Is SS more than you expected?

[RunningBum]

To those calculating present-value of future SS (I understand the logic of this):

Every retirement calculator I've used (including FIRE) appears to do something similar since first-year 100% safe spending level is 30% higher than DH's current SS + 4% of portfolio. It must be making similar assumptions since my SS doesn't start for either 2 or 5 years.

Sure, they should be doing that. I just don't use a retirement calculator to determine how much I can withdraw in a year.

And you want to make sure you don't double count SS by inputting the PV of future SS and adding it to your invest NW, and then having the tool also include SS.

(Speaking of the difference between early and FRA: tweaking the age I take SS makes surprisingly little difference.)

That's the way it's designed, to give you the same benefit value no matter when you take it, if you have an average life expectancy. There's no real bonus in taking early, or in holding out for the larger benefit, if you die at the typical age. The bonus with holding out comes if you live longer.

 

[Bir48die]

If I started collecting now it would be maybe 30% of our budget. DW started at 62. If I wait until FRA and drop in health insurance costs then we’re talking 50%. If I wait until 70 then whopee! Probably 65%. With her pension we’re almost 100% of a goodly sized budget

 

[athena53]

It would certainly cover a big % of my necessities. I'm collecting Survivor benefits on late DH's record and will get about $1,500/month more when I start my own at age 70.

It gets taxed, of course, and I'm getting slammed with IRMAA surcharges on Medicare.

My "wants" (mostly charity, travel and the grandkids' 529) are covered by investment income but it's reassuring to know that I have SS coming in regardless of market results.

 

[SumDay]

Mine starts in about 60 days, and DH will begin receiving my spousal benefit this summer. These two checks and my pension will cover around 50% of our spending. When DH turns 70 and takes his benefit, that % will jump, but it's too early on a Saturday to do that much math.

 

[MRG]

I turn 62 in a couple days could collect but won't. I'd just turn the money to the insurance company. I plan on 67-70. Yes it should cover about 70% of our current expenses. Won't have much need for 4% from our investments.

 

[ShokWaveRider]

What I actually do is go to https://www.immediateannuities.com/annuity-calculators/ to see what $100,000 in that calculator would give me in income, and take my monthly benefit/that calculated number * 100,000 to give the number it would cost to buy that annuity to replace SS. I multiply that by 0.75 in case of a 25% cutback in benefits.

You could also plug in your expected SS benefit and get the number directly rather than doing the math with $100,000 but I wasn't sure how it handled inflation.

So if I plug in age 57, not taking benefits until 70, and $100,000 investment, I get about $1100 monthly payment. If my expected SS benefit is $2500, 2500/1100*100,000 = $227,272. *0.75 = 170,454. That's the number I add to my investments. If I use a 3.5 WR, that gives me an extra ~$6000 to spend now. I can safely take that out of taxable now, because I know at age 70 I'm getting that $2500/month.

Sorry if I appear slow, but I am trying to understand this.

You are investing $100k in a SPIA. for how Long? The duration of your time BEFORE you reach 70 or for life. When I try for life I only get $560 is why I ask.

 

[wmc1000]

With my FRA SS payments starting in June of this year and including DW's SS and spousal bump it will exceed 100% of our budgeted expenses. Expenses include normal travel and entertainment.


Bottom line I guess is that SS covers far more than I, (we), anticipated when we were younger and not following what we might receive.

 

[Sunset]

Sorry if I appear slow, but I am trying to understand this.

You are investing $100k in a SPIA. for how Long? The duration of your time BEFORE you reach 70 or for life. When I try for life I only get $560 is why I ask.

I don't think he is actually investing in SPIA, just using it to see what the value is SS is worth.
Pretending if SS offered him a lump sum of cash right now, instead of what they do.

To figure what that lumpsum is why he uses the annuity site.

 

[W2R]

All during the accumulation phase we discounted SS, assuming it would not be there (yeah, we were conservative).
[…]
I just never expected SS to cover that level of our expenses, not that I am complaining.

And you?

Like you, I assumed SS would not be there for me. Before I retired, I made sure I could manage a bare bones existence even with no SS income.

I also wanted to claim SS late, because of longevity in my family and because of my view of it as essentially old age insurance in case I outlived my nest egg. So originally I was thinking of claiming between ages 66-70.

But then, the market boomed and I really didn't need it. Even better, at age 65 I found out (thanks to this forum) that I could get divorced spousal SS at age 66 and let mine continue to grow until age 70. So, I did that.

Now, I am 70 and have claimed my SS. I didn't pay into SS for part of my career (didn't have to when on the LSU faculty and I thought SS would crater so I didn't, oops). So my SS income is lower than it might otherwise be, but still it is exactly, to the penny, what I had computed that it would be given my work record. I am thrilled that it is 61% of what I spent in 2018. Between SS, my mini-pension, and equal monthly payments from the TSP G Fund that are like a second pension, I am getting 107% of what I spend in 2018.

Now, if only we don't have massive inflation then it looks like I have it "made in the shade", as the saying goes, at long last. Well, other than the fact that I am [-]older than Methuselah[/-] already 70 and unfortunately life is not eternal.

 

[Chuckanut]

No. My SS account benefit is about what I expected.

What I did not expect was to be able to claim on my former spouse's SS account while I let mine benefit increase until I turn 70. I fell into that crease in the law due to my advanced age. So, in that respect I am getting more than I bargained for.

 

[jollystomper]

When planning for retirement, I modeled the impact of losing one of the three "legs" of our retirement income sources (pension, SS, investments). Losing one would still make it feasible to retire, so in that sense I did not count on SS as a requirement for me to retire.

I am fortunate that I will be receiving the maximum SS benefit. Whenever we decide to take SS (no earlier than 64, in 2022), it will push our pension + SS combined to over $100K. By 70.5 RMD time, our taxable income with SS + pension + investment income + RMDs could be more than my Megacorp salary... gotta start working on the Roth conversions before then. But is it nothing for me to complain about.

 

[mickeyd]

When DW and I started doing "financial planning" about 50 years ago we agreed that we should not plan for SS to be around when we retired. We saved/invested as if SS would not be there when we finally decided to retire.

Well what do ya know? SS was there (and still is every month) when we retired. SS is now a bonus for us and is nice to receive every month along with pensions and other income streams.

 

[Koolau]

DW made some (IMO) significant errors in planning her SS. Her portion is a third of mine (could have been half of a larger number, but...) Anyway, the total (between the two of us) is STILL a pretty good chunk - more than I anticipated in my mis-spent youth (or middle age, for that matter.) Anyway, we could exist comfortably with SS and about that much added from savings. It turns out, we saved "too much" and can now spend an extra 2X our SS. So I am not complaining. YMMV

 

[RunningBum]

Sorry if I appear slow, but I am trying to understand this.

You are investing $100k in a SPIA. for how Long? The duration of your time BEFORE you reach 70 or for life. When I try for life I only get $560 is why I ask.

I am getting an online quote for an SPIA that starts at age 70 and goes for the rest of my life after that.

 

[ABQ2015]

SS is about what I expected and 85% is taxed by both the feds and my state. If I took it now, it would be 25% of my retirement income. I'll probably wait until FRA when it will be about 1/3 of income. No way would I want to live on SS alone.

 

[Spock]

Thinking I understood SS Spousal benefits, after reading yet another thread on this board about "when to take SS", I learned that I was wrong and my wife's spousal benefit will be about $200/mo higher than I budgeted.

So while repetitive threads can be annoying, some of them still have value!

 

[MichaelB]

Thinking I understood SS Spousal benefits, after reading yet another thread on this board about "when to take SS", I learned that I was wrong and my wife's spousal benefit will be about $200/mo higher than I budgeted.

So while repetitive threads can be annoying, some of them still have value!

That sure is a pleasant surprise. Nice!

 

[NW-Bound]

All during the accumulation phase we discounted SS, assuming it would not be there (yeah, we were conservative).

Now that we are getting close to collecting, I am realizing that SS will cover more than 60% of our projected expenses. FIRE'd 3 years ago at 60. Expect to take at FRA, but that could change, it just depends.

I am sure part of it is that we lived well below our means, so our spend is less than others in the former income level. We have always spent on a few luxuries (vacations, new cars every 5-7 years) and do not feel deprived by any means, just don't have any ultra expensive desires.

I just never expected SS to cover that level of our expenses, not that I am complaining.

And you?

We are of the same age, and if both of us delayed our SS till 70 we could live on it, assuming no future cuts. Life would be without frills, but comfortable. We will not be traveling much at 70, and care about "stuff" even less than we do now.

However, my wife has taken hers early at 62, as it is the common wisdom that a couple should take the lower SS early and delay the higher one. What she is getting is a fraction of what we currently spend, and we are not extravagant spendthrifts.

I guess SS is about what I expect.

 

[NYEXPAT]

I was surprised to learn in my 50's about the "Family maximum"! I started collecting at 62 and am receiving something like 180% of my FRA. It covers all basic expenses except for travel and sexy lingerie for the young wife!

 

[joeea]

I started collecting at 62 and am receiving something like 180% of my FRA.

You started at 62 and yet are receiving much more than your FRA?
How does that work?

 

[HadEnuff]

I was surprised to learn in my 50's about the "Family maximum"! I started collecting at 62 and am receiving something like 180% of my FRA. It covers all basic expenses except for travel and sexy lingerie for the young wife!

Can you explain "the family maximum"?

 

[Cobra9777]

SS has been a "monkey wrench" in our retirement planning. I had a progressively toxic work situation for the last 15 years (37-52). I wanted out ASAP. But I was not comfortable pulling the trigger until the numbers worked without SS. I knew that SS would be way off in the future, if at all. In retrospect, that may turn out to be a huge mistake.

I retired at 52 and we are now 57/58. As it stands now, our combined SS at FRA will cover 54% of spending. At 70, that goes up to 67%. We also have two pensions that cover 62%, plus some rental income. You get the picture. We also have a fairly sizable portfolio and even today (pre-SS), we make very few withdrawals beyond cash dividends.

I've never gone back to re-run the numbers. But I think it's pretty clear I could have retired in my mid-40s. 2008 was a scare (I was 47). As was having two kids in college on my nickel at the same time. So as a practical matter, it probably played out for the best. But another 5-7 years of freedom to detox from a crazy work situation and spend time with the kids sure would have been nice.

Fast-forward to today, and we are just now upping our spend to account for SS (along the lines of what RunningBum described... or more simply, just getting closer to the number FIRECalc/i-ORP says we can spend with SS plugged in at FRA). But even now, I'm still skeptical about SS. So we don't spend all of the 95% FIRECalc number. I have a feeling the kids are going to make out like bandits.

 

[jasg]

SS covers 75% of basic expenses (utilities, taxes, all insurance, gas and food).

I took it at 63.5, DW taking spousal until 70. After 7 years, it has returned 80% of both employee & employer contributions.

At age 25 I had just started my first real job at a leading research institute. I remember a very vocal group of older co-workers agitating to leave SS for fear it would disappear or be cut back when they retired. I thought it was crazy then and still do.

 

[wmc1000]

I was surprised to learn in my 50's about the "Family maximum"! I started collecting at 62 and am receiving something like 180% of my FRA. It covers all basic expenses except for travel and sexy lingerie for the young wife!

As I understand it Family Maximum applies only in the case of survivors or disabled beneficiaries.

 

[NYEXPAT]

Can you explain "the family maximum"?

You started at 62 and yet are receiving much more than your FRA?
How does that work?

The "Family Maximum" ranges from 150%-180% of your FRA benefit. It is for beneficiaries who have a young family. Children under age 18 each receive a benefit as does a spouse until the youngest is age 16.

In my case when I started at age 62, My spouse was 34 and my sons were 10 and 7 mos old. Each of my sons gets a check equal to a little more than 1/2 my check. My spouse would also get a check, but has never lived in the USA and does not have a SS# (required). We will move to the USA this year and when my oldest son ages out, my spouse will qualify and receive benefits until my youngest turns 16 or if we have more children in the future, until the last born turns 16.