U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Retirement
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
 
Old 03-14-2015, 03:56 PM
 
Location: Colorado Springs
4,865 posts, read 4,977,192 times
Reputation: 17368

Advertisements

The maximum Social Security benefit at full retirement age (66) is now $2663 per month. However, if you choose to file and defer, that monthly benefit grows by 8% per year to a maximum of $3515 at age 70.

If you have not put in the maximum, the ratios are still the same.

The difference is $10,224 per year. Consider that a US 10 year treasury bond now pays just 2.112%, to get that much more per year you would have to save $484,090.

So one way to think about this is that if you can use savings to fund your retirement to age 70, you will have saved the equivalent of $484K.

That seems like a very cheap annuity. Also, it's an annuity that rises with inflation and it becomes the survivor's benefit for a married couple. What a Deal.

However, less than 2% of Social Security recipients wait until age 70 to take benefits.
Quick reply to this message

 
Old 03-14-2015, 04:34 PM
 
71,878 posts, read 71,942,576 times
Reputation: 49418
this chart does not reflect any investment of the early ss money which can shift the entire equation to taking it early being the best financial deal.

it is not as easy a choice as you make it seem.

for one thing you can get slammed tax wise at 70-1/2 with that larger ss payment combined with rnmds. that is why i won't wait until 70.

you also have to see how the larger payment plays out tax wise as far as getting your ss taxed .


Quick reply to this message
 
Old 03-14-2015, 04:37 PM
 
Location: Colorado Springs
4,865 posts, read 4,977,192 times
Reputation: 17368
and your risk free return on investment is what?
Quick reply to this message
 
Old 03-14-2015, 04:38 PM
 
71,878 posts, read 71,942,576 times
Reputation: 49418
depends on all off the above as well as your investments including the tax situation created by waiting .

our rmds combined with another 10k by waiting would throw that extra 10k in the next marginal bracket. not worth it compared to taking ss at my fra.

in fact even that is not written in stone. i am retiring in july .

we have 2 years cash for withdrawals set aside.

if markets are down when it is time to refill i may take ss earlier to avoid selling equities at a loss.

there is so much thought that has to go into this other than a simple year to year comparison.

]if you look at the chart your return by age 90 waiting until 70 is only 5.20% . that is easy to beat typically in other investments.

don't forget while you increase 8% a year it isn't an 8% return . you are giving up checks that offset that by alot.
Quick reply to this message
 
Old 03-14-2015, 05:15 PM
 
71,878 posts, read 71,942,576 times
Reputation: 49418
here is a comparison showing just a 6% return pretax too , a 50/50 mix can do that , this is taking it at 62 vs 66-1/2

it is almost identical


Last edited by mathjak107; 03-14-2015 at 05:25 PM..
Quick reply to this message
 
Old 03-14-2015, 05:17 PM
 
71,878 posts, read 71,942,576 times
Reputation: 49418
here is 62. 66 vs 70 . up to age 80 62 was the best . if you made it to 90 70 was slightly ahead. but if you died before 84 you lost the bet . 84 to 90 barely ahead .

age 90 there is less than a 7% difference in balance . that isn't a year in return , that is in total . .


Last edited by mathjak107; 03-14-2015 at 05:27 PM..
Quick reply to this message
 
Old 03-14-2015, 05:57 PM
 
2,429 posts, read 3,230,179 times
Reputation: 3330
Thanks, mathjack once again you're educating me. (I 'd meet you at a Meet Up anywhere)
You had me convinced through previous posts and threads to wait until 70 for Soc. Sec. I thought you're posited that that was 'best' in most cases. Now I see you're thinking of taking your SS at what age? 66?

I want to retire BY 65.....my FRA is 67 (darn it, NOT 66)...I was thinking of waiting until 70 for Soc Sec. I don't have near as much in assets as you do, and my NON 401K money is in a Roth IRA so I don't have any mandatory RMDs (right?)...so maybe the RMD's causing a tax issue...won't be an issue.

At retirement would you roll a 401K into a regular IRA or Roth IRA?

As for annuities, I know a lot of people have them. A friend's financial planner is suggesting one for her and her husband. But for some reason the fine print scares me and I just can't seem to get a handle on the costs and risks. That being so, I'm from the Buffet/Bogle school of thought and don't invest in ANYthing I don't understand. So while I keeping hearing about annuities.....I'm SUPER wary.
Quick reply to this message
 
Old 03-14-2015, 06:45 PM
 
71,878 posts, read 71,942,576 times
Reputation: 49418
Thanks.
When to take ss if you can afford to have the choice is a complex decision.

Key word is when you have the option.

The irony is that usually those who can't afford to have the option end up taking it at 62 by default .

Either health or job issues make that choice for them ready or not.

But the fact is waiting until 70 has huge financial benefits for someone willing to work longer to make up the short fall.

I was going to wait until 70 to file but retire at 62 but looking at the work ups the combined higher ss and rmds bumbed us to high.

So 66 1/2 is my best choice.

However if markets crap out when the time comes to refill my cash i may take the ss earlier rather than sell equities at a loss.

That is why there can be no hard and fast rules. Each one of us is going to be unique.
Quick reply to this message
 
Old 03-14-2015, 07:14 PM
 
Location: Florida
4,379 posts, read 3,718,272 times
Reputation: 4116
Quote:
Originally Posted by Vision67 View Post
The maximum Social Security benefit at full retirement age (66) is now $2663 per month. However, if you choose to file and defer, that monthly benefit grows by 8% per year to a maximum of $3515 at age 70.

If you have not put in the maximum, the ratios are still the same.

The difference is $10,224 per year. Consider that a US 10 year treasury bond now pays just 2.112%, to get that much more per year you would have to save $484,090.

So one way to think about this is that if you can use savings to fund your retirement to age 70, you will have saved the equivalent of $484K.

That seems like a very cheap annuity. Also, it's an annuity that rises with inflation and it becomes the survivor's benefit for a married couple. What a Deal.

However, less than 2% of Social Security recipients wait until age 70 to take benefits.
I agree with you. I look at it as how much monthly income will I get. I do not assume I would invest the money or worry about taxes. I am looking for a reliable stream of income. However in the example being discussed in the posts following yours the delay until 70 results in $88,000 more cash.

I agree that if you want a safe flow of income you compare the delayed SS to the purchase of an annuity. I think the delayed SS will always be the better deal.
Quick reply to this message
 
Old 03-14-2015, 09:19 PM
 
Location: Los Angeles area
14,018 posts, read 17,765,919 times
Reputation: 32309
Quote:
Originally Posted by mathjak107 View Post

Don't forget while you increase 8% a year it isn't an 8% return . You are giving up checks that offset that by a lot.
This is what so many people fail to realize, judging by posts in this Retirement Forum over the years I have been here. They say things like "How can you beat an 8% guaranteed annual return from age 66 to age 70?" and the statement betrays the lack of understanding.

I did not intend the foregoing as an argument against waiting until age 70. I am just advocating starting from a position of correct understanding when analyzing one's own situation.
Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


 
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:
Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Retirement
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top