Good SS analysis (married, benefits, older, music)
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Everyone's needs and wants are different. I've never known anyone to start taking SS early and invest the income. Not saying it's a bad idea, just saying it doesn't happen. If any posters here are doing so, more power to you.
Not necessarily 'investing' the SS, but not drawing an equivalent amount from the 401K/IRA (When the time comes) either. Pensions and SS will cover our expenses and allow us to be more flexible and dynamic with IRA distributions and dividend income.
And like others have said, not drawing down your own savings in order to leave something behind . . . we all have different opinions on that but for us it is extremely important.
The way I see is this... you can claim SS at 62...
1) If you claimed at 66-67, you will break even at around 77..
2) If you claimed at 70, you break even at around 82...
At 62, you could take that money if you didn't need it and invest it...
1) If you die before 77, you made a LOT of money rather than zero... if you die at 82, you made a LOT of money rather than zero
2) If you didn't die and invested it, how much would 150k+ over 10 to 20 years of investment make you? So now, that 77 and 82 becomes irrelevant because you have all the SS money and a ton more by investing it...
3) The age group is "average", so 50% would die and 50% would not die at that age... but if you didn't need it and invested it,,.. you probably have to live a lot longer to break even which means your chance of death is even higher... it seems even if you didn't need it, take it at 62 and invest it... and you are more than likely to die and profit then to die and not profit...
It is nice to have charts to look at but very deceiving in my mind.
Not only are we guessing our life spans but also tax policies, investment returns, and individual life needs. I contend that no one has a crystal ball good enough to pick them all then project what is best going into the future.
Each household should evaluate their situation and make a decision... and they may well be different even if the chart is the same. We have chosen to delay until 70.
True, but there are certainly flags that should not be ignored. For example, both President Obama AND Senator Rubio have proposed reducing the growth of benefits for wealthier retirees. Rubio (and others) have also proposed strengthening the benefit for lower income seniors.
There appears to be bipartisan support for this idea - so it's probably worth adding to the other factors we might consider in choosing which way we, as individuals, should proceed.
,snip> And, as an aside, BTW, it looks like 2015 will be yet another "no Social Security COLA" year for seniors, who're continuing to take it on the chin for this administration.
Wow, "nice" forecast. Can I borrow your crystal ball?
Something I did not know until my visit to the SS office is that the increased-benefit-if-delayed factor only applies to your own SS benefits (claimed under your own SS#). It does not apply to the survivor's benefit.
So for instance if John and Mary are the same age and both have a full retirement age of 66, and John dies at age 60, Mary would not get an increased benefit by waiting to collect her widow's benefit until age 70. But depending on how much her benefit might increase, she might want to start with John's at age 66 and then see if her own (delayed) benefit may one day be larger than John's.
what you say if true BUT, the increased earnings do apply to survivor benefits. In your example John did not live long enough to collect any benefit let alone if FRA benefit or his Extra credit if he had waited to 70.
Lets look at your example again but this time John waits to collect until age 70 then dies, Mary at her FRA would be entitled to his full benefit with the increased credits, if that were more than her own benefit.
what you say if true BUT, the increased earnings do apply to survivor benefits. In your example John did not live long enough to collect any benefit let alone if FRA benefit or his Extra credit if he had waited to 70.
Lets look at your example again but this time John waits to collect until age 70 then dies, Mary at her FRA would be entitled to his full benefit with the increased credits, if that were more than her own benefit.
Forums can be dangerous places when the answer to one situation is applied to others
The way I see is this... you can claim SS at 62...
1) If you claimed at 66-67, you will break even at around 77..
2) If you claimed at 70, you break even at around 82...
At 62, you could take that money if you didn't need it and invest it...
1) If you die before 77, you made a LOT of money rather than zero... if you die at 82, you made a LOT of money rather than zero
2) If you didn't die and invested it, how much would 150k+ over 10 to 20 years of investment make you? So now, that 77 and 82 becomes irrelevant because you have all the SS money and a ton more by investing it...
3) The age group is "average", so 50% would die and 50% would not die at that age... but if you didn't need it and invested it,,.. you probably have to live a lot longer to break even which means your chance of death is even higher... it seems even if you didn't need it, take it at 62 and invest it... and you are more than likely to die and profit then to die and not profit...
the bigger ss payment is about cash flow more than dying with the biggest pile.
in fact i can take a 22k ss payment at 62 or 40k at 70. if i do wait until 70 that is 18k a year less i have to pull from savings and investments going forward plus colas.
good chance my wife is going on longer than me so 18k a year invested and compounded can grow a lot of dough if left alone ..
it can also be invested a lot more aggressively since i do not have to worry about having to sell equities at a loss or keep lots of cash cash to cover that 18k i don't have to withdraw.
the problem with investments generating the difference is because of the uncertainty of markets you need to keep a lot more powder dry to cover bad sequences of return.
did you know if you invested in a total market fund prior to 2000 you would have had a gain of only 63% over almost 14 years on any money prior..
if you took a 5% withdrawal rate with noooooooooooo inflation adjusting from a 1 million dollar investment you would have only 336k left or a 66% decrease .
that is the danger of trading a risk free income like ss for an income dependent on markets and interest rates.
going forward with such low interest rates and high stock valuations investing can be tough and historically we are in uncharted waters. ss may turn out to be the best deal going.
you couldn't even find an annuity that pays close to what ss does with colas that would cost the amount of cash you would lay out from 62 to 70 would run.,
Last edited by mathjak107; 06-02-2014 at 04:50 PM..
I'm adding 8% a year to my SS 'annuity' by waiting until 70 to file. If I could find an investment that guaranteed that rate of return, I'd consider filing now. .....
While you are correct that a "guaranteed 8% rate of return on an investment" would be rare, your analogy is fallacious. You can't invest money they don't pay you. Your decision may still be the best for you, but you need to calculate the lost "opportunity cost" of the many months you are paid nothing between FRA and 70. Getting 8%/year higher payments in the future is not the same as an 8% "rate of return". I am not criticizing your decision, just your "investment" assumption.
it has to do more with the consistancy of income than the actual amount when it comes to investing the money on your own vs higher ss payments.
higher ss payments are like an annuity ,they are insurance not an investment.
they are insurance you can not outlive the income stream which can not be said about investing on your own where you are subject to the whims of the market.
as we are experiencing we have had little actual investment growth on any older money prior to 2000 for almost 14 years. in fact on an inflation adjusted return basis we still have not even reached a new high . that can be a very dangerous scenerio in retirement if you are counting on savings and investments for your support.
that is one of the reasons developing more of a fixed base of reliable ,consistant income can be helpful. it can also cut demands on your own portfolio down later on allowing you to invest far more aggressively then you might otherwise would.
that usually makes a bigger difference then investing the early ss money since you have a far greater time to potentially grow that invested money instead of just the 8 years of early ss being the difference.
odds are if married you will have a bigger pile left at the end of your spouses life waiting if you are an investor,all things being equal..
in fact every calculator will show you higher withdrawal rates and higher ending balances by waiting utilizing the same scenerio and that is assuming the same investment style not even growing the money more aggressively down the road.
but there are situations waiting is not the best choice even if you think you have longevity.
there are tax ramifications to waiting. in fact we are seeing a planner tomorrow night to see if waiting for us will be a negative tax wise, whether roth conversions may help and to plan out the best way of dealing with what ends up being a very complex tax situation when everything is figured in the equation.
ideally i would love 100% roth income and little taxable income since a 65 year old couple can get 42k of taxable money and pay 1800 bucks in taxes.
add in a roth sttream of income and you can be good to go.
but to high in ss payments every year could throw you off track and make your tax bill very high once rmd's start with traditional accounts..
some folks will deplete their savings to low by waiting and it is a roll of the dice if their money will have a comfortable cusion until ss kicks in.
one emergency expenditure could hurt them .
Last edited by mathjak107; 06-03-2014 at 03:30 AM..
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I am not criticizing your decision, just your "investment" assumption.
