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re: Social Security at Retirement
Posted on 10/19/21 at 8:12 pm to Weekend Warrior79
Posted on 10/19/21 at 8:12 pm to Weekend Warrior79
I have to look at family history and my current health, nobody in my family on either parents side has lived past 80, nobody on my mother’s side of the family has lived past 71. I hope I might beat either of those life spans but it’s definitely not guaranteed.
I started drawing at 62, I just don’t feel like the current level of SS will be around in 10-15 years. My full retirement age was 66 & 8 months so by the time I’m 66.8 I will have already drawn over $100,000 in SS, if I waited, I’d have to live to 74 to break even and although I’d be gaining some money past 74, I’d have to live to 80 to make up about $110,000 difference between what I’d draw at 66.8 compared to what I’ll draw from 62, I’m willing to risk that because I probably won’t be here when I’m 80.
I started drawing at 62, I just don’t feel like the current level of SS will be around in 10-15 years. My full retirement age was 66 & 8 months so by the time I’m 66.8 I will have already drawn over $100,000 in SS, if I waited, I’d have to live to 74 to break even and although I’d be gaining some money past 74, I’d have to live to 80 to make up about $110,000 difference between what I’d draw at 66.8 compared to what I’ll draw from 62, I’m willing to risk that because I probably won’t be here when I’m 80.
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Posted on 10/19/21 at 8:16 pm to Weekend Warrior79
Most of my family died in the their 60's. But most smoked, and had cancer related issues.
When I hit 62, I will have worked for someone for 40+ years, I'm going to collect mine back as soon as I can.
It might be leaving money on the table, but it's the only guaranteed money I will get by collecting it the moment I'm eligible.
When I hit 62, I will have worked for someone for 40+ years, I'm going to collect mine back as soon as I can.
It might be leaving money on the table, but it's the only guaranteed money I will get by collecting it the moment I'm eligible.
Posted on 10/19/21 at 8:33 pm to UpstairsComputer
quote:
I always look at it as a guaranteed 7% between age 62-67, and then a guaranteed 8% between 67-70
I get what you are saying but I don’t look at it quite the same. I don’t look at it like it’s a pile of money that is guaranteed to earn 7% -8% that will be there for you or your family (should you die) when you want it. The reason they are increasing the percentage is because you are compressing the time by waiting and as you point out, waiting has associated risks.
Posted on 10/19/21 at 8:38 pm to Weekend Warrior79
It is all calculated the same. Weather you start drawing at 62 or 70, the monies will be the same at age 85 if you are a male or 87 if you are a female. Do the math!
Posted on 10/19/21 at 8:48 pm to JetsCoach
quote:
It is all calculated the same. Weather you start drawing at 62 or 70, the monies will be the same at age 85 if you are a male or 87 if you are a female. Do the math!
Huh? The math on breakeven calculations doesn’t matter if you’re a woman or a man.
Don’t get me wrong, I know it matters for life expectancy, but it doesn’t change the breakeven age.
Posted on 10/19/21 at 8:56 pm to Weekend Warrior79
If your wife will draw yours when you die and you think she will live into her 80s (or you will), wait
Posted on 10/19/21 at 11:01 pm to Weekend Warrior79
Social Security is also longevity insurance for you and your spouse. Break even is at 78 years old, but most people who are already 60 will live into their 80’s and possibly 90’s. Delaying is a guaranteed return, and I don’t believe the hysteria over it going bankrupt. Even if I don’t make it to 80, my wife gets 50% of my full retirement amount if I wait. I have to think of her also as she was a stay at home mom.
Posted on 10/20/21 at 6:14 am to Auburn80
Social Security Calculator
Make sure to check the applicable interest rate you want to assume your investments make. The default is fed funds which is about zero at the moment.
Make sure to check the applicable interest rate you want to assume your investments make. The default is fed funds which is about zero at the moment.
This post was edited on 10/20/21 at 9:54 pm
Posted on 10/20/21 at 6:20 am to Weekend Warrior79
If you do the math, I think you get the same amount of money taking early versus waiting.
I’m might take early, but maybe not at 62.
I had open heart surgery this year so I don’t think waiting until 70 is best option for me.
My spouse is 5 years younger, so I’ll possible wait until she’s 62.
I’m might take early, but maybe not at 62.
I had open heart surgery this year so I don’t think waiting until 70 is best option for me.
My spouse is 5 years younger, so I’ll possible wait until she’s 62.
Posted on 10/20/21 at 6:26 am to Auburn80
quote:
Break even is at 78 years old
Yeah, if you ignore taxes and opportunity costs, not to mention the stress it can have on a portfolio.
This post was edited on 10/20/21 at 6:27 am
Posted on 10/20/21 at 7:19 am to cgrand
quote:
based on my family history it's unlikely i live thru my 70's
Same here if I am not planning on making it to 80 why wait
Posted on 10/20/21 at 7:30 am to bayoudude
I took mine at 62 and just put it all in savings. I’m 73 now and it has grown into a tidy littlle nest egg.
Posted on 10/20/21 at 9:20 am to Auburn80
It will definitely take some planning in the years before I retire, but I do enjoy reading the different perspectives from people that actually look at all scenarios. The part that grinds my gears is when "experts" talk about leaving money on the table without considering the entire package. With that said, I also agree with what has been stated numerous times that this board is not representative of the average person. As we have seen from countless reports, the average American is relying almost solely on SS as they have nothing saved.
My wife works, makes a decent salary, and never wants to be a stay-at-home. The closest she will come is become a part-time consultant for the company she works for and only work during school hours.
I agree that I do not see it going bankrupt either, Congress will find a way to fund, even with more taxes. The person that was giving the CPE/CLE made a comment that at one point the ratio of worker to recipient at one point was ~4 to 1, and is now around 2.8 to 1. This is where the concern is coming that we could run out; just not enough people putting in right now. But what is also not factored in this concern is people are working longer in life (primarily because they didn't plan far enough ahead) which means they will have fewer years where they are collecting.
My wife works, makes a decent salary, and never wants to be a stay-at-home. The closest she will come is become a part-time consultant for the company she works for and only work during school hours.
I agree that I do not see it going bankrupt either, Congress will find a way to fund, even with more taxes. The person that was giving the CPE/CLE made a comment that at one point the ratio of worker to recipient at one point was ~4 to 1, and is now around 2.8 to 1. This is where the concern is coming that we could run out; just not enough people putting in right now. But what is also not factored in this concern is people are working longer in life (primarily because they didn't plan far enough ahead) which means they will have fewer years where they are collecting.
Posted on 10/20/21 at 9:25 am to Aliasau
quote:
I took mine at 62 and just put it all in savings. I’m 73 now and it has grown into a tidy littlle nest egg.
That's awesome. ~20 years out, but currently my plan is to take it out at 62 (or when I retire) and use it for expenses and limit how much I touch my growing nest egg. And even then, I'll only draw from my traditional IRA/401(k) to limit my RMDs when I hit 72.
With my family history, my life expectancy appears to either be around 80 or 105. So, if I make it past 85, I need to make sure I have enough to go another 20 years
Posted on 10/20/21 at 9:52 am to Weekend Warrior79
“That's awesome. ~20 years out, but currently my plan is to take it out at 62 (or when I retire) and use it for expenses and limit how much I touch my growing nest egg. And even then, I'll only draw from my traditional IRA/401(k) to limit my RMDs when I hit 72.
With my family history, my life expectancy appears to either be around 80 or 105. So, if I make it past 85, I need to make sure I have enough to go another 20 years “
That’s a perfect example that each individual has different circumstances that effect their financial planning. In our case we both have Defined Benefit Plans for our retirement and do not depend on our IRA’s but I do have an RMD that is now in effect. What I can say from our experience is that we spent more earlier in our retirement and as years go by it seems to be less every year. That could change should we have some type of major medical expenses but we do have a very good health insurance plan to supplement Medicare.
Posted on 10/20/21 at 10:00 am to Weekend Warrior79
quote:
My wife works, makes a decent salary, and never wants to be a stay-at-home. The closest she will come is become a part-time consultant for the company she works for and only work during school hours.
Being forced to retire because of health issues is not uncommon once a person passes 60, several of my retired friends never planned to stop working.
Posted on 10/20/21 at 11:23 am to Aliasau
Something I must be missing / not considering but why would I want to withdrawn money out of my personal retirement accounts and pay tax on it when I could start receiving SS and live off the government and continue to let my account grow. Based on my current projections if I start taking SS at 62 it will take 10 years before I would catch up to the money paid out if I started at 70 making me 80. This doesn't account for interest on the money in your nest egg that you didn't need to withdraw since the SS payment covers that need. If you assume 6% interest it takes an additional 2.5 years of payments after 70 to make up the difference (now age 82.5) If one waits until 70 the yearly payout is higher sure but I also drew down my personal account during my younger years. Then at 72 you start with RMD which would increase your income. This RMD and the higher yearly SS combined may trigger a higher tax rate.
I guess in the end there is multiple was to skin a cat but my general thinking is take what the government will give you sooner than later as later may never come.
I guess in the end there is multiple was to skin a cat but my general thinking is take what the government will give you sooner than later as later may never come.
Posted on 10/20/21 at 1:12 pm to ks_nola
I did some relatively rough math:
So let’s say you’re 62 on the button and haven’t worked this year. You retired in 2020 where you made $100k. SSA quick calculator suggests your benefit at 62 is $1,759, $2,469 at 66 and 10, and $3,094 at 70.
Let’s assume you need $4k/mth net to do what you’d like to do. Let’s also assume you’re in a state without income tax, and let’s assume all withdrawals are from pre-tax investments like a 401(k). Ignoring inflation and its impact on SS, tax brackets, and spending costs, a 6% annualized net return on a $1MM portfolio would push the breakeven point to 91 years old for an individual. The likelihood of any random 65 year old American living to 90 is between 25-33%, so you can understand why it probably doesn’t make sense in this scenario.
The other thing to consider in this example is the best/worst case scenarios. If you live to 100, waiting would have generated a net worth approximately 3-4% higher. However, if you wait until FRA and die right before you’d have a 12% lower net worth. Dying right before 70 would have given you a 19% lower net worth.
Is that trade off worth it?
Eta- I ignored RMDs, but that would basically make waiting even worse by increasing the taxable income and effective tax rate of waiting. It would push back the breakeven to 97 years old at the earliest.
So let’s say you’re 62 on the button and haven’t worked this year. You retired in 2020 where you made $100k. SSA quick calculator suggests your benefit at 62 is $1,759, $2,469 at 66 and 10, and $3,094 at 70.
Let’s assume you need $4k/mth net to do what you’d like to do. Let’s also assume you’re in a state without income tax, and let’s assume all withdrawals are from pre-tax investments like a 401(k). Ignoring inflation and its impact on SS, tax brackets, and spending costs, a 6% annualized net return on a $1MM portfolio would push the breakeven point to 91 years old for an individual. The likelihood of any random 65 year old American living to 90 is between 25-33%, so you can understand why it probably doesn’t make sense in this scenario.
The other thing to consider in this example is the best/worst case scenarios. If you live to 100, waiting would have generated a net worth approximately 3-4% higher. However, if you wait until FRA and die right before you’d have a 12% lower net worth. Dying right before 70 would have given you a 19% lower net worth.
Is that trade off worth it?
Eta- I ignored RMDs, but that would basically make waiting even worse by increasing the taxable income and effective tax rate of waiting. It would push back the breakeven to 97 years old at the earliest.
This post was edited on 10/20/21 at 2:05 pm
Posted on 10/20/21 at 1:30 pm to ks_nola
JPMorgan has the following slide in their annual Guide to Retirement. Note that it ignores taxes altogether.
Not terribly easy to read, but useful to the discussion.
Not terribly easy to read, but useful to the discussion.
Posted on 10/20/21 at 8:20 pm to Weekend Warrior79
There is a break even point at which waiting to draw is financially better. Run the numbers. I think my mom did it and found the age was like 77 or something.
Health, genetics and other assets should be examined before making a decision.
Health, genetics and other assets should be examined before making a decision.
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