done if you had delayed SS? I'm guessing it is pretty significant. Now you'll get to take them as RMDs at higher tax rates.

Also 15% of SS is tax free. I'd rather have 15% of 124 be tax free than 15% of 70. So if your SS at 70 was $50,000 a year your SS at 62 would be $28,225. The difference is $21,225 and 15% of the difference is $3,266. So by deferring to 70 not only do you have more headroom to do low tax cost Roth conversions for 8 years, you also have an additional $3,266 (plus growth from COLAs) that is tax free as long as you live.

 

[Cujet]

A few quick thoughts.

1) SS at 67 or later, means somewhat more depleted savings. (ask Grok3 to calculate the options)
2) I discovered that all my planning went out the window with a stunning number of huge expenses
3) ACA (health ins) tax break subsidies are set to expire in 6 months, and so far no effort to extend them exists
4) Mature American men now die on average, at age 73.5 years, according to the CDC. life expectancy at birth for males in 2023 was 75.8 years

I retired at age 60 due to health issues. I have practical expectations about my lifespan. Last month was terrible. This week pretty good so far. Each relapsing/remitting cycle does damage. SS at 62 for me.

 

[Koolau]

A few quick thoughts.

1) SS at 67 or later, means somewhat more depleted savings. (ask Grok3 to calculate the options)
2) I discovered that all my planning went out the window with a stunning number of huge expenses
3) ACA (health ins) tax break subsidies are set to expire in 6 months, and so far no effort to extend them exists
4) Mature American men now die on average, at age 73.5 years, according to the CDC. life expectancy at birth for males in 2023 was 75.8 years

I retired at age 60 due to health issues. I have practical expectations about my lifespan. Last month was terrible. This week pretty good so far. Each relapsing/remitting cycle does damage. SS at 62 for me.

Good call for you at 62. Here is hoping you go into complete remission. Blessings.

 

[Koolau]

Koolau,

I guess that he showed you, eh?

Yeah, I thought of posting that scene in "Blues Brothers" where the light falls on Jake as the preacher asks "Have you seen the light?" Classic!

Of course, WADR (with all due respect) to R48, he doesn't address MY reason for waiting to 70 - that is, to set DW up with a higher survivor benefit.

As far as the "investing the early payments between 62 and 70" goes, beating the inflation increases and actuarial increases that SS provides to those that wait would be a crap shoot in the market. You might WELL beat SS's generous monthly increases for waiting, but you might encounter 2000 to 2008 instead. I chose the "sure thing" promised by SS but as always, YMMV.

 

[Cujet]

Of course, WADR (with all due respect) to R48, he doesn't address MY reason for waiting to 70 - that is, to set DW up with a higher survivor benefit

You bring up a superb point: Leaving behind sufficient funds for my wife. One that in various forms, I've spent a lot of time thinking about due to my health. I am 61, my wife 65. I retired just over a year ago at age 60. Not leaving her destitute is why I am not purchasing an RV, boat, race car or any other toy I would love to enjoy now while I can.

My point: Don't forget inflation, as the SS admin calculates it improperly. Often wildly so. Consider auto, home and food prices as markers of real inflation and have an AI recalculate.

Even the max SS benefit is very modest when compared to solid working income. I used Grok3 to calculate 2 situations. One was SS ASAP at 62, and my wife taking SS now, and the other at 67 (and my wife taking her SS at 70). 5 years of inflation were included, along with 5 years of additional savings depletion. The difference came out to $8 per month in favor of waiting.

 

[Cujet]

Inflation using accurate metrics that include rent, home prices, fuel, food, insurance costs and consumer prices:
2020 =1.5%
2021 =10.2%
2022 =13.8%
2023 =6.9%
2024 =3.8%
2025 =3.6%

Social Security increases:

2020: 1.6%
2021: 1.3%
2022: 5.9%
2023: 8.7%
2024: 3.2%
2025: 2.5%

• Social Security COLA Total Inflation: 27.3%
• Accurate Inflation Estimate Total: 48.9%

I can't predict inflation or growth during the next 5 years. One thing is clear, counting on SS to increase rates properly is 'wishful thinking'. I also have serious concerns about SS raising the retirement age sometime soon. The idea that some of us would be unaffected is based on the current law. That could change.

 

[Diogenes]

Our service has done very well (as compared to the S&P) for the 20 odd years we have used them. ...

Welcome!

But.. a question: are you saying that cumulatively over the past 20 years, your investment portfolio, managed by your FA, has beaten the S&P 500, after fees and taxes (costs of turnover)?

 

[Koolau]

You bring up a superb point: Leaving behind sufficient funds for my wife. One that in various forms, I've spent a lot of time thinking about due to my health. I am 61, my wife 65. I retired just over a year ago at age 60. Not leaving her destitute is why I am not purchasing an RV, boat, race car or any other toy I would love to enjoy now while I can.

My point: Don't forget inflation, as the SS admin calculates it improperly. Often wildly so. Consider auto, home and food prices as markers of real inflation and have an AI recalculate.

Even the max SS benefit is very modest when compared to solid working income. I used Grok3 to calculate 2 situations. One was SS ASAP at 62, and my wife taking SS now, and the other at 67 (and my wife taking her SS at 70). 5 years of inflation were included, along with 5 years of additional savings depletion. The difference came out to $8 per month in favor of waiting.

I have to second your "notion" on the inflation front not adequately addressed by SS - I'm willing to assume it's because they use averages and, well, I'm not average. My personal inflation is "off the charts" the past couple of years. Not the "usual stuff" like gas and eggs, but stuff I never worried about until recently (HOA dues - primarily because of astounding increases in insurance costs) as well as things like "everything shipped in" (heh, heh, which is EVERYTHING). Even as fuel costs are ameliorating, the Island shipping company wants MORE money because they say they are losing money and will need to pull out - so, they get what they ask for. Not sure why THEIR costs go up quicker than others costs, but (maybe) they do.


IOW we all have our own inflation rates and SS may or may not cover those increases. Thank God that I saved extra or I might have actually panicked over things like 40% increase in already-high HOA dues. YMMV

 

[retired at 48]

@pb4uski , who posted: As others have mentioned one of the benefits to delaying SS is that you have more headroom to to more low tax cost Roth conversions, which you seem to like and with which I agree. By taking at 62 you end up with more in tax deferred, larger RMDs and higher tax brackets. Another benefit of delaying is that when you die your surviving spouse gets a larger benefit for life. For us it is likely that one or the other of us will live to our early to mid 90s.

R48 reply. First, you requested not using CAPs in certain words, as a form of "shouting." I use caps in broader posts to show the punchlines for general readers (I note Trump uses also in daily tweets). Yes, they can be construed as shouting, thus I will refrain from using any in this thread. I'm not here to offend anyone.

I note @Koolau posted same, that better to wait into age seventies for roth conversions. I see it differently. By taking at 62, one does not end up with larger RMDs. The age sixties in most investment forums are the best times to make Roth conversions from Trad IRAs. By taking SS early, you do not have to withdraw similar amounts from one's 401.k or IRA. Further, this same amount should then be converted to Roths.

If you wait to RMD time to convert, RMDs are income killers for many, boosting one into higher tax brackets for converting. The general scenario: Take untaxed (to a threshold) Soc Sec. income at age 62, buttress by selling some stock or bond funds in taxable accounts (modest boost to income due capital gains) to live on;, take from IRAs any remaining needs. This puts most people in a very low tax bracket. And yes, I do not recommend anyone convert paying, at any time, tax rates higher than 12%. You can also "barbell" some years...taking larger income at both ends of a tax years, using the lean year for conversions. Ditto re deductions such as Real Estate taxes.

An anecdote...my case. Retiring at age 48, needed TIRA and 401.K money to live on. Took until age 62, then took SS income, reducing my Trad IRA withdrawal needs. Sold some taxable account stock funds and bond funds at times. I also added a twist: I own three houses--took two large HELOCs out to live on during these sixties. Recently sold a house and sorry to have to pay off a 3% fixed, 16 years remaining HELOC. This meant I was in zero percent tax bracket thru most of sixties, and did major conversions to ROTHs...but never paying more than 10% tax rate to convert. And HELOCs were tax deductible.

What a country...the age sixties are the best time for doing conversions to Roths. Taking SS early plays a role.

R48

 

[retired at 48]

@pb4uski who wrote: "Since you seem to think you know a lot about annuities, can you steer me to where I can buy a life annuity, either immediate or deferred, where the annuity benefit increases each year for inflation?"

R48 reply: Two ways:

--First, the (reduced) SS taken early at age 62 is also an annuity benefit that increases each year with inflation.

--I identified in post above the "Longevity Annuity", that has built into it a degree of inflation hedge. Again look a these numbers...per the Wall Street Journal: " For instance, a 65 year old man, ...if you buy now, the same amount $100,000 policy, that begins at age 85 payouts, you get $63,900 per year. Annuity companies can provide this huge payout because they will invest the $100,000 in stock and bond assets. And approx 40% of stock returns all time is due to inflationary increases...thus keeping up with inflation.

R48