Re: Delay Pension and/or Social Security
I probably should point out something missing from the last couple of discussions...that the SSA lays out the numbers such that on average, you'll get paid the same regardless of whether you take it early or late. If you live longer than the mortality tables suggest, you'll get more. Otherwise you'll get the same or less regardless of when you take it...on average!
New Thinking said:
CFB - I think a lot of people put the incorrect amounts into FireCalc..Not saying that you did, but many do not account for COLAs that occur between the ages being projected. In other words, the amount you plug in at age 66 and the amount you plug in at age 70 have grown by the COLA rates during the "delay" period. The SS statements that come lead people down the wrong path because they all are in today's dollars..FireCalc is not in today's dollars.
No, i'm pretty sure I did the calcs correctly and had social security numbers correct. I and several other pretty competent numbers people did the runs a number of times. Its the nature of the beast; its finding sequences when you ran out of money. Most of the failures are barely failures, so injecting an income stream at some point always improves the # of failed sequences. Injecting a smaller income earlier will almost always give you better results than a larger amount later...in this case it eliminates minor failures for an additional 8 years.
Either CT did something funny in his run, or me and a few dozen other people all screwed it up the same way; this has been gone over to death in not just the SS discussions, but in a number of other scenario evaluations involving incorporation of an income stream, such as a pension, annuities, part time jobs, etc.
Cut-Throat said:
Also, I think FireCalc is the wrong tool for anaylizing this type of problem. We are talking about an 8 year span, which you can make the decision at age 62 and change it at age 63.
I don't have to use FireCalc to prove that this is the right decision for me! - I can use a simple spreadsheet, look at the 8 year period with my SS numbers and portfoilo.
CT, its your decision to make, but you're picking the tools and parameters that give you the answer you want, IMO. As with any of these decisions, while its easy to stick it in a fishbowl or limit the time period or what aspects of your financial picture you want to consider, you're not getting a full analysis.
IIRC you dont have a Roth, while many ER's might...and the interaction between that and the start date of social security is a big deal...and Firecalc wont do that calc but ORP will. For me in my plan, theres over a $100k benefit to delaying tapping my roth by taking SS at 62. That means I can spend that much extra over the next 20 years from my taxable port. Thats enough to send my kid to college fer cryin out loud.
Waiting until 62 to get the answer might also be counter productive...since we're both agreeing that the influence of SS increases spending in the years leading up to when you start taking it. I think your standpoint is that you can really spend away before 70 knowing you'll have a much larger monthly check to fall back on while mine is to spend a bit more every year for the next 20 years and inject the income stream at 62.
That having been said, all this is posturing and presuming...I dont count social security, pensions or anything other than the hard assets in my plans, and I cant spend the dividends and interest i'm receiving or think of anything I'd like to blow money on that i'm not buying already. If our social security, my wifes pension, my newly discovered miniature DEC pension and all the rest actually materializes it'll be a nice chunk of change. We'll definitely find a way to spend it.
No really, it makes a difference. A smaller portfolio is impacted more by the extra withdrawals needed to replace SS for the number of years you delay. In my case it's even worse because my pension is cut by a percentage of what I receive from SS so my withdrawals are even higher.
