When To Take Social Security? Study takes a statistical approach.

[jazz4cash]

Two points:

1) Most people have a pretty good idea what their Earned Income for the year is likely to be by early December. For regular working people, it's likely to be way more than the $7000 IRA contribution limit, so it's a non-issue.

Regardless, you can contribute to your IRA for 2023 anytime up until 4/15/2024.



2) Vanguard also used to have a reminder when I logged into my account that I could still contribute $X000 to my IRA for the current year, even though I've not had Earned Income for several years. I don't see that reminder anymore lately, so maybe they got complaints about it...

I don’t know about most people but I suppose you are correct. I only realized I could make Roth contributions recently. It can take a bit of the sting out of taxes due on Roth conversions. I could’ve easily exceeded the limit had I made aggressive Roth Conversions but again we are close to the limit.

As for this…
“For regular working people, it's likely to be way more than the $7000 IRA contribution limit, so it's a non-issue.”
… It certainly isn’t true for very many of the regular working people I know.

 

[COcheesehead]

I re-read post #123 and it is still not clear to me exactly what you are saying that Fidelity does. They track my contribution amount but they have no idea if I am even entitled to contribute $1 based on AGI. I think spousal IRA contributions also work on an honor system.

In 123, it was acknowledging that I was talking about brokerages tracking contribution limits, not contribution eligibility. We were on different pages.

 

[pb4uski]

The CDC directed me to this site, however, it say the same thing the CDC says.
https://www.humanprogress.org/dataset/u-s-life-expectancy-at-birth-by-race/

The problem is that you are looking at life expectancy at birth, for a 55 year old born in 1968. medical improvements have significantly improved longevity. The more relevant report and table is from the CDC's National Vital Statistics Reports United States Life Tables, 2020 (most current available) at https://www.cdc.gov/nchs/data/nvsr/nvsr71/nvsr71-01.pdf

Below is the relevant table. I read it as saying that someone that turned 55 in 2020 could expect to live another 26.2 years, to age 81.2.

81.2 closer to the mid 80s that many of us have been saying based on other sources and a far cry from the 61.4 that you posted.

At the end of the day, I would put more stock in the judgement of the Society of Actuaries than the CDC when it comes to predicting life expectancy.

 

[Midpack]

Btw, you can't assume somebody retiring at 55 today, is going to have 25 years or more to enjoy retirement, when according to the CDC, people born in their year have a life expectancy of 61.40.

I’d have to see that source, nothing like the CDC reports I find. I didn’t find data for at age 55.

US average life expectancy at age 65, 18.5 years = 83.5 (17.0 male, 19.8 female)
Lowest average life expectancy state (MS) at age 65, 16.1 years = 81.1 (14.6 male, 17.5 female)

In the same range as Soc Sec breakeven as expected…

https://www.cdc.gov/nchs/data/nvsr/nvsr71/nvsr71-02.pdf

 

[TheWizard]

...As for this…
“For regular working people, it's likely to be way more than the $7000 IRA contribution limit, so it's a non-issue.”
… It certainly isn’t true for very many of the regular working people I know.

I was talking about the legal requirement for making the max IRA contribution in a given year.
An older min wage worker might have $30,000 in Earned Income this year as this be eligible to contribute the maximum of $7500 (not $7000) to either type of IRA.

He might not have anything close to that amount leftover after expenses, but that's a separate issue from what is permissible...

 

[candidman]

The problem is that you are looking at life expectancy at birth, for a 55 year old born in 1968. medical improvements have significantly improved longevity. The more relevant report and table is from the CDC's National Vital Statistics Reports United States Life Tables, 2020 (most current available) at https://www.cdc.gov/nchs/data/nvsr/nvsr71/nvsr71-01.pdf

Below is the relevant table. I read it as saying that someone that turned 55 in 2020 could expect to live another 26.2 years, to age 81.2.

81.2 closer to the mid 80s that many of us have been saying based on other sources and a far cry from the 61.4 that you posted.

At the end of the day, I would put more stock in the judgement of the Society of Actuaries than the CDC when it comes to predicting life expectancy.

I have know choice but to hope you're right.

 

[Koolau]

I don't know if claiming at 70 was the best deal for ME. I just know that I want DW to have the highest survivor benefit when I kick. YMMV

 

[candidman]

I’d have to see that source, nothing like the CDC reports I find. I didn’t find data for at age 55.

US average life expectancy at age 65, 18.5 years = 83.5 (17.0 male, 19.8 female)
Lowest average life expectancy state (MS) at age 65, 16.1 years = 81.1 (14.6 male, 17.5 female)

In the same range as Soc Sec breakeven as expected…

https://www.cdc.gov/nchs/data/nvsr/nvsr71/nvsr71-02.pdf

The link was already provided above.

Here's the link again: https://www.cdc.gov/nchs/data/hus/2020-2021/LExpMort.pdf

First, you have to understand a person 55 today, would have to had been born in 1967.

On page 1, look at the far right section, "Black or African-American", then look under the "male" column. About three rows down (on the 1960 row), you'll see 61.1. The next row skips all the way to 1970, where you see 60.0. You know the row for 1967 would be close to the middle of rows 1960 and 1970, if it were included on this chart. Knowing that, just take the number you saw on the 1960 row, which was 61.1, and take the number you saw on the 1970 row, which was 60.0, and calculate the number that would be in between, which should be about 61. That would give you close to the average life expectancy of a 55 year-old African-American male born in 1967, according to this CDC data.

I was reading a website addressing this same topic about the best age to start drawing SS. I read were this 61 year old African-America male say he better take out SS at 62, since the CDC says his average life expectancy was 61 (which is the same life expectancy of a 55 year-old according to CDC as well). That's what prompt me to check the CDC data myself. But of course this also depends on what State, City, or County you live in too. So that number can be lower or higher.

 

[Midpack]

The link was already provided above.

Here's the link again: https://www.cdc.gov/nchs/data/hus/2020-2021/LExpMort.pdf

First, you have to understand a person 55 today, would have to had been born in 1967.

On page 1, look at the far right section, "Black or African-American", then look under the "male" column. About three rows down (the 1960 row), you'll see 61.1. The next column jumps all the way to 1970, where you see 60.0. You'll have to guess were the year 1967 would be if it were included on this chart, which would be close to the middle of 1960 and 1970. Just take the number you saw on the 1960 row, which was 61.1, and take the number you saw in the 1970 row, which was 60.0, and calculate the number that would be in between, which should be about 61. That would give you close to the average life expectancy of a 55 year-old African-American male born in 1967, according to this CDC data.

Post #178 already explained the flaw in that conclusion. Fortunately what was predicted in 1967 (1970 of 1960) is nowhere near today’s actual statistics.

 

[pb4uski]

... First, you have to understand a person 55 today, would have to had been born in 1967.

On page 1, look at the far right section, "Black or African-American", then look under the "male" column. About three rows down (the 1960 row), you'll see 61.1. The next row skips all the way to 1970, where you see 60.0. You'll have to guess were the year 1967 would be if it were included on this chart, which would be close to the middle of 1960 and 1970. Just take the number you saw on the 1960 row, which was 61.1, and take the number you saw in the 1970 row, which was 60.0, and calculate the number that would be in between, which should be about 61. That would give you close to the average life expectancy of a 55 year-old African-American male born in 1967, according to this CDC data.

But that is life expectancy at birth in 1968, not 1967. 1968 + 55 = 2023... if your birth year is 1968 then you turn 55 in 2023.

While the tables in the link are not that refined, the closest year is 1970, so lets use that. At birth, a Black or African-American male born in 1970 was expected to live to be 60. But, on the following table, if he lives to age 65 then he would have a life expectancy of 12.5 more years, to age 77.5.

I personally think that the CDC tables are a bit conservative compared to other sources that I use.

 

[Chuckanut]

By the way, when I said if somebody died on their 70th birthday, I wasn't just talking about people who were only relying on SS. I was also referring to individuals who were waiting to get their pensions, and cash in on their 401ks, etc..., and were waiting until they reached 67 or 70. So I'm afraid they would have lost out on more than 5.6 of their PIA. Btw, you can't assume somebody retiring at 55 today, is going to have 25 years or more to enjoy retirement, when according to the CDC, people born in their year have a life expectancy of 61.40.

You make a great case for taking SS at 70 if a person has the assets to fund retirement from 62 to 70. Why? Because that person can spend more money every year starting at 62 until they perish. Die early and you got to spend extra. Die at 99 and you still got to spend extra.

Here’s the math:

Maximize SS how much you get to spend​

Here is a pretty simple calculation for those that wish to spend more money in retirement and do not care about leaving an estate. For those that have a Big enough Portfolio and can afford to wait until 70 to take SS, you'll have more to spend every year of retirement.

Let's Say you retire this year at age 62 with the $1 Million Portfolio and decide to take a 4% SWR. You get Social Security of $19,476 per year at age 62 and delaying to age 70 would get you $34,092 per year. Let's assume no inflation for ease of calculations.

Scenario age 62. Your SWR is $40K per year and Social Security of $19,476 gets you a Spending total of $59,476 for each year of your retirement period.

Scenario age 70. You stash 8 years of $34,092 from your portfolio into a savings account for a total of $272,736. Your portfolio is now down to $727,264. Your 4% SWR is now $29,090 per year and you remove $34,092 from your savings account giving you a total of $63,182 to spend each year for the rest of your 30 year retirement period.

The Delay to age 70 gives you $3,706 more every year starting at age 62 with no more increased risk.

No need for any ... 'break even analysis'.

If your WR is more conservative, such as a majority of the people here and myself, the results are even more compelling. At a 3% WR plus SS at age 62 scenario is a total of $49,476 and the age 70 scenario is $55,910. The delay of SS to age 70 now increases your annual spending by $6,434.


https://www.early-retirement.org/forums/f28/laurence-kotlikoff-maximize-my-ss-com-77660.html#post1604411


https://www.early-retirement.org/forums/f28/laurence-kotlikoff-maximize-my-ss-com-77660.html#post1604411

 

[AudiDudi]

I don't know if claiming at 70 was the best deal for ME. I just know that I want DW to have the highest survivor benefit when I kick. YMMV

This was also a major consideration on me waiting til 70 as she had filed at 62. We both had about equal amounts at 62. Hers will go up ~78% if/when I pass.

 

[TheWizard]

You make a great case for taking SS at 70 if a person has the assets to fund retirement from 62 to 70. Why? Because that person can spend more money every year starting at 62.
Here’s the math:

Where?
Where's the math?

 

[Chuckanut]

Where?
Where's the math?

Sorry, it took a while to find where I had stashed the information on the computer. I have added it to the message above #186.

IMO, this method has two big IFs. IF you don't care about leaving an estate and IF you have the money to fund your retirement from 62 to 70. Obviously, this is not for everybody. But, it is one strategy that might work for some people. If one is afraid of leaving this planet earlier than normal or living much longer than normal, this might help avoid making the 'wrong' decision.

 

[candidman]

Post #178 already explained the flaw in that conclusion. Fortunately what was predicted in 1967 (1970 of 1960) is nowhere near today’s actual statistics.

Like I already said, you'll get more accurate numbers researching the most recent statistics in your State, or City, or County. That way you want get duped...lol.

 

[TheWizard]

Sorry, it took a while to find where I had stashed the information on the computer. I have added it to the message above #186.

IMO, this method has two big IFs. IF you don't care about leaving an estate and IF you have the money to fund your retirement from 62 to 70. Obviously, this is not for everybody. But, it is one strategy that might work for some people. If one is afraid of leaving this planet earlier than normal or living much longer than normal, this might help avoid making the 'wrong' decision.

Okay, I did something like that, but I didn't *spend* all the extra income from 63 (in my case) to 70. I put some of the extra income into after-tax investments, including Roth.

And I didn't put seven years of SS replacement funds into a lame savings account; I left the money fully invested, about 70% in stocks...

 

[candidman]

But that is life expectancy at birth in 1968, not 1967. 1968 + 55 = 2023... if your birth year is 1968 then you turn 55 in 2023.

While the tables in the link are not that refined, the closest year is 1970, so lets use that. At birth, a Black or African-American male born in 1970 was expected to live to be 60. But, on the following table, if he lives to age 65 then he would have a life expectancy of 12.5 more years, to age 77.5.

I personally think that the CDC tables are a bit conservative compared to other sources that I use.

Like I told the other poster. you can get more recent statistics just going by your State, City, or County.

 

[Jimonlimon]

… How many of us really need any Social Security to fund our retirement?

Me. I would need to work at least 6 years more to build my retirement income to replace projected SS for my wife and me. .

 

[pb4uski]

Like I already said, you'll get more accurate numbers researching the most recent statistics in your State, or City, or County. That way you want get duped...lol.

Well in that case just move to the state. city or county that has the best longevity and then you are all set, right?

 

[pb4uski]

Me. I would need to work at least 6 years more to build my retirement income to replace projected SS for my wife and me. .

Perhaps not... see post #186.

 

[candidman]

Well in that case just move to the state. city or county that has the best longevity and then you are all set, right?

It is what it is.

 

[Flieger]

just catching up, but I just can't see the point in sweating this small difference when you have that much. I would probably take much earlier if I had this NW.

My situation is different (don't have nearly that NW, have a lower earning spouse who has had some recent health issues...well, we both have), but planning the 62/FRA plan unless retirement funds progress well, then may delay to 70 purely for the survivor benefit value. Once you go to 1 SS payment and Single in tax situation, that's a big hit for my spouse if she outlives me.

Ok, so I thought I would try too, with FireCalc. I got my numbers for DW and I from the ssa.gov site, for ages 67-70.

Plugging 77% (haircut) of each them into FC, I got:

Age Average Amount
67 $9.11M
68 $9.17M
69 $9.25M
70 $9.42M

So, for the average of 117 scenarios, age 70 comes out ahead (for us). I *still* standby our plan to pull at 70.

I had always assumed that the values at various ages take the extra 8% per year into account. Is that true? But, I would not think it takes COLAs into account, since that is unknown yet.

 

[Midpack]

Like I already said, you'll get more accurate numbers researching the most recent statistics in your State, or City, or County. That way you want get duped...lol.

I posted most recent stats by state…but we’ve established your mind is made up.

 

[candidman]

I posted most recent stats by state…but we’ve established your mind is made up.

So is yours

 

[Jimonlimon]

Perhaps not... see post #186.

My comment was in response to FLJim asking “… How many of us really need any Social Security to fund our retirement?” Without SS I’d have to work at least 6 more years to fund the same retirement income.

When to take it is way more nuanced. I can argue for my wife and I (same age) both taking at 65, 67, or 70; she at 62 to 65 and me at 67-70. Each has pros and cons.

Later dates mean leaving more to our heirs if we live a long time. Earlier dates mean we leave more if we live a shorter time.

I have a pension. Whenever we both draw SS, even at 62, we will be able to get by on just pension + SS. Drawing later lets us have more for fun stuff without pulling from investments- but we will need to pull more until starting SS. For planning purposes I’m using 67 which means burning 1/3 to 1/2 our combined 401k to fund years 58-67.