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Old 05-13-2015, 04:40 AM
 
Location: NC Piedmont
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Quote:
Originally Posted by Hamish Forbes View Post
But the chance that at least one member of a healthy couple will live past 90 is a lot higher; hence the concern about survivor's benefits.
But still less than 50%. And what is a "healthy couple"? No history of cancer, cardiovascular problems, diabetes or obesity? I am not sure how high the bar is.
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Old 05-13-2015, 05:36 AM
 
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Quote:
Originally Posted by CarvedTones View Post
But still less than 50%. And what is a "healthy couple"? No history of cancer, cardiovascular problems, diabetes or obesity? I am not sure how high the bar is.
According to my information, the probability that at least one spouse of a now-both-65 couple will live to 90 is about 0.45 (45%) across the general population, making this a real possibility. The break-even age is usually given as late 70s, early 80s, IIRC.

As far as the specifics go, it's less clear, and I don't know how high the bar is for being "healthy." There are calculators online that take into account generalities such as race and level of education, and details such as cholesterol, blood pressure, and BMI to give more precise estimates of life expectancy. The probability of one spouse living past 90 can easily exceed 0.50 (50%) for some subsets.

In my opinion, the first problem to be addressed is ensuring that my surviving wife does not run out of money. If we both die early, so be it; we're both dead, and won't know the difference. On the other hand, if one survives and runs out of money, this is a real problem. I have seen elderly people run out of money -- it is not a pretty picture. But, as ER said above, this is a philosophical question as much as a financial one . . .
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Old 05-13-2015, 05:47 AM
 
Location: RVA
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I agree, it does really boil down to comfort level and other income sources. If your objective is to stop working as early as possible, and you have a fair amount of savings both tax deferred, after tax, and other income (rental. Pensions, etc), it makes little sense to delay past FRA, if you work until 63-65. The earlier you retire, say in your 50s, the more likely it makes sense to collect at 62, as you would have already been used to living on a fixed, limited income for quite a few years, and the psychological and income boost at 62 would be irresistible. If you are VERY wealthy, you would tend to already be investment savvy, and not need the money, (as well as possibly have a better chance for living longer) so delaying is both easier, less impactful, and the chance of living to see the ROI, more likely and worth the small risk.

I'm not retired yet, but close, and so I know maybe 2 dozen friends and relatives that are retired and collecting. Only 3 delayed or are delaying until 70 because they are either very wealthy (multi million net worth) or still working by choice. EVERY retiree that is either waited/waiting until FRA is for their spouse and because they work a fair amount of part time, have pensions and are financially sound. ALL others, that retired as soon as it APPEARED possible, collected at 62. It was a self fulfilling prophecy because collecting at 62 IS what enabled them to retire as soon as possible.

It is foolish to predict when you will collect until you approach the decision age. The best you can do is be educated about the options and outcomes of your choices.

As already discussed, those that would benefit the most by delaying can afford it the least, and their only path to that is to keep working as close to 70 as possible. Those that can afford the most to delay, have less to consider because the financial impact is so little. SS literature is ALWAYS written to explain the benefits and income issues for the less prepared people, where $100 - $200 a month is a lot of money, not for the wealthy or well prepared, where their income is $15k a month and $200/month is dinner out twice or once a month extra change.

Last edited by Perryinva; 05-13-2015 at 06:09 AM..
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Old 05-13-2015, 07:43 AM
 
Location: North Idaho
2,172 posts, read 2,083,015 times
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Quote:
Originally Posted by Hamish Forbes View Post
In my opinion, the first problem to be addressed is ensuring that my surviving wife does not run out of money. If we both die early, so be it; we're both dead, and won't know the difference. On the other hand, if one survives and runs out of money, this is a real problem. I have seen elderly people run out of money -- it is not a pretty picture. But, as ER said above, this is a philosophical question as much as a financial one . . .
I think this is a good way to look at it rather than worrying about whether you break even on delaying benefits. If both you and your spouse die earlier than the theoretical break even date, so be it, you're dead and you don't need the money.

The really bad risk you need to protect against is you and/or your spouse living long lives and running out of money or having to adjust your standard of living significantly to preserve your money. Fewer and fewer people have a better way than social security to establish a good base of inflation adjusted income that will last as long as you live. About the only exception would be those with government pensions, but even many of those are suspect nowadays.

Dave
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Old 05-13-2015, 03:24 PM
 
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Delaying SS also incorporates a built-in form of longevity insurance/hedging that you would not get from an investment portfolio.
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Old 05-13-2015, 03:34 PM
 
29,775 posts, read 34,863,854 times
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Quote:
Originally Posted by ncole1 View Post
Delaying SS also incorporates a built-in form of longevity insurance/hedging that you would not get from an investment portfolio.
Bada Bing! It is pure income protection in your later years.
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Old 05-13-2015, 04:33 PM
 
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it is called guarantees and that is what you pay for with life insurance and annuity products. but in this case you are trading longevity risk for market risk or the reverse and neither one has a guarantee .

Last edited by mathjak107; 05-13-2015 at 04:54 PM..
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Old 05-14-2015, 03:53 AM
 
71,526 posts, read 71,712,424 times
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Quote:
Originally Posted by Perryinva View Post
I agree, it does really boil down to comfort level and other income sources. If your objective is to stop working as early as possible, and you have a fair amount of savings both tax deferred, after tax, and other income (rental. Pensions, etc), it makes little sense to delay past FRA, if you work until 63-65. The earlier you retire, say in your 50s, the more likely it makes sense to collect at 62, as you would have already been used to living on a fixed, limited income for quite a few years, and the psychological and income boost at 62 would be irresistible. If you are VERY wealthy, you would tend to already be investment savvy, and not need the money, (as well as possibly have a better chance for living longer) so delaying is both easier, less impactful, and the chance of living to see the ROI, more likely and worth the small risk.

I'm not retired yet, but close, and so I know maybe 2 dozen friends and relatives that are retired and collecting. Only 3 delayed or are delaying until 70 because they are either very wealthy (multi million net worth) or still working by choice. EVERY retiree that is either waited/waiting until FRA is for their spouse and because they work a fair amount of part time, have pensions and are financially sound. ALL others, that retired as soon as it APPEARED possible, collected at 62. It was a self fulfilling prophecy because collecting at 62 IS what enabled them to retire as soon as possible.

It is foolish to predict when you will collect until you approach the decision age. The best you can do is be educated about the options and outcomes of your choices.

As already discussed, those that would benefit the most by delaying can afford it the least, and their only path to that is to keep working as close to 70 as possible. Those that can afford the most to delay, have less to consider because the financial impact is so little. SS literature is ALWAYS written to explain the benefits and income issues for the less prepared people, where $100 - $200 a month is a lot of money, not for the wealthy or well prepared, where their income is $15k a month and $200/month is dinner out twice or once a month extra change.
the last paragraph is the irony of the situation. those with the resources to spend down and delay while retiring at 62 likely do not need the longevity protection of waiting .

they would likely do more harm than good if they had to spend down their own investments early on in to a market down turn trying to delay..

those who have no choice and need those higher ss payments by delaying likely can't afford to retire at 62 in the first place unless they have a pension or other structured payments coming in.

delaying works best for those working from 62 to fra or later who cannot afford to retire yet.

the best situation is having a pension covering expenses , delaying ss and leaving the investments alone to grow, quite a few here are in that lucky situation although i am not . i am already spending down our portfolio by not reinvesting dividends and distributions and using that money for expenses ...
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Old 05-14-2015, 05:22 PM
 
2,759 posts, read 993,967 times
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I agree we are living longer. But here is my question . Let's supposed you or your wife lives to 90. How much will you really be spending. I can see health costs but doubt you will be spending much on traveling, eating out that you would have done in early years of retirement.
So if your house is paid off and you have SS,Medicare and hopefully a nice 401k account. I think you would be ok?
While getting into 90s and running out of money is a worry.not enjoying your early years worrying about getting to 90s which you might not even get to doesn't sound good to me either
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Old 05-14-2015, 05:43 PM
 
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if you have the resources spending just shifts from yourself to others. doing things for kids and grand kids instead of yourself becomes quite common later in life.
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