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I understand the logic to waiting to draw SS. My concern is more based on what changes they will make down the road. It used to be, retirement planning was simple. It was the same rules for ever. Now, you need to pay for healthcare, pensions are disappearing, and poiliticians are looking at every program trying to save money. I retire in 5 years at 60. I'll be ok whether I draw at 62 or 66 and 8 months. I know the smart thing to do is wait, but part of me just doesn't trust the powers that be not to change things. Most people in my shoes feel the same way.
All this retirement planning sometimes makes you want to go all cash and go live on a beach on some tropical island. Retirement shouldn't be this taxing.
You need to pay attention to the Ryan/Republican budget. That SS reform cutoff age has been moved from 54 to 55. It would appear that for each year not implemented the age cut off will move up a year so the math still works. You appear to be right on the cusp. Depending on 2016 election results you could be impacted.
I don't know - but we are talking longevity and since the most talked about tweak to Social Security benefits is the Chained CPI, I'd sure like to see a recalculation using those figures. I would be hesitant to take a substantial hit to my retirement funds, thus increasing my dependency on government benefits later in life, without this information.
BTW, did you see on Pfau's blog where his personal bond allocation is I Bonds and Vanguard's TIPS mutual fund? Interesting.
I doubt Dr Pfau ( or the OP) have much experience about how many people in the " real world" live
I am not sure his intended or actual audience is what you and others consider the real world. I mean when we see a thread title featuring Him, Bernstein, Slott or other similar authors that tells us what the discussion is about and who will probably relate to it the most. Sorta like a thread with the word frugal in it.
You don't need to work til 70 in order to delay taking SS until 70, presuming that you have a portfolio to bridge the gap, as many people posting here indeed have. For them, the question of when to take SS is a question of asset allocation.
In other words, the question of when to take SS is a question of whether or not you want to "purchase" more or less of this particular form of inflation-adjusted annuity (i.e., SS).
Pfau's recent work shows the expected real return for various outcomes of this decision so that someone who has adequate assets can make their decision rationally. Whether this amount is reduced for Medicare deductions makes little difference in calculating the rate of return. If you take Part-B at age 65, whether or not you have taken SS, you pay for it -- this is an independent question. Deduction from SS is mainly a convenience, although Medicare-premium inflation is capped for people who are actually on SS.
Lenora raises a good question about the effect of computing COLAs using different rules, and I hope that Pfau returns to the subject in order to clarify this point.
As far as other changes -- we don't know what's going to happen. Probably the most likely scenario is that everyone over age 55 (or whatever) will be grandfathered-in under the existing rules.
Last edited by Hamish Forbes; 04-02-2014 at 10:25 AM..
True dat! Take the money and run.....a sure thing now vs. a maybe if later, a bird in the hand, etc.
MathJak, whatdaheck is TIPS???? Gosh, I feel like when I was a sophomore in algebra, my eyes are glazin' over.....
This has been answered with a description, but it does not seem that the acronym itself has been addressed. So, since this is the only thing of substance I have to contribute to the discussion, here it is:
Is that adjusted in anyway to average inflation inflation? Does it count in anyway to what you can make on money gained early? Plus the very fact that likely we will see adjustments to SS in coming years. I certainly wouldn't want to do any coin toss on aging numbers which is what 50% chance is.
THIS is the reason I hang out with you! Mom got me started five years ago with a subscription to AARP (yeah, I know, but it was a good start) to begin learning the ropes NOW, not when retirement actually happens.
I am studying for the future so it doesn't whack me in the head. My Dad, upon turning 65, went to the SS office and he announced, 'So, you're here to teach me about Social Security and Medicare!'
Of course the worker was, like, just sign these forms, dummy. I had to TELL him to opt out of part B and D because the wifey has kickbutt insurance for them both (retired teacher).
I canot thank you enough for the information you put out here. Brokers, advisors and financial talk shows are more potatoes than meat, frankly. And, yes, at first I get that scared blonde doofus feeling when trying to absorb it sometimes.
I hope that when I am 70, 75, 80 I am still able to work. I have no plans to retire. Still, we plan for retirement becuase it is the smart thing to do. A question that I would have is, are we required to sign up for Social Security at age 70 or is it 71 and a half? I know that I will need to start taking disbursements from my 403B when I hit those numbers. Lets say that I am working though and do not want to sign up for Social Security. Do I have to anyway? Can you delay it till you are 80?
I hope that when I am 70, 75, 80 I am still able to work. I have no plans to retire. Still, we plan for retirement becuase it is the smart thing to do. A question that I would have is, are we required to sign up for Social Security at age 70 or is it 71 and a half? I know that I will need to start taking disbursements from my 403B when I hit those numbers. Lets say that I am working though and do not want to sign up for Social Security. Do I have to anyway? Can you delay it till you are 80?
Why in the world would you want to delay past 70?
( just curious )
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